E-commerce adoption by SMEs in developing countries: evidence from Indonesia

Abstract

This study aims to provide an overview of e-commerce adoption by SMEs in developing countries and, in particular, the extent of the adoption of e-commerce by Indonesian SMEs. It identifies the e-commerce benefits realized by these SMEs and investigates the relationship between the levels of e-commerce adoption and the benefits thus realized. The study was motivated by the limited studies related to e-commerce adoption by SMEs, especially in developing countries. In addition, it seems that most e-commerce studies are focused more on upstream issues: to see the factors that facilitate, or barriers faced regarding e-commerce adoption, rather than downstream issues: to see post-adoption benefits. This certainly limits our understanding about e-commerce adoption by SMEs in developing countries, as well as the post-adoption benefits of e-commerce. Indonesia was chosen as the place in which to conduct the study. A survey of 292 SMEs shows that the majority of them are still at an early stage in their adoption of e-commerce. Their use of e-commerce is dominated by marketing and purchasing and procurement activities. “Extending market reach”, “increased sales”, “improved external communication”, “improved company image”, “improved speed of processing”, and “increased employee productivity” are reported as the top six e-commerce benefits perceived by these SMEs. This study also shows that SMEs at the higher level of e-commerce adoption experience greater e-commerce benefits than those at other levels of adoption.