Description
The global nature of business today and the advances in information and communications technologies have compelled corporations to employ emerging technologies in order to remain competitive.
Abstract The global nature of business today and the advances in informa-
tion and communications technologies have compelled corporations to em-
ploy emerging technologies in order to remain competitive. In recent years
electronic business has been adopted by many corporations to improve
operational ef?ciency, pro?tability, and to strengthen their competitive posi-
tion. This study examines the impact of web-based e-business on the small and
medium-size enterprises (SMEs) in Sweden. The analyses of data collected for
this study provide valuable information to the executives of manufacturing
and service SMEs. The ?ndings show that the SMEs in the sample have
bene?ted from e-business implementation in both operational and perfor-
mance areas of their organization.
Keywords E-business Æ E-strategy Æ Barriers to entry Æ Customer relations Æ
Performance improvement
1 Introduction
The proliferation of the Internet has provided a unique opportunity for small
and medium-size enterprises (SMEs) to conduct business electronically, to be
more competitive, and to do business in a global environment. Implementing
H. M. Beheshti (&)
Department of Management, Radford University, Radford, VA 24142, USA
e-mail: [email protected]
E. Salehi-Sangari
Division of Industrial Marketing and e-Commerce, Lulea University of Technology,
Lulea, Sweden
e-mail: [email protected]
1 3
Service Business (2007) 1:233–245
DOI 10.1007/s11628-006-0010-y
ORI GI NAL PAPER
The bene?ts of e-business adoption: an empirical study
of Swedish SMEs
Hooshang M. Beheshti Æ Esmail Salehi-Sangari
Received: 15 September 2006 / Accepted: 15 November 2006 / Published online: 14 December 2006
Ó Springer-Verlag 2006
e-business and having an online presence can be bene?cial for many compa-
nies with adequate preparation prior to implementation. The Internet usage in
the European Union and Sweden grew by 147 and 68%, respectively between
2000 and 2005. About half the populations in the European Union member
states and 75% of the Swedes use the Internet (Internet Usage in Europe
2006).
Internet-based electronic business can be de?ned as a system that provides
businesses with a platform to connect with customers, business partners,
employees, and suppliers via the Internet, extranets, and intranets. The
internal and external connectivity of electronic business enables companies to
become more ef?cient by lowering costs, increasing productivity, and
accomplishing business goals faster. In addition, responsiveness to customer
needs, communications with businesses, and supplier relations and selection
can be improved.
The bene?ts of joining the e-business arena outweigh the costs for most
organizations (Barau et al. 2001; Lefebvre et al. 2005; Straub and Klein 2001).
However, the review of the literature shows that SMEs are using the Internet
in most part for electronic mail and advertising and are not taking full
advantage of e-business technologies when compared to large organizations
(Fillis et al. 2004; Peet et al. 2002; Quayle 2002; Grandon and Pearson 2004).
Understanding how a company can bene?t from e-business is the key to e-
business implementation. Small and medium-size organizations must ensure
that e-business will align with their organizational goals and in turn create
positive outcomes for the organization. Having a well-developed strategy that
includes ?exibility and adaptability for launching, maintaining, and updating
an e-business is crucial. E-business strategy can be de?ned as the development
and the execution of a plan for a company to do business electronically. When
developing an e-business strategy, companies must identify the areas of the
business that will be affected by e-business implementation. The business
owner/manager and key employees should participate in the development of a
plan for e-business implementation and identify bene?ts derived and changes
required by such a system. Managers should encourage customers and sup-
pliers participation in this phase since the readiness of both for e-business are
essential in the success of an e-business plan. The plan should include the type
of information and communications technologies and security measures nee-
ded as well as provide methods for earning the trust of the customers, business
partners, and suppliers. In addition, an entrance strategy must be developed.
Entering into e-business at the wrong time can prove detrimental to an SME
(Evans 1999; Wright 2000; Sanderson 2004; Cote et al. 2005).
Customers’ expectations and needs change over time; therefore, a company
must be ready to update its system in a timely fashion in order to meet the
changing demand of the marketplace. Satisfying customer needs requires an
effective marketing strategy that includes a customer relationship database
which contains information about the customers’ buying behavior and pref-
erences. This database allows marketing efforts to be directed toward cus-
tomer needs. An integrated program makes it possible for sales staff to view
234 H. M. Beheshti, E. Salehi-Sangari
1 3
how current and prospective customers are reacting to new programs, what
each customer is buying, and how they feel about pricing and customer ser-
vice. The ability to better serve each customer leads to customer loyalty as
well as improvement in the products and services offered by the ?rm.
The integration of e-business into business processes involves the incor-
poration of information and communication technologies into business
activities so that business transactions can be performed online with data
driven by corporate databases. For example, e-business integration with back-
of?ce operations can improve inventory management, sales processing, order
entry, and catalog development. In general, the development and imple-
mentation of marketing strategies for e-business necessitate substantial
restructuring and rethinking of the existing processes. Managers must com-
municate the importance of e-business applications to their employees and
provide training for them. Employees should understand what they are sup-
posed to do and how they can make the venture successful for the company.
An e-business model is the electronic methods and structures used by a
company to remain competitive and to generate revenue. There are several e-
business models that can be used by an organization but the ?ve common
models include: business-to-business (B2B), business-to-consumer (B2C),
portals, websites as goodwill or promotional vehicles, and mobile commerce.
Companies should carefully analyze their business and evaluate the bene?ts
and costs of each model to ensure that they utilize the best system for their
business. The selection of a suitable model can lower intermediary costs, re-
duce purchasing costs, improve buyer and supplier relationships, and improve
market share or development (Barau et al. 2001).
2 E-business in manufacturing and service sectors
The organizational structure of manufacturing and service organizations differ
greatly in comparison and these sectors have different motives for imple-
menting e-business. While a service organization is concerned with advertising
their competence and abilities, a manufacturing organization is more con-
cerned with getting their product out in the market for consumers. The service
sector lacks the tangible products that a manufacturing ?rm possesses;
therefore, they must create their name through exceptional customer service.
Manufacturing companies need to research, develop, and promote a quality
product that has premium after purchase warranties along with good customer
service. Collaborative planning between the manufacturer and the supplier,
distributor, and retailer is an essential part of the manufacturing strategy. For
this reason, the use of collaborative tools in manufacturing organizations has
increased with the introduction of the Internet and e-business applications.
Implementing e-business can be expensive and if it fails, a company loses the
time and money invested in the project and to an SME the failure could result
in ?nancial ruins.
The bene?ts of e-business adoption 235
1 3
In general, e-business integration and applications for service organizations
are less complex than manufacturing ?rms. Manufacturing ?rms have used
various technologies such as material requirements planning (MRP), manu-
facturing resource planning (MRP II), ?exible manufacturing systems (FMS),
and computer integrated manufacturing (CIM) over the years in their oper-
ations and have more experience in new technology adoption and integration
than service ?rms. However, manufacturing and service SMEs must exercise
caution before deciding on e-business integration into their daily operations.
The integration of e-business applications can be done in small steps to cap-
italize on the bene?ts of process improvement required by e-business imple-
mentation and to minimize the negative aspects of change and interruptions of
daily business activities. Both sectors must realize that the success of an In-
ternet-based e-business depends on a user-friendly website that is maintained
and updated regularly.
3 Research methodology and objectives
The primary objective of this research is to examine the impact of the Internet-
based e-business on the Swedish SMEs. The major research objectives are:
1. To decide the extent of electronic business integration and applications in
Swedish SMEs.
2. To determine the length of implementation time and the degree of sat-
isfaction with e-business.
3. To identify similarities and/or differences that exists between manufac-
turing and service SMEs with regard to the implementation and appli-
cations of electronic business.
4. To determine the common concerns of SMEs in the implementation and
applications of electronic business.
5. To decide the bene?ts of electronic business implementation in SMEs.
In this study, we adopted the European Commission’s de?nition of SME; that
is, any ?rm that employs less than 250 employees. However, ?rms with
employees of less than ten, very small, were excluded and considered not
suitable for this research. Data was solicited from 500 randomly selected,
Swedish companies having between 10 and 249 employees without regard to
their location or industry for analysis. A four-page survey questionnaire with a
cover letter explaining the objectives of the study, and a return envelope was
mailed to these SMEs. The total number of usable responses after two mail-
ings was 132 (26.4%). However, 58 (11.6%) of the surveyed ?rms indicated
they do not have an Internet-based e-business and 74 (14.8%) do.
3.1 Demographics of the survey group
The analysis of the responding ?rms with Internet-based electronic business
revealed that 60% of the respondents were manufacturing and 40% service.
236 H. M. Beheshti, E. Salehi-Sangari
1 3
The signi?cant majority of the manufacturing companies (92%) and service
?rms (89%) were privately owned. More manufacturing companies (77%)
than service organizations (52%) conduct business both nationally and
internationally; 77% of manufacturing and 52% of service corporations buy
and sell globally. All manufacturing and 69% of service companies use the
B2B model. The B2C model is used by 97 and 43% of service and manufac-
turing ?rms, respectively. The majority of service ?rms (85%) and manufac-
turing companies (60%) had their latest e-business implementation in the last
5 years.
4 Development and implementation of e-business
Three questions in the study solicited data with regard to the development and
implementation, maintenance, and technical support for e-business models in
use. Table 1 shows that the majority of the respondents developed their e-
business models and most of these systems are maintained and supported by
in-house technical staff.
Study participants were asked if the implementation of e-business was
based on an e-business strategy. More manufacturing organizations (67%)
than service ?rms (53%) had developed an e-business strategy before
implementing e-business. Full integration of e-business into business processes
was reported by 72% of manufacturing and 83% of service companies. An-
other question in the survey dealt with online purchasing and procurement.
Almost the same percentages were reported for online procurement by
manufacturing ?rms (70%) and service organizations (69%). It appears that
Swedish SMEs are taking advantage of this aspect of electronic business.
5 Cost reduction and increase in sales
The majority of the ?rms in the study group, 87% of manufacturing and 76%
of service organizations reported that the use of electronic business has re-
sulted in reducing the costs of doing business. Table 2 presents the percentage
of cost reduction for the participants.
Table 1 E-business development and support
E-business Manufacturing Service
In-house
(%)
Outsourced
(%)
In-house
(%)
Outsourced
(%)
Development and implementation 59 41 57 43
Managed and maintained 95 05 87 13
Technical support 74 26 69 31
The bene?ts of e-business adoption 237
1 3
Although both groups have experienced savings in their business from the
implementation of e-business, a higher percentage of service organizations
(94%) than manufacturing (23%) have saved 10% or more. Considering that
various technologies have been used by manufacturing ?rms over the last few
decades to streamline their processes and to reduce the cost of production, it is
not surprising to see that cost savings is less for this group.
One of the advantages of conducting business online is that it is convenient
for the customer to order and in return, this feature of business could increase
sales volume. More service (46%) than manufacturing (42%) ?rms reported
an increase in their sales volume because of e-business implementation.
6 E-business champion
The survey respondents identi?ed the most in?uential person or department
in their move toward e-business implementation. Table 3 depicts the results.
A comparison of the two groups shows that in service ?rms the CEO/owner
championed the e-business implementation followed by marketing and sales.
However, in manufacturing ?rms the marketing and sales department was
instrumental in persuading the organization to implement e-business.
7 Length of implementation
One of the areas of consideration in the implementation of any new tech-
nology is the time that it takes to acquire the hardware and software needed
for the project as well as integration and user training. The questionnaire
sought information about the time that it took to implement an e-business
system. The majority of the respondents (46% of manufacturing and 52% of
Table 2 Cost reduction due
to e-business use
Cost (%) Manufacturing (%) Service (%)
The global nature of business today and the advances in information and communications technologies have compelled corporations to employ emerging technologies in order to remain competitive.
Abstract The global nature of business today and the advances in informa-
tion and communications technologies have compelled corporations to em-
ploy emerging technologies in order to remain competitive. In recent years
electronic business has been adopted by many corporations to improve
operational ef?ciency, pro?tability, and to strengthen their competitive posi-
tion. This study examines the impact of web-based e-business on the small and
medium-size enterprises (SMEs) in Sweden. The analyses of data collected for
this study provide valuable information to the executives of manufacturing
and service SMEs. The ?ndings show that the SMEs in the sample have
bene?ted from e-business implementation in both operational and perfor-
mance areas of their organization.
Keywords E-business Æ E-strategy Æ Barriers to entry Æ Customer relations Æ
Performance improvement
1 Introduction
The proliferation of the Internet has provided a unique opportunity for small
and medium-size enterprises (SMEs) to conduct business electronically, to be
more competitive, and to do business in a global environment. Implementing
H. M. Beheshti (&)
Department of Management, Radford University, Radford, VA 24142, USA
e-mail: [email protected]
E. Salehi-Sangari
Division of Industrial Marketing and e-Commerce, Lulea University of Technology,
Lulea, Sweden
e-mail: [email protected]
1 3
Service Business (2007) 1:233–245
DOI 10.1007/s11628-006-0010-y
ORI GI NAL PAPER
The bene?ts of e-business adoption: an empirical study
of Swedish SMEs
Hooshang M. Beheshti Æ Esmail Salehi-Sangari
Received: 15 September 2006 / Accepted: 15 November 2006 / Published online: 14 December 2006
Ó Springer-Verlag 2006
e-business and having an online presence can be bene?cial for many compa-
nies with adequate preparation prior to implementation. The Internet usage in
the European Union and Sweden grew by 147 and 68%, respectively between
2000 and 2005. About half the populations in the European Union member
states and 75% of the Swedes use the Internet (Internet Usage in Europe
2006).
Internet-based electronic business can be de?ned as a system that provides
businesses with a platform to connect with customers, business partners,
employees, and suppliers via the Internet, extranets, and intranets. The
internal and external connectivity of electronic business enables companies to
become more ef?cient by lowering costs, increasing productivity, and
accomplishing business goals faster. In addition, responsiveness to customer
needs, communications with businesses, and supplier relations and selection
can be improved.
The bene?ts of joining the e-business arena outweigh the costs for most
organizations (Barau et al. 2001; Lefebvre et al. 2005; Straub and Klein 2001).
However, the review of the literature shows that SMEs are using the Internet
in most part for electronic mail and advertising and are not taking full
advantage of e-business technologies when compared to large organizations
(Fillis et al. 2004; Peet et al. 2002; Quayle 2002; Grandon and Pearson 2004).
Understanding how a company can bene?t from e-business is the key to e-
business implementation. Small and medium-size organizations must ensure
that e-business will align with their organizational goals and in turn create
positive outcomes for the organization. Having a well-developed strategy that
includes ?exibility and adaptability for launching, maintaining, and updating
an e-business is crucial. E-business strategy can be de?ned as the development
and the execution of a plan for a company to do business electronically. When
developing an e-business strategy, companies must identify the areas of the
business that will be affected by e-business implementation. The business
owner/manager and key employees should participate in the development of a
plan for e-business implementation and identify bene?ts derived and changes
required by such a system. Managers should encourage customers and sup-
pliers participation in this phase since the readiness of both for e-business are
essential in the success of an e-business plan. The plan should include the type
of information and communications technologies and security measures nee-
ded as well as provide methods for earning the trust of the customers, business
partners, and suppliers. In addition, an entrance strategy must be developed.
Entering into e-business at the wrong time can prove detrimental to an SME
(Evans 1999; Wright 2000; Sanderson 2004; Cote et al. 2005).
Customers’ expectations and needs change over time; therefore, a company
must be ready to update its system in a timely fashion in order to meet the
changing demand of the marketplace. Satisfying customer needs requires an
effective marketing strategy that includes a customer relationship database
which contains information about the customers’ buying behavior and pref-
erences. This database allows marketing efforts to be directed toward cus-
tomer needs. An integrated program makes it possible for sales staff to view
234 H. M. Beheshti, E. Salehi-Sangari
1 3
how current and prospective customers are reacting to new programs, what
each customer is buying, and how they feel about pricing and customer ser-
vice. The ability to better serve each customer leads to customer loyalty as
well as improvement in the products and services offered by the ?rm.
The integration of e-business into business processes involves the incor-
poration of information and communication technologies into business
activities so that business transactions can be performed online with data
driven by corporate databases. For example, e-business integration with back-
of?ce operations can improve inventory management, sales processing, order
entry, and catalog development. In general, the development and imple-
mentation of marketing strategies for e-business necessitate substantial
restructuring and rethinking of the existing processes. Managers must com-
municate the importance of e-business applications to their employees and
provide training for them. Employees should understand what they are sup-
posed to do and how they can make the venture successful for the company.
An e-business model is the electronic methods and structures used by a
company to remain competitive and to generate revenue. There are several e-
business models that can be used by an organization but the ?ve common
models include: business-to-business (B2B), business-to-consumer (B2C),
portals, websites as goodwill or promotional vehicles, and mobile commerce.
Companies should carefully analyze their business and evaluate the bene?ts
and costs of each model to ensure that they utilize the best system for their
business. The selection of a suitable model can lower intermediary costs, re-
duce purchasing costs, improve buyer and supplier relationships, and improve
market share or development (Barau et al. 2001).
2 E-business in manufacturing and service sectors
The organizational structure of manufacturing and service organizations differ
greatly in comparison and these sectors have different motives for imple-
menting e-business. While a service organization is concerned with advertising
their competence and abilities, a manufacturing organization is more con-
cerned with getting their product out in the market for consumers. The service
sector lacks the tangible products that a manufacturing ?rm possesses;
therefore, they must create their name through exceptional customer service.
Manufacturing companies need to research, develop, and promote a quality
product that has premium after purchase warranties along with good customer
service. Collaborative planning between the manufacturer and the supplier,
distributor, and retailer is an essential part of the manufacturing strategy. For
this reason, the use of collaborative tools in manufacturing organizations has
increased with the introduction of the Internet and e-business applications.
Implementing e-business can be expensive and if it fails, a company loses the
time and money invested in the project and to an SME the failure could result
in ?nancial ruins.
The bene?ts of e-business adoption 235
1 3
In general, e-business integration and applications for service organizations
are less complex than manufacturing ?rms. Manufacturing ?rms have used
various technologies such as material requirements planning (MRP), manu-
facturing resource planning (MRP II), ?exible manufacturing systems (FMS),
and computer integrated manufacturing (CIM) over the years in their oper-
ations and have more experience in new technology adoption and integration
than service ?rms. However, manufacturing and service SMEs must exercise
caution before deciding on e-business integration into their daily operations.
The integration of e-business applications can be done in small steps to cap-
italize on the bene?ts of process improvement required by e-business imple-
mentation and to minimize the negative aspects of change and interruptions of
daily business activities. Both sectors must realize that the success of an In-
ternet-based e-business depends on a user-friendly website that is maintained
and updated regularly.
3 Research methodology and objectives
The primary objective of this research is to examine the impact of the Internet-
based e-business on the Swedish SMEs. The major research objectives are:
1. To decide the extent of electronic business integration and applications in
Swedish SMEs.
2. To determine the length of implementation time and the degree of sat-
isfaction with e-business.
3. To identify similarities and/or differences that exists between manufac-
turing and service SMEs with regard to the implementation and appli-
cations of electronic business.
4. To determine the common concerns of SMEs in the implementation and
applications of electronic business.
5. To decide the bene?ts of electronic business implementation in SMEs.
In this study, we adopted the European Commission’s de?nition of SME; that
is, any ?rm that employs less than 250 employees. However, ?rms with
employees of less than ten, very small, were excluded and considered not
suitable for this research. Data was solicited from 500 randomly selected,
Swedish companies having between 10 and 249 employees without regard to
their location or industry for analysis. A four-page survey questionnaire with a
cover letter explaining the objectives of the study, and a return envelope was
mailed to these SMEs. The total number of usable responses after two mail-
ings was 132 (26.4%). However, 58 (11.6%) of the surveyed ?rms indicated
they do not have an Internet-based e-business and 74 (14.8%) do.
3.1 Demographics of the survey group
The analysis of the responding ?rms with Internet-based electronic business
revealed that 60% of the respondents were manufacturing and 40% service.
236 H. M. Beheshti, E. Salehi-Sangari
1 3
The signi?cant majority of the manufacturing companies (92%) and service
?rms (89%) were privately owned. More manufacturing companies (77%)
than service organizations (52%) conduct business both nationally and
internationally; 77% of manufacturing and 52% of service corporations buy
and sell globally. All manufacturing and 69% of service companies use the
B2B model. The B2C model is used by 97 and 43% of service and manufac-
turing ?rms, respectively. The majority of service ?rms (85%) and manufac-
turing companies (60%) had their latest e-business implementation in the last
5 years.
4 Development and implementation of e-business
Three questions in the study solicited data with regard to the development and
implementation, maintenance, and technical support for e-business models in
use. Table 1 shows that the majority of the respondents developed their e-
business models and most of these systems are maintained and supported by
in-house technical staff.
Study participants were asked if the implementation of e-business was
based on an e-business strategy. More manufacturing organizations (67%)
than service ?rms (53%) had developed an e-business strategy before
implementing e-business. Full integration of e-business into business processes
was reported by 72% of manufacturing and 83% of service companies. An-
other question in the survey dealt with online purchasing and procurement.
Almost the same percentages were reported for online procurement by
manufacturing ?rms (70%) and service organizations (69%). It appears that
Swedish SMEs are taking advantage of this aspect of electronic business.
5 Cost reduction and increase in sales
The majority of the ?rms in the study group, 87% of manufacturing and 76%
of service organizations reported that the use of electronic business has re-
sulted in reducing the costs of doing business. Table 2 presents the percentage
of cost reduction for the participants.
Table 1 E-business development and support
E-business Manufacturing Service
In-house
(%)
Outsourced
(%)
In-house
(%)
Outsourced
(%)
Development and implementation 59 41 57 43
Managed and maintained 95 05 87 13
Technical support 74 26 69 31
The bene?ts of e-business adoption 237
1 3
Although both groups have experienced savings in their business from the
implementation of e-business, a higher percentage of service organizations
(94%) than manufacturing (23%) have saved 10% or more. Considering that
various technologies have been used by manufacturing ?rms over the last few
decades to streamline their processes and to reduce the cost of production, it is
not surprising to see that cost savings is less for this group.
One of the advantages of conducting business online is that it is convenient
for the customer to order and in return, this feature of business could increase
sales volume. More service (46%) than manufacturing (42%) ?rms reported
an increase in their sales volume because of e-business implementation.
6 E-business champion
The survey respondents identi?ed the most in?uential person or department
in their move toward e-business implementation. Table 3 depicts the results.
A comparison of the two groups shows that in service ?rms the CEO/owner
championed the e-business implementation followed by marketing and sales.
However, in manufacturing ?rms the marketing and sales department was
instrumental in persuading the organization to implement e-business.
7 Length of implementation
One of the areas of consideration in the implementation of any new tech-
nology is the time that it takes to acquire the hardware and software needed
for the project as well as integration and user training. The questionnaire
sought information about the time that it took to implement an e-business
system. The majority of the respondents (46% of manufacturing and 52% of
Table 2 Cost reduction due
to e-business use
Cost (%) Manufacturing (%) Service (%)