Small Business and Web 2.0: Hope or Hype?

Boyles, Trish, Entrepreneurial Executive

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.

Web 2.0, a name reflecting an improved or upgraded version of the Web, is generally defined and distinguished by the presence of increased interactivity in Web applications including social media (online collaborative projects such as wikis, blogs, and social networking sites), cloud-based computing (information and software stored and run from a web server, not the user's computer), and the ability to access the Web via multiple device platforms (i.e. laptops, mobile devices, e-readers)(Governor et al., 2009; Kroski, 2006; O'Reilly, 2005; Peter, 2004; Shuen, 2008). The interactivity defining Web 2.0 is in large part a result of its underlying architecture as a technology platform, which includes an emphasis on participation-collaboration, a service orientation, and open source structured information, within the context of ubiquitous internet access. The major benefit Web 2.0 is purported to offer small businesses is the elimination of size advantages of larger corporations due to economies of scale (Anderson, 2006; Governor et al., 2009; Shuen, 2008). While evidence suggests that Web 1.0 applications such as e-commerce and informational web sites have not put small businesses on equal competitive footing with large corporations or reduced scale advantages (Hashim, 2009; Jones, 2005; Jones, Hecker, & Holland, 2003; Poon & Swatman, 1999), advocates of Web 2.0 technologies recognize this (O'Reilly, 2005; Shuen, 2008) and assert that Web 2.0 applications and technologies offer opportunities to small businesses that were imaginable but not feasible on a Web 1.0 platform (Anderson, 2006; O'Reilly, 2005).

The concept of Web 2.0 is not without controversy, as some argue it presents revolutionary opportunities for small businesses (Anderson, 2006; Governor et al., 2009; Li & Bernoff, 2008; O'Reilly, 2005; Rudman, 2010; Shuen, 2008; Wallace, 2007) while others suggest it is mere hype, representing nothing of substance (Carr, 2003; Dijck & Nieborg, 2009; Hindman, 2008; Maguire, 2007; Scholz, 2008). However, the term has grown in popularity among business practitioners and has spawned numerous workshops and consultants offering small businesses training on how to take advantage of Web 2.0 applications. Therefore, in this paper I consider the concept and meaning of "Web 2.0" and explore the potential opportunities and risks for small businesses, with an eye toward identifying fruitful future research opportunities.

Context of small businesses

Although there is no uniform and consistent definition of what constitutes a small business, definitions tend to be based on the number of employees, annual revenues, or amount of assets. The Small Business Administration (SBA) of the U.S. government considers companies with up to 500 employees, small businesses, while the U.S. Internal Revenue Service considers businesses earning less than $10 million in gross revenue to be small. Web 2.0 advocates have suggested opportunities offered by these technologies are available and exploitable by even a one-person operation. As such, the label 'small business' in this paper will primarily refer to a business that contributes over 50% of the owner's income, and has less than 20 employees. Although many researchers follow the SBA's definition of small businesses as organizations with less than 500 employees, external elements such as technology arguably have a different impact on a company with 5 employees versus a firm with 50 or 300 employees. In addition, firms with less than 20 employees represent a relevant and sizeable number of businesses in the U.S. (roughly 90% of all businesses (U.S. Census Bureau, 2006)). Finally, very little research focusing on firms with less than 20 employees has been conducted, particularly on analyzing impact of Web-based technology.

Since the early 1980s scholars have recognized that small businesses have certain unique characteristics that questioned the extension of existing management and business ideas to the small business domain (d'Amboise & Muldowney, 1988; Welsh & White, 1981). In particular, Welsh and White (1981) argued that small businesses experience a condition they labeled "resource poverty" resulting primarily from their small size. This …

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Small Business and Web 2.0: Hope or Hype?. Contributors: Boyles, Trish - Author. Journal title: Entrepreneurial Executive. Volume: 16. Publication date: Annual 2011. Page number: 81+. © 2008 The DreamCatchers Group, LLC. COPYRIGHT 2011 Gale Group.

This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.