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The factors affecting e-commerce adoption by Jordanian SMEs

Anas A. Al-Bakri Marios I. Katsioloudes
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To cite this document:
Anas A. Al-Bakri Marios I. Katsioloudes , (2015)," The factors affecting e-commerce adoption by
Jordanian SMEs ", Management Research Review, Vol. 38 Iss 7 pp. 726 - 749
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MRR
38,7
The factors affecting
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e-commerce adoption by
Jordanian SMEs
726 Anas A. Al-Bakri and Marios I. Katsioloudes
Department of Management and Marketing,
Received 24 December 2013
Revised 23 March 2014
College of Business and Economics, Qatar University, Doha, Qatar
2 August 2014
Accepted 3 August 2014

Abstract
Purpose – This paper aims to explore internal and external organizational factors affecting electronic
commerce or e-commerce systems adoption by small- and medium-sized enterprises (SMEs) in Jordan.
Design/methodology/approach – The authors developed a model containing factors that might
support e-commerce adoption. The model was tested using confirmatory factor analysis and then used
to explore the relationships between factors. The authors used qualitative and quantitative approaches,
including interviews, to explore awareness and adoption of e-commerce systems by Jordanian SMEs.
SMEs in Jordan were identified from the Annual Handbook Index of 2012, compiled by the Jordanian
Chamber of Commerce, and 500 in the industrial and services sectors were randomly selected as the
study sample.
Findings – The effect of the adoption of e-commerce systems by SMEs is affected by both internal and
external organizational factors, particularly readiness, strategy, managers’ perceptions and external
pressure by trading partners. Readiness and external pressure are most important for achieving
maximum benefit from e-commerce adoption.
Research limitations/implications – The relative importance of factors affecting e-commerce
adoption may vary depending on local business conditions. SME managers in Jordan who wish to
benefit from e-commerce introduction must therefore invest in activities to improve SME readiness,
especially information technology infrastructure.
Originality/value – This study is the first to explore both internal and external organizational factors
important for e-commerce adoption by Jordanian SMEs. It tells SME managers which factors are likely
to affect e-commerce adoption.
Keywords Small- and medium-sized enterprises, Electronic commerce, Organizational factors
Paper type Research paper

Introduction
Electronic commerce (EC) or e-commerce systems use the latest tools for automating and
streamlining the flow of transactions between companies and individuals, for example
letters, inquiries, payments and delivery notes. EC systems transfer information
between computer systems and enable users to integrate their functions, activities and
procedures with unprecedented accuracy and speed. EC systems can be divided into two
levels (Sahawneh, 2005). The simplest level covers the promotion and advertising of
products and services, and electronic distribution of goods. The advanced level includes
Management Research Review payment and distribution at local and global levels.
Vol. 38 No. 7, 2015
pp. 726-749
The Economist Intelligence Unit (2010) reported that Jordan was ranked 54th out of
© Emerald Group Publishing Limited
2040-8269
68 worldwide in its information technology (IT) and information systems (IS) readiness
DOI 10.1108/MRR-12-2013-0291 rankings. This indicates that Jordanian enterprises may meet many of the conditions
 required to conduct EC systems initiatives, although improvement and research are Factors
needed to create an environment more conducive to EC. This research will contribute to affecting
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a better understanding of EC systems between small- and medium-sized enterprises e-commerce

(SMEs) and their trading partners (TPs) in Jordan. We identified the importance of
various internal and external factors to measure the extent of EC system adoption.
adoption
The internal organizational factors were SMEs’ EC strategy and the perceptions and
experience of managers in adopting EC systems. The external factors were the readiness 727
of local and global TPs to adopt EC systems, and the external pressure by local and
global TPs who adopt EC systems, including the infrastructure, network availability
and online transactions. There are five primary economic sectors in Jordan: industrial,
services, trade, agriculture and construction. We focused on the industrial and services
sectors because most SMEs in Jordan and, particularly in its capital, Amman are in these
sectors.
This research is concerned with SMEs because most enterprises in Jordan, and
especially in Amman, are small (Department of Statistics in Jordan, 2012a). The
Department of Statistics classifies an enterprise with less than five employees, as small,
while those with 5 to 19 employees are classified as medium (Department of Statistics in
Jordan, 2012b). The industrial sector contributes about 20 per cent of Jordanian gross
domestic product and the service sector 18 per cent (Ministry of Industry and Trade in
Jordan, 2012). In Jordan, 88.2 per cent of workers in SMEs are employed in one of these
two sectors (Ministry of Industry and Trade in Jordan, 2012; Department of Statistics in
Jordan, 2012d).
In 2012, there were 135,585 small enterprises in the two sectors, of which 94,909 were
in the service sector and 40,676 were industrial. There were 6,780 medium enterprises in
the two sectors, with 2,550 service-based and 4,230 industrial enterprises (Department of
Statistics in Jordan, 2012c).

Importance and contribution of this study

Today, more than ever, the performance of enterprises, especially SMEs, depends on
access to accurate and up-to-date information, especially data flow between them and
their TPs. This suggests that the adoption of EC systems may be affected by many
factors, both internal and external. To our knowledge, there has to date been no
systematic examination of the factors that affect EC system adoption in SMEs in Jordan
in the industrial and service sectors. This study is therefore important because SME
managers in Jordan need to know the internal and external factors that may affect their
EC adoption, which have not previously been simultaneously tested in the same model.

Objectives
We aimed to explore the perceptions of SME managers in Jordan about the adoption of
EC systems, by asking:
(1) What is the current state of adoption and accomplishment of EC systems in
selected SMEs in Jordan?
(2) What are the factors that encourage or limit the adoption of EC systems in SMEs
in Jordan?
 MRR EC systems in Jordan
38,7 Studies such as Sahawneh (2005) and Titi (2005) show that information and
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communication technology (ICT) is widely used in education and training development

in Jordan. The Jordanian Government has also realized the importance of education in
developing IT and IS and mandated fundamental reforms to introduce computer-based
education in public and private schools (Turban et al., 2004). It has taken clear measures
728 toward adopting EC applications and Internet awareness, agreeing on directions to
make computer education a principal part in elementary schools (Department of
Statistics in Jordan, 2012b). We used a definition of EC systems from Zwass (2003, p. 8;
1996, p. 3):
The sharing of business information, maintaining of business relationships and conducting of
business transactions with local and global business TPs with telecommunication networks.

SMEs in Jordan
Several studies Kartiwi and MacGregor (2007) suggest that SMEs share strong owner
influence, central power, lack of specialist staff, small management team,
multifunctional management, unwillingness to take risks, low employee turnover, lack
of some necessary expertise and avoidance of sophisticated software or IT applications.

Literature review
Urwin (2000) suggested that the Internet and EC systems can help SMEs get the right
flow of information. Engsbo et al. (2001) developed a framework of EC system adoption
in SMEs that focuses on the relative power of the participants in a network and the
product involved in the exchange. The Internet is becoming more common in
communications and transactions between enterprises and TPs. Many transactions
now tend to be Web-based, including inventory queries, invoices, order placement and
market research (Sahawneh, 2002, 2005). According to Kim et al. (2006), the adoption of
EC systems is expected to result in a reduction in transaction costs. They are used by
enterprise managers to enhance productivity and to increase the enterprise’s
performance by creating a knowledge-based economy and improving educational
outputs.

Use of EC systems in SMEs in Jordan

SMEs may use EC systems to collect information about buying and selling, to provide
information about products and services and to provide help and support to TPs. A
report by the Arab Advisors Group (2012) based on a survey of almost 5 per cent of
Jordan’s SMEs showed a satisfactory level of adoption of EC systems. However, the
report also noted that Jordanian SMEs needed more awareness of IT adoption that could
better restructure their functions and activities with TPs (Arab Advisor Press Room,
2012). Recent studies in Irbid, a northern city in Jordan, showed that ICT and IS,
including business-to-business (B2B), business-to-customers (B2C), government-to-
business (G2B) and EC systems, were a dynamic value-added aspect of the economy and
played an important role in driving major economic sectors in Jordan (Sahawneh, 2005;
Titi, 2005).
The Jordanian Government suggested in 2012 that to increase e-commerce,
enterprises needed to train staff and increase the number of staff working on EC
systems. Awareness campaigns for businesses, especially SMEs, would also be helpful
 (Ministry of Information and Communication Technology in Jordan, 2012). It set Factors
ambitious plans to stimulate EC systems in SMEs. It also developed a legal framework affecting
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and national body to promote EC systems and encourages enterprises to engage in this e-commerce
area as well as providing technical support. However, there are many potential barriers
that could limit the adoption of EC systems in Jordan, such as privacy and security adoption
issues, skills and expertise, readiness of customers and suppliers, legal and regulatory
environment, infrastructure, business strategies, cost and awareness and knowledge 729
(Sahawneh, 2005; Titi, 2005).
The level of IS and IT sophistication and organizational readiness has often been
identified as a predictor of successful Internet electronic data interchange (I-EDI) system
adoption (Al-Bakri, 2007). Top management support, pressure from competitors,
knowledge and particularly chance factors are the primary reasons that most large
enterprises in Jordan use I-EDI systems (Venkatesh et al., 2003).
The adoption of electronic tools in business became a governmental target to make it
possible for SMEs to continue to achieve success (Al-Bakri et al., 2010). Most Jordanian
SMEs have little or no competitive pressure to use EC systems, as most suppliers,
customers and other competitors do not promote their use.

The factors influencing EC system adoption

Many enterprises in Jordan engage in activities such as selling, buying and exchanging
information with TPs and suppliers online (Abu-Samaha and Abdelsamad, 2007).
However, small enterprises are yet to optimize ICT because of obstacles such as lack of
knowledge, limited awareness and low levels of Internet penetration in business (Titi,
2005). Noting that nine years may have changed the picture considerably in Jordan,
Jordan was ranked sixth in the Middle East and Africa in ICT infrastructure,
connectivity, e-leadership, information security and e-business in 2012 (Ministry of
Information and Communication Technology in Jordan 2012). Jordan is witnessing a
rapid increase in online transactions, especially in the SME sector (ESCWA, 2012).
However, Al-Somali et al. (2011) concluded from a study in Saudi Arabia that the level of
EC adoption in the region has yet to mature, and customer readiness for Internet
shopping must improve before EC systems reach the higher levels of maturity seen in
other regions of the world. It is likely that many factors are important to ensure the
success of EC systems adoption in the Middle East. These include enterprise strategy,
culture, enterprise readiness, ICT infrastructure, economic developments and global
networks (Al-Somali et al., 2011; Al-Otaibi, 2013).
Venkatesh et al. (2012) and Wixom and Todd (2005) identified additional factors that
influence the perception and intention of enterprise managers to adopt new IT and IS.
The diffusion of innovation (DOI) model suggests five factors: relative advantage,
compatibility, trialability, observability and complexity (Rogers, 1995, 2003). Bradford
and Florin (2003) used Rogers’ model and asserted that the three major factors affecting
the adoption of innovation are technical compatibility, technical complexity and relative
advantage.
In understanding the adoption of EC systems by SMEs, it is important to look at the
factors that influence it (Chitura et al., 2008). The crucial internal factors are considered
to be the experience of SMEs in EC systems and the extent the enterprise feels ready to
adopt EC systems (Kartiwi and MacGregor, 2007).
 MRR Previous studies, such as Chitura et al. (2008) and Kartiwi and MacGregor (2007)
38,7 recognized that the support of top management, experience of enterprise managers and
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knowledge and awareness of enterprise managers about EC systems were critical

internal organizational factors. They also noted that the size of the enterprise might be
relevant. The level of IS and IT sophistication and readiness of local and global TPs
have been identified as external pressure factors.
730
Theoretical framework
Technology acceptance model
The original version of the technology acceptance model (TAM) is an adaptation
of the theory of reasoned action (TRA) to the field of IT and IS adoption (Al-Jabri and
Sohail, 2012). Both have strong behavioral elements and assume that when someone
forms an intention to act, they will be free to act without limitation. Previous researchers
have simplified TAM by removing the attitude construct found in TRA from the
specification (Al-Jabri and Sohail, 2012; Venkatesh et al., 2012). Figure 1 represents the
TAM model for IT and IS adoption in the enterprise.
Davis (1986, 1989) found that TAM posits two variables, perceived usefulness and
perceived ease of use, which decide an individual’s intention to use a system, with
intention to use mediating actual use. Other researchers introduced additional factors,
such as social and cultural factors and perceived credibility, that influence the
perception and intention of enterprise managers to adopt new IT and IS (Wixom and
Todd, 2005; Al-Jabri and Sohail, 2012; Venkatesh et al., 2012). Iacovou et al. (1995) found
the major factors that influence the adoption of IT and IS in small enterprises are
perceived benefits, organizational readiness and external pressure by TPs. We therefore
used these three factors. Al-Jabri and Sohail (2012) found that the observability of
systems by users, their compatibility with other technologies and the advantages that
they offer significantly influence their adoption. Iacovou et al. (1995) concluded that IS
adoption by an SME changes the way it does business.
Our research therefore uses specific factors from TAM and DOI theories, especially
perceived usefulness, perceived ease of use, technical compatibility, technical
complexity and relative advantage, to study the internal and external factors that
influence the adoption of EC systems in SMEs in Jordan. These include enterprise
characteristics, experience and perceptions of managers, readiness and external
pressure by local and global TPs. Figure 2 shows these factors.

Perceived
Usefulness

Behavioral Actual System

Intention to Use Use
Perceived Ease
Figure 1.
of Use
Technology
acceptance model
(TAM) Source: Venkatesh et al., (2003)
 Organisaonal Factors
Perceived Benefits External Pressure
affecting
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Readiness
e-commerce
adoption
IT and IS
Adopon
731

Figure 2.
Technology Impact Factors influencing
IT and IS adoption in
Source: Iacovou et al. (1995) SMEs

Proposed research model

Our model draws on various factors that might contribute to EC system adoption in
SMEs in Jordan (Iacovou et al., 1995; Bradford and Florin, 2003; Venkatesh et al., 2003)
to study the factors that influence the adoption of EC systems in SMEs in Jordan. We
used structural equation model (SEM) (Kline, 2005) and also tested the proposed
research model using confirmatory factor analysis (CFA) (Moore, 2004). Figure 3 shows
the proposed research model, which includes the four factors described in Table I.

Methodology
Development of study hypotheses
The literature suggested that the two main internal organizational factors influencing
adoption of EC systems were:
(1) The SME’s e-commerce strategy: This was measured by the enterprise’s ICT
infrastructure, use and trust of EC systems and size.

External Organisational
Factors

Extent of ECSystems

Internal Organisational Figure 3.

Factors Proposed research
model
 MRR (2) The perceptions and experience of SME managers in EC systems were measured
38,7 by the knowledge and awareness of SME managers of IT and IS, and the IT
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skills of managers and staff.

The two external organizational factors are:

(1) The readiness of local and global TPs to adopt EC systems: Enterprise readiness
732 includes both financial and technological readiness. Financial readiness is the
availability of financial resources to pay for EC system adoption costs, use of
subsequent enhancement and continuing expenses such as communications
charges and usage fees. Iacovou et al. (1995) noted that SMEs often lack the
financial resources necessary for EC systems and other IT investments.
Technological readiness is the level of IT usage and management in an
enterprise. Iacovou et al. (1995) noted that the low computerization level in SMEs
makes using sophisticated IT and IS applications difficult. SMEs with
computerized processes were better prepared for EC.
(2) The external pressure from local and global TPs and competitors to adopt EC
systems: As more TPs adopt EC systems, SMEs would be more inclined to do so
too, to maintain their competitive position.

The following hypotheses are therefore proposed:

H1. There is no relationship between internal organizational factors and the
adoption of EC systems in SMEs in Jordan.
H2. There is no relationship between external organizational factors and the
adoption of EC systems in SMEs in Jordan.

Study approaches
To gain a deeper understanding of EC system adoption in the Jordanian context, we
used both qualitative and quantitative approaches, including interviews, to explore the
awareness and adoption of EC systems in SMEs in Jordan. Interviews are the preferred
methodological tool in qualitative research, used chiefly to gain insights from the
respondents. During the interviews, participants were encouraged to describe their
perspectives and explain their perceptions about issues of interest. The recorded
information from ten interviews was coded and classified for qualitative analysis. The
findings were used to refine and further develop the constructs, to identify the factors
and questionnaire items that were most relevant to SMEs in Jordan. Hence, in this study,
quantitative methods were used to complement and validate the constructs developed
and redefined through qualitative methods.

Variables Factors

Internal organizational factors SMEs’ strategic in practicing EC systems

The perception of SME managers in EC systems
Table I. External organizational factors Readiness of local and global TPs
Factors descriptions External pressure by local and global TPs
of proposed research
model Source: Developed for this study
 To develop multi-item measurement scales, we defined the theoretical constructs, then Factors
generated a list of items and factors from literature and the qualitative research relating affecting
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to these constructs. We refined the measures using exploratory factor analysis,

supplemented with CFA. Data coding and analysis used various quantitative statistical
e-commerce
methods such as factor analysis, t-test, analysis of variance and correlation. SEM was adoption
used to examine the hypothesized relationships between factors and identify which
were lower and higher influences (Moore, 2004). SPSS v20 was used for all analyses. 733
Sample
A sample of ten SMEs in Amman was selected, from a list provided by the Jordanian
annual handbook index (AHI), based on 2012 data. They all had up to three years’
experience of using EC systems and had begun selling over the Internet in the previous
year. Ten face-to-face interviews were conducted in June and July 2013. Telephone
contact was made with the SME managers to request a 30-minute appointment to
complete the interview questions. Additional information collected during the first
contact included the name and titles of each SME manager and potential respondents.
Table II shows details of these enterprises.
We then chose a stratified random sample of 500 SMEs in Jordan in the industrial and
services sectors, because this covered the majority of SMEs in Jordan and, particularly,
in Amman. We selected the sample from the Annual Handbook Index of 2012, compiled
by the Jordanian Chamber of Commerce (Ministry of Industry and Trade in Jordan,
2012). The sample included four groups classified in Table III.

Enterprise No. of
(E) Size Sector Description employees

E1 Small Industrial Established in 1997 and adopted business-to- 4

business (B2B) systems since three years to deal
with its local and global TPs and suppliers
E2 Medium Industrial Established in 1999 and adopted B2B systems since 13
three years
E3 Medium Services Started activities in 2001 and adopted the B2B 8
systems in 2006. Software and hardware system
servicing
E4 Small Services Established in 2003 and adopted the B2B systems 3
in 2007
E5 Small Services Established in 1996 and adopted B2B systems in 4
2006
E6 Medium Industrial Established in 1994 and adopted B2B systems in 18
2006 pharmaceutical distributor
E7 Medium Services Established in 2004 and adopted B2B systems in 9
2007
E8 Small Industrial Established in 2001 and adopted B2B systems in 4
2006. Distributor of furniture, kitchens and doors
E9 Small Services Established in 1997 and adopted B2B systems in 4
2005. Family-owned business, middlemen in the
textile business Table II.
E10 Medium Services Established 1991 and adopted B2B systems in 2006, 18 Descriptions of the
producer and seller of textiles sample SMEs
 MRR Questionnaire design
38,7 The 500 SMEs were given a hand-delivered questionnaire. We took four weeks to test
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the questionnaire with pilot study respondents and about ten weeks for responses in the
stratified random sample. This questionnaire was used to collect quantitative data
about the factors affecting EC systems adoption. The questionnaires were addressed to
the SME owner/manager as the decision-maker. The respondents were asked to indicate
734 their perceptions of the factors on a five-point Likert scale. Survey questions were
developed using a deductive approach from the literature and subject matter experts.
The revised questions were combined into Guttman scales. The Guttman scale arranges
responses, so succeeding responses include all the previous responses in an item
(Guttman, 1994).
The questionnaire used 16 items to measure the SMEs’ EC strategy (Q1 to Q16) and
12 to measure the perceptions of SME managers (Q17 to Q28). Five items (Q29 to Q33)
were used to measure the readiness of local and global TPs, and nine (Q34 to Q42) the
external pressure from local and global TPs. In addition, five items were used to
measure frequency of e-transactions (Q43 to Q47) and six the extent of use of EC systems
with TPs (Q48 to Q53).
The questions in the first part were designed to test whether the effects of the EC
systems depended on enterprise size, types of activity (industry), EC system use
duration and enterprise sector. The enterprise size, enterprise activity and sector are
considered control variables of the SMEs’ strategic factor. In the second part of the
questionnaire, which measures the factors that influence EC system adoption in SMEs,
the five-point Likert scales were designed to measure the importance of the factors.
Definitions of the five scales used to represent factors that influence EC system adoption
are as follows:
• None: Means that factors and items do not affect the extent of EC system adoption
in your enterprise.
• ⬍25 per cent: Means that factors and items affect the extent of EC system
adoption in your enterprise, but less than 25 per cent of importance factor.
• 25-50 per cent: Means that factors and items affect the extent of EC system
adoption in your enterprise, but only 25-50 per cent of importance factor.
• 51-70 per cent: Means that factors and items affect the extent of EC system
adoption in your enterprise, but only 51-70 per cent of importance factor.
• ⬎70 per cent: Means that factors and items affect the extent of EC system
adoption in your enterprise, and more than 70 per cent of importance factor

Capitalization
No. of Registered market Services Industrial
Size/sector employees enterprises (JD million) Population Sample Population Sample Total
Table III.
The sample Small 1-4 120,188 333.8 94,909 250 40,676 150 400
proportions and Medium 5-9 55,377 394.9 2,550 50 4,230 50 100
population Total 175,565 728.7 97,459 300 44,906 200 500
demographics by
enterprise size Source: Developed for this study from (DOS, 2012a, 2012b, 2012c, 2012d; MIT, 2012)
 (Source: Developed for this study, based on Dillman, 2000; Kline, 2005; and Moore, Factors
2004). affecting
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The above-mentioned factors show the definitions of five scales used to represent the e-commerce
importance of each factor. adoption
The third part of the questionnaire measures the extent of adoption. Definitions of the
five scales used to represent the extent of EC system adoption are as follows: 735
• None: Means that activities are not performed online in your enterprise.
• ⬍25 per cent: Means that activities are performed online in your enterprise, but
less than 25 per cent of total activities are conducted online.
• 25-50 per cent: Means that activities are performed online in your enterprise, but
only 25-50 per cent of total activities are conducted online.
• 51-70 per cent: Means that activities are performed online in your enterprise, but
only 51-70 per cent of total activities are conducted online.
• ⬎70 per cent: Means that activities are performed online in your enterprise, and
more than 70 per cent of total activities are conducted online. (Source: Developed
for this study, based on Dillman, 2000; Kline, 2005; and Moore, 2004).

The questions in this part of the questionnaire measured the percentage of activities
conducted online.
We followed Dillman’s (2000) guidelines for survey instrument development,
hypotheses testing and data analysis, except the first method of contact. Instead of
recruiting respondents by email, we delivered the survey manually and made
face-to-face contact. The method for factor scoring used is known as “formative
variables”. This method develops factor scores by adding each respondent’s answer for
a set of questions (Kline, 2005). It is in contrast with reflective factors, where survey
questions are assumed to correlate, and a reliability index is calculated (Moore, 2004;
Kline, 2005).
The data analysis estimated the reliability using the survey questions and factors
scores. Testing the SEM was therefore important to formally test for the existence of EC
systems in the SME, which was included in the study measurement model. CFA was
used to estimate construct validity because evidence for the theoretical relationships
between factors is suggested in the literature (Kline, 2005). Kline (2005) suggested that
factors that correlated less than 0.85 with other factors in CFA showed sufficient
divergence to suggest that the factors were distinct.
CFA was used to discover factors that had not been theoretically identified (Moore,
2004). Non-response bias is difficult to estimate because the only way to validate the
results of convenience designs would be to get non-responders to respond. However, in
our stratified random sample, we estimated non-response bias through the control
variables. For example, if a specific sector in the sample is under-represented because of
non-response, responses received were used to estimate the bias of the sample. The
correlation analysis was necessary because the Pearson’ correlation coefficient and
other agreement analyses are subject to respondent-scale bias (Moore, 2004).
SEM was conducted on the model to test the hypothesized relationships among
factors and between lower and higher factors. SEM involves the application of several
statistical techniques to examine the relationship between continuous or separate
 MRR predictor factors and continuous or separate principle factors. The method combines the
38,7 analytical techniques of regression and CFA to remove all the error variance in the
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factors. SEM also estimates all the relationships in the model and provides several
indices of fit and non-fit using maximum likelihood and the chi-square statistic.
Convergent and divergent validity were examined by comparing a single-factor
model (SFM) to the structural model (second-order factor) using EQS software and the
736 maximum likelihood estimation method. The first step in CFA is to relate the factors to
the latent factors. This procedure assumes that a theoretical relationship exists.
For adoption of EC systems by SMEs in Jordan, based on selected questions in the
survey, enterprises may be divided into high, medium and low EC system adopters.
Correlation was examined to decide the discriminate validity of the survey, the extent to
which items differentiate among the measurement scales. A multi-item approach
(triangulation) was also used to measure factors. Each factor had a minimum of two and
up to seven questions in the questionnaire. The triangulation measure used interval
scales such as the five-point Likert scale to assess the reliability of the study.
Triangulation was also used to examine the influence of internal and external
organizational factors and the extent of EC system adoption. While the ordinal scale
determines factors influencing the EC system adoption, the nominal scale measures the
relationship between EC system adoption and the SMEs’ characteristics, such as type of
business and size, and strategies. Some survey questions used each of interval, ordinal
and nominal measurement scales.

Results and discussion

Interview findings
After pre-testing the questionnaire through the group of interviewees, the questionnaire was
updated and re-evaluated to ensure that it still met the research objectives. Using 22 questions in
each interview with the ten SME managers interviewed, we found that the interviewed SME
managers perceived a positive significance and direct effect between internal and external
organizational factors on EC system adoption. The majority of the respondents reported that
external organizational factors such as external pressure and readiness had more effect on EC
system adoption than the internal organizational factors. This leads to the conclusion that the
factors have a strong effect on EC system adoption in SMEs in Jordan.

Survey findings
The original purpose of factor analysis is to examine the associations among factors,
based on the correlations between them and see if there are underlying factors. As most
of our questionnaire items were adopted from prior research and were examined by the
instrument developer, we used factor analysis to examine whether our construct was
the same as the original set of factors. The results of factor analysis represented the
construct validity of the questionnaire.
There were ten factors in the questionnaire that required examination by factor
analysis, including internal organizational factors, external organizational factors and
the extent of EC system adoption. Each was combined with several items in the
questionnaire. Table IV presents the factor loadings for the ten factors affecting EC
system adoption.
All factor loadings were larger than 0.70 and therefore acceptable. This indicates that
analysis was based on a well-explained factor structure. The items measuring the
 Factor loadings (%) of
Factors
affecting
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Factor Item 1 2 3 4 Eigen value variance

e-commerce
Internal organizational factors 7.644 47.775
SMEs’ strategic in 1 0.896 adoption
practicing B2B systems 2 0.908
3 0.896
4 0.909
737
5 0.796
6 0.874
7 0.876
8 0.783
9 0.896
10 0.788
11 0.839
12 0.824
13 0.983
14 0.856
15 0.783
16 0.896
SME managers’ 17 0.723
perceptions 18 0.823
19 0.776
20 0.726
21 0.744
22 0.891
23 0.955
24 0.834
25 0.856
26 0.822
27 0.733
28 0.911
External organizational factors 2.499 15.616
Readiness of TPs 29 0.705
30 0.761
31 0.765
32 0.789
33 0.897
External pressure by TPs 34 0.860
35 0.775
36 0.778
37 0.795
38 0.879
39 0.855
40 0.750 Table IV.
41 0.760 Factor loadings for
42 0.980 the internal and
external
Notes: First is SMEs’ strategic; second is SME managers’ perceptions; third is readiness; and fourth is organizational
external pressure by TPs factors
 MRR internal and external organizational factors in this study were designed to be
38,7 categorized into four factors:
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(1) the SMEs’ strategic use of EC systems;

(2) perceptions of SME managers;
(3) the extent of readiness of B2B system adoption; and
738 (4) external pressure by TPs (Seyal and Rahman, 2003; Seyal et al., 2007).

Factors and items were consistent with these studies. For the extent of EC system
adoption, 11 items were examined. Based on Thong and Yap (1995), the items were
designed to be categorized into two factors:
(1) frequency of e-transactions; and
(2) use of EC systems with TPs.

The results indicated that all factor loadings were larger than 0.70, making them
acceptable (Lgbaria et al., 1995). All factors and items were consistent with Thong and
Yap (1995). Table IV also shows the items and factor loadings for the rotated factors of
the extent of EC system adoption.
The next stage of the data analysis was estimating the reliability of
the respondents using the questionnaire items and the factors’ scores. The small
service enterprise respondents (n ⫽ 218) were labeled SS. The small industrial
enterprise respondents (n ⫽ 107) were labeled SI. The 15 medium service enterprise
respondents were labeled MS, and the 28 medium industrial enterprise respondents
were labeled MI.
Reliability was examined by using the Pearson’s correlation coefficient. The
Pearson’s correlation coefficient was calculated across all 75 questions in parts two and
three in the questionnaire for (SS and SI), (MS and MI), (small and medium services
enterprises [SMS] and small and medium industrial enterprises [SMI]) and (small
services and industrial enterprises [SSI] and medium services and industrial enterprises
[MSI]). The correlations between (SS and SI), (MS and MI), (SMS and SMI) and (SSI and
MSI) for each of the scored factors and items are presented in Table A1 (Appendix 1).
Table V summarizes the results across groups for all factors.
After deletion of the 17 suspect enterprises and 6 multivariate outliers, data from 345
SMEs were analyzed. Descriptive statistics for the 345 respondents in the final sample
are in Table A2 (Appendix 2).

Single factor model

In this study, the CFA was conducted on two measurement models to test convergent
and divergent validity between factors. The first model was a SFM where all factors
were hypothesized to load on one. SFMs are often reported in SEM studies in operations
management. However, with a CFI of 0.74 and root mean square error of approximation
(RMSEA) of 0.18, the SFM was inadequate. According to Kline (2005), the poor fit indices
suggest that there is more than one latent factor. As the literature did not support testing
two-, three- or four-factor models, we examined a five-factor model (Kline, 2005; Brews
and Tucci, 2004).
 SS and SI MS and MI SMS and SMI SSI and MSI
Factors
affecting
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Factors Correlation Correlation Correlation Correlation

e-commerce
F1
1 0.991 0.789 0.985 0.759 adoption
2 0.792 0.955 0.781 0.973
F2 739
3 0.875 0.957 0.847 0.985
4 0.770 0.994 0.877 0.978
F3
5 0.890 0.879 0.940 Table V. 0.955
6 0.893 0.826 0.956 Pearson’s correlation 0.978
coefficient between
Notes: First is SMEs’ strategic; second is SME managers’ perceptions; third is readiness; fourth is factors across sample
external pressure; fifth is e-transactions; and sixth is practicing EC groups

Five-factor (CFA) measurement model

The five-factor model in Figure 4 is the theoretical CFA research model to test the
multiple factors.
The associations between factors were modeled as standardized covariance rather
than relationship coefficients. Table VI reports the fit indices and statistics for the CFA
five-factor measurement model.
The five-factor model meets the minimum recommended fit indices for an acceptable fit,
with a CFI of 0.91 and RMSEA of 0.093. The minimal difference between the maximum
likelihood and the results indicated that there is no adverse effect because of non-normality
in the few questionnaire items and factors that had kurtosis values above 3.0.
Table VII shows the CFA pattern matrix, with the factor loadings shown in Columns 2-4.
The model was tested without cross-loadings because CFA did not test for varying
degrees of simple structure as found in exploratory procedures.

E1 E2 E3 E4
0.480 0.342 0.668 0.164

External Pressure
SMEs’ Perceptions of Readiness by TPs
Strategic SMEs’ Managers

0.57 0.75* 0.80 0.85*

Internal External
Organisational Organisational
Factor 0.90 H1 H2 0.95 Factor

Extent of EC
0.88 0.82 Figure 4.
E-transactions System Practicing EC
E5 0.345 0.420 E6 CFA five-factor
Adoption
measurement model
 MRR Structural equation model
38,7 Our main reason for testing an SEM was to investigate whether some factors are more
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influential on the extent of EC system adoption than others. Figure 5 shows further
development of the theoretical model originally set out in Figure 3.
The relationships between EC system adoption and the internal and external
organizational factors were freely estimated with a parameter constraint for the
740 unstandardized relationships to be equal. Figure 5 reflects the standardized coefficients.
Constraining the relationships to be equal between the extent of EC system adoption and
the internal and external organizational factors tested the proposition that the first-order
factors contributed equally to the composition of the second-order factor (the extent of
EC system adoption). As the contribution of the internal and external organizational
factors was unknown, it was assumed to be equal. The fit indices and statistics for the
model are shown in Table VIII.

Statistic name Five-factor statistics results

Chi-square 182.85
DF 344
Mardia’s normalized estimate 9.10
Free parameters 35
Fixed parameters 20
Table VI. CFI–ML 0.91
Fit indices and CFI–robust 0.890
statistics for five- SRMR 0.064
factor (CFA) RMSEA–ML 0.093
measurement model RMSEA–robust 0.090

Internal organizational External organizational Extent of EC R-square

Factors factors F1 factors F2 adoption F3 (communalities)

1 0.601 0 0 0.533
2 0.692 0 0 0.515
3 0 0.803 0 0.320
4 0 0.821 0 0.299
5 0 0 0.702 0.685
6 0 0 0.681 0.785
7 0 0 0 0.511
8 0 0 0 0.664
9 0 0 0 0.425
10 0 0 0 0.567
11 0 0 0 0.784
12 0 0 0 0.440
13 0 0 0 0.513
Eigen values 1.27 1.63 1.38 –
Table VII.
CFA pattern matrix– Notes: First is SMEs’ strategic in practicing EC systems; second is SME managers’ perceptions; third
five-factor (CFA) is readiness; fourth is external pressure; fifth is e-transactions; and sixth is practicing EC; Structural
measurement model Equation Model (SEM)
 E1
0.282
E2
0.277
E3
0.355
E4
0.410
Factors
affecting
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SMEs’ Perceptions of External e-commerce

0.55
Strategic
0.70*
SMEs’ Managers
0.78
Readiness
0.80* Pressure by TPs adoption

741
Internal External
Organisational Organisational
Factors Factors

0.90 0.95

. Figure 5.
Extent of EC Structural equation
System model (SEM) (first
Adoption and second-order
factors)

Statistic Structural model

Chi-square 180.50
DF 344
Mardia’s normalized estimate 9.20
Free parameters 33
Fixed parameters 18
CFI–ML 0.920
CFI–robust 0.920
SRMR 0.069 Table VIII.
RMSEA–ML 0.087 Fit indices and
RMSEA–robust 0.084 statistics for SEM

The CFI of 0.920 and RMSEA of 0.087 imply that the model has an acceptable fit. The low
Mardia’s estimate and small differences between the maximum likelihood and robust
estimate indicate that the results were not affected by non-normal data. This implies that the
model is reliable and valid for partially explaining the relationships between factors. The
standardized structural coefficients are shown by the arrows in Figure 5.
The internal and external organizational factors were used as driving forces for the
adoption of EC systems. The standardized correlations for these factors with the EC
system adoption factor were 0.90 and 0.95, respectively. This implies that EC system
adoption explains 90 per cent of the variance in the external organizational factors
(0.952) and 81 per cent (0.902) in the internal organizational factors.
The evidence indicates that internal and external organizational factors did not
contribute equally to EC system adoption, with the external organizational factors
contributing 9 per cent more than the internal organizational factors (0.90 ⫺ 0.81 ⫽
0.09). The factors and measurement items representing external organizational factors
 MRR were more important for EC system adoption in SMEs in Amman than the internal
38,7 organizational ones.
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The factors of the EC system (e-transactions and using EC with TPs) provided some
measure of the extent of EC systems in SMEs. This should improve the construct
validity of the measurement, as shown in Table VIII.

742 Hypothesis testing

The SME managers in Jordan reported a perception of a positive significant and direct
relationship between internal and external organizational factors and EC system
adoption in SMEs in Jordan. The majority of the respondents reported that external
organizational factors such as external pressure by TPs and readiness had more effect
on EC system adoption than internal organizational factors.
Using the model shown in all relationship coefficients were significant with p ⬍ 0.05.
H1 was therefore rejected, as internal organizational factors have a direct effect of 0.90
on EC system adoption.
H2 is also rejected, because external organizational factors have a direct effect on EC
system adoption. The rejection of H1 and H2 leads to the conclusion that the factors
have a strong effect on EC system adoption in SMEs in Jordan.

Conclusions and recommendations

EC system adoption in SMEs is mostly limited by the use of traditional IT, such as email
and Internet. Effective EC system adoption in enterprises requires integration of
e-marketing, e-payments, catalogues, and so on. The impact of the adoption of EC
systems is affected by internal and external organizational factors, particularly
readiness, strategy, managers’ perceptions and external pressure by TPs.
While all factors that affect EC system adoption in our measurement model are
important, readiness and external pressure seem to be most vital in achieving proper
levels of e-commerce. Readiness includes having the necessary infrastructure and
Internet access to communicate with TPs. External pressure by TPs includes the
sharing of planning and control information electronically, electronic payments,
education and training, products and service development activities.
We therefore conclude that readiness and external pressure are vital to SMEs in
Jordan if they are to receive the full benefits of adopting EC systems, but that other
internal and external organizational factors are also influential.

Recommendations
We recommend that SME managers in Jordan should identify and plan for those
changes in a business process that have the best chance of automation. Managers must
invest in activities that improve SME readiness, especially building IT infrastructure, if
they are to receive the full benefit of EC system adoption.

Limitations and future research

Previous studies mentioned that TPs’ related business processes involve elements of order
fulfillment, outbound logistics and new products and services development and internal
business processes that involve elements of order fulfillment, production, planning and
control and revenue management. These were not covered in our study and might benefit
from further elaboration. However, because of the length of our questionnaire, we suggest
that these factors should be developed in different samples and separate instruments. A
 second limitation is that we did not include non-Internet-based EC systems. This was done Factors
intentionally to isolate the effects of Internet-based systems, but means that Jordanian SMEs affecting
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may have adopted e-commerce more widely than suggested here. A third limitation is that e-commerce
the findings may not be widely generalizable, as our focus was Jordan. Future studies should
use ours as a pilot and replicate it elsewhere. adoption
These limitations provide opportunities for replicating this research. Constructs for
measuring TPs’ relationships and internal business processes should be developed and 743
examined in an advanced model. This may provide a broader examination of the influence of
EC system adoption, which may increase its generality. The new factors may also account
for some of the remaining error variants, and so increase the model fit, without loss of power.

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 MRR Appendix 1
38,7
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SS and SI MS and MI SMS and SMI SSI and MSI

Factor Items Correlation Correlation Correlation Correlation

746 F1 1 0.961 0.998 0.855 0.856

2 0.960 0.897 0.997 0.878
3 0.971 n/a 0.980 0.879
4 0.973 0.987 0.784 n/a
5 0.957 0.895 0.999 0.659
6 0.998 0.658 0.975 0.899
7 0.982 0.779 0.984 0.952
8 0.782 0.794 0.985 0.772
9 0.985 0.856 0.876 0.935
10 0.856 0.659 0.874 0.876
11 0.977 0.899 0.855 0.937
12 0.947 0.892 0.783 0.927
13 0.658 0.980 0.896 0.798
14 0.955 0.789 0.788 0.977
15 0.715 0.560 0.704 0.982
16 0.953 0.999 0.789 0.875
17 0.840 0.874 0.934 0.780
18 0.915 0.876 0.956 0.836
19 0.855 0.783 0.950 0.988
20 0.750 0.896 0.945 0.972
21 0.660 0.788 0.920 0.782
22 0.980 0.839 0.999 0.965
23 0.830 0.824 0.975 0.846
24 0.834 0.983 0.984 0.977
25 0.760 0.844 0.985 0.947
26 0.872 0.955 0.876 0.658
27 0.744 0.999 0.954 0.955
28 0.891 0.975 0.986 0.789
F2 29 0.856 0.876 0.988 0.975
30 0.822 0.778 0.849 0.998
31 0.733 0.888 0.910 0.897
32 0.911 n/a 0.850 n/a
33 0.875 0.856 0.992 0.987
34 0.997 0.839 0.786 0.985
35 0.980 0.824 0.998 0.876
36 0.784 0.983 0.975 0.874
37 0.999 0.844 0.985 0.876
38 0.975 0.955 0.984 0.783
Table AI. 39 0.984 0.987 0.875 0.896
Pearson’s correlation 40 0.985 0.958 0.873 0.788
coefficient between 41 0.876 0.668 0.879 0.839
items across sample 42 0.874 0.855 0.789 0.824
groups (continued)
 SS and SI MS and MI SMS and SMI SSI and MSI
Factors
affecting
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Factor Items Correlation Correlation Correlation Correlation

e-commerce
F3 43 0.855 0.997 0.897 0.983
44 0.997 0.980 0.780 0.844 adoption
45 0.980 0.889 0.836 0.955
46 0.875 0.897 0.826 0.999
47 0.873 0.856 0.983 0.975
747
48 0.879 0.878 0.865 0.984
49 0.789 0.879 0.972 0.985
50 0.897 0.856 0.892 0.856
51 0.999 0.897 0.980 0.990
52 0.975 0.942 0.830 0.880
53 0.984 0.978 0.834 0.998

Notes: F1 is internal organizational factors; F2 is external organizational factors; and F3 is extent of

EC system adoption Table AI.
 MRR Appendix 2
38,7
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Factors Items Mean SD Skew Kurtosis Minimum Maximum

1 1 2.38 0.83 ⫺0.66 ⫺0.97 1.0 4.0

748 2 4.00 1.10 ⫺0.75 ⫺0.75 0.0 4.0
3 2.00 0.06 ⫺0.70 0.05 0.0 1.0
4 1.95 0.20 ⫺1.55 1.92 0.0 1.0
5 1.45 0.50 0.19 ⫺1.97 0.0 1.0
6 2.1 0.30 2.55 4.55 0.7 4.0
7 3.70 1.20 ⫺0.40 ⫺1.00 0.0 4.0
8 1.98 0.19 ⫺0.37 0.88 0.0 1.0
9 1.90 0.29 0.02 1.04 0.0 1.0
10 1.39 0.50 0.50 ⫺1.75 0.0 1.0
11 4.09 1.15 ⫺0.85 ⫺0.70 0.0 4.0
12 4.04 1.16 ⫺0.82 ⫺0.60 0.0 4.0
13 1.70 0.75 1.30 1.70 0.0 3.0
14 2.60 1.20 0.65 ⫺0.52 0.0 4.0
15 2.70 1.40 0.45 ⫺1.04 0.0 4.0
16 2.65 1.30 0.62 ⫺0.75 0.0 4.0
2 17 2.10 0.30 0.54 ⫺1.73 0.0 2.0
18 2.30 1.19 0.77 ⫺0.15 0.0 4.0
19 1.60 0.87 1.60 2.20 0.0 4.0
20 1.50 0.85 1.73 2.98 0.0 3.0
21 3.02 1.33 0.25 ⫺0.16 0.0 4.0
22 3.40 1.60 ⫺0.29 ⫺1.61 0.0 4.0
23 2.15 1.20 1.20 0.65 0.0 4.0
24 2.50 0.95 0.75 0.50 0.0 4.0
25 2.51 0.93 0.70 0.47 0.0 4.0
26 2.60 1.10 0.60 ⫺0.25 0.0 4.0
27 2.42 1.30 0.95 ⫺0.15 0.0 4.0
28 2.20 1.30 0.95 ⫺1.15 0.0 1.0
3 29 2.50 1.20 0.85 ⫺0.80 0.0 4.0
30 1.60 0.90 1.40 0.80 0.0 3.0
31 1.50 0.80 1.70 2.15 0.0 3.0
32 2.20 1.20 0.70 ⫺0.55 0.0 4.0
33 2.99 1.10 0.02 ⫺0.66 0.0 4.0
4 34 2.66 1.22 0.66 ⫺0.53 0.0 4.0
35 2.59 0.90 0.55 ⫺0.15 0.0 4.0
36 2.66 1.02 0.67 ⫺0.17 0.0 4.0
37 1.60 0.84 1.63 2.20 0.0 4.0
38 2.15 1.22 1.22 0.65 0.0 4.0
39 2.49 0.94 0.74 0.49 0.0 4.0
Table AII. 40 2.52 0.92 0.70 0.47 0.0 4.0
Descriptive statistics 41 2.60 1.09 0.57 ⫺0.23 0.0 4.0
for 75 items from the 42 2.42 1.28 0.68 ⫺0.52 0.0 4.0
final 345 SMEs (continued)
 Factors Items Mean SD Skew Kurtosis Minimum Maximum
Factors
affecting
Downloaded by LIBRARY & INFORMATION CENTRE of National Economics University, Mr Khoa Bui Thanh At 06:10 21 December 2016 (PT)

5 43 2.18 1.20 0.71 ⫺0.55 0.0 4.0 e-commerce

44 2.97 1.16 0.02 ⫺0.65 0.0 4.0
45 2.55 1.28 0.30 ⫺1.06 0.0 4.0 adoption
46 3.10 1.19 ⫺0.25 ⫺0.80 0.0 4.0
47 3.02 1.16 ⫺0.17 ⫺0.85 0.0 4.0
6 48 2.45 1.20 0.42 ⫺0.80 0.0 4.0
749
49 1.66 0.80 1.16 0.50 0.0 4.0
50 1.70 0.95 1.20 0.22 0.0 4.0
51 2.03 1.03 0.90 0.45 0.0 4.0
52 2.50 1.65 1.08 0.60 0.0 4.0
53 2.50 1.50 1.00 0.40 0.0 4.0 Table AII.

About the authors

Anas A. Al-Bakri is an Assistant Professor at the Department of Management and Marketing,
College of Business and Economics, Qatar University. Anas’ teaching areas include international
business, principles of management, entrepreneurship and small business management. Anas has
earned PhD of Business (Management) in 2010 from the University of Southern Queensland,
Australia. Anas has been awarded the following awards: the Outstanding Academic
Achievement Award 2009 (UWSPA) and UWS Top-Up Award 2009 (UWS), Australia. Anas has
also worked as an Assistant Professor and Supervisor at the College of Business in several
universities within Australia, Jordan, KSA and Syria for ten years. Anas’ research areas include
SME management, entrepreneurship performance and evaluation, small and micro enterprises
and its influence on economic, and technology adoption and its influence on SME performance.
Anas has published and submitted on these research topics At the international conferences
proceeding and also has reviewed journals. Anas A. Al-Bakri is the corresponding author and can
be contacted at: [email protected]
Marios I. Katsioloudes is a Professor of Management, College of Business and Economics,
Qatar University, September, 2011-present. Marios’ teaching interests include strategic
management, international business, entrepreneurship, change management and innovation and
leadership. Marios ’ research interests include strategic management in the for-profit and
non-profit sectors and the participation of employees in the process, strategic planning process in
the SMEs, challenges, issues, motivations of entrepreneurs in a number of countries and field
research and write-up of case studies in the above areas.

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