1.0 Brief Background to the Study
In the modern business environment, electronic commerce is not preferred by large corporations only but also Small and Medium Sized entities (SMEs) respectively. E-commerce is a term used to refer to the nature of transactions that are carried out using electronic devices such as computers and online platforms. It has gained dominance in the modern business world and entities are striving towards its adoption for purposes of keeping with the pace of modernization and technology. Nevertheless, there are quite a number of reasons behind such moves and the study sets to enquire and document the factors that motivate SMEs to adopt such platforms for conducting business. The outcomes in this inquiry will add incredible knowledge to existing frameworks that explain the foundations behind such dynamisms in society. It will be influential not only to academicians but also to business operators who use and plan to adopt E-commerce strategies especially in the developing countries, which is the main scope of this secondary research.
Statement of the Problem
In practice, there are limited studies that have been carried out especially focusing on developing nations as far as adoption of E-commerce in business among SMEs is concerned. A few of the studies that have been carried out have focused on large corporations and to some extent have skewed their focus on developed nations, which is not the scope under this investigation. Nevertheless, literature explains that E-commerce has benefits in making business enterprises reach their horizons because of simplifying business processes and improving efficiency, both in management and operation. Some of the reasons that have been cited that have caused an increased for E-commerce in business are categorized into four main classes which are; organizational factors, individual factors, environmental factors, and technological factors respectively. Despite these broad categorization, specific influences especially to smaller business can be said to include but not limited to; technological readiness of business owners, perceived benefits that will be derived from the use of ICT in business, owners’ IT experience and ability, and owners’ innovativeness among others. In this regard, the study aims to fill the existing gap of insufficient literature and limited studies that have focused on SMEs in developing nations with an aim of answering questions with regard to precise factors that are playing a major role in promoting E-commerce adoption.
1.2 Aims of Research
The aims of this research can be categorized into two namely overall (major) and specific which will lead to the formulation of precise questions that will guide the entire investigation as discussed under.
1.2.1 Major Aim
The overall aim or objective is to investigate the determinants of E-commerce adoption by SMEs in developing countries.
1.2.2 Specific Aims
For purposes of achieving the anticipated goals in an objective manner, the scholar decided to limit the scope of the inquiry into four specific objectives derived from the overall goal as follows;
(i) To determine how technological readiness determines E-commerce adoption by SMEs in developing countries.
(ii) To investigate how perceived benefits determines E-commerce adoption by SMEs in developing countries.
(iii) To explore how owners’ innovativeness determines E-commerce adoption by SMEs in developing countries.
(iv) To find out how owners’ IT experience and ability determines E-commerce adoption by SMEs in developing countries.
1.2.3 Research Questions
The precise questions that have been formulated from objectives are as follows;
(i) How does technological readiness determine E-commerce adoption by SMEs in developing countries?
(ii) How does perceived benefits determine E-commerce adoption by SMEs in developing countries?
(iii) How does owners’ innovativeness determine E-commerce adoption by SMEs in developing countries?
(iv) How does owners’ IT experience and ability determine E-commerce adoption by SMEs in developing countries?
Definition of Terms
In order to ensure that the entire paper is well understood by users of the information, it was imperative to define key terminologies in the context in which they are used herein. The term defined include E-commerce, Developing Countries, Perceived Benefits, Technological Readiness, Owners’ Innovativeness, and Owners’ IT experience and ability.
1.3.1 E-commerce
E-commerce is a term used to refer to the transactions which are conducted on the internet by the use of electronic devices.
1.3.2 Developing Countries
It refers to those countries which are poor and agricultural based as the main economic activity band which seeks to become socially and economically advanced.
1.3.3 Perceived Benefits
In the context if adopting E-commerce, perceived benefits refers to the merits that users anticipate to receive if they adopt certain strategies in business operation.
1.3.4 Technological Readiness
The phrase refers to how prepared and to what extent are people willing to adopt and accept technology in carrying out trade.
1.3.5 Owners’ Innovativeness
Owners in this context is used to refer to entrepreneurs who start and run SMEs, while innovativeness is the level of creativity and willingness to bring new ideas and approaches business.
1.3.6 Owners’ IT Experience and Ability
It is the level of knowledge for using ICT devices and instruments in running business.
Essay Structure
The essay will be structured in six sections where the first section that has already been covered is on introduction proving the overview of the research as well as aims and problem statement. The second section will give the review of past studies and theoretical framework (literature review), the third section will detail the approaches (methodology), the fourth will provide key issues and debates (findings and results), the fifth section will present key themes (discussions), and the last section will also give conclusions and recommendations respectively.
Section Two: Literature Review
2.0 Introduction
The second chapter as already outlined above serves as the basis of identifying gaps that exist in the field of study as well as acknowledging the previous scholars who have contributed to the current knowledge. Various books, related articles and other relevant sources to obtain information on the summary and description of the work are analysed. As such, three important sections will be covered here which are; the review of previous studies focusing on methodologies used, findings or conclusions, and possible gaps observed; secondly, the theories that support the assertions in the study, adoption of E-commerce by SMEs when it comes to developing countries, will be reviewed, and finally the chapter summary.
2.1 Review of Past Studies
Several publications and research papers have been written in e-commerce in most developing countries and so the main objective here is to review those papers and understand ecommerce together with factors affecting it. Websites occasionally are the main way to access the internet when it comes to electronic business, and so for e-commerce to develop, the websites have to first be developed. A paper by(Ochola, 2013) tries to point out how the SMEs have been affected ever since the evolution of the internet began. Data showed that in 2013, the websites in the world were approximately 1.5 billion and around 210 million of these were active(Hopkins, 2013). This definitely is a clear indicator that the e-business during that time grew massively. The developed nations for instance UK and US in the research carried out, it was identified that 99% of the SMEs are accountable for the GDP of the state that 49% of it, together with 54% of the employment available in the country because of their well internet connection. In other countries such as Malaysia(Seng Chee Lim,Ahmad Suhami Baharudin and Rong Quan Low, 2017) the major business is the SMEs, which constitute 97% of it whereas their GDP contribution is 31.5% and finally on the total employment is 59%. The developing countries are massively trying to adopt technology progressively but then the impact is not hugely felt as in the developed countries hence not easily noticed(Tambunan, 2009).
The business environment, the legal policies available on the environment, the business and consumer environment, infrastructure, technology, the cultural and social infrastructure, the e-services and connectivity are the factors that affect the e-readiness of a state. A e-readiness framework for the first e-commerce adoption was developed as stated by (Rouibah, 2009), that entails a model with two main factors, the external readiness and the internal readiness by the organization. External factors include the market forces, size of the firm, the government in charge and finally the support from the industries(Oliveira, 2012). As for the internal organization factors, the commitment of the team members, governance, the resources available and the existing awareness greatly determines the e-readiness. In developing countries, the availability of the ICT greatly affects them together with lack of support from the government. The poor ecommerce development in Africa is also defined by their e-readiness and this is due to the lack of the resources and government support on the ICT infrastructure (Kamel, 2006) carried out a research on the measures to help with the e-readiness in these developing countries and the conclusion made was that the organizations should ignore their organizational level and focus on the large environment essential for e-commerce. The investigation model outlined the e-readiness importance together with the technology acceptance(Quaddus, M. & Woodside, A, 2015).
A paper by (Pour, 2009) clearly depicts how the development of e-commerce has various stages that have to be followed for full development. The initial stage is readiness that is concerned with how the business, people, economy and the infrastructure are prepared for the e-commerce activities. Secondly, is the stage that deals with how communication and information technologies are fully used in a country and how far are the activities that require electronic commerce are set about(Vandenberg, P., Chantapacdepong, P. & Yoshino, N, 2016). The intensity is basically the rate at which e-commerce is practiced in a country. Impact, is the final stage when it comes development of e-commerce, and in this case, the impacts made by the electronic business are determined on the country’s economic activities and the national economy as a whole (Lee, 2016). The developing countries are mostly on the readiness and the intensity stages of development in e-commerce (Qirim, 2006)while the developed countries are done with all the three stages hence the breakthrough in the e-commerce development.
A study using a mixed methodology by employing literature review and case study was employed by (Antoldi, F., Cerrato, D. & Depperu, D, 2011) with the researcher using qualitative and quantitative approach to obtain data on the factors leading to slow development of e-commerce in the developing countries. These factors as identified were the unequal internet distribution in the countries, the lack in some countries and poor state of the ICT infrastructure contributed hugely, the distrust that exist between the consumers and their local internet producers, harsh regulations and policies set by the governments in these countries limit wide access and finally the disorganization that exists in the electronic market(Chrysostome, E. & Molz, R, 2014). Basically, if these factors would be tackled then the country’s GDP would be improved.
In SMEs various papers have addressed the difficulties existing in the business. One of them by (Rouibah, K., Khalil, O. & Hassanien, A, 2009)indicated that limited capital, inadequate use of the present technological skills, stiff competition from the other business and lack of managerial skills when it comes to governing the small business, were the main factors that contributed to their failure, hence retarding the economic development and growth of the country. Findings from the theoretical research carried out in the past few years on SME’s development indicate that miserable performance is often associated with the inadequate knowledge and information on the external foreign markets and also the ideas the foreign markets use to manage their business responsibly(Wang, J. & Yang, J. , 2016).
This greatly applies to large SME’s practicing the export business. For smaller SME’s tax constraint is a major problem for them and at some point, the tax imposed on the local good and services can be higher than what they earn garnering losses. In financial constraints, two factors are considered, the difficulty the SME’s have in obtaining money due to the high imposed interest rates together with lack of funds to expand their small and medium enterprise.(Fischer, E. & Reuber, R, 2013) carried a research on the topic SME’s development, it was discovered that new private established firms tend to develop at a faster rate as compared to the firms owned by the state. The researchers took into consideration how the capital is utilized together with the expansion of the employment factor. China scholars(Orr, S., Menzies, J. & Zheng, C. , 2018) further supported the firms owned by state that they rarely fail since they do not have financial problems and grow at a faster rate when it comes to business unlike the smaller business who have a lot of obstacles in both sales and finance.
2.2 Theoretical Review
Like the other areas of business, E-commerce and SMEs are grounded on a rich base of theories that support its existence and development as well as relevance in any organization. In the process of elaborating some of the important theories and assumptions that relate to the current investigation, the author will endeavor to cover a few areas which include the historical development of the innovation theories as explained in the sections underneath.
2.2.1 Technological Acceptance Model
The model was developed by Davis in 1982, it is aimed at predicting how the information system is accessed. Closely related to the planned behavioral theory, modification that a system has to be introduced to, so as it can be user acceptable(Suqri, M. & Aufi, A, 2015). Two main factors are considered here are the perceived usefulness, which is the extent to which an individual believes his job performance would be enhanced by the usage of a certain system and the ease of use where an individual believes effort free would be as a result of using a particular system(Teo, 2011). For instance, when there is a simple, easy to use technology, the company revenues will be increased due to the wide adoption of the technology widely by the small and the medium enterprises, also productivity increases will be noticed(Saariluoma, P. & Isomäki, H, 2009).
2.2.2 Diffusion of Innovation Theory
Being one of the oldest model around, was developed in 1962 by Rogers E.M, and it originated while trying to explain how a product or an idea over time, gains force and spreads through a certain population quick. Occasionally the conclusion of the theory entails people in a certain social system with an idea, product or behavior, will adopt it and perceive it(Rogers, 1995). The innovation is a progressive one that does not occur at the same time since people have different speeds in the adoption of the idea. When introducing an idea to a certain population, it is always of importance to consider the factors that will hinder or help the diffusion of the idea.
During its promotion, various methods are employed and they include using innovators, the early adopters, both the early and late adopters and finally the laggards. The latter, are the people who in a society are very conservative when it comes to their tradition and are bound by it. When it comes to change this is the hardest group to apply them hence very skeptical(Valente, 1995). This population needs strategies such as fear appeal, statistics and force exerted on them from the other groups. The innovators, is the beneficial group which should be considered, consisting of the individuals who are always the initial ones to apt an idea. Their interest in the idea defines their willingness to venture into business despite being aware of the risks and occasionally the innovative ideas are developed by them(Larsen, T. & McGuire, E, 1998). Another group of people to be considered are the early adopters whose main characteristic is to state what the other members want. Basically, they are the opinion leaders and they always embrace the opportunities of change presented before them. The importance of this group is that they clearly understand the necessity for change and so the adoption of new ideas becomes so easy. To appeal this population, the strategy required is to provide them with manuals on how the innovative idea will be implemented. The majority are the people who are not leaders but their adoption to new ideas determines whether they are the early or late majority. The early ones tend to adopt faster than an average person whereas the late on grasp them right after the majority have tried them. So, this groups requires the strategy of providing information tried out by other people and also the success accompanied by it. This theory improves the relationship between the SME’s owner and the customer, efficiency in the SME’s is also improved together with their expansion(Balgrosky, J., Brady, J. & Speaker, R, 2015). This business on the other hand enhances the growth and the economic development of the nation.
2.2.3 Theory of Planned Behaviour
The developing countries are greatly affected by the behaviour and the attitudes issues which will be listed in the theory. This theory plays a huge role when it comes to e-commerce by basically explaining how an individual act reacts to technological innovation. And is mostly determined by the norms, behavioural control and the individual’s attitude. Planned behaviour theory, developed by (Rush, 2014) clearly identifies the relationship that exists between attitudes and beliefs. How an individual is ready to perform a specified task, is determined by his behaviour intention(Lange, P., Kruglanski, A. & Higgins, E, 2011). How they react to the available technology determines how well they are going to excel in their small and medium enterprises.
2.2.4 The Reasoned Action Theory
The theory of reasoned action developed by Martin Fishbein and Icek Ajzen in 1967 is one among the three basic models of persuasion, it was invented for the purpose of improving the theory of information integration. Its main objective is to describe human behavior in relation to their attitudes(Fishbein, M. & Ajzen, I, 2009). The model points out the environment within which a person is highly modifies a person’s belief structure and consequently their behaviour. It is used in the anticipation of human reactions based on previously shown intentions and attitudes. It is distinguished from the information integrations theory mainly by the fact that it is concerned explicitly with human behavior rather than predicting attitudes. The theory also admits circumstances that limit how much attitude influences human behavior. The main elements used in the theory are; norms, based on other peoples’ expectations and intentions(Hennessy, 2012). This helps to determine the human attitude influence on behavior, and the effects of the norms on the same, and the contradictions they both present. The norms, what people expect someone to do under normal circumstances, provide an important motivation for compliance since it’s important for an individual to do what he or she thinks others expect him to do. The norms, which are subjective, play an important role in the strengthening of the ability to evaluate the attitudes that influence a persuasive goal(Suqri, M. & Aufi, A, 2015).
2.2.4 Integrated diffusion of innovation theory and technology acceptance mode.
Innovation can be basically defined as the process of change. Innovated ideas could be new or an improvement to the existing methods manifested in an engineering process to solve new requirements for a society or market. The theory of diffusion innovation and the technology acceptance model share important constructs and are complimentary of each other in the examination of the adoption of information technology and other related technologies. Studies that have attempted to integrate the two have provided reliable results which have been used in the synthesis of a model that blends the key construct for the two theories together(Kim, 2012). The five key ideologies of innovation characteristics, usefulness and innovation were adopted from the TAM and DIT. It has been observed by studies that the adoption of any ecommerce by any firm is highly influenced by support from the top management, the firms experience with information systems, the reediness of the organization and the size of the firm(Dwivedi, Y., Wade, M. & Schneberger, S. , 2012). The owner of the firm is also a significant factor that would affect the adoption of ecommerce, the adoption present two contradicting sides, for instance, the incremental costs would be small if a firm owns a telephone and a computer, and on the other hand, the set up and ongoing costs, complexity of innovation and technical problems may make innovations unappealing thus affecting their integration to the firms.
2.3 Chapter summary
A detailed review of literature and theories has been done based on the topic of research. Various existing theories were identified and expounded by basing its relation on the E-commerce adoption. A review of the past studies was also conducted and the gaps presented in history analysed together with the methods used to obtain the data mentioned in various research papers. The chapter has also provided the current understanding on the e-commerce and SME’s by the use of the past research studies. The episode that follows will expound on the exact strategies the researcher used to extract data from the available resources with the main aim being obtaining desired goals and outcomes respectively.
Section Three: Methodology
3.0 Introduction
A methodology section details the strategies a researcher employs in obtaining data that acts as evidence while answering questions as well as making inferences. As such, the section will elaborate the specific measures taken while collecting data specifically the research paradigm employed, philosophy, design, population, data, ethical concerns, and analysis of obtained information respectively. The overall methodology used in this analysis is qualitative approach where secondary sources of information have been obtained from previous researchers and publications on the topic, and comparisons made to provide answers to the questions proposed in section one.
3.1 Research Philosophy
A research philosophy is the general belief envisaged by a scholar on how facts should be collected and be analyzed in order to provide needed evidence. There are various types of research philosophies and selection of any depends on the study’s overall approach and researcher’s decision. Examples of the philosophies include; positivism, realism, interpretivism, axiology, epistemology and so forth. The scholar focused on two philosophies which are positivism and interpretivism from which a selection was to be made. Positivism is a philosophy that is anchored on the belief that there is stability in reality which can be observed and be described in an objective manner. According to the supporters of these philosophy, they maintain that observing and describing of a phenomenon can be done without any interference to what is being investigated. Positivists are of the opinion that while studying about a phenomenon, it is important to isolate it and repeat the observations in order to be able to arrive at objective conclusions.
Contrary to the positivism, interpretivism contend that only though a subjective interpretation can a reality be observed and be understood. And that such phenomena or reality should be understood through an intervention. Hence the two philosophies differ in terms of reality intervention and subjective or objective approach. According to interpretivism, although observations and studies can lead to varied interpretations of phenomena, such different interpretations are regarded as part of the scientific process of knowledge inquiry, which is also of great importance in research. As such, it is true in this ideology that scientists can longer be able to avoid disturbing or affecting phenomena while making investigations and therefore it is imperative to acknowledge and admit variety of opinions and inferences that emerge from the processes. Based on the establishments in these two philosophies, the scholar opted for positivism philosophy simply because it provides for the need to accommodate various interpretations from different scholars or scientists, on the issue of E-commerce adoption among the SMEs in developing countries. Hence, the main focus will be to establish what findings have been formulated from various inquiries and how can they be compared, not compromising the need of objectivity but appreciating the differing opinions whether based on subjectivity or objectivity aspects.
3.2 Research Paradigm
Paradigm in research is a word used to describe a world-view and set of conventions on how things work generally. It is the manner in which reality is globally shared in a mutual manner especially concerning research techniques. Three basic methodologies are recognized on paradigm and they include qualitative, exploratory and quantitative respectively. The focus on interpretivism approach was founded on two pillar foundations which are need for an intervention on the studied phenomena and an application of subjectivity. In this regard, the chosen paradigm is qualitative technique which will be used in a secondary approach to review opinions and conclusions from different people which might be different and coming up with an informed conclusion. As a matter of fact, the subjectivity implies that no one knowledge has an absolute answer to an issue but divergence of opinions can be used together to develop a clear and deeper understanding from different dimensions.
3.3 Research Design or Strategy
A design also known as a strategy is the overall tactics envisaged by a researcher through a combination of both the philosophical stance and paradigm adoption respectively. A design is therefore a terminology to refer to the integration of various components in ensuring there is coherence and clarity of issues. It encompasses various techniques and ensures logicality in answering the questions and addressing the problem that warranted a research to be done. There are various types of research designs which include but they are not limited to the following; causal, case study, meta-analysis, exploratory, experimental, descriptive, longitudinal, historical and many others. A researcher is allowed to select any design deemed appropriate to the context of the methods he or she wants to use and based on the scope employed. In this specific circumstance, the researcher decided to employ a mixed design methodology because of the nature of data that was to be employed (as described in the section that follows) and also based on the assumptions made in terms of philosophy and paradigm. The mixed strategies used included causal approach, case study and descriptive approaches. Causal analysis was selected as it enables a researcher to formulate conclusions in the form of X and The Y meaning showing the relationship that exists in the form of change development. Fundamentally, this approach was selected because it will allow the researcher to conclude how the adoption of E-commerce helps to achieve improvement in business operations and hence making it necessary to be adopted. Case study is a situation where a research is based on a given context. For instance, in this study it was conducted on developing countries with a specific focus on SMEs adoption of E-commerce. Further, a descriptive approach is one which is allows researcher to answer pertinent questions in the form of what, where, which and how among others. For example, the main aim in this analysis was findings solutions to questions such as how does perceived benefits promote the adoption of E-commerce by SMEs in developing nations? What is the extent to which innovativeness of owners determine the adoption of technology? How is technological readiness influencing the adoption of –commerce by SMEs? And how is owners’ IT experience and ability of determining the adoption of E-commerce by SMEs in developing nations? These questions warrant the use of descriptive approach which will ensure that the answers are established at the end of the exercise.
3.4 Target Population and Sampling
Population refers to the elements that will be investigated in a scholarly work in order to make inferences and conclusions about them. It can be anything that scholars are concerned with. In this specific scenario, the population of study involves developing countries with a particular focus on SMEs. However, since there are many developing nations, it will be important to sample a few studies on a few countries to represent the entire populace of developing nations. The process through which such samples are selected is referred to as sampling. There are various types of sampling including simple random sampling and convenience sampling respectively. Random sampling is an example of probabilistic based approaches of sampling while convenience sampling is an example of non-probabilistic based approaches. In this context, researcher decided to use convenience sampling by identifying a few studies published online on developing countries and making comparisons before drawing conclusions.
3.5 Data Collection, Nature and Sources
As already explained in the preceding sections, nature of data to be utilized here will be secondary in nature, whose sources will be online studies and publications that shall be retrieved by conducting web search using key term such as SMEs E-commerce adoption in developing nations and so forth. secondary data is one that has been obtained other people or parties for different uses or studies and have already been offered to the public access. As opposed to primary data that researchers collect from the source, this can be said to be obtained from other parties as opposed to primary origins. Instruments of collecting information will be the use of diaries where statistics will be recorded before they are analyzed. Summaries will be drawn and comparisons will be made using tables and text respectively.
3.6 Data Analysis Approaches
Analysis of data is the transformation of original facts into meaningful information that is based on the context of the current research. Since this study has employed secondary sources of data, it will use simple analytical skills such as comparison in identifying the differences and similarities as observed any other scholars, and pointing of gaps that might require further inquiry.
3.7 Reliability and Validity
Reliability in research is basically the ability of having outcomes in an investigation to be repeatable. Si
