Stirling Management School The Adoption of E-commerce in SMEs

318 Pages·2013·3.08 MB·English

Stirling Management School

The Adoption of E-commerce in SMEs: An
Empirical Investigation in Egypt

By

Mohamed Hassan Rabie

A Doctoral Thesis
Submitted in partial fulfilment of
The Requirement for the award of
The Degree of Doctor of Philosophy

2013
ميحِ رَّ لا نمَ حْ رَّ لا الله مسب
ِ ِ
ميكِ حَ لْ ا مُ يِلعَ لْ ا تَ نَْأ كَ نَّ ِإ انَ تَ مْ َّلعَ امَ لَّ ِإ انَ َل مَ لْ عِ لَ كَ نَ احَ بْسُ اْ وُلاقَ
َّ
ميظعلا ُالله قدص
They said, "Exalted are you; we have no knowledge except what You have
taught us. Indeed, it is You who is the Knowing, the Wise.
{Al-Baqarah; 32}

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Abstract
The Adoption of E-commerce in SMEs: An Empirical Investigation in
Egypt
It is recognised widely that e-commerce can offer substantial opportunities for Small and
Medium sized Enterprises (SMEs) to compete in the global market. In developing countries,
e-commerce opportunities can be a meaningful approach for SMEs to be able to compete
with large businesses and to access, with lowest possible costs, international markets.
However, the current situation shows that SMEs continue to lag behind in maximising their
capabilities in taking these chances. Universally, they are reported to be slow adopters of
new technologies as a result of limited financial resources and lack of expertise. The
importance, of SMEs, emerged from their positions since they contributed more than 90% to
many developed or developing countries’ economies and they were considered to be the
backbone of any economy.

Hence, the main purpose, of conducting this research, was to increase the body of knowledge
about the process of the adoption of e-commerce. This was done by a primary empirical focus
on small and medium sized enterprises (SMEs) in Egypt. SMEs represented about 90% of all
Egyptian businesses (ITP, 2012). This study aimed to investigate the factors which could
influence the SMEs’ adoption of e-commerce. In order to accomplish this objective, the
researcher investigated the previous studies, on the same approach, in order to identify the
gap, within the literature, regarding the adoption of e-commerce amongst SMEs.
Additionally, the researcher integrated existing theories on the adoption of innovation in
order to develop a conceptual framework for the determinants of the adoption of e-commerce
in the SMEs sector.

The researcher reviewed the Diffusion of Innovation (DOI); Resource Based View of the
Firm (RBV); Technology–Organization–Environment (TOE) Model; and Technology
Acceptance Models (TAM) to give constructive information about the firm and decision
makers, within the firm, who were believed to have an impact on the adoption of innovation.
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The proposed model was tested using quantitative research data. The data was collected by
means of an online questionnaire survey and, subsequently, due to the high rate of non-
respondents, changed to a face-to-face survey. A total of 130 usable responses were
generated for purpose of analysis.

The study contributed to the existing research by providing valuable information about the
factors which influenced the SMEs’ adoption of e-commerce. As the results showed, there
were 6 groups of factors which impacted mainly on the adoption processes. Namely, these
were: Decision maker characteristics (education level, position within the firm, management
support, management attitude); organisational characteristics (firm activity, firm size, firm’s
assets/capital, firm age, employee’s IT knowledge, firm marketing capability); innovation
characteristics (Perceived Relative Advantage); e-readiness (Individual and organisation e-
readiness); government support; and barriers to e-commerce.

This study’s findings offered important information for Egyptian government, policy makers
and managerial participants; those were the people who encouraged the Egyptian SMEs to
adopt e-commerce. These findings could be generalised to be applied to other countries with
similar conditions to Egypt, as well as being applicable to Egyptian SMEs in other sectors.

Keywords:
E-Commerce, B2B, SMEs, Adoption, Diffusion, IT Usage

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DEDICATION

To My Mum and Dad
For love that is never exhausted by the time
For endless Kindness and no obstacle can stand in its way

To My Wife
For her sentimental Love and Endless Support

To My sons
For Inspiration to Achieve Greatness

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ACKNOWLEDGEMENTS
All my gratitude and Praise be to ALLAH who blessed me with everything.
I am thankful to everyone who has helped me in this journey to achieve this dream.
Especially, I am grateful to my principal supervisor, Dr Ian Fillis, for his endless enthusiasm,
effort and knowledge in aiding me to complete this dissertation. I would like to thank, also,
Dr Keri Davies whose wisdom and experience was greatly appreciated.
I must acknowledge, also, my brothers Hossam, Sameh, Alaa for all of the help; support;
encouragement; and prayers which they gave me along this journey. I extend my deepest
thanks to my Parents- in-law, Professor AbdAllah, and Mrs Waffa, for their prayers, support
and encouragement during my studies.
I would like to include, also, a note of thanks to my friends Mahmoud Samy, Mohamed Abd-
Allah and Mohamed Fouad, and Nick Telford for their reassurance and sharing experiences.
Thanks also go to the Egyptian Higher Education Ministry for their financial support and to
Stirling University’s Management School for their friendship; advice; and support during the
course of my study.
I extend my gratitude, also, to Zagazig University, Egypt, and especially to Professor Salah
Mansour, Professor Ibrahim Soliman and Professor Abd El Hakim Nor El-Din
Finally, I would like to express my gratitude to The International Trade Point, Egypt, and to
the CEOs/top management of SMEs in Egypt who provided a most welcome amount of
valuable data and, without whose eagerness for their work, this research would not have been
possible.

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Table of Contents
Abstract .................................................................................................................................................. 2
ACKNOWLEDGEMENTS ............................................................................................................. 5
Chapter One: Introduction to The Research ............................................................................. 14
1.0 Introduction ..................................................................................................................................... 15
1.1 Research Background and Its Importance ...................................................................................... 15
1.2 Research Problem ........................................................................................................................... 18
1.3 Research Questions ......................................................................................................................... 19
1.4 Research Objectives ........................................................................................................................ 19
1.5 Background to Egypt ...................................................................................................................... 20
1.6 Structure of the Thesis .................................................................................................................... 21
Chapter Two: Internet and E-commerce ................................................................................... 25
2.0 The Introduction .............................................................................................................................. 26
2.1 Internet Backdrop ............................................................................................................................ 26
2.1.1 History of the Internet .................................................................................................................. 27
2.1.2 Use of the Internet ........................................................................................................................ 27
2.1.3 Internet in Developed Countries .............................................................................................. 28
2.1.4 Internet in Developing Countries ............................................................................................. 29
2.1.5 Internet in Egypt ...................................................................................................................... 30
2.2 Background to E-commerce............................................................................................................ 33
2.2.1 What is E-commerce? .............................................................................................................. 34
2.2.2 The History of E-commerce ..................................................................................................... 35
2.2.2.1 Traditional Commerce ...................................................................................................... 35
2.2.2.2 E-commerce ...................................................................................................................... 36
2.2.3 The Growth of E-commerce in Developed Countries .............................................................. 38
2.2.4 The Growth of E-commerce in Developing Countries ............................................................ 39
2.2.5 E-commerce and Arab countries .............................................................................................. 40
2.2.6 E-commerce and Egypt ............................................................................................................ 41
2.3 E-commerce Types ......................................................................................................................... 42
2.3.1 Business to Consumer (B2C) ................................................................................................... 42
2.3.2 Business to Business (B2B) ..................................................................................................... 44
2.4 E-commerce Challenges and Barriers ............................................................................................. 45
2.5 Summary ......................................................................................................................................... 47

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Chapter Three: SME Adoption of Innovation .......................................................................... 49
3.0 Introduction ..................................................................................................................................... 50
3.1 SMEs ............................................................................................................................................... 50
3.2 The Decision Making Process in SMEs .......................................................................................... 54
3.3 SMEs’ Adoption of E-commerce ................................................................................................... 55
3.4 The Diffusion Of Innovation (DOI) ................................................................................................ 58
3.5 Firm Level of Innovation Adoption ................................................................................................ 58
3.6 E-commerce as an Innovation ......................................................................................................... 59
3.7 Level of Innovation Implementation ............................................................................................... 60
3.8 Factors Influencing the Adoption of E-commerce .......................................................................... 66
3.8.1 Individual characteristics ......................................................................................................... 68
3.8.2 Organisational Characteristics ................................................................................................ 70
3.8.3 Innovation Characteristics........................................................................................................ 73
3.8.4 E-Readiness.............................................................................................................................. 76
3.8.5 Government Support ................................................................................................................ 77
3.8.6 Barriers to E-commerce ........................................................................................................... 78
3.9 Perceived Benefits of Adopting E-commerce ................................................................................. 79
3.10 Gaps in Literature in Adopting E-commerce ................................................................................ 81
3.11 Summary ...................................................................................................................................... 82
Chapter Four: Theoretical Framework ...................................................................................... 83
4.0 Introduction: .................................................................................................................................... 84
4.1 Theories of Adoption of Innovation................................................................................................ 84
4.1.1 Theory of the Diffusion of Innovation (DOI) .......................................................................... 84
4.1.2 The Model of the Innovation-Decision Process ....................................................................... 86
4.1.3 Innovation Characteristics........................................................................................................ 89
4.1.4 Model of Rates of Adoption..................................................................................................... 90
4.2 Resource-Based View of the firm (RBV) ....................................................................................... 94
4.3 Theoretical Linkages and Empirical Evidence .............................................................................. 95
4.4 Technology–Organization–Environment (TOE) ........................................................................... 96
4.5 Technology Acceptance Models (TAM) ........................................................................................ 98
4.6 The Unified Theory of Acceptance and Use of Technology (UTAUT) ....................................... 101
4.7 Proposed Conceptual Model ......................................................................................................... 102
4.8 The Development of Hypotheses of the Research ....................................................................... 104
4.9 Summary ....................................................................................................................................... 106

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Chapter Five: Research Methodology ....................................................................................... 109
5.0 Introductio………………………………………………………………………………….. 109
5.1 Research philosophy ..................................................................................................................... 109
5.1.1 Positivist ................................................................................................................................. 110
5.1.2 Interpretivist ........................................................................................................................... 110
5.2 Research Methodology ................................................................................................................. 111
5.2 Research Methods ......................................................................................................................... 112
5.2.1 Qualitative Research .............................................................................................................. 113
5.2.2 Quantitative Research ............................................................................................................ 114
5.3 Qualitative and Quantitative Researches ...................................................................................... 116
5.4 The Adopted Research Methodology ........................................................................................... 118
5.5 Survey Strategies .......................................................................................................................... 119
5.5.1 Telephone Interviews ............................................................................................................. 119
5.5.2 Personal Face-to-Face Contact ............................................................................................... 120
5.5.3 Mail Survey ............................................................................................................................ 120
5.6 Chosen Data Collection Method ............................................................................................... 121
5.7 Design of Questionnaire ............................................................................................................... 123
5.8 Sampling Approach and Data Collection ...................................................................................... 124
5.9 Data collection and The Egyptian revolution ……………………….…………………………. 126
5.10 Non-Response alignment ............................................................................................................ 126
5.11 Questionnaire Contents ............................................................................................................... 127
5.11.1 Dependent Variable ............................................................................................................ 127
5.11.2 Independent Variables.......................................................................................................... 128
5.12 Summary ..................................................................................................................................... 135
Chapter Six: Research Findings ................................................................................................. 137
6.0 Contents: ................................................................................................................................... 137
6.0.1 Introduction ............................................................................................................................ 137
6.0.2 Data Collection and Analysis ................................................................................................. 138
6.1 Survey Response ........................................................................................................................... 139
6.2 Respondents Profile ...................................................................................................................... 140
6.2.1 Respondents Current Position ............................................................................................... 140
6.2.2 Respondent Age .................................................................................................................... 141
6.2.3 Respondents Gender ............................................................................................................. 141
6.2.4 Respondents Education level ................................................................................................ 142
6.2.5 Top management support ..................................................................................................... 142
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6.2.6 Top management attitude towards change ............................................................................. 143
6.3 Profile of Responding SMEs........................................................................................................ 144
6.3.1 Sector ..................................................................................................................................... 144
6.3.2 Firm Age ................................................................................................................................ 145
6.3.3 Number of Employees ........................................................................................................... 146
6.3.4 Market Orientation ................................................................................................................. 147
6.3.5 Market Destinations ............................................................................................................... 147
6.3.7 Employees IT knowledge..................................................................................................... 149
6.3.8 Marketing capability ............................................................................................................ 150
6.4 Access to International Market and E-commerce Experience ...................................................... 150
6.4.1 International Market Advertising Methods ............................................................................ 151
6.4.2 Number of Years Using e-commerce ..................................................................................... 152
6.4.3 E-commerce level ................................................................................................................ 153
6.4.4 Factors Influencing the Practise of E-commerce ................................................................... 154
6.4.5 E-commerce benefits ............................................................................................................. 155
6.4.6 E-commerce Relationship. ..................................................................................................... 157
6.4.7 E-commerce and the Performance of Firm’s Tasks. ........................................................... 158
6.4.8 Government Support .............................................................................................................. 159
6.4.9 E-readiness ........................................................................................................................... 160
6.4.10 Absence of e-commerce Strategies. ................................................................................... 161
6.4.11 Problems experienced by SMEs in International Markets. ................................................. 162
6.4.12 E-commerce limitations ...................................................................................................... 163
6.5 Multivariate Inferential Statistical Testing of Results .................................................................. 164
6.5.1 Formulating hypotheses of the study ..................................................................................... 166
6.5.2 Proposed Conceptual Model .................................................................................................. 168
6.5.3 Hypotheses Results ................................................................................................................ 170
6.6 Summary ....................................................................................................................................... 200
Chapter Seven: Discussion of Findings ..................................................................................... 202
7.0 Introduction ................................................................................................................................... 202
7.1 Analysis of the Approach .............................................................................................................. 202
7.2 Level of Adoption of E-commerce ............................................................................................... 204
7.3 Individual Factors ......................................................................................................................... 205
7.4 Organizational characteristics ....................................................................................................... 209
7.5 Characteristics of E-commerce ..................................................................................................... 213
7.6 E-readiness .................................................................................................................................... 218
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