The Perceived Strategic Value of E-Commerce in the Face of Natural Disaster: E-Commerce Adoption by Small Businesses in Post-Katrina New Orleans

INTRODUCTION The impact of Hurricane Katrina has resulted in serious implications for small businesses in New Orleans, leaving those businesses as one of the biggest commercial casualties. With the instant complete loss of markets due to this natural disaster, the greatest challenge for these small businesses by far has been the need for displaced residents to return. Because small businesses rely so much on the local economy, they have not been able to recover at the same rate as larger businesses and corporations. Hurricane Katrina has made these businesses modify the way that they sell, market and produce goods; technology has also called for businesses to transition the way they do business (Bring New Orleans Back, 2008). Among the barriers faced in the post-Katrina era by small businesses in New Orleans are the reduced rate of tourism to the city and the inability to reach consumers outside the bayou. This is where e-commerce can be an effective tool in rebuilding the small businesses of New Orleans. A phenomenon that is emerging rapidly among businesses all over the world, E-commerce can be described as the process of buying, selling, or exchanging products, services, or information via computer networks, including the Internet (Chaffey, 2004; Turban et. al, 2006). The benefits of e-commerce to an organization include access to new global customer markets, the creation of new selling channels, and reduced costs of doing business (Chaffey, 2004; Saloner & Spence 2002; Chaudhury & Kuilboer, 2002; Turban et. al, 2006). Despite the benefits of e-commerce, its adoption by small businesses has remained limited (Gallup, 2008). Although some research has been conducted on the adoption of e-commerce in small businesses (e.g., Grandon & Pearson, 2003; Mirchandani & Motwani, 2001), the post-Katrina impact on the small business environment in New Orleans has produced a unique case in e-commerce adoption among small business. Also, much of the research in e-commerce studies has focused on e-commerce consumers rather than on small business owners who fund and make the ultimate decision on in e-commerce adoption of their organizations. The purpose of this research is to identify the factors that influenced perceived strategic value of e-commerce adoption by small business in post-Katrina New Orleans. LITERATURE REVIEW The Technology Acceptance Model (TAM) has been widely used to explain adoption of e-commerce. TAM was originally developed as an information systems theory by Davis (1989) to model how users come to accept and use a technology. Specifically, TAM proposes perceived ease of use (PEOU) and perceived usefulness (PU) as influencing factors for technology acceptance. Since its introduction, TAM has provided a basis for explaining adoption behavior in various contexts (Venkatesh et. al., 2003). Another popular theory that has been used to explain technology adoption is that of diffusion of innovation. According to Rogers (2003), diffusion of innovation is the study of how, why, and at what rate new ideas and technology spread through cultures. Diffusion of innovation theory proposes that decision makers (i.e., management and owners) within a business or organization will evaluate an innovation's characteristics such as relative advantage, compatibility, complexity, trialability, and observability and that their perceptions of these characteristics will determine whether the organization or business will adopt this innovation. PERCEPTION OF STRATEGIC VALUE IN E-COMMERCE The concept of strategic value in this study is defined as the summation of perceived benefits from e-commerce minus the summation of perceived costs of e-commerce over a period of time. The potential benefits of e-commerce implementation include an increased number of new customers, better service to loyal customers, and increase in profit and market share. The strategic value of e-commence can be illustrated as a value-driver model with four factors driving value creation of e-commerce: transaction efficiency, complementarities, lock-in, and novelty (Amit & Zott, 2001). …