Determinant Factors of E-commerce Adoption by SMEs in Developing Country: Evidence from Indonesia

The aim of this study is to investigate those factors that influence SMEs in developing countries in adopting e-commerce. This study is motivated by the fact that the adoption of e-commerce by SMEs, especially in developing countries, is still very far behind the adoption by large companies. Yet to be able to survive in the new economic era, which is the information era; businesses, including SMEs, are forced to adopt e-commerce. Non-adopters will be left behind by the adopters. In addition, studies regarding e-commerce adoption by SMEs are rarely found. Therefore, the results of this study provide a timely understanding of e-commerce adoption by SMEs in developing countries.

The model developed in this study is based on the TOE framework. Eleven variables are proposed as the factors that influence SMEs in adopting of e-commerce. These are organized into four groups, namely: technological factors, organizational factors, environmental factors and individual factors. Based on a survey of 292 Indonesian SMEs, it was found that perceived benefits, technology readiness, owners’ innovativeness, owners’ IT ability and owners’ IT experience are the determinant factors that influence Indonesian SMEs in their adopting e-commerce.