Strategic Uses of E-Commerce by SMEs in the East of England

Pergamon European Management Journal Vol. 21, No. 1, pp. 79–88, 2003  2003 Elsevier Science Ltd. All rights reserved. Printed in Great Britain doi:10.1016/S0263-2373(02)00148-2 0263-2373/03 $30.00 + 0.00 Strategic Uses of ECommerce by SMEs in the East of England STEPHEN DREW, University of East Anglia Small- to medium-sized businesses (SMEs) are emerging as significant Internet users and like their larger counterparts increasingly adopting e-commerce. This research suggests that SMEs in different industry sectors may adopt different strategies for e-commerce and have different needs for training and support. It also explores the possibility that the Internet may not be an unmitigated blessing. It can pose both a threat and an opportunity for SME business strategies. Survey results in the eastern England region of the UK show that despite recent setbacks to the dot-com sector, SMEs are placing ecommerce at the centre of their technology and corporate strategies and plan to use the Internet as a means for achieving transformational change.  2003 Elsevier Science Ltd. All rights reserved. Keywords: E-Business, E-Commerce, SMEs, Internet, Digital business, United Kingdom Background The Internet has penetrated homes and businesses at a very rapid rate. E-Mail and the World Wide Web have proven to be phenomenal technological successes. The first e-businesses were founded in the early to mid-1990s. E-Commerce is a relatively new phenomenon with which many firms, large and small, are still grappling. The failures of high profile pioneers such as Boo.com, ValueAmerica.com, Webvan and Chemdex.com have shown ambition: technology and marketing hype are not enough on their own to launch a successful business on the Internet.1 Few purely digital firms may survive the market collapse and shakeout of the early 2000s. However, established firms whose business model is a mixture of ‘bricks-and-clicks’ stand to benefit from the experimentation and learning of early entrants and the maturing of the technologies underpinning the InterEuropean Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 net. Several observers also suggest there are major opportunities for new entrepreneurs and small- to medium-sized businesses to flourish in the maturing of e-commerce (Weintraub, 2001). Larger firms tend to grab most of the headlines in the business press and small- to medium-sized enterprises (SMEs) are often overlooked. However, in the UK 99 per cent of firms fall into this category, and a large fraction of total employment and GDP is generated by SMEs. The E.U. defines a small business as one with less than 50 employees and a mediumsized business as one with less than 250 employees and turnover of less than 40m. Surveys in several countries show that SMEs have been slower to adopt e-commerce than their larger counterparts, but the rate of Internet usage in SMEs is growing quite rapidly. For example a study (Jones and Boxall, 2000) published by the British Chambers of Commerce reported that in 1997 only 33 per cent of European SMEs used e-mail, but by 1999 this had grown to 85 per cent. Many SMEs have made innovative uses of Internet technologies to invent new business models or to enhance existing practices: ❖ FriendsReunited.com has created a successful business connecting people who attended the same schools in the UK and who subsequently lost contact. It is expanding its successful business model to a number of other countries. ❖ Maclachlans Highland Supplies (www.bagpipes2000.com) offers web-streaming audio samples of its products. Clarratts, a manufacturer of birdscaring devices, shows streaming video demonstrations (www.clarratts.com) of its latest models. ❖ Peter Beale’s Roses, a UK specialty garden supplier (www.classicroses.co.uk), has placed its catalogue online and offers a huge amount of information of interest to rose enthusiasts on its Website. 79 SMEs Research on the Use of E-Commerce by SMEs Much research into the use of e-commerce to date has been of an exploratory and qualitative nature (Drew, 2002). Interest has tended to focus on larger firms, new business models, the growth and development of dot-coms and the ‘new economy.’ SMEs in traditional industries have been slower to adopt e-commerce than their larger competitors and research into the use of the Internet by such firms is more recent. Issues that have been addressed in the SME literature to date include: ❖ Barriers to adopting the Internet (Walczuch et al., 2000). ❖ Benchmarking the use of the Internet by small companies (Webb and Sayer, 1998). ❖ The use of the e-commerce by small manufacturers in Australia (Van Beveren, 2002). ❖ Innovation and learning in small manufacturing firms adopting e-commerce (Chaston, 2001). ❖ The use of the Internet by very small firms (Dandridge, 2000). ❖ Internet and technology usage in entrepreneur-led family businesses (Davis, 2000). ❖ Strategic use of the Internet by SMEs (Sadowski, 2002). ❖ Characteristics of leaders of Internet start-ups (Colombo, 2001). ❖ E-Commerce in Irish SMEs (McDonagh, 2000). ❖ The Internet and globalization of small business (Lituchy, 2000). ❖ Adoption of E-Business in a stages model (Daniel et al., 2002). The business press and trade journals have also given coverage to many of the issues faced by SMEs in moving to e-commerce (e.g. DeZoysa, 2001; Grande, 2001; McIntosh, 2000; Nairn, 2000). Issues receiving very little attention in the research to date, and which are addressed in this investigation, include: ❖ Comparisons of e-commerce in different sectors of small- to medium-sized business. ❖ Competitive and industry pressures driving SMEs to the Internet. ❖ The nature of the opportunity presented by the Internet to different entrepreneurial businesses. ❖ Strategic plans for future use of e-commerce by SMEs. ❖ The state of Internet usage by SMEs in a significant regional economy of the UK. What can SMEs Sell or Promote on the Internet? The top categories of items sold by larger firms on the Internet include computer hardware and 80 software, airline and hotel reservations, financial services, collectibles, books, CDs and gift items. The most successful and profit-making large sites include Dell, Expedia, e∗Trade, e-Bay, Yahoo! and Amazon. However not all goods and services are suited to direct sale over the Internet. In many sectors the Web represents another channel or source of information supporting sales by other means. Few high value items such as cars are traded over the Internet, but many sites provide information of interest to car purchasers. Similarly there are many sites for real estate, but few direct purchasers of homes over the Internet. Research and anecdote suggest categories of goods selling best by SMEs are often similar to those described above. For example cursory searches of the Internet reveal many local bed and breakfasts, and inns, offering online booking services (Lituchy, 2000). A wide range of specialist local gift and specialty stores can be found on the Web (e.g. www.awickedgift.co.uk, www.main-chain.com). SMEs also sell goods and services over the Internet catering to national and regional cultural predilections. Many people in the UK are avid gardeners and a host of gardening centres on the Web serve this market. Specialist growers, such as Peter Beale’s Roses (www.classicroses.co.uk), are leveraging the Web to reach international markets. A variety of sites sell a wider range of gourmet cheeses and foods than held by the large supermarket chains (e.g. www.fromages.com, www.gourmetslair.co.uk). In some cases small businesses are using the Web to sell directly to customers rather than through traditional channels (e.g. www.martins-seafresh.co.uk). The types of goods or services that are appropriate for SMEs to sell or promote over the Internet seem to be: ❖ Rare and difficult to find items, such as collectibles or fine art. ❖ Services of local interest that can be digitized, such as B&B reservations. ❖ Products and services that appeal to a community, such as ethnic foods, antique collectors or hobbyists. ❖ Niche products and services that may have a broader geographical market, such as specialist gift items or jewellery. ❖ Products and services of entrepreneurial start-up businesses in high technology or similar sectors. ❖ Services that rely on local knowledge and relationships, such as real estate. ❖ Products or services where there is an opportunity to sell directly to the consumer, such as fresh fish or agricultural products. SMEs are characterized by diversity and one of the main difficulties of analysing or serving them is the lack of homogeneity in their activities and needs. European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 SMEs Small manufacturing businesses may be predominantly business-to-business (B2B) in their approach to e-commerce. Small service businesses may be more focused on the business-to-consumer (B2C) category. In larger firms B2B e-commerce has tended to lag B2C in the rate of implementation due to the greater technological challenges and the barriers in overcoming existing business models. Many small businesses struggle with technology and lack the necessary skills and knowledge. Other startup businesses, notably university spin-outs, have been founded to exploit opportunities presented by the growth of high technology and knowledge intensive industries. Therefore it is suggested there may be significant differences in the adoption and use of e-commerce by SMEs: Hypothesis 1 (H1). High tech and knowledge intensive SMEs will be more proactive in the use of e-commerce than other types of SME. Hypothesis 2 (H2). Manufacturing and service SMEs may differ in their strategies for e-commerce, with manufacturing firms lagging service firms in the rate of implementation. The Internet: Threat or Opportunity for SMEs? The Internet is usually presented as an opportunity for smaller firms because it helps reduce transaction costs and level the playing field (Evans and Wurster, 1997). Often-cited benefits include expanding the scope of marketing, wider and richer communications, reaching new markets, reducing the cost of operations and partnering with suppliers and other collaborators. However, a few authors (Kleindl, 2000; Steinfield and Whitten, 1999) have drawn attention to the darker side of the Internet for smaller businesses. Competitive threats may increase as the new medium allows larger firms to mimic the traditional strengths of SMEs in serving niche markets, developing customer intimacy and exploiting local knowledge. Suddenly a regional firm, which previously may have had little local competition, may be faced with new threats from across the country or the globe. The new technology may also increase competitive rivalry and the pace of competition by reducing barriers to entry and increasing the rate of product and process innovation. The situation may be compared to that of local businesses in small towns in the US when a Wal Mart opens nearby, or local hardware stores when a Home Depot arrives. In the UK large supermarket chains European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 have forced many local groceries to retrench or exit their business. It is possibly no coincidence that firms such as Wal Mart, Home Depot and Tesco are also well known for their competencies in information technology and telecommunications. In B2B e-commerce the development of large online marketplaces and auctions potentially enhances the power of large firms to squeeze the margins of smaller suppliers. Sites such as Freemarkets.com allow procurement managers of corporations to run reverse auctions whereby suppliers are forced to compete more aggressively on price and other factors with a wider universe of competitors. The degree to which a small- to medium-sized enterprise may experience the Internet as a threat or opportunity in developing business strategies will depend on industry and firm factors such as: ❖ The smaller firm’s technical and Internet knowledge. ❖ The rate at which the market is growing. ❖ The pace of innovation and change in the industry. ❖ The technical and Internet strengths of the larger competitors. ❖ The sources of competitive advantage for the smaller business. ❖ The strategic intent of the larger competitors. ❖ The structure of the industry in which the firm competes. The intensity of competition for SMEs arising from the growth of e-commerce will also be influenced by political and economic strategies of local, regional and national governments. In many countries, including the UK, governments are active in promoting the growth of entrepreneurship and in regulating competition. Hypothesis 3 (H3). The degree to which an SME experiences the Internet either as a threat or opportunity will depend on its market, industry structure and macroenvironment. Hypothesis 4 (H4). SMEs in an industry with a rapid rate of innovation and intense competitive rivalry are likely to experience the Internet as a stronger driver for strategic change than SMEs in other types of industries. Issues for SMEs It is no longer an option for most SMEs to ignore the Internet and take a ‘wait and see’ attitude. The costs of access and launching a simple website have declined to levels where these no longer present barriers to e-commerce. A large percentage of the customers of SMEs are online and the Internet has penetrated a significant number of households in countries such as the UK. The growth of B2B e-commerce and the move towards digital government is 81 SMEs forcing many suppliers to large firms and governments to venture onto the Internet. The issues of interest to entrepreneurs in SMEs include the following: ❖ What are the competition and business partners doing about e-commerce? ❖ Does e-commerce represent a significant opportunity for the business? ❖ What are the benefits to be expected? ❖ What will be the pace of development and impacts of new technologies such as broadband and 3G? ❖ What resources are needed to trade on the Internet? ❖ How can the firm best launch and manage an ecommerce operation? ❖ What significant barriers need to be overcome? ❖ Where are the risks in e-commerce and how can these be managed? ❖ Where is help available to acquire the necessary skills and resources? The research described in this article was aimed at exploring these issues within an important local region of the UK. A questionnaire was designed to measure the degree to which SMEs have adopted various Internet technologies, the uses and benefits of e-business, barriers to e-business, and driving forces to conducting business on the Internet. A sample of 200 firms was identified which (i) had established active websites, (ii) appeared to be conducting e-business to some degree, (iii) fit the UK definition of an SME and (iv) were independent rather than the subsidiary or branch of another entity. More details of the survey and methodology can be found in the Appendix. An online business directory (www.countyweb.com) was used, nevertheless some difficulty was experienced in drawing up a larger sample size due to the requirements listed above. The survey was conducted by a professional firm of telephone interviewers under the guidance of the author. This approach was adopted for reasons of efficiency and to raise the response rate from a limited sample size. The telephone interviewers also aimed to ensure that questions were answered as completely as possible. Full interviews were obtained with 50 individuals representing a response rate of 25 per cent. There was no reason to suspect bias due to non-response, as discussed in the Appendix. All interviews were completed within four weeks of Spring 2002. Scores were compiled according to a Likert-style scale. Research Scope and Approach Investigation was restricted to SMEs in the east of England region of the UK. This includes the counties of Essex, Cambridgeshire, Norfolk and Suffolk, with a population of 5.5 million out of a national total of approximately 59.5 million people. Characteristics of the regional economy are: ❖ ❖ ❖ ❖ £178bn. in annual economic activity Home to over 1500 overseas-owned businesses Strong manufacturing and services sectors European leadership in biotechnology and information technology ❖ UK leadership in research and development ❖ Four international airports and seaports. (Source: www.investeastofengland.com). A survey approach was adopted to investigate the strategic use of e-business by SMEs in the region. The activities of such SMEs are quite diverse, reflecting the economic characteristics of each county. Cambridgeshire has a dynamic and fast growing economy with a cluster of advanced high technology and biotechnology businesses around the University of Cambridge Science Parks. Essex contains a broad range of businesses that benefit from proximity to London and good transportation links. Norfolk and Suffolk are less industrial. Small to mid-sized businesses in those counties have traditionally served the retail, agricultural, leisure and tourism industries. 82 Classification of Firms The firms in the sample were assigned to one of three broad categories: manufacturing (MFG), services (SER), and high technology/knowledge intensive (HITECH). This threefold scheme was chosen for reasons of simplicity and in recognition of the limited sample size. The classification in each instance was based on self-identification of the firm, either by name or the activities described on the website. Businesses in the manufacturing category (40 per cent) were representative of traditional industries such as plastics, machinery, paper, windows, chemicals, kitchen fittings, ceramics and flooring. Firms engaged in agriculture and related activities (such as garden centres) were relatively few in number and assigned to the manufacturing category for simplicity. Firms in the services category (36.5 per cent) were typically drawn from sectors such as environmental management, hospitality, transportation, logistics, real estate, retailing, publishing, consulting, and car sales. The high tech/knowledge intensive sector (23.5 per cent) included businesses that appeared to be engaged in ‘new economy’ activities such as software development, Internet consulting, telecommuniEuropean Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 SMEs Figure 1 Importance of Internet Technologies cations, biotechnology, precision engineering, optoelectronics, research, and educational publishing. Many of these firms were located in the Cambridge Science Parks or the Cambridge region. Analysis of Results Use of Internet Technologies The high-tech/knowledge intensive (HITECH) firms were notably more sophisticated in their use of Internet technologies, with the possible exception of sales and marketing (Figure 1). In particular they attached much more importance to the use of the Web for recruitment, procurement (supply chain management), and internal communications (Intranets) than either the manufacturing (MFG) or service sector (SER) firms. There did not appear to be a significant difference between the practices of MFG and SER firms, and all categories of firms attached very high importance to the use of e-mail. Impacts of Internet Technologies HITECH firms experienced the greatest impacts of Internet technologies across all areas of the business. Change was perceived as being transformational in nature. The Internet helped such firms increase sales, reduce costs, streamline operations, and improve communications with business partners (Figure 2). There appeared little significant difference between the impacts of the Internet on MFG and SER firms. However, SER firms noted slightly more impact on improving customer service and MFG firms relatively more impact in reducing the costs of operations. These differences are to be expected given the nature of service and manufacturing firms. Driving Forces for E-Commerce HITECH firms again were notably more affected by Internet technologies than other types of firms. All categories of strategic forces arising from e-commerce appeared to have proportionately greater influence Figure 2 Impacts of Internet Technologies on the Business European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 83 SMEs Figure 3 Driving Forces for Adoption of E-Commerce on the actions of HITECH firms (Figure 3). The most important driving forces were industry changes and trends, opportunities for growth and the need to keep up with competition. The threat posed by larger competitors was also highly ranked. There appeared little significant difference again between the SER and MFG firms, however the SER firms ranked six out of nine strategic forces slightly higher than their MFG counterparts. 2.5 in importance on a 5-point scale. Lack of knowledge about e-commerce was the second highest barrier, followed by insufficient funding. All three categories of firms, MFG, SER and HITECH appeared to rate the significance of barriers about equally. These findings might suggest that SMEs are unlikely to hold back their involvement in e-business in the future due to major internal or environmental barriers. Barriers to Doing Business on the Internet Management of E-Business Ventures There are a number of potential barriers for SMEs conducting business on the Internet. Technical factors such as access to broadband (ADSL or ISDN) and application of appropriate e-business software could present difficulties to some firms. However, access to simple dial up connections and website hosting is widespread. Therefore this study focused on the barriers arising from organizational and environmental factors, such as risk aversion, resistance to change, lack of resources or lack of the necessary skills. As shown in Figure 4, all such barriers were perceived as being relatively low in significance. The highest barrier for all categories of firms was lack of technical skills, but even this was rated on average less than Firms can go about organizing for e-business in different ways. They may decide to employ a consultant and outsource their operations to one of the major solution providers. An alternative would be to develop a proprietary website and e-commerce facilities using internal skills and resources. Figure 5 shows the proportion of firms employing a number of different approaches, including ‘going it alone,’ joint ventures and outsourcing. An example of a joint venture would be for a retailer to set up a website on a so-called ‘cybermall’ with a number of other firms. The majority of firms appeared to favour using and extending their own operations, with a smaller percentage (Mostly SER firms) engaging in some Figure 4 Barriers to Doing Business on the Internet 84 European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 SMEs Figure 5 Management of E-Business Ventures in the Firm form of subcontracting. It is instructive to speculate on the reasons for favouring ‘going it alone,’ since this approach might present significant costs and time commitment. Possibly firms feel that the costs are outweighed by the potential advantages of developing proprietary organizational learning and new competencies. Chaston (2001) has noted that SMEs engaged in e-commerce are more likely to adopt a double-loop form of organizational learning which can lead to new core competencies and competitive advantages. Key Management Issues To put plans for e-commerce into context, firms were asked to rate the importance of a number of strategic initiatives as shown in Figure 7. This indicates that all types of SME are concerned with growth and making changes to marketing, product quality and process efficiencies. There appeared no major differences in these priorities for different types of firms. However, it was interesting that in all issues examined, MFG firms placed highest priority on making change, followed by HITECH firms and then SER firms. Future Plans for E-Business More firms agreed with the statement that e-business will be a transformational force for change rather than leading to incremental changes. HITECH SMEs in particular saw the Internet as supporting major future growth thrusts. All firms tended to believe that the Internet would be central to business strategy, although the average score of about 3 on the 5point scale also hinted that other business priorities would come into play. The implication for strategy makers and policy advisors is that e-business is becoming a mainstream part of business planning in many SMEs (Figure 6). Conclusions This research has thrown some light onto the strategies for e-commerce being adopted by different types of small- to medium-sized businesses in an important region of the UK. A consistent pattern of differences is emerging. SMEs in the high technology and knowledge intensive sectors are notably advanced in the adoption and use of the Internet in their businesses, thus vindicating the proposition stated in the first research hypothesis (H1). This has implications for policy makers and advisors to SMEs Figure 6 Future Plans for E-Business European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 85 SMEs Figure 7 Key Management Issues in formulating strategies for supporting such firms. The needs of firms in different sectors appear not to be homogeneous and programmes directed at SMEs may need to be adapted to the industry sector to some degree. with 3.6 on a 5-point scale, and threat with 3.4 on a 5-point scale. The SER and MFG firms rated the Internet as a threat to a lower degree (2.6–2.8 on a 5point scale). The characteristics of the three types of firms sampled (manufacturing, service and high tech/knowledge intensive) are shown in Table 1. It appears that the HITECH SMEs are indeed effective in creating significant employment and in adding economic value, confirming the importance of the sector for regional growth. Finally, it is notable that all types of SME appear to recognize the transformational nature of e-commerce in their strategic thinking and future plans. The results show that the Internet is likely to be a central component of business strategy and growth thrusts in many such firms. Although there has been an adjustment in perceptions as a result of the market corrections and dot-com failures of the early 2000s, the future plans of SMEs discovered in this study suggest that there is now a healthy realism as to the potential benefits of e-commerce and the likely commitments required. Little evidence of systematic differences between service and manufacturing firms has emerged, thus providing an inconclusive answer to the proposition stated in the second hypothesis (H2). This is not to say that further research may not uncover some significant differences in the way in which SER and MFG firms might best exploit e-commerce, and there is an a priori case to be made for relating potential improvements in business processes and practices to the nature and activities of the firm. It has been argued the Internet may on occasion represent a threat to SMEs in that it may facilitate the entry of new and larger competitors to local domains by reducing barriers to entry. In this research it has been shown the HITECH firms tended to view the Internet much more significantly as a force for change - both an opportunity and threat — than other types of firm. Therefore the propositions advanced in the third and fourth hypotheses (H3 and H4) could be plausibly defended in the case of the HITECH firms, who rated the Internet as opportunity Table 1 All firms MFG firms Number of firms Average sales (£m) Average employees 86 50 13.8 139 19 14.1 144 SER firms 19 12.7 95 HITECH firms 12 15.0 199.8 Specific suggestions that follow from the work described here are the following: 1. Training in Internet technologies and e-commerce should be a key component of courses and programmes directed at new entrepreneurs across all sectors of business. For example, the School of Management of the University of East Anglia delivers such courses for the UK New Entrepreneurs Scholarship scheme. 2. Hi-technology and knowledge intensive SMEs might benefit from programmes targeted to their unique needs, perhaps building on the emerging experiences of best practices and successful case studies. 3. SMEs need tailored advice on e-commerce strategy and appropriate business models for trading on the Internet. Whilst the Internet represents a positive transformational force for strategic change, it can also be a particularly disruptive technology for SMEs, quickly changing industry boundaries and facilitating new forms of strategic challenge and threat. European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 SMEs Appendix: Research Methodology Sample Firm addresses and details were obtained from an online business directory (www.countyweb.com) that claims to include listings for 2.45 million UK firms in 52 counties. The Small Business Service of the UK estimated that there were 3.7 million active businesses in the UK at the start of the year 2000 (www.sbs.gov.uk) of which some 99.8 per cent were small- or medium sized enterprises (SMEs). A sample of 200 businesses in the East of England was selected. This region includes the counties of Norfolk, Suffolk, Cambridgeshire and Essex. Businesses were only chosen that had a live website at the time of the investigation, and that fitted the UK definition of an SME with fewer than 250 employees and less than £25m in sales. Firms were excluded which appeared to be subsidiaries or branches of a larger entity in the region or elsewhere. Structured telephone interviews were conducted with the manager responsible for e-business strategy of 50 of these firms (25 per cent response). The firms employed an average of 139 people and reported an average of £13.8m in sales. Industry characteristics of the sample and of those firms interviewed are as shown below. There appeared to be no reason to suspect significant non-respondent bias. Sample of 200 firms (%) Manufacturing 40 Services 36.5 High23.5 tech/knowledge intensive 50 firms interviewed (%) 38 38 24 Questionnaire A 47-item questionnaire was designed to address the following topics: 1. Current use of Internet and Web applications in the firm, including e-mail, website, intranet and extranet. 2. Impacts of Internet technologies on the business to date on areas such as sales, operations, business processes and communications. 3. Driving forces behind the efforts in e-business to date, including competitive pressures, opportunities for expansion, pressures from trading partners and suppliers. 4. Major barriers to the use of the Internet in busiEuropean Management Journal Vol. 21, No. 1, pp. 79–88, February 2003 ness, including lack of knowledge, funds, technical factors, culture and risk aversion. 5. Management of e-business ventures in the company, including use of contractors and outsourcing. 6. Future plans for e-business for new products, processes or business models. 7. Strategic directions of the firm for growth, cost reduction, quality improvement and opening new markets. Questions were of closed form and scored on a Likert scale. Space was provided to invite optional openended commentary. The questionnaire was reviewed by survey design experts at the University of East Anglia and at the firm of telephone interviewers employed. It was then was pre-tested on a sample of five of the firms in the sample and several adjustments made before administration. Copies of the questionnaire may be obtained from the author on request. Note 1. The difficulties experienced by dot-com pioneers in the early phase of e-commerce arose from (i) wildly optimistic forecasts, (ii) unclear business models and strategic plans, (iii) poor financial controls, (iv) inexperienced management, (v) unproven technology, (vi) uncritical investor ‘exuberance,’ and (vii) poor — in some cases criminally negligent — leadership and governance. References Chaston, I. (2001) The Internet and e-commerce: an opportunity to examine organisational learning in progress in small manufacturing firms? International Small Business Journal 19(2), 13–30. Colombo, M.G. (2001) Technology-based entrepreneurs: does internet make a difference? Small Business Economics 16(3), 177–190. Dandridge, T. (2000) High-tech potential? An exploratory study of very small firms’ usage of the internet. International Small Business Journal 18(2), 81–91. Daniel, E., Wilson, H. and Myers, A. (2002) Adoption of Ecommerce by SMEs in the UK: towards a stage model. International Small Business Journal 20(3), 253–270. Davis, P.S. (2000) Internationalization and organizational growth: the impact of internet usage and technology involvement among entrepreneur-led family businesses. Family Business Review 13(2), 107–120. DeZoysa, S. (2001) SMEs — not just a number. Telecommunications 35(10), 27–30. Drew, S.A.W. (2002) E-Business research practice: towards an agenda. Electronic Journal on Business Research Methods 1(1). Evans, P.B. and Wurster, B.S. (1997) Strategy and the new economics of information. Harvard Business Review 75(5), 70–83. Grande, C. (2001) Seizing e-mail’s lifeline: SMEs and e-commerce. Financial Times 15 April, p. 15. Jones, T. and Boxall, J. (2000) Europe, Small business and ecommerce. http://www.chamberonline.co.uk/cmn/viewdoc.jsp?cat= all&ct=research&docid=BEL1—Research—0000000765, accessed September 4, 2002. 87 SMEs Kleindl, B. (2000) Competitive dynamics and new business models for SMEs in the virtual marketplace. Journal of Developmental Entrepreneurship 5(1), 73–85. Lituchy, T.R. (2000) Bed and breakfasts, small inns, and the internet: the impact of technology on the globalization of small businesses. Journal of International Marketing 8(2), 86–97. McDonagh, P. (2000) Euroclicking and the Irish SME: prepared for e-commerce and the single currency? Irish Marketing Review 13(1), 21–33. McIntosh, N. (2000) Small business solutions: jargon-buster: signing up for the e-revolution. The Guardian 30 November, p. 5. Nairn, G. (2000) Fragmentation hinders the sector’s growth: small- and medium-sized enterprises. Financial Times 18 October, p. 11. Sadowski, B.M. (2002) Strategic use of the internet by smalland medium-sized companies: an exploratory study. Information Economics and Policy 14(1), 75–93. Steinfield, C. and Whitten, P. (1999) Community level socioeconomic impacts of electronic commerce. Journal of Computer Mediated Communication 5(2), online at: http://www.ascusc.org/jcmc/vol5/issue2/steinfield.html Van Beveren, J. (2002) The use of electronic commerce by SMEs in Victoria, Australia. Journal of Small Business Management 40(3), 250–253. Walczuch, R., Van Braven, G. and Lundgren, H. (2000) Internet adoption barriers for small firms in The Netherlands. European Management Journal 18(5), 561–572. Webb, B. and Sayer, R. (1998) Benchmarking small companies on the internet. Long Range Planning 31(6), 815–827. Weintraub, A. (2001) The mini-dots; small, frugal, and unflashy, they are making money where the big guys couldn’t. Business Week 19 March, pp. EB44-EB48. 88 STEPHEN DREW, School of Management, University of East Anglia, Norwich NR4 7TJ, UK. E-mail: [email protected] Stephen Drew is Professor and Deputy Dean at the University of East Anglia School of Management. He is also Associate Faculty Member of Henley Management College where he directs a number of programmes and supervises DBA research. European Management Journal Vol. 21, No. 1, pp. 79–88, February 2003