SMEs Adoption of E-business by - Iloka Benneth chiemelie , Ehumadu Chika

1.0 INTRODUCTION

     The use the internet/web for e-commerce has seen a rapid growth in relationship to the growth in website. The benefits include but not limited to information processing, order placing, product delivery and improved service performance (Ching and Ellis, 2004). It also had an impact on the barriers of entry, by allowing small medium enterprises (SME’s) to enter the market and communicate globally like other big firms (McCue, 1991; Hoffman and Novak, 1996; Herbig and Hale, 1997; Nguyen and Barrett, 2006).

     There is no distinctive definition of an SME, but for the purpose of this paper and SME will be describe as an enterprise that employs less than 250 staffs, has an annual turnover not in excess of EUR 50 million, and/or annual balance sheet not exceeding EUR 45 million (Forfas, 1999). There is a clear recognition of the importance of SMEs in the economy and has been estimated to account for 80 per cent of economic growth across the globe (Jutla et al., 2002).

     Although they have been a widespread of acceptance of internet use in corporate environments, the extent of usage by the SME shows variety from one firm to another (Sadowski et al., 2002). The internet can provide various economic benefits through an alternative channel for companies, especially those on the peripheral grounds, and for those organisations that don’t engage in e-marketing activities, they could be doing it at their own “peril” (Egan et al., 2003).

     While they have been an increasing number of studies on the internet, limitation exists on such issues as constraints, successful e-marketing strategies, the role of internet in relation to organisations marketing activities; and in fact the merits of e-marketing for SMEs (Ching and Ellis, 2004; McCue, 1999; Avlonitis and Karayanni, 2000). This viability leads the bases of this research paper which is to present critiqued arguments on e-marketing and the SME; operational lessons for the future as described by the research paper.

     This research paper is thus, divided into three sections. The first section provides a summarization of the e-marketing article used to better describe the topic in general for the reader, the second section goes on to critique the points highlighted from the e-marketing article. The final section is the recommendation and conclusion part that provides pathways for further researches on the same topic or topic of similar interests in the future.

2.0 SUMMARIZATION

2.1 E-MARKETING ACTIVITIES DEFINED

     E-marketing refers to the use of digital interactive technologies and information technology to accomplish traditional marketing practices of creating, communicating and delivering value to customers. Of similar ways, internet marketing and e-marketing are often used synonymously and taken to mean the same thing (Strauss and Frost, 2005; Coupey, 2001; Chaffey, 2003; O’Connor et al., 2004).

     The internet is the medium for e-commerce and e-business by providing information through the World Wide Web, e-mail, allowing communications in real-time and enabling database sharing. Nevertheless, e-marketing is more than the internet. It involves other technologies that enable customer relationship management, enterprise resource planning, supply chain management, bar code scanner, TV, other Telecommunication Medias and text messaging.

2.2 SMEs AND INTERNET MARKETING ACTIVITIES

     The internet/web has enhanced the development and richness of marketing activities and contents efficiently; making available to all companies including SMEs, the opportunities that perhaps would not have been available to them (Palmer and McCole, 2000). Among the number of studies that has been adopted t predict internet usage within the organisation is the technology adoption model that predicts individual computer acceptance based on perceived usefulness and usage in relation to social influence and cognitive instrument processes(Davis, 1989; Venkatesh and Davis, 2003).

     Further studies, points out organisation’s marketing orientation and learning orientation as potential indicators or intention to adopt the internet (Nguyen and Barrett, 2006). However, lack of actual research on the internet and SME making actual adoption of a standard framework for e-marketing in regional economy difficult (Ching and Ellis, 2004; McCue, 1999; Avlonitis and Karayanni, 2000). This is because marketing in the small firm is different to marketing in larger organisation (Carson et al., 1995).

     Marketing in the SME is based on their ability to serve niche markets and maintain good customer relationship and this is enhanced to some extent by the internet in business of any size. The threat of entry by bigger firms is of great importance because of the lower capital requirement and this could force SMEs to jump into the wagon of internet marketing without fully understanding the implications of doing so (Herbig and Hale, 1997).

     Earlier studies indicated possible benefits of implementing the internet technology into marketing mix by SMEs to include, improved marketing products and service through online quotes, less expensive but wider advertising, e-mail marketing which will reduce printing cost.  SMEs could also see their credibility enhanced by creating professional image through the presence of an efficient website, live chat about products and services and conducting research in multi-lingual markets (McCue, 1999; Kula and Tatoglu, 20003).

     Studies in 2000 showed that the SMEs where slow in adopting the internet despite the benefits it provides and the merits predicted(Gallagher and Gilmore, 2004). This is because the SMEs see the internet as a separate entity rather than incorporating it within the organisation, thus, they were not able to utilize the potentials to create competitive advantages. This lead to research to postulate as to whether the internet and e-marketing will ever replace conventional marketing practices used by the SMEs (Egan et al., 2003; Windrum and Barranger, 2003; Gallagher and Gilmore, 2004).

2.3 DRIVERS TO INTERNET AND E-MARKETING ADOPTION AMONGST SMES

     Based on the literature, various pro-active and reactive factors have been identified as motivations for SMEs to adopt the internet and e-marketing into their firms. The proactive reasons includes chances to enhance their competitive edge in peripheral regions, chances of lowering operating and marketing costs, better promotion opportunities and enriched overall marketing communication mix. Further reasons includes management enthusiasm, enhances sale and market research(Jeffcoate et al., 2002; Downie, 2002; Dann and Dann, 2001; Poon and Swatman, 1997).

     On the other hand, the reactive reasons includes increased competition from local competitors, shrinkage in domestic markets, fear of competitive demerits, as well of lack of full implications involved in adopting the internet (Kardaras and Papathanassiou, 2000; Premkumar and Roberts, 1999; Ching and Ellis, 2004).

2.4 BARRIERS TO INTERNET/E-MARKETING ADOPTION FOR SMES

2.4.1 GENERIC CHARACTERISTICS OF SMES

     It is consistent of most of the literature to point out generic characteristics as the direct factor effecting the adoption of the internet by SMEs (Windrum and Berranger, 2003). Financial aspect of the generic characteristic can be related to their selective nature in choosing between internet based marketing and conventional methods because SMEs are eager to see the advantages between the two. The human issue involves overstretching of staffs work load, which we result in the internet being viewed as the least important compared to other activities(Winkholfer and Houghton, 2004), and the lack of adequate technical skills required for web advertising (Chapman et al., 2003). The generalist nature managers and employees within SMEs’ results in limited knowledge about how various computer technologies could contribute to an overall e-marketing strategy (Jeffcoate et al., 2002).

2.4.2 PRACTICAL IMPLEMENTATION AND MAINTENANCE ISSUES

     The day-to-day activities required in maintaining and implementing e-marketing strategies could result in disastrous consequences on the SMEs (Hormozi and Harding, 1998). This activities could includes cost of acquiring the hardware, how big is the website, and lack of updating which will drastically reduce return purchase by customers and result in serious financial implications to the company (Herbig and Hale, 1997; Downie, 2002).

     During implementation, many SMEs have experienced information overload, SPAM, unattractive web design, poor penetration measurement and low quality links and banners that have proven to result in deleterious effects (Downie, 2002). Though the cost of globalisation in the internet is low, it has been seen as disastrous when SMEs are attracted to go into globalisation due to the price of online advertising (Burns, 2003).

2.4.3 ORGANISATIONAL OBSTACLES

     A common problem faced by SMEs that adopt the internet is cost effectiveness; many SMEs complain that despite high enquiry rate, only few of these have actually ended up in a completed purchase (Ching and Ellis, 2004; Poon and Swatan, 1997). In reality, the main obstacle is due to suppliers, partners and even customers of SMEs ate not competent enough with the internet, emails and other technological tools(Dann and Dann, 2001; Noyce, 2002).

3.0 PURPOSE OF THIS RESEARCH

     The main purpose of this research is to re-examine the impact of internet and e-marketing on SMEs and this purpose was achieved by presenting a critiqued argument on the barriers and drivers of e-marketing in the SMEs. Based on the arguments proposed, the aim was to make specific suggestion as to what the SMEs need to consider while planning adopting the internet as a marketing medium by clearing understanding the pros and cons associated with such decision both now and in the future.

4.0 SIGNIFICANCE OF STUDY

     This research is significant because it helps to understand the future of the SMEs in the e-marketing world. SMEs are crucial element of the economy because they make 80 percent of the total economic growth. Besides that, undertaking this research paper will help to develop new e-marketing framework and model for SMEs as well as enhance the competitive atmosphere of the marketing world.

5.0 CRITIQUE

     For this research, a critiqued argument will be presented on the drivers to internet and e-marketing adoption in SMEs and the barriers to internet and e-marketing adoption in SMEs. This is because other contents found in the research journal are theoretically confirmed in the marketing field and investigating on unconfirmed contents would be better as it offers opportunities to criticize the content.

5.1 DRIVERS

     Depending on owner/marketer orientation, the rapidly growing impact of technology on e-marketing can have both negative and positive perceptions in different firms (Covin, 1991). Poon and Swatman (19917) see one of the major benefits of adoption information technology in smaller firms as the ability to access information, which are bigger than those owned by larger firms. This allows trading of intellectual properties (Leadbeater, 2000). This flexibility in business approach offer SMEs the opportunity to gain competitive advantage over the more hierarchical tiers of decision makers in larger firms(Durkin and McGowan, 2001).

     O’Keefe et al. (1998) believe that proactive first users of the internet can gain business advantage in the same level as early entrants. The stimuli behind this adoption include low cost and risks involved, enhanced customer relationship, quality distribution process and supply chain management (Weiber and Kollman, 1998). Many researches see this access to information as a key success factor, and this concurs to the early explanation in the summary of the article as main drivers of information technology adoption in SMEs.

     But, in the marketing world, everything does not work perfect as it seems. These drivers to internet adoption can arguably become barriers and threats. This is because, though the information technology offers enhanced services, cases such Scam, Spam, Fraud and Virus can easily scare e-marketing adopters away. And while this drivers create opportunities to enhance and profitable business, they can also they can also be perceived as threats and barriers to entry (Sahay et al., 1988).

5.2 BARRIERS

     Study shows that many SMEs are not achieving minimal levels of internet adoption, raising concerns as to why adoption programmes are not successful (Jutlas et al., 2002; Korchak and Rodman, 2001; Van Beveren and Thomson, 2002). Major barriers to adoption includes(Cragg and King, 1993; Mehrtens et al., 2001), lack of technical skills(Darch and Lucas, 2002; Duan et al., 2002), lack of trust in information technology (van Akkeren and Cavaye, 1999; Bode and Burn, 2002), lack of understand of the realisable benefits (Goode, 2002; Poon, 2000), and reluctance in some industry sectors (Lewis and Cockrill, 2002).

Source: adapted from Rosemary and Craig (2004)

Other the above paragraph and figure (1) highlights the barriers to adoption of the internet and e-marketing in SMEs, it is arguable to know that those SMEs that overcome these barriers and started along the paths to e-marketing often remain reluctant to move into the “market space”. The evidence for this argument is increasingly been reported in the business press(Erbschleo, 1999; Howarth, 2002). Understanding that overcoming the barriers of adoption isn’t just enough for adopting e-marketing in SMEs makes the task of increasing the adoption rate more difficult.

6.0 FINDINGS

     The findings relates to the critique section of this research paper, and the overly generalized barriers to adoption of internet and e-marketing in the SMEs were seem to be just the root to a more complicated decision making process SMEs need to make while deciding on whether or not to undertake the adoption. And while researches might have provided some benefits of adopting e-marketing in SMEs, it was also found that while this benefits could enhances business operations, it on one hand, increases entry barriers for companies that wish to adopt the system.

7.0 METHODOLOGY

     Due to the nature of the research objectives it was determined that qualitative research techniques would be better for an in-depth understanding of SME and decision making would be most appropriate for the study. They have been arguments that SME researches conduct studies that are sensitive to the unique characteristics of small firms(O’Donnell et al., 2001). A qualitative approach that aims to explain rather than predicting business phenomena (Leavy, 1994) and to understand situations rather than measure them (Gordon and Langmaid, 1988) is deemed to be more suitable for understanding the business activities of the SMEs (Gilmore et al., 2001).

     An in-depth study of a sixty eight articles and journals in total that relates to the topic was conducted to better understand the approach for exploring the research paper. This journals where selected from one of the best marketing publishers in the world, and analysed based on the quality of contents and evidence provided within the journals.  Most of which were used as a citation in this study.

8.0 FRAMEWORK

     The framework for this research is designed into two dimensions based on the driver to e-marketing adoption in SMEs and the barriers to e-marketing in SMEs. The research presents several points on the two frameworks and the study was developed based on these points.  

9.0 RESEARCHABLE AREAS

     This research paper present various researchable areas such as the drivers and barriers to e-marketing and internet adoption in SMEs. This is because they have been little researches on these areas and going into further research will present a clear and visual understanding of why SMEs adopt e-marketing and what makes them adopt e-marketing as well as developing framework for a better adoption model in the SME.

10.0 CONCLUSION

     The findings in this study show that e-marketing adoption in the SMEs is still in its infancy in regional economy, and there is still a significant scope in its potential use. All though the use of the internet by SMEs since 2000 has seen a growth, it is clear that the impact is not clear based on what should be done and what should not be done to adopt a successful e-marketing strategy in the SME.

     The overall implication of this study encompasses the idea that adoption of the internet and e-marketing in the SME is not fully evident. And if SMEs don’t want to be left behind in the competitive environment, they must adopt this approach into their conventional marketing practices. This means they have to take the risk involved, while covering all the necessary expenses and requirements. On this base, they will help in development more internet skill and improve the e-marketing world. The SME also have a role to play in the provision of internet related skills-based workforce and practical support for stability in regional economy and competitiveness in growing electronic business world.

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