Factors affecting e-commerce adoption and business success of Thai SMEs.

AuthorJantarajaturapath, Palan
PositionSmall and medium sized enterprises - Report
  1. INTRODUCTION

    Electronic commerce (e-commerce) is a process of trading goods, information, or services via computer networks including the internet over website (Jantarajaturapath and Ussahawanitchkit 2009; Silveira, 2003).E- commerce is changing the way business is conducted throughout the world and provides a lot of opportunities to improve the performance of businesses. E-commerce is not just about buying and selling products only, it covers information for customer inquiry on products and information, price comparison. Therefore, e-commerce has a direct impact on business owners, suppliers, and customers. The rapid change of environment such as internet, computer, and communication technology including infrastructure enable e-commerce to allow small- and medium- enterprises (SMEs) to streamline their business process, enhance customer service and offer new channel to customers (Chang, 2003).

    SMEs have an advantage over large enterprises because of their closely customer and staff, independent management, and affordable establishment of e-commerce. SMEs use e-commerce to access to global markets and managerial productivity for competitive advantage.

    In Thailand, SMEs are important as a mechanism that helps the country to survive and compete in highly competitive markets e.g. economic crisis in 1997 and economic crisis in 2009 (OSMEP, 2011). The Thai government's ICT plan (2000-2010) initiated and implemented a series of national plans activities to promote the diffusion of e-commerce to SME's. The government agencies such as Office of Small and Medium Enterprises Promotion (OSMEP) are in a leading role in promoting the use of e-commerce for competitiveness, provide free homepage, email and training program for SMEs. Hence, understanding the factors and advantages of e-commerce adoption become important. Today very few studies have conducted to examine factors affecting e-commerce adoption by SMEs in Thailand. Specifically, the purpose of this study is to test the relationships between e-commerce adoption and business success by market turbulence and technological turbulence are a moderator of Thai SMEs. IT competence, organizational support, and trust and security are antecedents of e-commerce adoption via competitive pressure as a moderator, and research question of the study is what are factors affecting e-commerce adoption by Thai SMEs.

    This paper is organizes as follows. First, hypotheses are proposed in which each is derived from the related literature. The next section address the data source and variables used in the empirical tests. Analysis of the results from OLS regression will be reported in the following section. Lastly, discussion and implications based on results will be drawn.

  2. LITERATURE REVIEW

    2.1 E-commerce Adoption

    E-commence adoption refers to firm which establishes electronic products or service transactions through the internet and providing material, information directly to customers (To and Ngai, 2006). The benefits of e-commerce participation for SMEs do relate to their ability to keep pace with a changing business landscape. SMEs use e-commerce to access to global market, decision aid, managerial productivity, work support, changing production method, reducing transaction costs and improving communication for competitive advantage (Grandon and Pearson, 2004). Olatokun and kebonye (2010) found that SMEs in Botswana adoption of e-commerce technology for competitive advantage and the electronic payment are widely used. According to Alam et al., (2007) who found that manufacturing in Malaysia adoption e-commerce for promotion their business online and cost reduction. Thus, the following hypothesis is proposed:

    Hypothesis 1: The e-commerce adoption will positively affect the business success.

    2.2 Business Success

    Business success refers to firm to survive, reach its goals and their ability to generate net profit in SMEs business (DeLone and McLean, 2004). Prior studies suggest that the financial performance only is a very narrow scope to measure business success (Quaddus and Achjari, 2005) According to Kaplan and Norton (1992) argue that business performance must be measured from four different perspectives: financial, customer, innovation and learning perspective. DeLone and McLean (2004) propose the strategic perspectives such as goal attainment is considered to be measuring. Therefore, in this study, financial perspective, customer perspective, and strategic perspective are suitable for combining to measure business success (Jantarajaturapath and Usahawanitchakit, 2009).

    2.3 Moderating Effects of Market Turbulence and Technological Turbulence

    Although SMEs adoption e-commerce is believed to contribute to business success, environmental turbulence does moderate the effects of SMEs adoption e-commerce and business success. SMEs should pay great effort in achieving business success in a more cost effective and seek the appropriate level of specific competencies of firm to match the level of environment turbulence (Wang, Lo, and Yang, 2004). In this study, market turbulence and technological turbulence are emphasized and studied.

    2.4 Market Turbulence

    Market turbulence is the rate of change in the composition of customers and their preferences (Jaworski and Kohli, 1993). In rapid changes of information technology, online marketplace and customer behavior, SMEs make efforts to reduce uncertainty that affects their own firm and responds rapidly to changes in customers preferences to its products or services offered continually in order to successfully support customer preferences (Jantarajaturapath, 2007; Chatterjee, 2002). Hult, Hurley and Knight (2004). Kumar, Subramaian and Yauger (1998) found that market turbulence is a moderating effect to firm performance. Thus, the hypothesis is proposed:

    Hypothesis 2: The greater the market turbulence is, the stronger the relationships between e-commerce adoption and business success will be.

    2.5 Technological Turbulence

    Technological turbulence refers to the rate of technology change (Jaworski, Kohli, 1993) that means customer perception is unable to accurately predict or completely understand some aspects of the technological environment. Since they enable a firm to understand customer needs, and offer products and services that meet those emerging needs, SMEs working...

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