Small Business and Web 2.0: Hope or Hype?

ABSTRACT Considering the number of small businesses in the US, the magnitude of their impact on the economy, and the prevalence of "Web 2.0" in discussions regarding businesses, the dearth of scholarly work on small businesses and evolving web technologies seems salient. Web 2.0 is generally defined and distinguished by the presence of increased interactivity in Web applications and an underlying open and collaborative platform. Web 2.0 advocates suggest that the platform eliminates size advantages for businesses and allows small businesses and even single individuals the ability to compete with large corporations. Therefore, in this paper the opportunities and risks in Web 2.0 for small businesses are considered within the context of small business resource poverty. The structure and elements of Web 2.0 are analyzed and reveal potential opportunities within digital industries; however capitalizing on these opportunities requires resources that small businesses are not likely to possess. Overall, it appears that Web 2.0 is primarily a basis of competition, making it a risk for those small businesses that do not utilize it. In addition, no systematic method for evaluating the return on investment (ROI) of utilizing Web 2.0 applications has been developed. This leaves small businesses on their own to weigh the risks of not participating against the lack of understanding regarding the return on investment (ROI) of Web 2.0. Given the ubiquity of Web access and the permeation of the Web across numerous product and service categories, understanding and participating in the Web will only grow in importance for small businesses. As such, small businesses would be well served by research on Web 2.0 and its impact on small business success. Based on the analysis fruitful and practically useful research avenues are identified. INTRODUCTION "Especially in a "flat world" where "size matters not," small- and medium-size enterprises and even one-man local businesses or projects can use these [Web 2.0] business models to advantage" (Shuen, 2008) "The tools of Web 2.0 allow anyone willing to put in the time and effort to harness the tools of the Internet and build the next great startup. Inexpensive and collaborative technology is allowing entrepreneurs to create unbelievable products and services even with meager resources and this environment of innovation should inspire entrepreneurs of any age to tap into the opportunities. " (Small Business News, 2010) Perhaps due to its ambiguous meaning and debated usefulness Web 2.0, and the evolution of web technology in general, and its impact on small business has not been adequately addressed by the academic business community. A recent article search in an EBSCO hosted database of business publications revealed that over the last decade scholarly articles focusing on small business and the World Wide Web oriented technologies constituted just 2.3% of all articles published on small businesses. Considering the number of small businesses, the magnitude of their impact on the economy, and the prominence of the role of technology and the World Wide Web in discussions regarding business, the dearth of scholarly work on this subject seems salient. While a modicum of research has been conducted on small businesses and specific Web technologies, such as e-commerce (Grandon & Pearson, 2004; Hashim, 2009; Kendall, Tung, Chua, Ng, & Tan, 2001; Mehta & Shah, 2001; Poon & Swatman, 1999) and internet marketing (Poon & Jevons, 1997; Schmengler & Kraus, 2010), few scholars have considered Web 2.0 as a general technology platform for small businesses. The widespread usage of the term "Web 2.0" in the business world suggests that, at a minimum, an analysis of its definition and alleged role in small business development and success is warranted. The growing buzz around the ability of so-called Web 2.0 technologies to democratize various aspects of society and culture, including politics, information, publishing, and business (Anderson, 2006; Governor, Hinchcliffe, & Nickull, 2009; Hippel, 2005; Kelly, 2005; Shuen, 2008), suggests more in depth conceptual and empirical analyses of this issue are needed to further understanding and offer guidance for small business owners and managers. …