INSTITUTE OF RURAL DEVELOPMENT PLANNING (IRDP) - DODOMA

DEPARTMENT OF DEVELOPMENT FINANCE AND MANAGEMENT

STUDIES

FACTORS INFLUENCING THE ADOPTION OF E- COMMERCE

TECHNOLOGY AMONG OWNERS OF SMALL AND MEDIUM

ENTREPRISES IN DODOMA MUNICIPALITY

BY

DELUX DICKSON

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT FOR THE

REQUIREMENTS OF THE AWARD OF BACHELOR DEGREE IN

DEVELOPMENT FINANCE AND INVESTMENT PLANNING

OF THE INSTITUTE OF RURAL DEVELOPMENT PLANNING, DODOMA,

TANZANIA

AUGUST, 2017
 ABSTRACT

The purpose of this study is to analyze the factors influencing the adoption of e-

commerce technology among owners of small and medium enterprises. Specific

objectives were to investigate the extent of adoption of e-commerce among owners of

small and medium enterprises, to assess benefits realized by SMEs in adopting e-

commerce and to examine the factors hindering the adoption of e-commerce among the

small and medium enterprises in Dodoma municipality

The methodology employed in this study was questionnaire survey. Questionnaires were

filled by SMEs listed in the latest official business directory of Viwandani ward as well

as other sources. Analysis of the data obtained found that the general usage of e-

commerce among the SMEs in Dodoma municipality is low; most firms seemed to have

implemented only basic e-commerce applications and do not adopt advance e-commerce

applications. In light of these findings, this study would advance the following

recommendations;

The government, through the Tanzania Communication Regulatory Authority (TCRA),

conducts a national baseline survey to exploit ways in which the entrepreneurs would be

encouraged to fully integrate e-commerce into their businesses.

There is also need to conduct capacity building training and commercial awareness of e-

commerce as this would go a long way to inculcate a certain degree of confidence in e-

commerce by the infant enterprises.

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 DECLARATION

I Delux Dickson declare that this dissertation is my own original work and that it has not

been presented to any other Institute for a similar or any other degree award.

Delux Dickson

_________________

August, 2017

ii
 COPYRIGHT

No part of this paper may be produced or transmitted in any form and by any means

without permission of the writer or the Institute of Rural Development Planning.

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 RESEARCH SUPERVISOR’S CERTIFICATION

I certify that I have read and hereby recommend for acceptance by the Institute of Rural

Development Planning the dissertation entitled Factors Influencing the Adoption of E-

Commerce Technology Among Owners of Small and Medium Enterprises in Dodoma

Municipality, in fulfillment of the requirements for the degree of Bachelor Degree in

Development Finance and Investment Planning of the Institute of Rural Development

Planning.

_____________________

Prof. Baltazar M.L. Namwata

August, 2017

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 ACKNOWLEDGEMENT

I thank God for the gift of life that has enabled me to finish this degree program. I would

like to acknowledge both the material and moral support received from all those who

were instrumental in my completion of the program. It is not possible to thank each one

of them individually, but nonetheless the general reference here does not in any way

diminish their valuable contribution. Nevertheless, I would like to specifically thank my

supervisors Prof. Baltazar M.L. Namwata whose unwavering support provided me with

the impetus to complete this dissertation.

I owe a great deal of appreciation to my former colleagues in the Department of

Development Finance and Management Studies, for their comments, which helped

tremendously in shaping this study. Last but not least, my appreciation goes to Institute

of Rural Development Planning (IRDP) for providing a wonderful environment for me

to pursue his study.

TABLE OF CONTENT

v
ABSTRACT........................................................................................................................i

DECLARATION...............................................................................................................ii

COPYRIGHT...................................................................................................................iii

RESEARCH SUPERVISOR’S CERTIFICATION......................................................iv

ACKNOWLEDGEMENT................................................................................................v

TABLE OF CONTENT...................................................................................................vi

LIST OF TABLES.............................................................................................................x

LIST OF FIGURES..........................................................................................................xi

LIST OF APPENDICES.................................................................................................xii

LIST OF ABBREVIATIONS AND ACRONYMS......................................................xiii

DEFINITIONS OF KEY TERMS................................................................................xiv

CHAPTER ONE................................................................................................................1

INTRODUCTION.............................................................................................................1

1.1 Background Information................................................................................................1

1.2 Statement of the Problem...............................................................................................3

1.3 Significance of the Study...............................................................................................4

1.4 Research Objectives.......................................................................................................5

1.4.1 General objective.................................................................................................................5

1.4.2 Specific objectives...............................................................................................................5

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1.5 Research Questions........................................................................................................6

1.6 Scope of the Study.........................................................................................................8

CHAPTER TWO...............................................................................................................9

LITERATURE REVIEW.................................................................................................9

2.1 Theoretical Literature Review.......................................................................................9

2.2 Empirical Literature Review........................................................................................11

2.2.1 Organizational factors...............................................................................................11

2.2.2 Environmental factors...............................................................................................13

2.2.3 Technological factors................................................................................................15

2.2.4 Information Gap........................................................................................................17

2.4 Conceptual Framework................................................................................................19

CHAPTER THREE.........................................................................................................20

RESEARCH METHODOLOGY...................................................................................20

3.1 The Study Area............................................................................................................20

3.2 Research Design..........................................................................................................21

3.3 Data Types and Sources...............................................................................................22

3.4 Data Collection Methods and Tools............................................................................22

3.4.1 Questionnaires..........................................................................................................23

3.4.2 Interviews.................................................................................................................23

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3.5 Sampling......................................................................................................................24

3.5.1 Sampling frame.........................................................................................................24

3.5.2 Sampling unit............................................................................................................24

3.5.3 Sample size...............................................................................................................24

3.5.4 Sampling procedures..........................................................................................................25

3.7 Data Processing, Analysis and Presentation..........................................................................26

3.7.1 Data analysis......................................................................................................................26

3.7.2 Data processing.........................................................................................................27

3.7.3 Data presentation......................................................................................................27

CHAPTER FOUR...........................................................................................................29

RESULTS AND DISCUSSION......................................................................................29

4.1 Extent of E- Commerce Adoption Among SMEs.......................................................29

4.1.1 Types of SMEs engaged in the study.......................................................................29

4.1.2 Usage of electronic commerce applications.............................................................31

4.1.3 Electronic marketing.................................................................................................32

4.1.4 Electronic advertising...............................................................................................32

4.1.5 Customer support service.........................................................................................32

4.1.6 Order and delivery....................................................................................................33

4.1.7 Payment system........................................................................................................33

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4.2 Benefits Realized Through Adoption of E-Commerce...............................................35

4.3 Factors Hindering the Adoption of E-Commerce Applications..................................37

CHAPTER FIVE.............................................................................................................39

CONCLUSIONS AND RECOMMENDATIONS........................................................39

5.1 Conclusions..................................................................................................................39

5.2 Recommendations........................................................................................................41

REFERENCES................................................................................................................42

APPENDIX 1: Data Collection Questionnaire for SMEs owners or managers.........45

APPENDIX 2: Interview Schedule.................................................................................52

APPENDIX 3: Codebook................................................................................................53

LIST OF TABLES

Table 1: Classification of SMEs by business sector........................................................30

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Table 2: State of e-commerce adoption............................................................................31

Table 3: Usage of e-commerce applications by SMEs.....................................................34

Table 4: Realized benefits of e-commerce.......................................................................36

Table 5: Top six factors hindering e- commerce adoption by SMEs in Dodoma

municipality......................................................................................................................38

LIST OF FIGURES

Figure 1:The conceptual framework..................................................................................19

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 LIST OF APPENDICES

APPENDIX 2: Interview Schedule…………………………………………………

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 LIST OF ABBREVIATIONS AND ACRONYMS

B2B Business – to – Business

B2G Business – to – Government

DIT Diffusion Innovation Theory
E-COMMERCE Electronic Commerce
EDI Electronic Data Interchange
EFT Electronic Fund Transfer
FAQ Frequently Asked Questions
ICT Information and Communication Technology
IT Information Technology

xii
MSMEs Micro, Small and Medium Enterprises
PEU Perceived Ease of Use
PU Perceived Usefulness
ROI Return on Equity
SE Standard Error
SMEs Small and Medium Enterprises
SPSS Statistical Packet for Social Science
TAM Technological Acceptance Model
TRA Tanzania Revenue Authority
WEO Ward Executive Officer

DEFINITIONS OF KEY TERMS

Diffusion of Innovation Theory: The Diffusion of Innovation Theory (DIT) is a model

developed to explain the process by which innovations in technology are adopted by

users. An innovation can be defined as an idea, practice, or object which is perceived as

new by an individual or organization.

Drivers of e-commerce adoption: Factors that positively influence the adoption of e-

commerce technologies and can be internal or external to the firm.

E-commerce: All electronically mediated transactions between organizations and a third

party in such areas as communication, product/service delivery, making payments, and

business processes among others to enable cost- cutting and at the same time increase

speed and quality of service delivery and online buying and selling of products and

information.

E-commerce typology: This includes Business-to-Business (B2B), Business-to-

Customer (B2C), and Customer - to- Government (C2G).

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Micro, Small and Medium Enterprises (MSMEs): In the context of Tanzania, micro

enterprises are those engaging up to 4 people, in most cases family members or

employing capital amounting up to Tshs.5.0 million. The majority of micro enterprises

fall under the informal sector. Small enterprises are mostly formalized undertakings

engaging between 5 and 49 employees or with capital investment from Tshs.5 million to

Tshs.200 million. Medium enterprises employ between 50 and 99 people or use capital

investment from Tshs.200 million to Tshs.800 million.

Technology Acceptance Model: The Theory of Acceptance Model (TAM) is an

adaptation of TRA- for modelling and understanding user acceptance of information

systems. The primary goal of TAM is to guide the interpretation of the factors

determining computer acceptance.

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 CHAPTER ONE

INTRODUCTION

1.1 Background Information

The Information and Communication Technologies (ICTs) and the Internet have become

very important and a powerful tool in today’s business world in such a way that it is now

becoming ‘the life blood’ of business, without which most businesses cannot stand the

modern day competition of it’s operations. ICT, especially, the Internet has different

meanings and uses to many people (Rao, 1997). E-commerce became possible in 1991

when the internet was commercialized and since that time many businesses have

developed their own web sites (Ecommerce Land, 2004).

E-commerce could be defined as any economic or business activity that uses

applications based on Information and Communication Technology (ICT) to enable the

buying and selling of products and services and thus facilitating the transaction of

business activities between and among businesses, individuals, governments, or other

organisations (Huy and Filiatrault, 2006). McIvor and Humphreys (2004) perceive e-

commerce as having two main roles. First, it is the use of ICTs to strengthen a

company’s internal operations such as logistics, procurement, and human resource and

contracts management; information and data management; and communication

functions. Second, e-commerce refers to using ICTs to facilitate the flow of products

1
between businesses and consumers (e.g., marketing, ordering, payment, delivery, and

finding suppliers).

Despite the global reach of e-commerce, not all countries have taken advantage of or

benefited from e-commerce. There is a big gap in Internet and ecommerce adoption

between the developed and developing countries (Licker & Motts, 2000); thus creating a

digital divide. Digital divide is defined as the “differential capabilities of entire social (or

municipalal) groups to access and utilize electronic forms of knowledge” (Straub, 2003),

segregating the ‘haves’ from the ‘have-nots’ in the information society.

Tanzania like any other developing countries in the world, has taken a number of

measures to promote ICT usage in different sectors including SME sector. For instance,

development of 2003 National Information and Communications Technologies Policy,

the policy that aims at enhancing nation-wide economic growth and social progress by

encouraging beneficial ICT activities in all sectors through providing a conducive

framework for investments in capacity building and in promoting multi-layered co-

operation, knowledge sharing locally as well as globally.

Although the SME sector is important to the socio-economic development of Tanzania,

studies have revealed that it is under-performing due to a multitude of impediments

facing it (Mutambala, 2011). One of the main impediments facing SMEs in Tanzania is

poor usage of ICTs and its related technologies (Mhede, 2012). For example, Tanzania

is said to have a low internet penetration rate with 14% in comparison to mobile

penetration with 74% (Budden.com, 2013). Until June 2012, the country had 5.6 million

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internet users which is merely 13% of the entire Tanzanian population which prove the

grounds for the digital divide syndrome in the country (ITU, 2013).

1.2 Statement of the Problem

Tanzania is far behind when it comes to the adoption of e-commerce. The impact of e-

commerce in the country is very minimal. There is a need to build telecommunication

infrastructure in order to promote growth in e-commerce. The lack of effective

telecommunication policy and a regulatory authority in the municipal impede the

flourish of e-commerce.

There has been a limited study particularly in Dodoma municipality concerning e-

commerce and SMEs. Most studies investigate general ICTs and SMEs. On the other

hand, a few studies which have related e-commerce focuses on the country as whole,

while others have tended to generate multiple barriers which sometimes differ from one

another. The sluggish step of e-commerce diffusion in SMEs sector has led to a variety

of studies. These studies have reported that SMEs are generally lagging behind to large

organizations as far as the adoption and usage of ecommerce is concerned (Simpson M.

& Docherty A., 2004). (Fillis 2003) observed the adoption of ecommerce by SMEs and

found that SMEs could gain competitive advantage through adopting e-commerce as it

could improve their market performance by having better access to the market.

Organizations adopting e-commerce in emerging countries which includes Tanzania,

face problems such as lack of telecommunications infrastructure, lack of qualified staff

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to develop and support e-commerce sites, lack of skills among consumers needed in

order to use the Internet, lack of timely and reliable systems for the delivery of physical

goods, low bank account and credit card penetration, low income, and low computer and

Internet penetration (Kapurubandara, 2009).

1.3 Significance of the Study

This study will be a significant endeavor in promoting development of SMEs in reduced

information search costs and transactions costs that is improving efficiency of

operations-reducing time for payment, credit processing, and the like. Surveys show that

information on the following is most valuable to SMEs: customers and markets, product

design, process technology, and financing source and terms. The Internet and other ICTs

facilitate access to this information. Also it will help to facilitate the marketing of

different products and services which SMEs is engaging with.

Moreover, this study will be helpful to the retail industry and business practitioners in

training and informing them in the area of e commerce technology integrations with

human resources management, objectives, and strategies. It will also serve as a future

reference for researchers on the subject of e-commerce technology practice among

SMEs. And importantly, this research will educate clients in deciding on whether an

industry for example business industry is really fulfilling its responsibility to the

community or is just showing off to promote its business.

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The research study could provide information on the issues of e-commerce adoption

technology particularly on the application, challenges and opportunities in integrating

with SMEs in Dodoma municipality. 

1.4 Research Objectives

1.4.1 General objective

To analyze the factors influencing the adoption of e- commerce technology among

owners of small and medium enterprises.

1.4.2 Specific objectives

i. To investigate the extent of adoption of e-commerce among owners of small

and medium enterprises in Dodoma municipality

ii. To assess benefits realized by SMEs in adopting e-commerce.

iii. To examine the factors hindering the adoption of e-commerce among the

small and medium enterprises in Dodoma municipality

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1.5 Research Questions

 What are the electronic commerce applications that are adopted by SMEs in

Dodoma municipality?

a) Electronics marketing

b) Electronic advertising

c) Customer support Service

d) Order and delivery

e) Payment system

 What are the benefits realized by SMEs by adopting e-commerce?

a) Increase in market share

b) Increase in profit

c) Reduce in cost

d) Increase in Return on Investment (ROI)

e) Improved of customer service

f) Increase accessibility to the end users

g) Enhance company brand and corporate image

h) Increase customer loyalty and retention

i) Improve business processes flow

j) Increase the efficiency in dealing with suppliers

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  What are the factors hindering SMEs from using or using more electronics e-

commerce applications?

a) Cost of setting up electronic commerce is high

b) Market potential of electronic commerce users is too small

c) Security and trust

d) Lack of skilled workers to handle or maintain electronic commerce system

e) Telecommunication infrastructure is not adequate

f) Lack of standards/regulations from government on electronic commerce issues

g) Lack of knowledge about the potential applications of electronic commerce

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1.6 Scope of the Study

This study focused on SMEs operating in Dodoma municipality. The firms of interest

included were those registered legally and comply with the taxation requirements of the

Tanzania Revenue Authority (TRA). This study is designed to target a large number of

e-commerce adopters across the sectors, the key business sectors to be investigated are

manufacturing, non-professional services, professional services, Information and

Communications Technology (ICT), wholesale, and retail/hospitality. In terms of the

theoretical content, the study focused mainly on the factors pertaining to business

process development and the operations/supply chain. The specific factors investigated

were service delivery systems, production processes, inventory management systems,

and supply chain management among others.

The study also focused on establishing whether perception of the benefits of e-

commerce among firm owner or managers had any influence on the decisions to adopt

technology with the key technological benefits to be investigated being the relative

advantage of the technology, compatibility, trainability, complexity, observability, and

security/confidentiality. Similarly, both the organizational and environmental factors are

to be investigated. On methodology, the study used quantitative, descriptive, and

inferential approaches and specifically proportions, and diagrammatical representation.

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 CHAPTER TWO

LITERATURE REVIEW

In this chapter, both the theoretical and empirical literature is reviewed. The first

section reviews the relevant theories and exposes the theoretical foundation

underlying the effects of technological, organizational, and environmental factors

on adoption of e-commerce. The second section covers the empirical literature, while

the third section presents an overview of the literature and research gap. The final

section is a discussion of the conceptual framework.

2.1 Theoretical Literature Review

A number of theoretical models have been proposed to facilitate the understanding of

factors impacting the acceptance of information technologies (Davis, 1989). The

Technology Acceptance Model (TAM), which is viewed as an adaptation of the

Theory of Reasoned Action (TRA), is one of the most influential and robust models in

explaining Information Technology (IT)/ Information System (IS) adoption behavior

(Park, 2009). The theory was originally designed to predict users’ acceptance of IT

and usage in an organizational context. Generally, the model can be used to explain user

behavior across a broad range of end-user computing technologies and user populations

(Davis, 1989). Prior empirical studies strived to explicate the determinants and

mechanisms of users’ adoption decisions on the basis of the TAM with the conviction

that the adoption process influences successful use of particular technology systems

(Liao, et al., 2009).

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The TAM focuses on two particular beliefs, namely, perceived usefulness (PU) and

perceived ease of use (PEU) of innovation, which play an important role from the

perspective of innovation acceptance behavior. Perceived usefulness has been defined

as a user's subjective perception of the ability of a computer to increase job

performance when completing a task. Perceived ease of use refers to a person's

subjective perception of the effortlessness of using a computer system, which affects

the perceived usefulness, and thus having an indirect effect on technology acceptance by

the user.

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2.2 Empirical Literature Review

Huy and Filiatrault (2006) in their study on e-commerce adoption in micro, small and

medium-sized enterprises (MSMEs) found that innovation adoption is influenced by

organizational, environmental, and technological factors.

2.2.1 Organizational factors

The empirical results supporting the influence of organizational characteristics suggest

that the determinants of e-commerce adoption are employees’ knowledge of e

commerce (Scupola, 2005) and the size of the enterprise (Zhu & Kraemer, 2005).

These results are dissimilar to findings reported by Joen, et al., (2006) with regard

to the employees’ knowledge of e-commerce and to reported results by Vilaseca-

Requena, et al., (2007) with respect to the resources of the enterprise. Huy (2012), in a

study on the significance of organizational determinants as factors of adoption also

found that employees’ knowledge of e-commerce, size of the enterprise, and attitudes

of managers towards innovation were positive and statistically significant.

Other findings also confirm the positive relationship between the attitude of managers

towards innovation and adoption (Al-Qirim, 2007), but the relationship is not

significant regarding knowledge of the new information technologies of e-commerce.

According to Dubelaar et al., (2005), the level of education of the owner/manager has

a positive and significant relationship with the likelihood of adopting an innovation.

Similarly, Ramdani et al., (2009) found that lack of knowledge was the main barrier to

the use of e-commerce and ICT among MSMEs. Chang and Tung (2006) found that

11
the CEO’s knowledge of technology has a significant relationship with e-commerce

adoption among MSMEs Nguyen (2009) also found a statistically significant

relationship between the status of e-commerce in the SMEs and the perception of lack

of knowledge as a barrier.

These results support the view that having adequate education level by the owners or

managers of SMEs alone is not a necessary condition for such firms to adopt e-

commerce, but they must also have relevant knowledge in ICT use.

This is in line with earlier studies by, for example, Zhu and Kraemer (2002) and

Adeyeye (2008). On ICT skills and experience by employees, Sparling et al.

(2007) found that the higher the level of ICT skills, the higher the likelihood that a

firm will adopt e-commerce. That is, previous IT experience has been observed to be

an important factor influencing the success of e-commerce adoption. Filiatrault and

Huy (2006) found a significant relationship between types of business (governmental,

local, or foreign organization; characteristics of products; and number of product

categories) and the likelihood of e-commerce adoption.

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2.2.2 Environmental factors

Huy (2012) found a positive correlation between e-commerce adoption and the

manager’s perception of the intensity of competition, support of industry pressure,

supplier and buyer behaviour, and sector of business operations. These findings

conform to those of prior studies by Al-Qirim (2007) and To and Ngai (2007) but are

inconsistent with those of Joen et al. (2006) and Vilaseca-Requena et al. (2007). It has

widely been argued that the industry in which the firm operates influences the adoption

of information systems, including e-commerce innovations. Service industries, retail

industries, and the manufacturing industry were the key sectors that demonstrated a

significant relationship with innovation adoption.

The authors further established that usage of information systems varies not only across

sectors but also within the constituent sub-sectors. The role of market scope as a

predictor of the adoption of e-commerce can be explained from two main perspectives.

Firstly, internal coordination costs increase as firms expand their market reach due to

increased administrative complexity and information processing. Secondly, external

costs (search costs and inventory holding costs) would also increase with market scope;

that is, when firms expand their market reach, they incur search costs, which include

searching for consumers, trading partners, and distributors. Arguably, firms that serve

broader markets are more likely to adopt e-commerce, thus SMEs with greater market

scope are more likely to adopt e-commerce.

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Vilaseca-Requena et al., (2007) has also established that there is a positive and

significant relationship between competitive pressure and the adoption of e-commerce.

The plausible argument for this observation is that if the innovation directly affects the

competition, then the adopter will have an incentive to take up the technology.

According to Vilaseca-Requena et al., (2007), the greater the competitive pressure, the

more likely that MSMEs will adopt e-commerce. There is also evidence that the growth

of third-party information systems support has a significant influence on the likelihood

of e-commerce adoption whereby the greater the external support, the more likely

they will be adopted by SMEs, Porter (2008) has suggested that the adoption of IT

will change the competitive environment in three ways: through changing the

structure of the industry, changing the rules of competition, and giving businesses new

methods by which to gain competitive advantage over the competition. According to

Sandy and Graham (2007), intensity of competition is associated with the degree of e-

commerce adoption and that competitive pressure is a critical factor influencing the

extent of e-commerce adoption among SMEs.

In contrast, Pan and Jang (2008) found that competition has very little influence on the

adoption of new technologies or e-commerce in small enterprises. But a study by

14
Thomas and Simmons (2010) produced contrary results. A relationship also exists

between the intensity of competition in an industry and the degree of adoption of

electronic commerce. According to Kinyanjui and McCormick (2002), ensuring

competition and entry opportunities for other market players, particularly smaller

ones, must be an on-going policy priority.

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2.2.3 Technological factors

The decision to adopt a technology according to Cupolas (2009) is not only dependent

on what is available on the market, but also on how the new technologies match with

those that a firm already possesses. The key factors characterizing such technologies

include attributes such as relative advantage (perceived innovation benefits and

impact), compatibility (both technical and organizational), and complexity (ease of use

or learning e-commerce).

Compatibility has been found to be a significant determinant of adoption because it

deals with perception of the importance of the innovation in performing various tasks

presently and in future. For instance, if e-commerce is compatible with the

traditional way of performing various activities of a business enterprises, with the

existing values and mentality of the professionals, and with different communication

parts involving day-to-day operations and their future development, them a higher rate

of adoption will occur. Grandon and Pearson (2004) also found that compatibility

with a firm’s culture and values was a statistically significant determinant of e-

commerce adoption, a result that is also in line with studies by To and Ngai (2007).

The implication of this observation is that the management of the MSMEs consider

compatibility of the innovation as an important pre-requisite for technology adoption.

16
Confidentiality and security have been discussed broadly both in academia and

practice. Confidentiality is defined as the ability to control and manage information

about oneself, while security refers to the ability to protect against potential

threats. From the consumers’ standpoint, security is the ability to protect consumers’

information from information fraud and theft in the online banking business (Hua,

2009).

Due to such attacks, companies endeavor to base their e-commerce adoption decisions

on the innovation’s security and confidentiality. Therefore, heightened security

concerns could stop potential damages ensuing from insecure transactions, hacking,

or poor access control to important data. Hesson and Alameed (2007) and Belkhamza

and Wafa (2009) found that security and confidentiality issues and the system risks of

e-commerce are the major determinants of adoption behavior.

According to Rogers (2003), complexity is the degree of difficulty associated with

understanding and learning how to use an innovation. Grandon and Pearson (2004)

and Mahazir and Mohd (2012) found that perceived complexity is a vital factor

influencing the decision to adopt e-commerce and that the likelihood of adoption of the

innovation is inversely related to the perceived complexity variable especially amongst

the MSMEs. The introduction of new technology might require the employees to

develop new skills in order to use the technology. Rogers (2003) contends that the

new technology can be intimidating, particularly if it requires change in the existing

17
businesses practices or acquisition of new skills.

The measurement of perceived complexity or ease of use can be in the context of how e-

commerce can be easily controlled, the degree of flawlessness, reasonableness,

adaptability to changes, user friendliness, and how easy it is for one to become skillful

in using e-commerce.

2.2.4 Information Gap

The literature reviewed so far suggests that the available theories of adoption of

innovation focus mainly on organizational, technological, and environmental contexts.

It is also evident from the literature that a number of studies have attempted to address

the determinants of adoption from different perspectives. Alam and Ali (2011), for

example, attempted to gain a deeper understanding of the factors that influence the

adoption and usage of ICT by SMEs in Malaysia. They found that ICT provides

numerous opportunities for MSMEs to compete equally with large corporations.

In line with the studies on MSMEs, it is clear that the two models considered appropriate

for the studies are those that integrate the DIT and TAM frameworks (McFarland &

Hamilton, 2007). Theoretically, TAM is intended to apply to any specific domain of

human-computer interactions (Davis et al., 1989). The TAM model considers two

salient beliefs, namely, PU and PEU. In addition, the model indicates that both PEU and

PU indirectly affect system usage (Liao, et.al., 2009). Research on the diffusion of

innovations has been widely diverse disciplines.

18
An innovation is “an idea, practice, or object that is perceived as new by an individual or

another unit of adoption” (Rogers, 2003). Diffusion, on the other hand, is “the process

by which an innovation is communicated through certain channels over time among the

members of a social system” (Rogers, 2003). Therefore, the DIT theory argues that

potential users make decisions to adopt or reject an innovation based on the beliefs

formed about the innovation.

Theoretically, DIT has been found to have an explicit relationship with the TAM as both

models share some key constructs. The relative advantage construct in DIT is similar to

the notion of the PU in TAM and the complexity construct in DIT captures the PEU in

the technology acceptance model, although the sign is the opposite. Additionally, in

terms of the complexity construct, TAM and DIT propose that the formation of users’

intention is partially determined by how difficult the innovation is to understand or use.

19
2.4 Conceptual Framework

Dependent Variable
Indep ndentVari bles
Figure 1:The conceptual framework

20
 CHAPTER THREE

RESEARCH METHODOLOGY

This chapter identifies the research design of the study. It further highlights the target

population, sampling procedures and the methods of data collection. Also included are

the measures undertaken to ensure the validity of data collected, and its reliability in this

study.

3.1 The Study Area

Dodoma municipality is traced back to 1973 when it was declared the National Capital

under Presidential Decree No. 320 of 1973. Since then, series of successful events have

followed. In 1980 Dodoma municipality was established. In 1995 the Government

shifted Parliamentary activities to Dodoma and has recently declared the town to be a

center of education. Dodoma municipality is located in the middle of the Country. It is

boarded by Chamwino district in the East and Bahi district in the West. It lies between

Latitudes 6.000 and 6.300 South, and Longitude 35.300 and 36.020 East. It is 456 kms

to Dar es Salaam and 426 kms to Arusha.

The municipality covers an area of 2,769 square kms. It is characterized with both Urban

and rural qualities. It stands on broad upland plateau with an altitude ranging between

900-1000 meters above sea level, with beautiful stony hills such as Image, Isanga,

Mkalama and Mlimwa. It experiences a long draught and short rainfall seasons. Due to

unreliable rainfall, the area has scanty vegetation such as shrubs, grasses as well as

conspicuous baobab and acacias trees.

21
Dodoma municipality is administratively divided into one parliamentary constituency, 4

divisions, 41 wards, 18 villages, 170 mitaa and 89 hamlets.

According to the population and housing census of 2012, Dodoma District had 410,956

people of which male are 196,487 and females 211,469 with the households’ size growth

of 4.4. The number of households is 93,339. Growth rate is 2.7%. Population projection

for the year 2016 is 457,825 where by male are 222,238 and female 235,587.

3.2 Research Design

Nachamias (2004) postulated that a Research design is the blueprint that enables the

investigator to come up with solutions to problems and guides him in the various stages

of the research. Cooper and Schindler (2003) summarizes the essentials of research

design as an activity and time based plan; always based on the research question; guides

the selection of sources and types of information; a framework for specifying the

relationship among the study variables and outlines the procedures for every research

activity.

In view of the lack of sufficient research in this area of study, particularly in the context

of a developing country like Tanzania, an exploratory research design was considered

the most suitable approach. The study used survey research design as it was helpful in

indicating trends in attitudes and behaviors and enable generalization of the findings of

the research study to be done (Kuterand Yilmaz, 2001). This design was considered

appropriate for this study because it saves time, expenses and the amount of quality

information yielded is valid.

22
3.3 Data Types and Sources

The data were obtained from the field under study and government offices these

includes, ward offices. Primary data was collected from respondents in the field while

Secondary data was obtained from different sources both published and unpublished

documents and relevant literatures such as reports, journals, pamphlets, newspapers,

publications and internets. These documents were obtained from libraries, different

governmental and non- governmental institutions and offices office and other books

related to the study.

Not only that but also the qualitative and quantitative was used as the types of data,

where by in qualitative data gathering texts or words related data was collected during

data collection while in quantitative data types numerical data was collected.

3.4 Data Collection Methods and Tools

Chaleunvong (2009) opined that data-collection techniques allow us to systematically

collect information about the subjects of study (people, objects, phenomena) and about

the settings in which they occur. In the conduct of this study, two major instruments of

data collection were used: written questionnaires and interviews.

23
3.4.1 Questionnaires

A written questionnaire (also referred to as self-administered questionnaire) is a data

collection tool in which written questions are presented that are to be answered by the

respondents in written form. These written questionnaires were administered to

respondents via hand-delivery and collection was done later.

Questionnaires, incorporating both open-ended and closed-ended questions items were

used to gather the necessary data to conduct this study. According to Cooper and Emory

(2008), the questionnaire is conveniently used because it is cheaper and quicker to

administer, it is above researcher’s effect and variability, and is highly convenient for

the respondents as they could fill them during free times or when workloads are

manageable. Also incorporated in the data collection instruments is a Likert scales to

measure perception, attitude, values and awareness.

3.4.2 Interviews

An interview is a data-collection technique that involves oral questioning of

respondents, either individually or as a group (Chaleunvong, 2009). While the

questionnaires were largely administered to the small scale enterprise entrepreneurs, in-

depth interviews were preferred for the medium scale enterprise entrepreneurs as they

are deemed more knowledgeable and experienced. Responses to the questions posed

during the interview was tape-recorded, as well crossed from a checklist.

24
3.5 Sampling

3.5.1 Sampling frame

This is a list of the entire population from which the sample is to be drawn. The study

included individuals who are engaging in small and medium enterprise, customers, and

Municipal officers. Sample frame which was used in this study come from a list of 455

SMEs owners available in business register book at Viwandani ward executive office.

3.5.2 Sampling unit

In this study the sampling unit encompasses the respondents from SMEs including firm

owners and their respective employees, officials such as municipal business officer and

ward executive officer.

3.5.3 Sample size

Due to the impracticability of collecting data from the entire population, samples

are usually used. McDaniel and Gates (2002) state that the basic issue when defining

the study population of interest is to specify the characteristics of the individuals you

intend to collect data from. In this study, a sample size was determined using the

model below in which an acceptable standard error (S.E.) term of 10 per cent is

assumed.

25
Sample size was calculated using the following formula;

n= N

1+N (e)2

Whereby;

n = Number of the sample size

N= Number of the total population in the study area (455 SMEs owners’

available

in business register book at Viwandani ward executive office)

e= Percentage error ranging from 5%-10%

n= 455
2
1+ 455 10

100

n = 82

3.5.4 Sampling procedures

The study used both probability and non-probability sampling techniques. With

probability sampling, simple random sampling was used to pick staffs for interview. But,

with non-probability sampling, purposive sampling was preferred to get key informants

for interviewing (Kothari, 2009)

26
3.7 Data Processing, Analysis and Presentation

3.7.1 Data analysis

The data collected was carefully analyzed by using the Statistical Packages for Social

Science (SPSS) program version 20 specifically by using descriptive methods,

dimension reduction specifically factor analysis and multiple responses.

As the first part of the paper is to assess the state of e-commerce adoption among the

SMEs in Dodoma municipality surveyed in this study, frequency distributions was used

to describe the number as well the types of e-commerce applications being implemented.

Besides, the study also used frequency distributions to evaluate the stage of e-commerce

adoption by the respondents in the sample obtained.

Descriptive statistics was used to evaluate the benefits realized by the SMEs surveyed in

this research. Means for each benefit was obtained using the SPSS software.

Likert - type scale was used to measure the benefits of e-commerce in which number(s)

1 presented a very high profit, 2 for high profit, 3 for medium profit, 4 for low profit and

5 for virtually no profit, analysis was made and benefit with a mean value less than 3

implied that that particular benefit has been realized while those with means more than

or equal to 3 implied that those benefits have not been realized.

27
3.7.2 Data processing.

In this study the data collected was carefully, summarized, edited to eliminate

inconsistencies, and coded for easy classification in order to facilitate tabulation and

interpretation. These statistics was generated with the aid of computer software,

Statistical Package for Social Sciences (SPSS) which offers extensive data handling

capability and numerous statistical analysis routines that can analyze small to very large

data statistics.

3.7.3 Data presentation

The results of the analysis were presented and interpreted by use of frequency tables,

percentages and other measures of central tendency (mean, mode and standard

deviations).

28
3.8 Limitations of the Study

Although the study has provided some meaningful answers to the research questions, a

few limitations needed to be addressed. First of all, the sample size is only 82, which is

not big enough. An ideal sample size for factor analysis is 100 so that the results will be

more significant. The problem of small sample size also affected the generalizability of

the findings in this study. The second limitation is that some moderating variables such

as the level of awareness of security risks might have some influence on the accuracy

and significance of the results, and they were not identified here.

The third limitation is that the study did not take the motivating factors into

consideration in assessing the level of e-commerce adoption. The motivating factors

might have strong enough positive influence on e-commerce adoption that they might

offset the negative influence of the limiting factors or barriers, which mean that the

regression model may not be sufficient to explain the influence of the barriers on the

adoption level, as the adoption level could be dependent on both type of factors.

29
 CHAPTER FOUR

RESULTS AND DISCUSSION

This chapter presents the results of the findings based on the entire data collected. The

data analysis and its presentation seek to conclusively address the research questions: 1.)

what is the extent of e-commerce adoption among the small and medium enterprises in

Dodoma municipality? 2.) What are the benefits realized by SMEs in Dodoma

municipality by adopting e-commerce? 3.What are the factors that could be hindering

the adoption of e-commerce among the small and medium enterprises in Dodoma

municipality?

4.1 Extent of E- Commerce Adoption Among SMEs

4.1.1 Types of SMEs engaged in the study

Most of the SMEs participated in the survey are in the retail sector as shown in Table 1.

Out of the total valid sample, 39.0% of the firms are involved in the retail sector,

leisure services which include hotels, lodges and guest house comprise of 15.9%, while

the rest of the firms are in other sectors.

30
Table 1: Classification of SMEs by business sector

Business Sector Frequency Percent

Agriculture 2 2.4
Transport 1 1.2
Construction 9 11.0
Leisure services 13 15.9
Wholesale 6 7.3
Finance 3 3.7
Retail 32 39.0
Information Technology 4 4.9
Education 3 3.7
Health 4 4.9
Sports and entertainment 2 2.4
Car repair and maintenance 1 1.2
Security and defense 1 1.2
Energy 1 1.2
Total 82 100.0

4.1.2 Usage of electronic commerce applications

Most SMEs in Dodoma municipality are at a fairly low state of e-commerce adoption.

Out of the firms surveyed, 30.4% of them have not adopted any e-commerce

application, 37.80% are at the promotion level, 18.29% are at the provision stage,

10.97% are at the transaction stage while as low as 2.43% have moved on to the

integration stage. However, the figures might not be very accurate as the firms were

classified in a certain stage as long as they have adopted one of the applications in that

stage. Therefore, it is also important to examine percentage of usage in each individual

31
e-commerce application.

Table 2: State of e-commerce adoption

Adoption stage Frequency Percentage

Non-adopter 25 30.48

Promotion 31 37.80

Provision 15 18.29

Transaction 9 10.97

Integration 2 2.43

Total 82 100

4.1.3 Electronic marketing

From the statistics obtained, the extent of usage in this area is considered low as only

39.0% of the surveyed firms have implemented research about their customers’

preferences, 56.1% of them are carrying out research and evaluation on their suppliers

and slightly less are doing research on competitors (46.3%).

4.1.4 Electronic advertising

The adoption rate in this area among the companies surveyed is considerably higher

than in the electronic marketing. Out of the sample, 46.3% of the companies are

displaying their corporate as well as products or services information online.

However, most of the websites are hosted by other companies (29.3%), only very few

32
companies are having their own web servers (24.4%). In addition, not many firms are

advertising on third party web site (17.1%) or using electronic catalogues (26.8 %).

4.1.5 Customer support service

This is an area that is related to relationship management. It is apparent that most

companies are providing some support services to their customers through the Internet

as 18.3 % of them are using personalized email to communicate with their customers.

However, besides using email, not many companies have implemented web-based

support services. Out of the total number of companies surveyed, only 34.1 % are

providing FAQ (frequently asked questions) service while 24.4% of them are

displaying products updates over the web. In addition,24.4% of them are handling

customers’ feedback online and 18.3 % of them provide online application as well as

registration. The main reasons behind this phenomenon could be due to the cost

constraints and the lack of technical expertise.

4.1.6 Order and delivery

This area comprises two very important functions of the companies, namely order

processing and fulfillment. However, not many companies are capitalizing on Internet

technologies in this area. While companies (22.0%) of companies are processing sales

order from customers online, only 25.6 % of them are involved in online procurement

and much fewer companies engage in online orders tracking (26.8%). In addition,

EDI seems to be the least use application in this area (13.2%). The above facts could

again be explained by cost constraints and lacking in technological know-how.

33
4.1.7 Payment system

It is apparent that the usage of online payment system is very much lower compared to

the other e-commerce applications. From the data obtained, only 26.8% of the sampled

companies are using EFT (electronic fund transfer) and 29.3 % of them provide online

credit card processing while much fewer are using smart card (24.4%) and prepaid card

(19.5 %).

Table 3: Usage of e-commerce applications by SMEs

E-commerce Applications Percentage (%)

In use Not in use
Electronic Marketing
Research on consumers’ preferences 39.0 61.0
Research and evaluation of new suppliers 56.1 43.9
Research on Competitors 46.3 53.7
Electronic Advertising
Displaying company information and 46.3 53.7
products/services offered
Web site hosted by another company 29.3 70.7
Web site hosted by own server 24.4 75.6
Advertising on third party web site 17.1 82.9

34
Electronic catalogues 26.8 73.2
Customer Support Service
Online help- Frequently Asked Questions 34.1 65.9
Online help- products updates 24.4 75.6
Handling customers feedback/queries online 24.4 75.6
Personalized email communication 18.3 81.7
Online application/registration 18.3 81.7
Order and Delivery
Processing sales order from customers online 22.0 78.0
Coordinating procurement with suppliers online 25.6 74.4
Tracking incoming and outgoing goods delivery 26.8 73.2
Electronic Data Interchange (EDI) 23.2 76.8
Payment System
Electronic Fund Transfer (EFT) 26.8 73.2
Online credit card processing 29.3 70.7
Smart card 24.4 75.6
The above results obtained have adequately answered the first research question raised

in this study, which is to find out the extent of e-commerce adoption. As initial results

indicated that SMEs in Dodoma municipality are at a fairly low state of e-commerce

adoption, subsequent statistical analyses show evidence that the general level of e-

commerce usage among the SMEs in Dodoma municipality is low

4.2 Benefits Realized Through Adoption of E-Commerce

To analyze the realized benefits of e-commerce, the sample size was reduced to

57 by omitting the non-adopters who were 25 out of 82. Therefore, descriptive

statistics were used.

35
First of all, the means of all the benefits were computed. Out of the 12 benefits

of e- commerce, nine of them were considered realized benefits based on the means

(<3.0) as the scales for measuring benefits were coded 1 for very high benefit while 5

coded for no benefit. The other three of the benefits (with mean>3) were considered not

realized. From Table 4, the realized benefits were Increase in productivity reduce in

cost Increase in Return on Investment (ROI), improved customer service, increased

accessibility to the end-users, increased responses from end-users, enhance company

brand and corporate image, increased customer loyalty and retention, improved

business processes flow. One the other hand, the unrealized benefits of e-commerce

adoption were Increase in market share, increase in profit and Increase the

efficiency in dealing with suppliers.

Table 4: Realized benefits of e-commerce

E-commerce benefits Mean

Increase in productivity 2.94
Reduce in cost 2.78

Increase in Return on Investment (ROI) 2.81

Improved customer service 2.63
Increased accessibility to the end-users 2.74
Increased responses from end-users 2.76
Enhance company brand and corporate image 2.56
Increased customer loyalty and retention 2.59
Improved business processes flow 2.65

36
Although the findings have basically answered research question 2, further research

need to be carried out to find out the reasons why some of those benefits of e-commerce

adoption were not realized.

4.3 Factors Hindering the Adoption of E-Commerce Applications

Before examining the factors that might hinder the adoption of e-commerce

applications by SMEs in Dodoma municipality, factor analysis was performed

where only six variables was explained as the most factors hindering the adoption

of e-commerce applications.

A frequency table was obtained for all the items that were used to measure those

barriers. None of the twenty items gave a mean of less than 3 all returned a mean of

more than three. This implied that the respondents considered all twenty measures are

barriers to e-commerce adoption. From the results, insufficient security to prevent

hacking and viruses was the top perceived barrier (mean =4.74). The second barrier

most concerned by the respondents was insufficient qualified vendors for developing

applications (mean=4.15). Three subsequent barriers were lack of government

leadership (mean=3.9), Insufficient security for online credit payment and

transactions (mean=3.6), Mindset shift towards using e-commerce (mean=3.57). The top

six barriers are listed in Table 9.

37
Table 5: Top six factors hindering e- commerce adoption by SMEs in Dodoma

municipality

Barriers Mean
Insufficient security to prevent hacking and viruses 4.74
Insufficient qualified vendors for developing 4.15

applications
Lack of government leadership 3.90
Weak support from top management 3.60

Insufficient security for online credit payment and 3.60

transactions
Mindset shift towards using e-commerce 3.57

These findings closely coincided with other studies such as that by (Ndyali, 2013)

which found that the top four barriers were concern about security and privacy of

transactions, cost of consultants, lack of government incentives as well as lack of IT

38
expertise of staff, only in different orders.

39
 CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATIONS

5.1 Conclusions

The objectives of this study were to analyze the factors influencing the adoption of e-

commerce technology among owners of small and medium enterprises. A conceptual

model was developed to assess the possible influence of various factors on the

adoption of e-commerce by the SMEs. The research method was questionnaire survey

where the questionnaires were sent to all the respondents in the designated sampling

frame. The data gathered were then analyzed using SPSS tools in order to provide

answers to research questions that were raised earlier.

Pertaining to the extent of e-commerce adoption, the results showed that some

SMEs in Dodoma municipality have adopted some form of e-commerce applications,

but the adoption level was low, as majority of them have only adopted basic

applications. The findings implied that more efforts are needed to help and encourage

SMEs in Dodoma municipality to speed up e-commerce adoption, particularly the more

advanced applications.

Regarding the second research question, only descriptive statistical analysis was

performed. Based on the mean scores of the benefits, it could be concluded that SMEs

in Dodoma municipality that have adopted e-commerce have gained some of the

benefits of e-commerce, particularly in the areas of customer service, market

expansion, back-end efficiency and inventory management.

40
With respect to the third research question, a few statistical analyses were

performed. Descriptive statistics based on the mean scores showed that the top

four barriers to e-commerce adoption were insufficient security to prevent hacking

and viruses, the need to have additional staff to manage e-commerce, a high degree of

human interaction is required in sales and marketing and the high cost of setting up e-

commerce.

The above findings were found to be similar to most previous studies on e-commerce

adoption. For example, precious studies in Tanzania revealed that the main barriers to

e-commerce adoption were lack of security and privacy high set up cost, lack of

skilled staff to manage e-commerce as well as business required personal touch and

interaction (Sulaiman 2000; Khatibi et al. 2003).

41
5.2 Recommendations

In light of these findings, this study would advance the following recommendations;

 That the government, through the Tanzania Communication Regulatory

Authority (TCRA), conduct a national baseline survey to exploit ways in which

the entrepreneurs would be encouraged to fully integrate e-commerce into their

businesses. This would inform the key ICTs sector players and provide insights

to ensure that the heavy investments being made into the sector do not go to

waste or end up being under-utilized thus reducing the would-be returns on

investment of such projects.

 There is also need to conduct capacity building training and commercial

awareness of e-commerce as this would go a long way to inculcate a certain

degree of confidence in e-commerce by the infant enterprises. This would also

prove beneficial too to the Government as the Revenue Authority would be able

to bring on board the informal sector via such electronic platforms. Tax

compliance would also be significantly improved as defaulters would be

retraced by their electronic footprints

 In this digital age; it would also be commendable for the young entrepreneurs to

invest in IT and other technical skills, and where possible also invest in their

staff, in order to demystify the workings of e-commerce and other business

oriented new technologies.

42
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45
APPENDICES

APPENDIX 1: Data Collection Questionnaire for SMEs owners or managers

SECTION 1: ELECTRONIC COMMERCE APPLICATIONS
Research Questionnaire
This questionnaire seeks to analyze the factors influencing the adoption of e- commerce
technology among owners of small and medium enterprises. You are not required to fill
in your names. All information given will be treated with utmost confidentiality.

Please put tick against the following electronic commerce applications that are relevant
to your organization: In use Not in use
1. Electronics Marketing
i. Research on consumers' preferences
ii. Research and evaluation of new suppliers
iii. Research on competitors'

2. Electronic Advertising
i. Displaying company information and the
products/services offered
ii. Web site hosted by another company
iii. Web site hosted by own server
iv Advertising on third party website.
v Electronic catalogues

3. Customer Support Service

i. Online help- Frequently Asked Question (FAQ)
ii. Online help- products update
iii. Handling customer's feedback/queries on-line
iv. Personalized email communication
v. Online application/registration

4. Order and Delivery

i. Processing sales order from customers' online
ii. Coordinating procurement with suppliers online
iii. Tracking incoming and outgoing goods delivery
(shipment, courier service online)
iv. Electronic Data Interchange (EDI)

46
5. Payment System
i. Electronic Fund Transfer (EFT)
ii. Online credit card processing
iii. Smart cards
iv. Prepaid cards

SECTION 2

To what extent the followings hinder your organization from using or using more
electronics e-commerce applications?
(Please circle only ONE appropriate score on the scale 1 to 5)

Strongly Disagre Neutral Agree Strongly

Disagree e Disagree
1 Cost of setting up 1 2 3 4 5
electronic commerce is
high
2
Need additional staff to
manage electronic 1 2 3 4 5
commerce applications
2
4
applications
3 Difficult to justify the cost
with desired benefits 1 2 3 4 5
4 Information from the 1 2 3 4 5
electronic commerce is not
useful
5 Market potential of 1 2 3 4 5
electronic commerce users
is too small
6 Our sales/marketing 1 2 3 4 5
requires high degree of
human interaction
7 Electronic commerce is not 1 2 3 4 5
as effective as traditional

47
 marketing channel
8 Most suppliers do not have 1 2 3 4 5
access to electronic
commerce

9 It will upset existing 1 2 3 4 5

distribution channels
10 Insufficient security for 1 2 3 4 5
online credit payment
11 Insufficient security to 1 2 3 4 5
prevent hacking and viruses
12 Insufficient qualified 1 2 3 4 5
vendors for developing
applications
13 Lack of skilled workers to 1 2 3 4 5
handle or maintain
electronic
14 Lack of 1 2 3 4 5
standards/regulations from
government on electronic
commerce issues
15 Lack of 1 2 3 4 5
standards/regulations from
government on
16 Telecommunication 1 2 3 4 5
infrastructure is not
adequate
17 Lack of government 1 2 3 4 5
leadership
18 Weak support from top 1 2 3 4 5
management
19 Keeping up with changing 1 2 3 4 5
technology
20 Mindset shift towards using 1 2 3 4 5
electronic commerce

48
If you are not using any e-commerce applications, please omit section 3

SECTION 3: BENEFITS OF ELECTRONIC COMMERCE

How would you rate the benefits received from electronic commerce?
(Please circle only ONE appropriate score on the scale 1 to 5)

Very Hig Medium Low Virtually

High h no
Benefits
1 Increase in market share 1 2 3 4 5
2 Increase in profit 1 2 3 4 5
3 Increase in productivity 1 2 3 4 5
4 Reduce in cost 1 2 3 4 5
Increase in Return on 1 2 3 4 5
5 Investment (ROI)
Improved of customer 1 2 3 4 5
6 service
Increase accessibility to 1 2 3 4 5
7 the end- users
Increase responses from 1 2 3 4 5

8 end-users
Increase the efficiency in 1 2 3 4 5
dealing with Suppliers
9
Enhance company brand 1 2 3 4 5
and corporate image
1
0
1 Increase customer 1 2 3 4 5
1
loyalty and retention

49
 12 Improve business 1 2 3 4 5

processes flow

SECTION 4: PROFILE OF THE ORGANISATION

We need some information about your organization to enable meaningful interpretations

of the study. Please be assured that this information will be treated with strict
confidence.
Please put tick (√) or fill in the blanks where appropriate

1. In which sector/sub-sector is your organization Classified:

Agriculture Transport
Construction Tourist and leisure services
Wholesale Finance
Retail Information Technology
Manufacturing Education

Others, Please Specify: ________________________

2. Year established: ________________________
3. Major products/services
i ____________________
ii ____________________
iii. _____________________
4. Ownership of the Organization:
a) Sole Proprietor
b) Partnership
c) Private Limited
d) Others, Please Specify: ____________
5. Total number of employees in your organization: ____________

50
6. Annual sales turnovers or revenue:
Less than TZS
5,000,000
TZS 5000000 - TZS 9,999,999
TZS 10,000,000 - TZS 19,999,999
TZS 20,000,000 - TZS 29,999,999
TZS 30,000,000 - TZS 39,999,999
TZS 40,000,000 - TZS 49,999,999
TZS 50,000,000
and Above

8. IT investment in the last three years:

Less than
TZS 2,000,000
TZS 2,000,000 - TZS 5,000,000
TZS 5,000,000 - TZS 10,000,000
TZS 10,000,000 - TZS 15,000,000
More than
TZS 15,000,000

9. Investment in electronic commerce in the last three years Expenditure (TZS)

i. Hardware _____________
ii. Software _____________
iii. Website development fees _____________
iv Consultancy fees _____________

10. Who provides the system support for maintenance of the electronic commerce
infrastructure?

51
Own IT department
Vendors
Others, please specify: _____________

11. Total number of IT personnel: _____________

12. Do you send your staff for electronic commerce related training?
Yes No
13. Types of electronic commerce training :(You may select more than one)
On-the-job training Local vendors
In-house training overseas training
Local institutes

14. Company Name & Address:

_____________________________________
______________________________________
_______________________________________

52
APPENDIX 2: Interview Schedule
1. Currently, have you incorporated the use of e-commerce in your enterprise?

2. If no, please indicate some of the major inhibitors/ barriers to such adoption.

3. If yes, please indicate some of the major factors that lead to such adoption.

4. How would you describe the state of ICTs in Dodoma municipality with
references to:

a) Government policy and regulations

b) Network infrastructure and service quality

In your opinion; what is the level of preparedness of enterprises in Dodoma

municipality to adopt e-commerce in reference to:

a) Attitudes and beliefs towards e commerce

b) Levels of IT and other technical skills

6. How compatible do you find the various e commerce applications (e mail, e

marketing, customer support etc.) to your daily business needs?

7. How would you describe the ease of testing and/ or implementing the said e-
commerce applications?

8. What is the integrity of these systems (e-commerce applications) in your business

environment with regards to authenticity, confidentiality and repudiation?

9. What are your greatest concerns (security/ privacy or otherwise) with this whole e-
commerce business?

10. In your opinion; what sectors/ industries are best suited for the adoption of e-
commerce?

11. would you advice the young entrepreneurs to adopt e-commerce? Why?

12. Any additional remarks?

Thanks a lot for your assistance!

53
APPENDIX 3: Codebook
SECTION ONE: ELECTRONIC COMMERCE APPLICATIONS
DESCRIPTION OF SPSS VARIABLE CODING
VARIABLE NAME INSTRUCTION
(VARIABLE LABEL)
Research on consumers em1 1= In use
preferences
2= Not in use
Research and evaluation of new em2 1= In use
suppliers
2= Not in use
Research on Competitors em3 1= In use
2= Not in use
Displaying company information ea1 1= In use
2= Not in use
Web site hosted by another ea2 1= In use
company
2= Not in use
Web site hosted by own server ea3 1= In use
2= Not in use
Advertising on third party web ea4 1= In use
site
2= Not in use
Electronic catalogues ea5 1= In use
2= Not in use
Online help- Frequently Asked css1 1= In use
Questions
2= Not in use
css2 1= In use
Online help- products updates
2= Not in use
Handling customers css3 1= In use
feedback/queries online
2= Not in use
Personalized email css4 1= In use

54
communication 2= Not in use
Online application/registration css5 1= In use
2= Not in use
Processing sales order from od1 1= In use
customers online
2= Not in use
Coordinating procurement od2 1= In use
with suppliers
2= Not in use
Tracking incoming and od3 1= In use
outgoing goods
2= Not in use
Electronic Data Interchange od4 1= In use
(EDI)
2= Not in use

Electronic Fund Transfer (EFT) ps1 1= In use

2= Not in use
Online credit card processing ps2 1= In use
2= Not in use
Smart card ps3 1= In use
2= Not in use
Prepaid card ps4 1= In use
2= Not in use

SECTION TWO: HINDRANCE TO E-COMMERCE USAGE

55
 DESCRIPTION OF SPSS VARIABLE CODING
VARIABLE NAME INSTRUCTION
(VARIABLE LABEL)
Cost of setting up e-commerce h1
is high
Need additional staff to manage h2
e-commerce applications
Difficult to justify the cost with h3
desired benefits
Information from e-commerce h4
is not useful
Market potential of e- h5
commerce users is too small 1= Strongly disagree
E-commerce is not as effective h6 2= Disagree
as traditional channel 3= Neutral
Most suppliers do not have h7 4= Agree
access to e-commerce 5= Strongly agree
Insufficient qualified vendors h8
for developing applications
It will upset existing h9
distribution channels
h10
Our sales/marketing require
high degree of human
interaction
Lack of skilled workers to h11
handle or maintain e-commerce
system
Lack of knowledge about h12
the potential applications of e-
commerce
Weak support from top h13

56
management
h14
Insufficient security for online
credit payment and transactions
Insufficient security to prevent h15
hacking and viruses
Lack of standards/regulations
from government on e-
1= Strongly disagree
commerce issues
Telecommunication h16 2= Disagree

infrastructure is not adequate 3= Neutral

Lack of government leadership h17 4= Agree
5= Strongly agree
Keeping up with changing h18
technology
h19
Mindset shift towards using e-
commerce

SECTION THREE: BENEFITS OF E-COMMERCE

DESCRIPTION OF SPSS VARIABLE CODING

VARIABLE NAME INSTRUCTION
(VARIABLE LABEL)
Increase in market share b1

57
Increase in profit b2

Increase in productivity b3

Reduce in cost b4
1= very high
Increase in Return on b5
Investment (ROI) 2= high

Improved customer service b6 3= medium

4= low
Increased accessibility to the b7 5= virtually no benefits
end-users
Increased responses from end- b8
users

Increase the efficiency in b9

dealing with suppliers
Enhance company brand and b10
corporate image
Increased customer loyalty and b11
retention

Improved business processes b12

flow

SECTION FOUR: PROFILE OF THE ORGANIZATION

DESCRIPTION OF VARIABLE SPSS CODING
VARIABLE INSTRUCTION
(VARIABLE LABEL) NAME
In which sector is the organization sector 1= Agriculture
classified
2= Transport

58
 3= Construction
4= Tourist and leisure
services
5= Wholesale
6= Finance
7= Retail
8= Information
Technology
9= Manufacturing
10= Education
11= Others
Year established year

Major products/services p1

P2

P3
Ownership of the organization Ownership 1= sole proprietor
2= partnership
3=private limited
4=public listed

Total number of employees tne

59
 1= Less than TZS
5,000,000
Annual sales turn over sales
2= TZS 5000000 - TZS
9,999,999
3= TZS 10,000,000 – TZS
19,999,999
4= TZS 20,000,000 - TZS
29,999,999
5= TZS 30,000,000 – TZS
39,999,999
6= TZS 40,000,000 – TZS
49,999,999
7= TZS 50,000,000 and
Above

IT investment in last 3 years Investment 1= Less than TZS

2,000,000
2= TZS 2,000,000-TZS
5,000,000
3= TZS 5,000,000-TZS
10,000,000
4= TZS 1,000,0000-TZS
15,000,000
5= More than TZS
15,000,000

Investment in hardware hard 0= no investment

Investment in software soft 1 TZS 500,000

investment in web development web 2 TZS 100,000

60
consultation fee consult
3 TZS 1,500,000

Who provide e-commerce infrastructure maintain 1= own IT

4≥ TZS dept
2,000,000
1=own IT dept 2= vendors
maintenance
3= Others

Total number of IT personnel itp

Do you send your staff for e-commerce training 1= yes

1= yes
2= no
training
Types of electronic commerce training trainingtype 1= On the job training
2= In-house training
3= Local institutes
4= Local vendors
5= Overseas training

61