E-Commerce Usage and Perception of E-Commerce Issues among Small Firms: Results and Implications from an Empirical Study

By Bharadwaj, Prashanth Nagendra; Soni, Ramesh G. | Journal of Small Business Management, October 2007 | Go to article overview

E-Commerce Usage and Perception of E-Commerce Issues among Small Firms: Results and Implications from an Empirical Study


Bharadwaj, Prashanth Nagendra, Soni, Ramesh G., Journal of Small Business Management


This paper details the results of an empirical study conducted to study the scope and effectiveness of e-commerce deployment in the Commonwealth of Pennsylvania as perceived by small business owners in the state. The methodology and results of this study may be applicable to several other states. In addition to a comprehensive survey of small businesses, a dozen businesses successful in deploying e-commerce were interviewed at great length. The results showed that main parts of an e-commerce infrastructure included (1) flow of information; (2) organizational image; (3) reaction to customer needs; (4) increased sales; and (5) access to new markets. The major reason for businesses to not engage in e-commerce is their perception that it is not strategically important for their business. Results pertaining to regional parameters, sales tax considerations, human resources infrastructure, and Internet security issues as well as policy recommendations are discussed in the paper.

Introduction

Notwithstanding the meltdown of the dot.com businesses in the recent past, the "new economy" industries have a great potential to help the overall country's economy to grow (White Paper by PNC Real Estate Finance 2000; Report of the Expert Meeting on Electronic Commerce 2002). In order to experience significant economic expansions, there is a need for all types of businesses across the country to rapidly adapt to the "new economy" by utilizing technology and e-commerce. The Progressive Policy Institute's (PPI 2002) report on the New Economy Index emphatically states that the "new economy is here to stay." The report identifies one of the realities of the new economy as follows: "the states' economic success will increasingly be determined by how effectively they can spur home-grown technological innovation and entrepreneurship." The report does not advise the states to recreate Silicon Valley or Boston's Route 128; rather, it asserts that the states should encourage local businesses to develop new products and service innovations for spurring economic growth. The PPI report ranks the 50 states based on the New Economy Index. States in the North East/Mid Atlantic, West Coast, and Colorado placed high in these rankings, whereas most states in the Midwest, Great Plains, and the South ranked at the bottom. The PPI study highlights the need to comprehensively research the role of the new economy in specific geographic areas with respect to entrepreneurship and economic development. The present research is focused on studying the status of the new economy in the state of Pennsylvania, which ranked in the middle (22nd) in the PPI study.

The adaptation to the new economy in any state or region will not be smooth and far-reaching unless the small businesses participate actively in e-commerce. This is especially true in rural parts of states such as Pennsylvania where small businesses constitute about 90 percent of all businesses (Center for Rural Pennsylvania 2002). For that to happen, small businesses need to (1) possess the necessary confidence in the safety and security of the Internet; (2) have the required electronic infrastructure; (3) experience tax benefits and government support while they make the transition; (4) have access to the human resources and to any needed training; and (5) most importantly, have the perception and belief that e-commerce makes good business sense (that is, it provides them cost savings and benefits of enhanced productivity, market share, profitability, and customer satisfaction). This paper not only addresses the five issues just given (Internet safety and security, electronic infrastructure, tax issues, human resource infrastructure, and business strategy) but also details the results of an empirical study conducted to analyze the scope and effectiveness of e-commerce deployment in Pennsylvania as perceived by small business owners in the state. Specifically, it looks at the differences in perceptions of the previously given five parameters between companies that deploy e-commerce and that do not deploy e-commerce, as well as the differences in perception between rural and urban businesses. …

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