African Journal of Business Management Vol.6 (15), pp.

6486-6496, 6 June, 2012

Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM11.1768
ISSN 1993-8233 ©2012 Academic Journals

Full Length Research Paper

Analyzing the effects of electronic commerce on

organizational performance: Evidence from small and
medium enterprises
Asghar Afshar Jahanshahi1*, Mahdi Rezaei2, Khaled Nawaser3, Vahid Ranjbar4 and
Bairagi Kachardas Pitamber5
1
Department of Commerce and Research Center, University of Pune, India.
2
Marketing Management, University of Payam - e - Noor, Iran.
3
Institute of Management in Kerala (M.Phil), University of Kerala, India.
4
Information Technology Management, University of Sistan and Baluchestan, Iran.
5
Department of Commerce and Research Center, University of Pune, India.
Accepted 8 September, 2011

The main purpose of this research is to study the impacts of electronic commerce (e-commerce)
applications on the organizational performance of the Indian small and medium enterprises (SMEs).
There are many different types of e-commerce applications that may influence the organizational
performances; in this research, they are categorized into five different categories: electronic
advertising, electronic payment system, electronic marketing, electronic customer support service and
electronic order and delivery. According to literature review, most common types of organizational
performance measures that are used in recent empirical researches are included: Financial or
accounting performance, operational performance and market-based performance. For analyzing the
data derived from questionnaire structural equation modeling (goodness of fit tests and path analysis)
were used and the software used for analyzing the data were LISREL 8.54 and SPSS 18. The survey
method was considered to be the most suitable research method for this investigation. On the whole,
this paper illuminates significant relationships between applications of electronic commerce and
operational and market based performance. The proposed measurement model exhibited a good level
of model fit, too.

Key words: Electronic commerce, operational performance, organizational performance, market-based

performance, financial performance, small and medium enterprises (SMEs).

INTRODUCTION

Since small and medium enterprises are the strength
point of a dynamic economy (resources), increasing
development of information communication technology
(ICT) has provided suitable ground for the improvement
of the organizations‟ performance. With the development
of these technologies in business and trade, the
organizational performance is gaining an unprecedented
improvement. This improvement can obviously be
investigated in operational, financial and market sectors.
Organizational performance is probably the most widely
*Corresponding author. E-mail: Afsharasghar@yahoo.com.
used dependent variable in organizational research.
Today, yet at the same time it remains one of the most
vague and loosely defined constructs. A few studies
(Afshar et al., 2011; Kardaras and Karakostas, 1999;
Schubert and Selz, 2001) have investigated the overall
effectiveness of e-commerce and its impact on
organizational performance in small and medium
enterprises in the whole world.
Small and medium enterprises are increasingly seeing
the benefits arising from e-commerce as expanded
geographical coverage giving them a larger potential
market into which they can sell their products and
services (Rastogi, 2002). Some of the sectors that have
high potential for early adoption of e-commerce are:
 Jahanshahi et al. 6487

Table 1. Different applications of e- commerce.

Different applications of
Description Researchers
e- commerce
Provide product information to customers Afshar et al. (2011)
Advertising
Displaying company information on website
On-line electronic brochures or buying guides
Display only a range a products which are relevant to the particular customer

Online help- frequently asked question Turban et al. (2000)

Customer support service
Online products update Online order
entry and delivery
Afshar et al. (2011)
Handling customers feedback/queries online
Online application/registration

Allowing a customer to contact a sales office Arie et al. (1995)

Marketing
Share information with competitors Johnson (2003)
Coordinating procurement with suppliers online Kotler (2000)

Electronic fund transfer (EFT) Lawal (2010)

Payment system
Online credit card processing
Electronic money Smart card

Coordinating procurement with suppliers online Johnson (2003)

Order and delivery Tracking incoming and outgoing goods delivery Turban et al. (2000)
Electronic data interchange (EDI) Fahri and Omar (2001)

Financial (stock exchanges and banks), automobiles
industry, retail, tourism industry and manufacturing.
In this research, endeavors and efforts have been
made in order to study the relationship between
electronic commerce and organizational performance in
small and medium enterprises.
The purpose of this research is to study the
components affecting electronic commerce and
organizational performance from the perspective of
electronic business and also provide a comprehensive
model for building proposed strategies in various
industrial sectors.
LITERATURE REVIEW
Electronic commerce applications
E-commerce is changing all business functional areas
and their important tasks, ranging from advertising to
paying bills. E-commerce has attracted significant
attention in the last few years. This high profile attention
has resulted in significant progress towards strategies,
requirements and development of e-commerce
applications (Upkar, 2002; Kalakota and Robinson, 1999;
Afshar et al., 2010).
The earliest e- commerce studies can be traced back to
those published in 1994 (Cronin et al., 1994; Barker,
1994). Barker (1994) provided one of the first surveys on
how small businesses used the Internet for business
purposes. Cronin et al. (1994) discussed how e-
commerce might change while competitive intelligence
was being gathered.
They also discussed briefly how small businesses
could benefit from such a tool. In the next year or so,
more researches were published focusing on SMEs and
e-commerce (Cockburn and Wilson, 1995; Dou, 1996;
Fuller and Jenkins, 1995; Poon and Swatman, 1995).
Since then, much has been published from the
perspective of information systems, marketing and
management cited in (Poon and Huang, 2004). Turban et
al. (2002) defines e-commerce as: “An emerging concept
which describes the process of buying, selling, or
exchanging services and information via computer
networks”. Raymond (2001) defines e-commerce as:
“The functions of information exchange and commercial
transaction support that operate on telecommunications
networks linking business partners (typically customers
and suppliers).” Although, there are many different types
of e-commerce applications, we can group them
according to categories. Table 1 describes five different
categories of electronic commerce applications in small
and medium enterprises.
E-commerce offers lower costs per business
transaction, especially with respect to mailing and paper
6488 Afr. J. Bus. Manage.
Figure 1. Most common types of organizational performance measures.
costs (Lawal, 2010). Fewer mistakes occur in paperwork
because fewer people handle the data. Customer
satisfaction is heightened due to better access to order
and promotional data. The old rules are breaking down.
Companies now share information with competitors,
producing “competition”. Suppliers and buyers share
information: Economic and cultural boundaries are
disappearing – in some market segments businesses
must be global (Johnson, 2003).
Concept of organizational performance
Organizational performance is probably the most widely
used dependent variable in organizational research today
yet at the same time it remains one of the most vague
and loosely defined constructs (Rogers et al., 1998).
Measuring organizational performance is difficult,
especially when what has to be measured keeps
changing (Hubbard, 2006).
Many small and medium-sized enterprises are
becoming ever more focused on their organizational
performance. Organizational performance comprises the
actual results or output of an organization as measured
against its intended results or outputs. Typically, there
are different ways to characterize various types of
organizational performance in small and medium sized
enterprises. Dyer and Reeves (1995), proposed four
possible types of measurement for organizational
performance in small and medium-sized manufacturing
firms: 1) Human resource outcomes (job satisfaction,
absenteeism, turnover), 2) Organizational outcomes
(quality, productivity, service), 3) Financial accounting
outcomes (return on assets, profitability) and 4) Capital
market outcomes, (stock price, growth, returns).
Pierre et al. (2009) argued that organizational
performance encompasses three specific areas of firm
outcomes: (a) Financial performance (profits, return on
assets, return on investment, etc.); (b) Product market
performance (sales, market share, etc.); and (c)
Shareholder return (total shareholder return, economic
value added, etc.).
According to Shaker and Basem (2010) organizational
performance indicators from relationship marketing
perspective include: Increasing market share, retaining
current customers, attracting new customers, creating
loyal customers, increasing profit, Increasing return on
investment, positive image. Venkatrman and Ramanujam
(1986) argued that organizational performance have
three dimensions: Financial performance, operational
performance, and stakeholder performance.
According to literature review, most common types of
organizational performance measures that are use in
recent empirical researches are: Financial or accounting
performance, operational performance and market-based
performance (Combs et al., 2005; Brealey et al., 2001;
Helfert, 1994; Higgins, 1995; Penman, 2001; Carton and
Hofer, 2006) (Figure 1).
Financial and accounting performance
Performance is usually assessed with accounting-based
measures (for example, profitability measures such as

return on assets, return on investment, return on sales,
return on equity), market-based measures (for example,
stock market returns) or a mixture of accounting- and
market-based measures (for example, price-earnings
ratio). Accounting-based criteria are common in
performance evaluations. Popular management journals
(such as business week, management today) use
profitability criteria for performance-league tables. Also, in
academic performance studies profitability measures are
the most often used (McGuire and Hill, 1986; Hubbard
and Bromiley, 1995). Accounting-based figures can be
misleading because they might have been manipulated to
look good. A lack of consistency in corporate accounting
methods (for example, with regard to the treatment of
inflation, inventory valuation, and depreciation or
intangible assets) and a lack of standardization in
international accounting conventions make interpretations
as well as comparisons between organizations difficult. A
further shortcoming of all accounting-based performance
measures is their backward-looking focus (Kaplan and
Norton, 1992). Data of past years reveal little about the
future potential of a firm. The ‟short-termism‟ of the
accounting-based measures relates to another point of
criticism. Profit can easily be raised in the short-term by
cutting expenditures (for example, for advertising or R
and D), but that kind of practice might be harmful in the
long-run. Thus, the question is if ‟firm performance‟ is
truly assessed when merely relying on accounting based
measures (Ursula and Wilderom, 1997).
Market-based performance
Given the criticism with regard to accounting-based
measures, several authors propose market-based
measures as better overall performance indicators
(McGuire et al., 1986; Habel, 1992). Stock-market data
are assumed to reflect investor‟s estimations of future
firm potential and thus focus on the long-term value of the
enterprise. Under the assumption that investors evaluate
firms appropriately (perfect markets), stock-market data
are seen as sensible indicators of corporate performance
for listed firms. However, the idealistic assumption of
perfect markets and the high percentage of unlisted firms
pose serious limitations to their widespread use. The
relation of market- and accounting-based measures is
unclear. A number of empirical studies have found
accounting- and market-based measures of performance
to be essentially uncorrelated; factor analyses revealed
two independent dimensions of financial/economic
performance (Meyer and Gupta, 1994). Other studies,
however, found correlations between the two types of
measures (Douma and Kabir, 1995), as well as a single
underlying construct of firm financial performance (Rowe
et al., 1995). The convergence of accounting- and
market-based performance measures seems to depend
on time and context factors: Fryxell and Barton (1990)
Jahanshahi et al. 6489
found a higher convergence in times of uncertainty;
Douma and Kabir (1995) found a significant correlation
only for large firms. Further research in this area has to
solve this issue of dimensionality. In general it can be
said that both types of measures have their limitations
and – where possible -- should be combined.
Accounting measures refer to variables that can be
derived from the three basic financial statements of all
businesses, namely balance sheets, income statements
and statements of cash flows. Most accounting measures
are generally expressed as values, ratios or percentages.
The calculation of the amounts presented in reporting
companies‟ (those companies required to file periodic
reports with the securities and exchange commission)
financial statements in the United States is based upon
generally accepted accounting principles (GAAP)
consistently applied both over time and across
companies. While it would seem that following a common
set of rules for reporting financial results would produce
uniformity in presentation among similar companies,
there is sufficient variation both in the nature of financial
transactions and interpretation by those applying GAAP,
to result in significant variation in the way companies
present their financial information, often making
comparison across companies difficult (Carton and Hofer,
2006).
Operational performance
According to Carton and Hofer (2006) operational
performance can be further subcategorized into market
share, new product introduction, product/service quality,
marketing effectiveness and customer satisfaction. In
addition to financial/economic performance criteria,
Venkatraman and Ramanujam (1986) propose
operational performance measures such as market
share, new product introduction, product/service quality
and marketing effectiveness. Comparable approaches
are the balanced scorecard or the business-model
approaches (Kaplan and Norton, 1992), which include
financial as well as operational criteria relating to value
for customers, innovation and internal business
improvement. These models promote the linking of data
from several financial and operational measures in order
to see if improvement in one area has been achieved at
the expense of another. The latter presumption relates
exactly to the main point made by the (earlier discussed)
competing values approach. Operational performance
indicators come close to what other authors label ‟critical
success factors‟ (Hoffmann, 1986; Wijn et al., 1994).
There is, however, a conceptual difference: Operational
performance variables are conceived as indicators of the
performance construct itself, whereas critical-success-
factors are regarded as predictors of performance. This
conceptual difference relates to a crucial issue both in
organizational effectiveness and in corporate performance
6490 Afr. J. Bus. Manage.

Table 2. Demographics of responses.

Characteristics Measure Frequency Percentage

Man 86 71.7
Sex
Woman 32 26.7

>20 11 9.2
20-30 26 21.7
Age 30-40 56 46.7
40-50 21 17.5
50< 2 1.7

>5 20 16.7
5-10 42 35.0
Work experience 10-15 33 27.5
15-20 13 10.8
20< 8 6.7

Diploma 42 35.0
Education Bachelor 60 50.0
Master 15 12.5

>20 25 20.8
20-40 33 27.5
Number of employees
40-60 50 41.7
60< 12 10.0

>10 65 54.2
10-20 33 27.5
Number of IT personnel
20-30 13 10.8
30< 3 2.5
**As some of the participants did not answer some questions, the total number is not equal to 120.

research: defining the boundaries of the construct strongly agree respectively. Section II is designed to collect
including the distinction between predictors (means) and information related to the company profile. There are 8 questions
where the respondents are required to tick one answer or fill in the
criteria (ends) (Ursula and Wilderom, 1997). blank.

RESEARCH INSTRUMENT
Questionnaires are one of the most popular methods of conducting
scholarly research. They provide a convenient way of gathering
information from a target population. The questionnaire for the
study is divided into two sections. Section I is again divided into
sub-section A and sub-section B. Sub-section A is designed to
collect information related to the various usage of electronic
commerce namely electronic marketing, electronic advertising,
electronic customer support service, electronic order and delivery
and electronic payment system. The questions are made up of
simple type, which every item required the respondents to choose
one answer out of five alternatives. Subsection B is to collect
information related to organizational performance. There are 39
items, which can be categorized into operational performance,
financial performance and market-based performance. Every item
required the respondents to choose one answer out of five
alternatives. The scale used is called the Likert scales, where the
five alternatives are strongly disagree, disagree, neutral, agree and
Reliability and validity analysis
Cronbach‟ α coefficient is the most extensive measurement method
of reliability. A coefficient is distributed between 0 to 1, on the
minimum acceptable reliability coefficient, scholars are not
unanimous. Here we use the theoretical more common practice,
namely under general circumstances, if Cronbach‟ α coefficient
ranges between 0.80 to 0.90, it is considered very good, ranges
between 0.70 to 0.80, it is relatively good, and between 0.65 to 0.70
is acceptable, 0.60 to 0.65 is unacceptable. For not yet proven
variables, as long as Cronbach‟ α is above 0.60, then it can be
accepted. For determining reliability of the study Cronbach‟s alpha
method was used. Table 3 presents the resulted from this analysis.
For determining validity of the questionnaire content credit was
used. Content credit of this questionnaire has been justified by
guide professors and also initial distribution of questionnaire among
number of experts, scholars and considering their corrective
comments, it was confirmed to have the necessary credibility.
 Jahanshahi et al. 6491

Table 3. The reliability of the pretest questionnaire.

Indicator Number of questions Cronbach’s coefficient alpha

Electronic marketing (EM) 3 0.809
Electronic advertising (EA) 4 0.702
Electronic costumer service (ECS) 5 0.768
Electronic order and delivery (EOD) 4 0.750
Electronic payment system (EPS) 4 0.870
All questions related to applications of e commerce (AeC) 0.858
Operational performance (OPP) 15 0.883
Financial performance (FP) 15 0.754
Market based performance (MBP) 9 0.744
All questions related to organizational performance 0.845

Electronic
Marketing Operational
Performance

Electronic
Advertising

.
Electronic
Financial
Customer Support
Service
Application of Organizational Performance
. E- Commerce Performance

Electronic Order
and Delivery

Market-based
Electronic Payment Performance
System .

Figure 2. Research model.

The proposed research model Sub-hypotheses

A review of the literature indicates that there are many different
types of e-commerce usage that may be influential to organizational
performance in small and medium sized enterprises; we can group
them according to five different categories: 1) electronic advertising
2) electronic payment system 3) electronic marketing 4) electronic
customer support service 5) electronic order and delivery. On the
other hand, organizational performance can be further
subcategorized into operational performance, financial performance
and market-based performance (Figure 2).
H1.1: E-commerce applications have significant and positive impact
on operational performance in small and medium enterprises.
H1.2: E-commerce applications have significant and positive impact
on financial performance in small and medium enterprises.
H1.3: E-commerce applications have significant and positive impact
on market-based performance in small and medium enterprises.

Research hypotheses
This research shall attempt to test one main hypothesis and three
sub-hypotheses.
Main hypotheses
H1: E-commerce applications have significant and positive impact
on organizational performance in small and medium enterprises.
Hypotheses testing
The specification of the model consists of the translation of the
verbal hypotheses into a series of equations previously represented
in the form of a causal or a path analysis. The path analysis shows
the causal relationships among all variables in the system. It should
be based upon a priori knowledge of such relationships which are
ultimately related to previous experience or theoretical basis
(Anderson and Gerbing, 1992). Thus, the path analysis represents
the working hypothesis about the causal relationships among
variables. Path analysis is a straightforward extension of multiple
6492 Afr. J. Bus. Manage.
Figure 3. Structural model of the study for confirming hypotheses in standard estimates state.
Figure 4. Structural model of the study for confirming hypotheses in signification (t-Value) state.
regressions. Its aim is to provide estimates of the magnitude and
significance of hypothesized causal connections between sets of
variables. This is well explained by considering a path analysis. To
construct a path analysis in this research the researchers simply
write the names of the variables and draw an arrow from each
variable to any other variable which is believed that it affects. We
can distinguish between input and output path analysis. An input
path analysis is one that is drawn beforehand to help plan the
analysis and represents the causal connections that are predicted
by our hypothesis.
An output path analysis represents the results of a statistical
analysis and shows what was actually found. Within a given path
analysis, can tell which are the more important (and significant)
paths and this may have implications for the plausibility of pre-
specified causal hypotheses. If two or more pre-specified causal
hypotheses can be represented within a single input path diagram,
the relative sizes of path coefficients in the output path analysis
may tell us which of them is better supported by the data. After
keying all collected data into LISREL and by doing normality and
linearity checking, so non-linear pattern was detected. Hence, it is
concluded that we should meet linearity assumption and it was
decided to adjust the proposed conceptual model as follows. For
this reason and for all hypotheses of the study, hypothesis testing
was used (Figure 3). Figure 4 also shows significance and resulted
parameters from the hypotheses test.
Ho: α = 0 Null hypotheses: Correlation between two variables is not
significant
H1: α ≠ 0 Alternative hypothesis: Correlation between two variables
is significant
The measurement model with all two constructs was using path
analysis (Anderson and Gerbing, 1992). Table 4 presents factor
 Jahanshahi et al. 6493

Table 4. Factor loading and t-values of the measurement model.

Construct/indicator Factor loading t-value

Application of e- commerce
EM 0.42 8.35
EA 0.52 13.38
ECS 0.59 13.96
EOD 0.61 12.04
EPS 0.80 9.48

Organizational performance
OPP 0.72 12.48
FP 0.11 1.82
MbP 0.63 10.02

Table 5. Test of convergent validity.

Construct/indicator Indicator reliability Composite reliability Average variance extracted

Application of e- commerce 0.87 0.51
EM 0.84
EA 0.82
ECS 0.87
EOD 0.88
EPS 0.84

Organizational performance 0.88 0.62

OPP 0.88
FP 0.89
MbP 0.81

loading and the corresponding t-values of indicators in the
measurement model. All loading exceed 0.4 and each indicator is
significant at 0.05 levels (except FP). The measurement model
exhibited a good level of model fit.
The psychometric properties of the five constructs and indicators
(dimensional scales) were assessed with respect to convergent
validity and discriminate validity (Joreskog and Sorbom, 2001). The
reliability of individual items/indicators, the reliability of the
constructs (composite reliability) and the average variance
extracted were used as the measures for convergent validity. To be
considered adequate, the individual item reliability should be
greater than 0.50 and/or a significant t-value should be observed for
each indicator (Bagozzi and Yi, 1998). The average variance
extracted should be at least 0.5 and the composite reliability should
be greater than 0.6 (Anderson and Gerbing, 1992). Table 5
summarizes the eight measures of the convergent validity for the
model. Only FP had item/indicator reliability below 0.50 but in Table
5, 32 of the corresponding t-values were significant for all two. In
terms of the average variance extracted, for all constructs were
slightly over 0.50. Hence, the measurement model seems to
possess adequate convergent validity.
Another approach suggested by Fornell and Larcker (1982) is
that discriminate validity is demonstrated when the squared
correlation between two constructs is lower than the respective
average variance extracted. Table 6 shows the comparison
between squared correlations of each constructs and the average
variance extracted for each construct. Overall, all of the three
constructs show evidence of high discriminate validity. Therefore,
the measurement model exhibited a good level of model fit as well
as evidence of discriminate validity.
Based on analysis done using path analysis, results of testing
hypotheses of the study can be seen in Tables 7 and 8. Standard
estimation test and significance value in confirming or rejecting the
hypotheses (significance of hypotheses) was used.
Table 7 shows results of goodness of fit tests of structural model
(based on hypotheses) and Table 8 shows results of testing the
hypotheses of the study using path analysis.
According to statistical analysis in this area, the results indicates
that the electronic commerce applications have significant and
positive impact on operational and market based performance as a
part of organizational performance in small and medium
enterprises. On the other hand, the electronic commerce
applications have not a significant and positive impact on financial
performance.
RESULTS AND DISCUSSION
Population and sample
In this study stratified random sampling was used to
6494 Afr. J. Bus. Manage.
Table 6. Test of discriminate validity (covariance matrix).
EM EA ECS
EM 1.00
EA 0.42 1.00
ECS 0.41 0.65 1.00
EOD 0.46 0.54 0.48
EPS 0.43 0.48 0.54
OPP 0.51 0.57 0.51
FP 0.53 0.61 0.48
MbP 0.63 0.43
collect the necessary data. The population of the
research will be all the SMEs in Pune which are using E-
commerce applications and own internet website which is
estimated to be 395 units. Out of 395 units, a sample of
120 SME units was taken to obtain the primary data. As
it is observed from the fallowing graph, the survey sample
consisted of representatives from two major groups,
namely: The manufacturing sector and the service sector.
The results show that most firms in the sample belong to
the manufacturing sector. Of the 120 respondent firms: a)
57.5% (69 firms) belong to small sized enterprises; b)
42.5% (51 firms) belong to medium sized enterprises.
And on the other hand: a) 53.3% (64 firms) belong to
manufacturing sector; b) 46.7% (56 firms) belong to
service sector.
The demographic responses indicated that, 26.7% of
respondents were female and 71.7% were male. The
majority of respondents‟ age was about 30 to 40 (46.7%).
21.7% of them were about 20 to 30. From work
experience point of view, majority of samples were
between 5 to 10 years (equal to 35%) (Table 2).
Subsequently, in verifying education of the subscribers,
results demonstrate that 50% of respondents had
bachelor degree, 35% diploma degree and 12.5 % had
master of art degree. Also among the respondents, most
of them had between 40 and 60 employees, while only
10% had more than 60 employees. It shows that most of
small and medium enterprises have very few employees
as the scale of operation is small and also because of the
capital constraints. Majority of the respondents employ
less than 10 IT personnel while only 2.5% employ more
than 30 IT personnel. The table reflects that most small
and medium companies in India have few IT personnel
as the IT requirement is relatively small.
Conclusion
In this world of accelerating economic globalization,
advances in science and technology continue apace and
knowledge is recognized as a core competence in
accumulating wealth. This new environment has created
EOD EPS OPP FP MbP
1.00
0.61 1.00
0.41 0.39 1.00
0.27 0.40 0.44 1.00
0.34 0.41 0.46 0.45 1.00
favorable conditions for Indian SMEs to develop in a
broader range of fields, and offered unprecedented
opportunities, but also poses new challenges. In order to
turn this challenge into opportunities, not only must SMEs
better equip themselves, they must also be quick in
adapting to changing market conditions.
Based on the findings of this study in most of SMEs,
electronic commerce applications were still new and at an
early stage. Many SMEs participants in this study were
unclear about the benefits and problems of using
electronic commerce. They did not realize the potential of
advanced Internet technologies in their business
activities, thus the application of electronic commerce in
the SMEs were mainly for general activities such as
marketing and advertising.
This study thoroughly states that e-commerce
application is very important in any organization, whether
it may be small or medium. It helps to improve marketing
processes, assists to improve payment system of the
organization and ultimately helps to increase efficiency of
the workers and profit of the organization. This research
also has delivered a model which shows the relation
between five applications of electronic commerce and
three parts of organizational performance in small and
medium enterprises.
Some findings of this study are summarized here:
1) According to statistical analysis in this study the results
indicates that the electronic commerce applications have
significant and positive impact on operational
performance in small and medium enterprises.
2) According to statistical analysis in this study the results
indicates that the electronic commerce applications do
not have a significant and positive impact on financial
performance in small and medium enterprises.
3) According to statistical analysis in this study the results
indicates that the electronic commerce applications have
a significant and positive impact on market based
performance in small and medium enterprises.
4) According to statistical analysis in this study the results
indicates that the electronic commerce applications have
a significant and positive impact on organizational
performance in small and medium enterprises.
 Jahanshahi et al. 6495

Table 7. Goodness of fit tests for structural model of the study.

2 Root mean square Goodness of Adjusted goodness of Root mean square Normed fit Non-normed fit Comparative fit
χ /df
residual (RMR) fit index (GFI) fit index error of approximation index (NFI) index index (CFI)
1.34 0.047 0.96 0.96 0.051 0.96 0.94 0.93

Table 8. Results of testing the hypotheses of the study using path analysis.

Hypotheses Path Standardized estimates The significance of parameters Results

H1 Electronic commerce Organizational performance 0.81 14.94 Confirmed
H1a Electronic commerce Operational performance 0.81×0.72=0.58 12.48 out of (-1.96,1.96) Confirmed
H1b Electronic commerce Financial performance 0.81×0.11=0.08 1.82 into (-1.96,1.96) Rejected
H1c Electronic commerce Market based performance 0.81×0.63=0.51 10.02 out of (-1.96,1.96) Confirmed

RECOMMENDATIONS FOR FUTURE
RESEARCH
In future researches it is recommended to identify
and test other mediator variables and while testing
the model in other parts of the country, a
comparison among the present study findings and
the future researches should be done. Therefore,
some of the most important suggestions for future
researches can be as under:
1) It is recommended that the future research be
extended to all the states in India in order to
obtain results that are more representative.
2) Further work needs to be done to determine the
effects of using electronic commerce on both
business process and management process.
3) Study the interrelationships between the
components of electronic commerce
4) Study the consumer acceptance of electronic
commerce among micro, small and medium
enterprises
5) Study the relationship between electronic
business and different parts of the organizational
performance.
REFERENCES
Afshar JA, Nawaser Kh (2010). Mobile commerce: the force of
electronic commerce future. Int. seminar on „innovations in
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