E-Commerce adoption by small and medium sized enterprises in Indonesia : an empirical study of influencing factors and the impact of e-commerce adoption on SME performance

This study considers e-commerce adoption by SMEs in developing countries and, in particular, SMEs in Indonesia. It not only explores the extent of e-commerce adoption by SMEs in Indonesia and the determinant factors of e-commerce adoption but also the post-adoption benefits of e-commerce. It adds to the extant literature by considering both ‘downstream’ and ‘upstream’ factors within the context of developing countries. Many existing studies only consider upstream or downstream issues and in the context of developed countries. The focus is not on business organizations in general but SMEs in particular. The significance of this study is due to the limited current studies regarding e-commerce adoption in SMEs that were conducted developing countries. Eleven factors were identified as the determinant factors of e-commerce adoption and fifteen post adoption (upstream) benefits were identified. A combination of questionnaires and semistructured interviews were used in the data collection. Three hundred and one questionnaires provided quantitative data which was analysed by using regression analysis and ANOVA. The twenty-two, semi-structured interviews provided qualitative data about the reasons why these SMEs adopted e-commerce and the actual benefits realised by them, and all of that gave useful support to the questionnaire results. Data collection was in late 2013 / early 2014. This study found that six factors, namely perceived benefits, technology readiness, external support, manager/owners innovativeness, manager/owners IT experience and manager/owners IT ability, have a positive and significant correlation with e-commerce adoption. Then, extending market reach; increased sales; improved external communication; improved company image; improved speed of processing; and increased employee productivity were found as the top six e-commerce benefits perceived by the Indonesian SMEs. In addition to this, the adoption of e-commerce has a positive and significance impact on SMEs market performance and communication performance. The findings have implications for the Indonesian government, IT vendors and the SME owners. The low level of e-commerce adoption by Indonesian SMEs certainly has an implication for the Indonesian government. The results of this study could help them to increase further, and better target, effective programmers to encourage the adoption of ecommerce by Indonesian SMEs. For IT vendors, this condition would be an opportunity for them in promoting their products and services. In order to increase their success, they should also consider the determinant factors of e-commerce adoption. Many SME owners want to raise their level of adoption so that they can excel in competition This thesis makes a contribution to theory and practice by providing for Indonesian SMEs in particular, and SMEs in developing countries in general, a holistic picture of e-commerce adoption; the extent of e-commerce adoption; and, the determinant factors leading to adoption and the post adoption benefits.