Adoption model of e-commerce from SMEs perspective in developing country evidence – case study for Indonesia

Abstract

The number of Indonesia people using internet have increased due to advances in information technology, and the activity of electronic commerce (E-Commerce) is increasingly growing. This is a huge potential market for businesses including for SMEs. However, there are only a few Small and Medium Enterprises (SMEs) in Indonesia which have adopted E-Commerce. In fact, they are one important part of the economy in Indonesia. On the other hand, technological advances have made the competition tougher for SMEs. To understand perspective of E-Commerce from SMEs side, this study aims to find out what are the factors that support SMEs to adopt E-Commerce and the effect of the adoption to SMEs’ performance. This research discusses the adoption of E-Commerce by Indonesia SMEs and performance improvement as the effect of the adoption. The problems in this research are elaborated into research questions, i.e. do compatibility, top management support, organizational readiness, perceived benefits and external drive have significant positive effect to E-Commerce adoption? And does the adoption have significant positive effect to company’s performance? The purpose of this research is to analyze factors that support E-Commerce adoption on Indonesia SMEs and to analyze whether the adoption improves the performance of the SMEs. Partial Least Squares Structural Equation Modeling (PLS-SEM) Techniques is applied to analyze by using SmartPLS3. This technique enables researchers to test the relation between complex variables and to get an overall view of the whole model.