Don’t be an island

Over the past two years, researchers from the University of Karlstadt, Sweden and the University of Wollongong, Australia, have been examining the adoption and use of e-commerce by small to medium enterprises (SMEs). Aside from the ‘normal university links’, the two locations were chosen because they were of comparable size and population. Both locations had a large number of SMEs in close proximity; they had a similar government and university infrastructure and each town centred on a major industry — steel in Wollongong, timber in Karlstadt. The researchers were interested in how and why e-commerce was adopted and used by SMEs, what factors deterred some SMEs from adoption and what the long-term benefits and disadvantages of e-commerce adoption were for SMEs.

The data has given rise to some important insights into the adoption of e-commerce by SMEs. But perhaps the most significant finding was the comparison of the two groups, Sweden and Australia. Of the 313 Swedish SMEs that were surveyed, 53 percent indicated that they had adopted e-commerce into their day-to-day business activities. By comparison, of the 164 Australian SMEs surveyed, only 15.6 percent indicated that they were using e-commerce.

The researchers examined those SMEs that had not adopted e-commerce to determine the major reasons behind the non-adoption. Both the Swedish and Australian respondents said the major barriers to e-commerce adoption were:

  • e-commerce did not fit the way they did business
  • e-commerce did not fit the way their customers did business
  • Lack of technical know-how
Curiously, the percentages of each of these barriers were almost identical for both the Swedish and Australian respondents. The researchers looked at factors such as employee numbers, business sector, market focus, turnover and found, again, that figures differed between the Swedish and Australian respondents by only one or two percentage points.

Finally the researchers examined whether there were any differences in the populations in terms of SMEs working alone or forming strategic alliances with other SMEs. The data showed that 46.2 percent of the Swedish SMEs had decided to join with other SMEs to form some form of strategic alliance. By comparison, only 8 percent of the Australian SMEs had formed alliances with other SMEs.

Previous studies have shown that a large percentage of Australian SMEs have a single owner/operator and that most owner/operators have a strong desire for independence. These studies have shown that joint ventures are avoided because they may impinge upon this independence. In many cases the use of consultants is avoided, as there is a fear that vital information may be transmitted to rivals. In place of the consultant, family and friends are often called upon to provide technical and marketing advice. The result is often a highly risky business with poor planning and poor internal control that stays within a niche market due to lack of relevant technical and marketing know-how.

While this description obviously fits a large number of Swedish SMEs, there is a very visible move by many to put aside the fear of having their independence compromised and to move towards some form of mutual assistance. Strategic alliances don’t necessarily reduce independence, but rather their role is to pool talent and resources together to produce results that would not be possible if the SME operated in isolation.

E-commerce is a disruptive technology. Any company that is adopting and using it will need to alter the way they do business and will probably require their customers to alter the ways they do business. The benefits, however, usually outweigh the changes required for its initial implementation. The studies in both Sweden and Australia showed that more than 60 percent of those that had adopted e-commerce reported reduced administrative costs, improved internal efficiency, improved marketing and improved competitiveness.

Much has been written concerning e-commerce, its adoption, its use and its many benefits. Much has also been written concerning how e-commerce can and should be adopted by both large business as well as SMEs. A comparison of the Swedish and Australian findings would suggest, at least for SMEs, a vital component of successful adoption is the sharing of marketing and technical know-how by way of strategic alliances. For many Australian SMEs, this appears to be the missing piece of the puzzle.

Rob MacGregor and Lejla Vrazalic are with the Department of Information Systems, University of Wollongong

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