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Journal of Small Business and Enterprise Development

SMEs and e-business

Michael Taylor Andrew Murphy
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Iss 3 pp. 280 - 289
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SMEs and e-business
Governments are besotted with information
and communications technology (ICT) and
Michael Taylor and e-business. Simplistically, they see them as the keys
Andrew Murphy to the knowledge-based economy and the assured
competitive advantage of their economies. To meet
this goal, there is mounting pressure for small and
medium-sized enterprises (SMEs) to more fully
embrace ICT and e-business techniques because,
in aggregate, they are big buyers, big sellers, big
innovators and, most important politically, big
employers. Now, in the USA, Europe and most
The authors
developed economies, there are innumerable
sector-based reports on:
Michael Taylor is Professor of Human Geography and .
the take-up of e-business (see for example the
Andrew Murphy is Lecturer in Human Geography, both in the
DTI Web site in the UK);
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School of Geography, Earth and Environmental Sciences,

University of Birmingham, Birmingham, UK.
international league tables on e-business take-
up rates; and
analyses on what countries have state-of-the-
art, best practice polices on SME e-business
Electronic commerce, Small to medium-sized enterprises,
support (European Commission, 2002) –
Human capital
carefully avoiding such terms as
Abstract “effectiveness”.
This paper explores a range of issues surrounding the adoption Policy aspirations, however, do not always match
of ICT and e-business technologies and techniques by small and with the realities of creating and running small
medium-sized enterprises (SMEs). The paper reviews the nature businesses. Naı̈ve technical fixes and “one-size-
and extent of the take-up of these technologies by small firms, fits-all” policies miss the diversity of the SME
and the digital divides that have emerged. Models of e-business
sector. In this paper, we want to explore some of
adoption by SMEs are examined, the linear model being
contrasted with the more realistic “PIT” model. Barriers to the
the issues that run through current discussion of
adoption of e-business technologies and techniques are e-business in SMEs. In particular, we want to
discussed, together with factors that promote successful touch on six issues:
adoption, and the major role played by human capital. It is (1) How are SMEs engaging in e-commerce and
concluded that the take-up of e-business by SMEs needs to be e-business?
seen as a means to an end and not an end in itself. Government (2) Is there a geography associated with this
preoccupation with the take-up of the technology of e-commerce engagement of SMEs with e-business?
needs to be tempered with a more realistic view of how small (3) What is the process of e-business take-up
firms operate.
(especially the linear versus other models of
Electronic access
(4) What deters SMEs from adopting
The Emerald Research Register for this journal is e-commerce and e-business techniques?
available at
(5) What factors create successful e-enterprises?
(6) Does e-business bring the economic rewards
The current issue and full text archive of this journal is everyone is after (the productivity debate)?
available at

The engagement of SMEs with e-business

In the face of economic globalisation, many
governments, especially in the developed world,
are seeking to promote the “new economy” cum
“knowledge economy” as a way of building
international competitive advantage and
generating economic dynamism, growth and jobs
Journal of Small Business and Enterprise Development
Volume 11 · Number 3 · 2004 · pp. 280-289 (European Commission, 2002; Department of
q Emerald Group Publishing Limited · ISSN 1462-6004 Trade and Industry (DTI), 2001). This economic
DOI 10.1108/14626000410551546 vision is strongly aspirational and:
SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

. . . consists of strong non-inflationary growth account for some 55% of the private sector
arising out of the increasing influence of workforce (Dixon et al., 2002, p. 6).
information and communications technology and
the associated restructuring of economic activity . . . In the USA, however, little has been known until
[embracing features such as] . . . the growth of small recently about the extent to which SMEs are
high-tech firms, the increasing importance of participating in the digital economy. Recent
mobile and highly skilled talent, the rise of findings are consistent with findings for European
entrepreneurship and the centrality of venture states. SMEs in the USA are less engaged with the
capital (Thrift, 2001, p. 414). digital economy than their large firm counterparts.
Since the bursting of the bubble, this They invest less per employee than large firms, and
vision of the economic future has been stripped of the level of engagement is highly variable between
its more excessive embellishments and “rhetorical firms and sectors reflecting the heterogeneity of
flourishes”, such as the “death of the business this type of enterprise (Buckley and Montes,
cycle” (not an altogether novel flourish) and
“unlimited growth”. The interest of governments
in the knowledge economy springs from the SME take-up of e-business techniques
ubiquification of most factors of production that A first question to ask concerns the extent to which
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occurred progressively through the twentieth SMEs are engaged with ICT and e-business
century (Maskell et al., 1998), now leaving techniques. This is a remarkably difficult question
“knowledge” and “learning” as the principal to answer from available statistics because of the
locationally sticky factors of production that might level of generalisation involved and the different
be manipulated to spur local growth. The adoption ways that statistics have been compiled. First and
of ICT and e-business techniques is seen as vital to quite obviously, SMEs are not a homogeneous set
the achievement of growth under these economic of businesses. They vary significantly by size, age,
conditions. sector, motivation, mode of organisation, ethnic
The unspoken, central tenet of policies to background, location, knowledge base, power and
promote the knowledge economy is the control of resources, innovative capacity and so on.
technologically deterministic, almost Orwellian And, all these characteristics can play directly on
contention, “All ICT good. No ICT bad”. And, in their need and opportunity to engage with
line with this contention, SMEs are seen engaging e-business. Second, statistics on the adoption of
with the knowledge economy through: e-business techniques can be fashioned in a
their linking to the Internet; number of ways. The EU has used rates of
their use of brochure Web pages; adoption of new technologies to measure SME
their establishment and use of transaction- engagement. The US Department of Commerce
capable Web sites; and has used investment per employee as an index,
the transformation of their business while some more conservative estimates made in
organisation and operations through the full the UK and for some OECD countries have been
based on the percentage of firms’ business
integration of their Web sites and their back-
conducted on the Web. What is more, most e-
office computing.
business statistics focus primarily on e-commerce
This engagement is seen as the path to sustainable – on buying, selling and paying on-line –
economic growth. In Europe, SME engagement neglecting the power of ICT to transform business
with e-business technologies is described as organisation and operation, while remaining
“critical” if the EU collectively is to become a transfixed by the technology.
dynamic and competitive knowledge-based Table I presents data on the take-up rates of
economy. That is because there are 19 million different aspect of e-commerce by SMEs in a
SMEs in the EU: selection of EU countries and Norway. In these
. . . and in most EU Member States they make up countries, between 86 per cent and 96 per cent of
over 99% of enterprises . . . generate a substantial SMEs use ICT and over 60 per cent have Web
share of European GDP and . . . are a key source of access. A smaller proportion of SMEs have their
new jobs as well as a fertile breeding ground for own Web sites, especially in Italy, and those
entrepreneurship and new business ideas percentages fall further for making e-commerce
(European Commission, 2002, p. 1). purchases and e-commerce sales.
The same pressure is evident in the UK for SMEs These take-up rates among SMEs in Europe are
to engage with e-business because: impressive and equate well with US take-up rates
The 3.7 million Small and Medium Enterprises for all types of business enterprise (Buckley and
(SMEs) in the UK produce 40% of GDP, and have Montes, 2002). However, they massively overstate
an annual turnover of approximately one trillion the level of e-business (and in effect only
pounds. Employing 12 million people, they e-commerce) engaged in by SMEs. Figures for the
SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

Table I SME e-business adoption rates in 2001 – selected countries

SMEs (%) UK Austria Sweden Italy The Netherlands Norway
Using ICT 92 92 96 86 87 93
Web access 62 83 90 71 62 73
Own Web site 49 53 67 9 31 47
Making e-commerce purchases 32 14 31 10 23 43
Making e-commerce sales 16 11 11 3 22 10
Source: European Commission (2002, p. 4)

UK that can be extracted from Foley and Ram techniques by SMEs. The emergence of the
(2002) demonstrate the level of overstatement, Knowledge Economy (at least in discourse) has
and these are presented in Table II. sparked a debate on whether e-commerce and e-
Dealing first with SMEs’ purchasing activity, 22 business in general will erode the importance of
per cent of UK micro businesses make purchases proximity for economic activity. The counter
online and 13 per cent of UK small firms. argument is that urban agglomeration will persist,
However, the value of goods ordered online and fuelled by local external economies and the
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paid for online is as low as 2 per cent and no higher benefits of clustering coupled with the continuing
than 6 per cent. The disparity for sales is even strengths of cities in terms of infrastructure,
greater. While 38 per cent and 30 per cent of small consumption, social and cultural functions and the
and micro firms respectively enable customers to ease of face-to-face dealings (Evans, 2002; Toffler,
order goods on line, and 17 per cent and 15 per 1980; Scott, 1998; Gillespie et al., 2000;
cent of small and micro firms let customers make Negroponte, 1995).
payments online, as little as 2 per cent and no more For SMEs and e-business the currently
that 4 per cent of the value of orders and sales are available, fragmentary evidence suggests that the
made online. Making allowance for the generally underlying geography is becoming increasingly
accepted lesser involvement of SMEs in concentrated, although the processes involved are
e-commerce, these figures for the UK are in broad only just beginning to be explored. At the supra-
agreement with online sales information for national scale, the European Commission (2002),
sectors of the US economy (Buckley and Montes, for example, has recognised a regional digital
2002) and for e-commerce sales for the OECD divide:
countries more generally (OECD, 2002, p. 661). . . . arising from the different rates of progress in e-
So, based on the no more than preliminary data business development within the EU, generally
presented here, the extent to which e-commerce, perceived as between the Nordic/Western and the
let alone e-business, has penetrated the SME Southern European Member States. While the
Nordic and some Western European countries are
sector to date is very much an open question.
fast and sophisticated adopters of e-business – in
some cases perceived as the world-wide benchmark
– the situation is entirely different in regions with
Elements of a geography of SME e-business less developed economies, particularly in Southern
adoption Europe (European Commission, 2002, p. 3).
The next obvious question is whether there is a
At the smaller national scale, equivalent urban/
geography to the take-up of ICT and e-business
rural differences in e-adoption have been
recognised in the UK (Evans, 2002). In the UK
Table II E-Purchasing and e-sales of small and micro firms in the UK – business the available data show that it is in London and the
adoption and value of business
Southeast region where SMEs are most likely to be
Small firms Micro firms online or to have Web sites (Dixon et al., 2002).
(%) (%) London also has the highest use of computers
E-purchasing among SMEs (98 per cent) and the greatest take-
Businesses that order online 13 22 up of broadband technology (Federation of Small
Value of purchases made online 5 6 Businesses, 2002). The differences between the
Value of purchases paid for online 2 3 Southeast of the UK and other regions are stark.
One set of estimates puts the proportion of SMEs
online in the Thames Valley at 66 per cent, while
Businesses letting customers order online 30 38
Businesses letting customers pay online 17 15
the comparable figures for the West Midlands,
Value of orders online 3 4 Yorkshire and Wales are 39 per cent, 40 per cent
Value of sales online 2 2 and 40 per cent respectively (Dixon et al., 2002).
Whether these differences are more apparent than
Source: Foley and Ram (2002)
real is open to debate because of the greater
SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

availability of necessary infrastructure in London lies, “. . . at the heart of [UK] governmental

and the Southeast and because this is the part of understanding of the adoption of . . . ICTs . . . by
the UK where there is the greatest concentration of existing small firms” (Sergeant, 2000, cited in
finance and insurance activities – the main (and Martin and Matlay, 2001). It implies that business
most advanced) users of ICT. benefits derive directly from the organisational
change and increasing ICT sophistication that the
Internet facilitates. That change is progressive and
Models of e-business adoption the greater sophistication derives, in turn, from the
SME take-up rates of ICT and the techniques of supposed unique qualities of the Internet:
e-business along with their geographical patterns .
are, however, only snapshots of business level .
interactivity – that permits collaboration;
processes of investment decision-making and .
speed – that allows businesses to build
innovation. What is more, when they are viewed quickly; and
from a purely technological perspective, they tend .
intelligence – endowing the ability to retrieve,
to suggest that engagement with the technology of store and process information.
e-business is sequential and progressive. The
sequence begins with the use of e-mail and These qualities, it is argued, offer new ways of
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progresses through Web site development to the organising value chains (especially
buying, selling and payment mechanisms of disintermediation and reintermediation) and allow
e-commerce, to the supply chain management of new forms of marketplace to emerge (Kenney and
e-business and the new business models built on Curry, 2001). But, to achieve the goal of becoming
full immersion in the technology. an “e-SME”, the Local Futures Group (2001,
This “adoption ladder” approach is favoured by cited in Dixon et al., 2002) suggest that firms must
the UK government’s Department of Trade and cross two digital divides. The first divide involves
Industry (DTI) and is illustrated in Figure 1 which acquiring basic ICT skills and technology to
details the elements of organisational operate e-mail and simple brochure Web sites. The
sophistication that are seen as accruing at second digital divide is the threshold to e-business
successive steps on the ladder. Indeed, the ladder proper, and requires advanced technology and IT

Figure 1 The DTI adoption ladder

SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

skills (including R&D) and a wide range of for three increasingly sophisticated activities,
specialist business skills and knowledge in areas which give the model its name:
such as management, strategy and marketing. (1) to publish and publicise information on a Web
The benefits of this “adoption ladder” approach site, such as product and contact details and
are that it highlights the transformational aspects other “brochureware”, plus terms and
of technology and the key social processes from conditions or delivery schedules;
which it emerges (Scarborough and Corbett, (2) to interact with customers and suppliers
1992). However, it remains a profoundly and through automated communications systems
problematically deterministic view of change and that are more than the simple exchange of
emails and, for example, verify credit cards or
implies that:
recognise returning customers; and
. . . technological necessity operates by welding
(3) to transform the way a business undertakes its
science, technology, markets and organisations
together in an objective and interlocking chain
activities, allowing customers to specify
(Dixon et al., 2002, p. 6). delivery times and places or enabling real time
tracking of deliveries, for example.
It implies that all SMEs have the need and
opportunity to follow one prescribed course; with Second, this progressive e-business sophistication
can be applied to some, or even all, of a number of
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the implication that not to finish the course (cross

areas of business activity within an SME (also see
the divides and climb to the top of the ladder) is
The Economist, 2000b). In the finance area, for
some kind of failure.
example, it might be introduced for account
Perhaps a more sympathetic way to view and
reconciliation with customers and suppliers,
interpret patterns of take-up of e-business online access to banking, and to communicate and
techniques among SMEs, is provided by Foley and transact with accountants and statutory bodies on
Ram’s (2002) PITs model which better tax matters. Foley and Ram (2002) recognise six of
accommodates the diversity of application and these areas of activity in SMEs (Figure 2):
adoption of ICT and e-business approaches (1) logistics and delivery;
amongst SMEs. The model has two elements: (2) finance;
what functions ICT can be used for in the firm, (3) purchasing and procurement (including the
and what activities it can be applied to (Figure 2). management of infrastructure and support
First, ICT and the Internet can be used by SMEs services);

Figure 2 The PITs model of ICT adoption by SMEs

SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

(4) operations, processing and assembly transformation has been in the area of finance.
(including process, product and services Outside managing their finances, only 5-10 per
R&D); cent of UK small firms have become so deeply
(5) marketing and sales; and engaged with ICT and e-business techniques.
(6) after-sales service. Indeed, it would not be too great a generalisation
to suggest a halving of involvement with ICT at
It would seem reasonable to add human resource
each step of the e-business progression.
management to this list.
Plainly, ICT might be introduced into different
areas of a firm’s activities at different rates and at
different times. Also, as the use of ICT becomes Barriers to entry into the digital economy
increasingly sophisticated and e-business activities
in different parts of the firm begin to overlap, What is immediately clear from these analyses of
synergies begin to appear which have the potential SME adoption of ICT is that there are formidable
to bring major changes to the enterprise and the barriers to firms entering the digital economy.
way that it functions. In Figure 2, these synergistic A review of available literature would suggest that
changes are seen in the shape of automated billing, there are at least six forms of barrier (Dixon et al.,
automated payment, automated stock 2002, European Commission, 2002, Buckley and
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replenishment, mass customisation and customer Montes, 2002):

driven relationship marketing. However, this is by (1) First, and probably most importantly, many
no means an exhaustive list of the synergies that SMEs are unaware of the potential of ICT to
might evolve. enhance their business operations, or they
Foley and Ram (2002) have applied this model consider that these technologies and
to ICT take up among ethnic and non-ethnic small techniques are not applicable to the products
and micro business in the UK and the West and services they offer, or the manner in which
Midlands. Data extracted from this study on just they choose to do business.
small UK firms (10-49 employees), which is (2) Second, some SMEs occupy small and clearly
presented in Table III, illustrate the unevenness defined niche markets, sometimes entirely
and complexity of ICT take-up by SMEs. Data on local, that do not need the global connectivity
the take-up of ICT for publicity has been drawn available through the Internet. These are
unproblematically from the study, but to illustrate niches where word-of-mouth acts as the
interaction and transformation, responses to what guarantee of quality, service and reliability,
have been selected as indicator activities have been and these are businesses where trust and
read from a range of bar charts. stability underpin successful operations.
The figures in Table III suggest quite variable (3) Third, there are at the very least perceptions of
speeds and depths of engagement with ICT in the unresolved security and privacy issues
activities of small firms. ICT for publicity is associated with the use of the Internet. These
principally applied to sales, R&D and, to a lesser problems are most acute in relation to making
extent, purchasing and logistics. ICT for payments online, and they discourage small
interaction is used to about the same extent for firm take-up of this technology and way of
sales and marketing, logistics and finance, but doing business.
much less for purchasing and operations. While (4) Fourth, many SMEs lack the necessary IT
Foley and Ram (2002) report that 80 per cent or skill-base to engage with the digital economy.
more of firms maintain that most aspects of their Some may have ICT enthusiasts as owner-
businesses have been transformed by their managers, but the majority of firms do not.
adoption of ICT, small firms’ engagement with The lack of staff to implement ICT is a
high-end ICT activities suggests that the greatest separate aspect of this same deterrent. It may

Table III ICT take-up rates and the PITs model: an illustration for small firms in the UK (percentage of firms)
Area of activity Publicity Interaction Transformationa
Logistics 23 20 (tracking orders)b 8 (enable when and where deliveries are made)
Finance 14 25 (access to accounts) 17 (real time knowledge of state of finances)
Purchasing 30 13 (place orders online) 5 (automated reordering)
Operations 58 12 (enhanced flexibility) 8 (automated supplier relationships)
Marketing 85 30 (take orders online) 10 (enable customers to specify requirements)
After-sales 41 15 (respond to online queries) 5 (automated analysis of feedback)
Note: a Principally high-end activities; b Indicator activities selected from the study are presented in parentheses
Source: After Foley and Ram (2002)

SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

well be difficult or too expensive for an SME .

innovation, a competitive advantage and
to hire people with the necessary technical flexibility;
expertise to pursue an ICT strategy. .
close contact with customers;
(5) Fifth, the high initial set-up costs and .
a focus on profits rather than sales; and
perceived on-going costs of ICT and .
strong demand and operating in a growth
e-business can act as a barrier to take-up market (European Innovation Monitoring
among SMEs. These firms can find that they System (EIMS), 1996; Burns and Harrison,
cannot finance the necessary additional 1996; Yeh-Yun Lin, 1998; Perren, 2000;
investment. Equally, that investment might Feindt et al., 2001).
not be cost effective, and it might be better for
Feindt et al. (2001) extended this approach to
the firm to outsource its IT activities.
identify factors critical to the successful rapid
(6) Finally, some SMEs will be restricted in their
ability to evolve their ICT provision because of growth of SMEs engaged in e-commerce. From
a legacy of IT sunk costs. Most small firms do survey research they identified eleven success
not have the luxury of resources for factors that divided into three broad sets:
experimentation in the IT area. Their (1) those relevant to all companies involved in e-
investments need to work for them and cannot commerce (content, convenience, control and
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be quickly written down. To adopt new IT interaction);

solutions and e-business models, they need to (2) those relevant to all companies in an particular
be able to integrate this new provision with industry sector (community, price sensitivity);
their existing provision. Where this is not and
possible, that existing equipment is a (3) those relevant to individual companies (brand
formidable barrier to progress. image, commitment, partnership, process
improvement and integration).
Overcoming these barriers is a major challenge for
policy makers and SMEs alike. However, it has The full list of factors and their definitions is
also been contended that these barriers vary presented in Table IV.
between member states in the EU and also vary Four conclusions can be drawn from the
over time. Charting the shifting nature of these findings of Feindt et al. (2001) on rapid growth
barriers is, therefore, a significant task for policy e-commerce SMEs. First, all critical success
analysts. factors relevant to e-commerce activities (factors
1-4 in Table IV) are recognised by businesses as
having to be implemented in the start-up phase of
a venture. Second, the actual implementation of
Successful adoption of e-business start-up CSFs at an average of 5.7 out of 7 suggests
sub-optimal behaviour even among high growth
SMEs. Commitment, content, brand image,
For those SMEs that choose to employ ICT in convenience and price sensitivity (factors 1, 2, 6, 7
their business operations and engage with the and 8) appear to be readily implemented, but
digital economy, there appear to be significant control and interaction (factors 3 and 4) are less
critical factors that can bring commercial success. routinely implemented, perhaps because they are
The notion of critical success factors is associated difficult tasks to initiate and undertake, or possibly
with the Sloan Management School as a model for because the new ventures were insufficiently
information systems development and integration powerful. Third, price sensitivity (factor 6) and
that recognises the small number of areas in a brand image (factor 7) are vital in the
firm’s activities where satisfactory results can establishment and growth phase following start-
ensure competitiveness (Rockart, 1979; see up. This reflects the expectation that prices will be
discussion in Feindt et al., 2001). lower on the Web and the need for product
Many factors have been recognised as differentiation in the global market place. Fourth,
promoting business success in general among commitment is a critical success factor in all firms,
SMEs, most of which relate to the internal rather but in the context of the Web economy it
than the external conditions of the firm. Principal necessitates being committed to continuous
among these are: innovation and reinvention of the firm’s business
owner motivation, experience and strategy.
management skills; The lesson to be drawn from this research is
expertise in managing growth; that:
access to resources (money, technology and . . . e-commerce is more about strategy that about
people); technology (Feindt et al., 2001, p. 55).
SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

Table IV Critical success factors (CSFs) for fast growth e-SMEs does not necessarily work for another. This
CSFs relevant to all companies involved in e-commerce diversity of SMEs engaged in e-commerce and
1. Content Attention-grabbing and compelling Internet e-business is encapsulated in a quote from Buckley
presentation of a product and Montes (2002, p. 10):
or service A venture capital funded application software
2. Convenience Usability of a Web development start-up in Silicon Valley that has five
site, fitness for purpose people on staff is a fundamentally different type of
3. Control Having defined processes the firm than a 15-year-old small town antique shop
firm can control (e.g. with a five person staff. Both firms have the
being informed by fulfilment potential to use and benefit from the Internet, but
company about deliveries; responding they face different opportunities and different
to customer queries; Web
site updating) What needs to be taken into account in assessing
4. Interaction Relationship building with customers the take-up of ICTand e-business techniques is the
CSFs relevant to all companies in a particular industry sector differentiated nature of SME businesses, and the
5. Community Relationship-building with like-minded individuals way business opportunities are identified and
and organisation by enabling developed by them. How relevant is ICT to the
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information exchange and tailored firm’s business? How committed are the firm’s
services owners to growth? Is the firm’s investment in ICT
6. Price sensitivity Sensitive to Internet price proactive or reactive (Martin and Matlay, 2001)?
competition What is the ICT knowledge and skills base of
CSFs relevant to individual companies firms’ owner managers? Are they enthusiasts with
7. Brand Image Use of online and skills and positive attitudes, unconvinced artisans
offline branding techniques with low IT skills, or pragmatists with low IT skills
8. Commitment Motivation to use the but with an eye on the prize? What power do they
Internet and to innovate wield in the environment within which they
9. Partnership Use of partnerships to operate? The relative predisposition for some types
leverage Internet presence and of SME to take on ICT and e-business has been
expand business more fully elaborated by Southern and Tilley
10. Process improvement Change and automate business (2000) who have identified three sets of small firms
processes with very different attitudes to ICT:
11. Integration Link IT systems to (1) SMEs with low-end ICT use – where there is
support partnership and process not a good fit between ICT and the owner-
improvement manager’s concept of the business;
Source: Feindt et al. (2001) (2) medium-level ICT users – with more
expertise, separate IT and communications
systems, open access to company data
This runs counter to the proposition that (network and files servers), IT in production
underpins most governments’ policies on ICT and (e.g. CNC) and email, and a plan for and
e-business. Since the bubble burst, it is in delegation of the management and routine
fact no longer enough to have a good business idea upgrading of IT;
and to be technologically smart to move into (3) high-end ICT users – leading edge and
e-business. Now, the business settings have to be innovative IT use, ICT integrated in the
right too (The Economist, 1999). business process, a full digital information and
communication system, ICT as a formal
responsibility with a dedicated manager.
SMEs, diversity, decision making and At the same time, there is the suggestion that
human capital external parameters in the commercial
environment affect the propensity of SMEs to
The discussion of the preceding sections of this adopt ICT. Corso et al. (2001) argue from
paper all point to there being no simple linear empirical information that a high level of
progression for the adoption of ICTand e-business environmental complexity encourages SMEs to
techniques by SMEs or, indeed, by any other type adopt and implement “boundary technologies”,
of enterprise. Unravelling what is happening is such as 3D, CAD and external networks, to
made particularly hard by our limited knowledge support technological integration with their
of ICT use by small firms and the dearth of customers. In contrast, a high level of product
longitudinal research in this field. SMEs are complexity appears to cause SMEs to adopt more
incredibly diverse, and what works for one firm traditional new product development tools, rather
SMEs and e-business Journal of Small Business and Enterprise Development
Michael Taylor and Andrew Murphy Volume 11 · Number 3 · 2004 · 280-289

than ICT, because of the difficulties associated techniques that might have geographical
with its use. dimensions (European Commission, 2002).
In short, it can be suggested that some types of A major research question is determining the
SME will permanently occupy certain rungs on the means by which ICTand e-business techniques are
ICT adoption ladder because not all have the taken up by small firms. In this paper we have
desire, the capacity or the opportunity to become explored the adoption ladder and PITs
“e-SMEs”. What has not been incorporated into interpretations of this process. What is clear, given
analyses of the adoption and take-up of ICT and the diversity of SMEs, is that we need a better
e-business techniques by SMEs is any full understanding of how these firms recognise and
understanding of the way entrepreneurs and small develop business opportunities in general, and not
firms identify and develop business opportunities. just those that might or might not be associated
What we need to more fully understand in this with a particular set of technologies. Indeed, given
context are issues of: the relatively recent bust, it is hardly
entrepreneurial alertness; surprising that small firms might be reluctant to
information asymmetries and prior engage with e-commerce and e-business any
knowledge; further than is necessary.
the workings of social networks; What is more, does e-business bring the
Downloaded by UNIVERSITAET OSNABRUCK At 02:51 31 January 2016 (PT)

the personality traits of entrepreneurs, economic rewards at the national level that
including optimism and self efficacy, and governments seem to crave? It was Solow, in his
creativity; and 1987 Nobel Prize acceptance speech, who
types of opportunity (Ardichvili et al., 2003). crystallised the productivity paradox:
You can see computers everywhere but in the
In part, these ideas resonate with ideas in productivity statistics.
economic geography on enterprise segmentation
(Taylor and Thrift, 1983), network relationships The paradox remains unresolved (The Economist,
2000a). However, we would argue that it might be
among firms (Dicken and Thrift, 1992) and
more productive if attention was redirected away
unequal power relationships between firms
from ICT as an end in itself towards ICT as a
(Taylor, 1995, 2000), all of which emphasise the
means to an end, i.e. realising business
constrained choices available to different types of
opportunities, generating profits and creating
small firm. As it was expressed by Martin and
Matlay (2001, p. 407), “The importance of human
capital for ICT acquisition and development . . .
[by smaller firms] . . . should be explicitly
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