AN EXPLORATORY INVESTIGATION OF E-BUSINESS

CONSTRAINTS AMONG LARGE ORGANIZATIONS IN

PORTUGAL

Elisabete Morais, José Adriano Pires

Instituto Politécnico de Bragança, Bragança, Portugal

Ramiro Gonçalves

Universidade de Trás-os-Montes, Vila Real, Portugal

Keywords: Stages of growth, e-Business progression, Constraints.

Abstract: It is well recognized that e-business supports all parts of an organization’s value chain, and offer valuable

competitive advantages to firms. It is imperative for an organization to identify potential constraints to e-

business in order to minimize the risk derived from its e-business initiative. Hence, in this paper, we explore

a range of constraints that the literature suggests influences e-business evolution, so that organizations could

be better equipped in anticipating any difficulties while in progress through their e-business initiatives.

Thirteen hypotheses were formulated and tested. Questionnaires were applied to investigate the research

problem. It was administered to 1000 managing directors of the biggest (according to the amount of

business) Portuguese enterprises. Results suggest that organizational constraints are more critical, such as,

conflict with traditional trading partners, conflict with traditional business and e-business initiatives,

reengineering business processes and resistance to change, among other.

1 INTRODUCTION

New economy, new tools, new rules. Few concepts

have revolutionized business more profoundly than

e-business. To compete effectively in the e-business

world, a company must structurally transform its

internal foundation. This structural change requires a

company to develop an innovative e-business

strategy, focusing on speed to market and

breakthrough execution (Kalakota and Robinson,

2000).

The present paper explores the constraints

associated with e-business evolution. Were

identified environment, organizational and

technological constraints. We want to explore if the

constraints are equal for all e-business maturity

stages.

The remainder of the paper is organized as

follows: the next section reviews the concept of e-

business; sections 3 and 4 briefly discuss the

research model and data collection. Section 5

presents and discusses the results obtained.

2 DEFINING E-BUSINESS AND

MATURITY MODELS

The terminology involved within the field of

Information Communication Technology (ICT)

usage on the Internet is vast and contradictory. Two

frequently used terms are e-commerce and e-

business.

Kalakota and Whinston (1996) define electronic

commerce as the “… buying and selling of

information, products and services via computer

networks”. Laudon and Travel (2006) define

electronic commerce as the “use of the Internet and

the Web to transact business”. Sewell and

McCarthey (2001) identify electronic business as

business facilitated by ICT. Others argue that

electronic business encompasses the entire word of

internal and external electronically based activities,

including electronic commerce (Kalakota and

Robinson, 2003). In the scope of this paper,

electronic commerce will be regarded as a subset of

electronic business.

Morais E., Adriano Pires J. and Gonçalves R. (2009).

AN EXPLORATORY INVESTIGATION OF E-BUSINESS CONSTRAINTS AMONG LARGE ORGANIZATIONS IN PORTUGAL.

In Proceedings of the International Conference on e-Business, pages 85-90

DOI: 10.5220/0002188700850090

 SciTePress

Based on various types of trading partners, there are

many categories of e-business. Without the use of

face to face operations, all e-business transactions

are performed electronically by using computer and

communication networks. The three principal

categories of e-business applications are (Phan,

2003):

1. Electronic markets or e-marketplaces: buying

and selling goods and services.

2. Inter-organizational systems: facilitating inter

and intra-organization flow of goods, services,

information, communication, and collaboration.

3. Customer service: providing customer service,

help, handling complaints, tracking orders, etc.

Since the introduction of computer technology

into organizations in the 1960s, there have been

numerous attempts to develop models of

Information Systems/Information Technology

(IS/IT) maturity. These models are premised on the

idea that organizations pass through stages of

maturity with respect to the way they use and

manage IS/IT to support and facilitate business

activities, processes and operations.

3 RESEARCH MODEL AND

HYPOTHESES

The research model includes e-business constraints

and e-business maturity as shown in Figure 1. Being

an early, exploratory study, the focus was on

primary associations. A single stage model was

adopted that directly related dependent variables

with independent variables without any intermediate

variables. We first looked at e-business maturity and

then at e-business constraints, and then we

developed the hypotheses. The focus is on the

biggest (according to the amount of business)

Portuguese enterprises.

3.1 e-Business Maturity

Therefore, in order to explain the progression of e-

business in the context of the Portuguese enterprises,

we used the Stages of Growth for e-business model

(SOGe). As with all other stages of growth models,

the SOGe model assumes that a normal progression

is from a less mature to an increasing sophistication

over time (Prananto et al., 2003).

H12 (-)

H11

H12

H10

Organizational

constraints:

Traditional Business

Partners

Traditional Business

Initiatives

Lack of Senior

Management Support

Project Management

Business Process

Reengineering

Business-Technology

Alignment

Lack of Human Resources

Qualified

People Coordination

Resistance to Change

H13

Inadequate Technology

Cost

Insecurity

Technological constraints:

Environment constraints:

Activity Sector

E-business

Maturity

Figure 1: The conceptual model.

3.2 e-Business Constraints

The literature suggests various factors that inhibit

the e-business development, including: Environment

constraints; Organizational constrains; and

Technological constraints.

H0: The constraint “Inadequate technology” is the same

for all e-business maturity stages.

H1: There are at least two stages of maturity with

significantly different average.

The technology is obviously the driver of the e-

business (Bakry and Bakry, 2001).

H0: The constraint “Cost” is the same for all e-business

maturity stages.

H2: There are at least two stages of maturity with

significantly different average.

The cost of technology is enormous (Grover et al.,

1998, Legris et al., 2003), hence this could be one of

the constraints of the e-business.

H0: The constraint “Insecurity” is the same for all e-

business maturity stages.

H3: There are at least two stages of maturity with

significantly different average.

A huge success factor in any e-business initiative is

the security (Worner, 2002). The uncertainty

regarding the security aspects, the lack of trust in

virtual relationships may affect the success of e-

business (Chepaitis, 2002).

H0: The constraint “Conflicts with traditional business

partners” is the same for all e-business maturity stages.

H4: There are at least two stages of maturity with

significantly different average.

ICE-B 2009 - International Conference on E-business

If the traditional business partners don’t adhere

to this new way of doing business, conflicts with it

could be a constraint to the development of e-

business. One of the first steps in the evolution of e-

business is to improve relations with key partners in

traditional business (Eisenmann, 2007).

H0: The constraint “Conflicts with traditional business

initiatives” is the same for all e-business maturity stages.

H5: There are at least two stages of maturity with

significantly different average.

It is Porter’s (2001) belief that a successful

company in the real world should take advantage of

its brand and its other assets to become stronger in

the digital world. In defining a strategy based on

electronic business, it is essential to define how it

will manage the conflict between the business online

and offline business (or traditional). For this, it will

prevent the new channel (online) to compete directly

with the businesses already established in the same

group of customers (cannibalization effect). Thus,

the existence of conflicts between these two

channels may be a constraint to the development of

e-business.

H0: The constraint “Lack of senior management support”

is the same for all e-business maturity stages.

H6: There are at least two stages of maturity with

significantly different average.

The support of top management is generally

accepted as being critical to the success of e-

business. This is because the leader of the company

is usually the main decision maker because of the

influence he has on the allocation of key resources

(Lertwongsatien and Wongpinungwatana, 2003;

Martin and Matlay, 2003). Sorenson (2000) also

found a positive association between a participatory

leadership of the leader and the performance of

electronic business.

H0: The constraint “Project management” is the same for

all e-business maturity stages.

H7: There are at least two stages of maturity with

significantly different average.

E-business projects, as all other projects of the

organization, need to be evaluated and monitored

(Grembergen and Amelinckx, 2002).

H0: The constraint “Business process reengineering” is

the same for all e-business maturity stages.

H8: There are at least two stages of maturity with

significantly different average.

In the globalized world, in which organizations

are embedded, the changes appear to be increasingly

complex, characterized by increasing demands for

speed, quality, low cost, flexibility and customer

satisfaction. In this context, to ensure high levels of

business competitiveness, the companies must act

quickly and flexibly, in a pro-active, innovating their

services, processes and technology, focused on

customer needs and market.

H0: The constraint “Alignment between technology and

business” is the same for all e-business maturity stages.

H9: There are at least two stages of maturity with

significantly different average.

According to (Kearns and Lederer, 2000)

alignment between IT and the business plan is

necessary to achieve the objectives of the business

and capitalize on the use of IT, helping and ensuring

that investments in IT are correctly used to support

these objectives and increase competitive advantage

through the use of IT.

H0: The constraint “Lack of qualified human resources”

is the same for all e-business maturity stages.

H10: There are at least two stages of maturity with

significantly different average.

According to the OECD report, the lack of qualified

human resources is a barrier to the development of

electronic business (OECD, 1999).

H0: The constraint “People coordination” is the same for

all e-business maturity stages.

H11: There are at least two stages of maturity with

significantly different average.

A business model is a mediated construction

between technology and business (Chesbrough and

Rosenbloom, 2002). A poor coordination between

the leaders of these two areas may be a constraint to

the development of e-business in the organization.

H0: The constraint “Resistance to change” is the same for

all e-business maturity stages.

H12: There are at least two stages of maturity with

significantly different average.

Innovation is a major factor leading to

competitive advantage of organizations. Resistance

to change is inevitable, even if this represents

growth and development. In this context, managers

should be prepared to manage resistance to change

(Fine, 1986).

H0: The e-business maturity is the same for all activity

sectors.

H13: There are at least two activity sectors with

significantly different average.

It has been proven in literature that the

characteristics of each activity sector influence the

adoption of e-business (Mehrtens et al., 2001), with

benefits for the companies which take on e-business.

4 DATA COLLECTION

A questionnaire was developed to collect data. Prior

AN EXPLORATORY INVESTIGATION OF E-BUSINESS CONSTRAINTS AMONG LARGE ORGANIZATIONS IN

PORTUGAL

to distribution, a series of pilot tests were conducted

with a group of 10 information system director

enterprises from a range of businesses and a group

of 5 PhD students. The test participants were asked

to complete the questionnaire and then evaluate the

questionnaire and make suggestions. After the

questionnaire had been finalized, it was administered

to the 1000 managing directors of the biggest

(according to the amount of business) Portuguese

enterprises. The information about the enterprises

was given by the Portuguese National Institute of

Statistics (INE, 2007).

We chose the questionnaire and not other method

of data collection, such as interview, for reasons of

time and cost. Besides the questionnaire as a tool of

data collection, there are other studies that address

similar issues, namely case studies, and which lead

to similar results (Gibbs et al., 2003).

A total of 1000 presentation letters of the

questionnaire were sent by post and 774 by e-mail to

some of the 1000 companies that have an e-mail

address. This presentation letter and e-mail referred

the website, the login and password for the survey.

All the enterprises had a login and a password to

access to the questionnaire to guarantee that each

enterprise would only answer once.

The presentation letters of the questionnaire were

distributed in November 2007.

Within the cut-off date, set at 3 weeks after the

survey was distributed, there were 208 returned

questionnaires. Of the 208 questionnaires, 70 were

incomplete (32 do not answer about its maturity

stage and 38 do not answer the question where the

constraints associated to each maturity stage are

questioned), prompting their removal from the

sample as this might increase the error and bias of

the survey. Effectively, 138 usable responses were

included in the sample for further analysis,

representing response rate of 13,8%. This is well

above the normally low response rate of 5-10% for a

postal survey (Alreck and Settle, 1985; Barnett,

1991).

5 RESULTS

5.1 Descriptive Results

Within the sample, 48,6% are directors, 5,8%

general directors, 5,8% administrators, 16,7%

executives and 23,2% have other function in the

enterprise. The respondents who answered “Other”

are the majority responsible for Information Systems

(IS) department. Only 11,6% of the sample did

Secondary school, all the others are graduated or

post-graduated.

Respondents were categorized into seven

industry sectors: Manufacturing, Information and

Communication Activities, Retail and Wholesale,

Financial Services, Commerce of Vehicles, Civil

Construction, Transports and Others. The final

sample, comprised of 138 enterprises, consists of

25% manufacturing firms, 26% retail & wholesale,

4% information and communication activities, 9%

financial services, 8% civil construction, 8%

transport, 7% commerce of vehicles and 13%

enterprises of various categories.

Figure 2 shows the evolution of e-business

maturity between 2005 and 2007 in the 1000 biggest

Portuguese enterprises. It is interesting to verify that

in 2005 almost half of the enterprises were between

stage 1 and stage 2 and in 2007 approximately 64%

were between stage 4 and stage 6. This shows that

enterprises are sensitive to e-business. There could

be a natural tendency for people, who would like to

make the questionnaire completion easier.

Nevertheless, according to the report "The

Information Society in Portugal 2007" 100% of

large firms has Internet connection. 97% are

connected to the Internet by broadband, occupying

Portugal, the 7 the place ranking in the EU27. About

7 in 10 companies use the Internet to interact with

organizations and public authorities, which

represents an increase of 20% from 2006 to 2007.

86% of large companies have an Internet presence

(UMIC, 2007). This report may be an indicator that

the questionnaires were answered seriously.

Satge 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6

Number of enterprises

2005

2007

Figure 2: Evolution of the e-business maturity.

Respondents were also asked to rate the

concerns/problems acting as constraints for the

development of their e-business initiatives.

Respondents scored each item on a 7-point scale,

where 1 is not problematic and 7 is very

problematic. The responses are reported in Table 1.

The maturity of the enterprises increased over the

years, and with this evolution in the maturity stage it

is interesting to verify that the major problems are

always the same ones, but simultaneously,

they have diminished over time.

ICE-B 2009 - International Conference on E-business

Table 1: Major constraints encountered in each year.

2005

(N = 138)

2006

(N = 138)

2007

(N = 138)

Constraint Mean SD Mea

SD Mea

The technology existent

is not the most adequate

to e-business

3,13 1,89 2,83 1,80 2,53 1,77

Cost of e-business 3,61 1,93 3,38 1,84 3,28 1,84

Uncertainty with aspects

related to security

3,23 1,83 3,02 1,69 2,80 1,66

Conflict with traditional

trading partners

3,67 2,04 3,46 1,96 3,28 2,03

Conflict with traditional

business and e-business

initiatives

3,77 2,00 3,59 1,97 3,41 1,98

Lack of senior

management support

2,62 1,77 2,41 1,62 2,23 1,52

Managing e-business

project

3,08 1,76 2,91 1,67 2,76 1,67

Reengineering business

processes

3,69 1,85 3,51 1,79 3,33 1,86

Business-technology

alignment

3,75 1,91 3,46 1,82 3,22 1,83

Access to technical skills

and expertise

3,39 1,77 3,16 1,64 2,97 1,66

Coordination between

business-technology

people

3,27 1,77 3,06 1,69 2,93 1,70

Resistance to change 3,41 3,89 3,15 1,73 2,93 1,69

Overall, it is reported that conflict with

traditional business and e-business initiatives,

conflict with traditional trading partners and

reengineering business processes are the greater

constraints, although they have values less than 4.

The less problematic is the lack of senior

management support. It is important to remind that

we are talking about the biggest Portuguese

enterprises.

5.2 Hypotheses Testing

To test our hypotheses we used the Kruskal-Wallis

test, since this is a more powerful test when using

ordinal variables (Maroco, 2003). The results are

show in Table 2.

The test results lead us to conclude that for all

hypotheses, with the exception of H2 and H3, there

are at least two stages of maturity with significantly

different average for each of the years, since the p-

values are always below 0,05. As such, we can

confirm all the hypotheses except H2 and H3. In

other words, we can’t say that the cost of e-business

and the uncertainty with aspects related to security

are more or less problematic depending on the

maturity stage of the organization.

Table 2: Hypotheses Results using Kruskal-Wallis test.

2005 2006 2007

Hypothe

ses

Chi-

Square

p-value Chi-

Square

p-value Chi-

Square

p-value

H1 14,895 0,011 11,339 0,045 19,004 0,002

H2 5,472

0,361

6,969

0,223

5,241

0,387

H3 6,178

0,289

2,836

0,725

10,547

0,061

H4 20,596 0,001 27,017 0,000 29,984 0,000

H5 28,407 0,000 29,67 0,000 37,277 0,000

H6 15,598 0,008 19,225 0,002 15,976 0,007

H7 11,29 0,046 11,238 0,047 19,58 0,001

H8 18,702 0,002 23,573 0,000 25,815 0,000

H9 22,203 0,000 20,532 0,001 25,287 0,000

H10 15,619 0,008 9,09 0,106 11,459 0,043

H11 12,453 0,029 15,387 0,009 24,094 0,000

H12 14,038 0,015 15,577 0,008 21,027 0,001

H13 15,56 0,029 14,213 0,048 16,454 0,021

6 CONCLUSIONS

It is said that in the last decade e-business has

revolutionized the business world. This study

attempts to explore the constraints associated to e-

business evolution in big enterprises. The study

found that big enterprises are sensitive to e-business

and that they had an evolution of maturity from 2005

to 2007. This evolution was probably caused by

some initiatives launched by governments. In the

last few years several initiatives have been taken

and, at the end of 2005, the Technological Plan was

launched. This plan aims at mobilizing the

Portuguese society to overcome the modernization

challenge the country has been facing in the last

years. This plan, included in a broader plan - the

National Action Program for Growth and Jobs,

2005-2008 - is based on three main axes:

Knowledge - To qualify the Portuguese for the

knowledge society, fostering structural measures

which aim at enhancing the average qualification

level of the population, implementing a broad and

diversified lifelong learning system and mobilizing

the Portuguese for the Information Society;

Technology - To overcome the scientific and

technological gap, reinforcing public and private

scientific and technological competences;

Innovation – To boost innovation, helping the

productive chain to get adapted to the challenges of

globalization by means of the diffusion and

development of new procedures, organizational

systems, services and goods.

In 2006 the program “On-the-Spot-Firm” was

launched. This program enabled the establishment of

certain online companies in less than one hour. The

European Commission acknowledged the relevance

of this initiative and recently granted Portugal with

the European Enterprise Award, on the category

AN EXPLORATORY INVESTIGATION OF E-BUSINESS CONSTRAINTS AMONG LARGE ORGANIZATIONS IN

PORTUGAL

“Red Tape Reduction”.

The constraints associated to change, are

normally the most problematic. Gibbs et al. (2003)

conclude that for many European countries, cultural

resistance to change and innovation is at the root of

resistance to e-business. And Portugal, we believe is

no exception.

This study was also intended to test a set of

factors that could act as constraints to e-business

development. Were confirmed eleven of the thirteen

hypotheses.

We are doing the same research on Small and

Medium Enterprises (SMEs), because perhaps the

great part of the partners of the big companies are

SMEs. And if SMEs are in a low stage of maturity

they will be able to influence the maturity stage of

big companies and, mainly, its evolution.

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