E-Commerce Adoption in Developing Markets: SME Perspectives

Amit Mishra

, Shashi Kant Gupta

, Prabhdeep Singh

and Orooj Siddiqui

University of Lucknow, India

Eudoxia Research University, U.S.A.

Shri Ramswaroop Memorial University, India

Integral University, India

Keywords: E-Commerce, Readiness, Awareness, Barriers, Small and Medium-Sized Businesses (SMEs).

Abstract: E-commerce may enhance communications among manufacturers, retailers, customers, and even

policymakers. However for a number of causes, the usage of e-commerce by small and medium-sized

businesses (SMEs) in the process of countries is still constrained. This research seeks to establish the variables

that affect how SMEs in Ho Chi Minh City employ the E-commerce model. Next, numerous policy

implications are offered for Ho Chi Minh City Businesses to encourage e-commerce. The research included

data from 302 Ho Chi Minh City Firms. In order to analyze data, statistical methods such as correlation test,

the Cronbach's Alpha reliability scale, as well as the linear regression model along with exploratory factors

(EFA) was utilised. Results indicate adoption of e-commerce is boosted by the enterprise's preparedness,

understanding of the advantages of online shopping, and promoting regulations.

1 INTRODUCTION

The integration of electronics, telecommunications,

and the internet into manufacturing and commerce

represents a monumental paradigm shift in global

economic dynamics. E-commerce has emerged as a

focal point in various academic disciplines, including

economics, management, technology, marketing, and

finance (Rajagopal et al., 2022). Its significance

extends to both developed and developing nations,

providing numerous opportunities for economic

advancement. However, challenges persist that can

inhibit the full exploitation of e-commerce benefits,

particularly in developing nations. These challenges

include underdeveloped monetary and financial

infrastructure and legal frameworks characterized by

outdated laws and inadequate regulations (Pandey et

al., 2021).

Consequently, many developing nations struggle to

fully exploit the benefits of e-commerce, which can

impede their economic growth potential. Despite

these obstacles, e-commerce offers innovative

avenues for enhancing competitiveness and

organizational development, fostering consumer

engagement, and expanding market reach (Alrumiah

et al., 2021). These advantages are particularly

relevant in regions like Ho Chi Minh City, where

there is a notable lack of literature on the factors

influencing e-commerce adoption.

Small and mid-size enterprises (SMEs), which

typically lack extensive resources, stand to gain

significantly from engaging with e-commerce.

However, the limited research on this topic creates a

gap in understanding how these businesses can

effectively leverage e-commerce to their advantage

(Lv et al., 2020). Addressing this gap is crucial for

identifying opportunities and formulating effective

policy interventions aimed at enhancing SMEs'

engagement with e-commerce.

The essay proposes specific policy changes tailored

to bolster SMEs' adoption of e-commerce,

recognizing the pivotal role they play in the economic

landscape of Ho Chi Minh City and beyond. By

examining the unique challenges and opportunities

faced by SMEs in this region, the research aims to

provide a comprehensive framework for supporting

their integration into the e-commerce ecosystem

(Tolstoy et al., 2022).

This exploration is essential not only for fostering

local economic growth but also for contributing to the

broader understanding of e-commerce's impact on

small businesses in developing regions. By

addressing the infrastructural and regulatory

challenges and promoting targeted policy

Mishra, A., Gupta, S., Singh, P. and Siddiqui, O.

E-Commerce Adoption in Developing Markets: SME Perspectives.

DOI: 10.5220/0012988200003882

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd Pamir Transboundary Conference for Sustainable Societies (PAMIR-2 2023), pages 1613-1616

ISBN: 978-989-758-723-8

1613

interventions, the potential for e-commerce to drive

economic development and enhance the

competitiveness of SMEs in Ho Chi Minh City can be

significantly improved. This approach highlights the

transformative potential of e-commerce and

underscores the need for ongoing research and policy

support to realize its full benefits.

2 LITERATURE REVIEW

Table 1: Exploring SME E-commerce Adoption: Global Perspectives and Insights.

Author Findings

Wanzu, et al., 2019 E-commerce usage affects SMEs' growth in Uganda. A structured, self-administered questionnaire

was used to surve

172 U

andan SME owners/mana

ers in Kam

ala.

Awe, et al., 2021 A research study wishes to explore the motivations of young Gambian business owners to use e-

commerce technolo

and their

ers

ectives on its advanta

es.

Rabayah, et al., 2022 SME e-commerce application model development efforts are mentioned. The study reviews

empirical data showing how firms' preparation influences SMEs' IT adoption.

Nather et al., 2020 The study focuses on e-commerce usage and attitudes among six manufacturing SMEs in Wenzhou,

Zhe

ian

ovince, China, a re

ion economicall

develo

ed for SMEs.

Wongsunopparat, et

al., 2021

Investigated factors affecting live streaming e-commerce client buying behaviour. The study

examines one purchase decision and six independent factors, including platform loyalty,

engagement, pricing, product individualization, and the live streamer's public image.

3 HYPOTHESIS DEVELOPMENT

H1: Enterprise readiness improves E-commerce apps.

H2: E-commerce awareness improves business E-

commerce applications.

H3: E-commerce obstacles hurt corporate

applications.

H4: Supporting policies boost business e-commerce

applications.

4 RESEARCH METHODOLOGY

A comprehensive investigation into the adoption of e-

commerce among small and medium-sized

enterprises (SMEs) in Ho Chi Minh City incorporates

both qualitative and quantitative methodologies. In

the qualitative approach, the research model's

variables including Enterprise Readiness (ER),

Awareness of E-commerce Benefits (BE), E-

commerce Application Hurdles (BA), Support

Policies (PO), and E-commerce Application

Performance (AP) were refined through a

collaborative discussion involving seven e-commerce

specialists. This qualitative phase allowed for a

nuanced understanding of the key factors influencing

e-commerce adoption within the SME sector.

Subsequently, the quantitative method involved

the practical sampling of 302 businesses in Ho Chi

Minh City. Businesses were selected from compiled

lists and contacted directly via email to participate in

the study by completing a questionnaire. The

collected data were then subjected to analysis using

the SPSS 20 tool, enabling researchers to derive

statistical insights into the patterns of e-commerce

adoption, the challenges faced by SMEs, and the

effectiveness of existing support policies. This

combined qualitative-quantitative approach provides

a holistic perspective on the dynamics of e-commerce

utilization among SMEs in Ho Chi Minh City,

facilitating informed policy recommendations and

strategic interventions to foster greater uptake in the

sector.

5 RESULT AND ANALYSIS

The reliability of a scale, as assessed by Cronbach's

Alpha coefficient, is crucial in research to ensure

consistency and accuracy of measurements. In this

study, the Cronbach's Alpha coefficients ranged from

0.830 to 0.929, with the highest value attributed to the

influencing element for policy and the lowest to

Internet applications. These coefficients indicate high

internal consistency, with values above 0.8

considered satisfactory. Moreover, individual

components such as enterprise preparation,

applications obstacles to e-commerce, and

comprehending the benefits of e-commerce

demonstrated robust reliability with coefficients of

PAMIR-2 2023 - The Second Pamir Transboundary Conference for Sustainable Societies- | PAMIR

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0.914, 0.904, and 0.888, respectively. The overall

correlation exceeding 0.3 further confirms the

adequacy of the variables included in the analysis.

Furthermore, the study assures the reliability of

the exploratory factor analysis (EFA) with a total of

20 variables, 17 independent and 3 dependent, all

meeting the requisite criteria. This comprehensive

analysis provides a solid foundation for

understanding the factors influencing policy, e-

commerce applications, and associated challenges,

thus offering valuable insights for decision-makers

and researchers in the field.

Table 2: Cronbach’s Alpha analysis results.

Factor Cronbach’s

alpha

Variable

Enterprise readiness 0.907 5

E-commerce app hurdles 0.915 6

Support policies 0.931 4

wareness of E-commerce benefits 0.929 5

E-commerce application 0.898 5

All 17 independent factors examined in the

exploratory factor analysis (EFA) met the

requirements for reliability as evidenced by

Cronbach's Alpha analysis. Bartlett's test, with a

significant level of 0.000, indicated satisfactory

results, validating the factor structure. Furthermore,

the Total Variance Explained, exceeding 50% at

79.837%, underscores the adequacy of the factors in

explaining the data variability. Factor correlation

analysis, as presented in Table 1, revealed the nature

of relationships between variables. Notably, the E-

commerce application demonstrated positive

correlations with ER and BE, while exhibiting a

negative correlation with BA, all within acceptable

significance levels below 5%. Consequently, these

findings support the use of a linear regression

approach to establish connections between variables,

indicating a promising avenue for further analysis and

interpretation of the data.

Table 3: Correlation analysis result.

Enterpris

readiness

warenes

of E-

commerce

enefits

E-

commerce

applicatio

arriers

Support

policies

E-

commerce

applicatio

Pearson

orrelatio

0.354** 0.671** -0.237** 0.200** 1

Sig.

(2-tailed)

1.001 1.001 1.001 1.001

N 304 304 304 304 304

The regression analysis indicates that the parameters

ER, BE, and PO positively influence AP, while BA

has an adverse effect on AP. The R2 value of 0.586

suggests that the model accounts for 58.6% of the

variance in e-commerce usage. In other words, ER,

BA, BE, and PO collectively explain 58.6% of the

variation observed in the use of e-commerce. This

underscores the significance of these factors in

understanding and predicting patterns of e-commerce

adoption and usage.

Table 4: Regression model results.

Model Unstandardized

coefficients

Standardized

coefficients

t Sig.

B Std.Error Beta

1 (Constant) -0.781 0.325

-2.446 0.016

E-

commerce

application

arriers

-0.224 0.047 -0.204 -5.847 0

Enterprise

readiness

0.253 0.038 0.279 7.942 0

Support

olicies

0.245 0.043 0.234 5.607 0

E-

commerce

advantages

0.467 0.037 0.515 13.187 0

The standardized regression coefficients reveal the

impact of various components on the dependent

variable, AP. Beginning with BE, its positive beta

value of 0.514 indicates a significant positive

influence on AP. For every unit increase in BE, AP

rises by 0.389 units, underscoring their positive

relationship. Similarly, ER demonstrates a positive

impact on AP, with a beta value of 0.278. A one-unit

increase in ER corresponds to a 0.278 unit

improvement in AP, further highlighting their

constructive association. Conversely, BA exhibits a

negative impact on AP, with a beta value of 0.203,

implying that AP decreases by 0.203 units for every

unit increase in BA. Lastly, the relationship between

AP and PO is also positive, as indicated by a beta

value of 0.236. With each unit increase in PO, AP

improves by 0.236 units, reinforcing their favourable

correlation. Overall, these findings underscore the

varying influences of different components on AP,

highlighting both positive and negative associations.

E-Commerce Adoption in Developing Markets: SME Perspectives

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Figure 1: Research model results.

6 CONCLUSION

In Ho Chi Minh City, the adoption of e-commerce by

small and medium-sized enterprises (SMEs) is crucial

for enhancing customer retention and facilitating

growth. This study aims to identify the factors

influencing the utilization of e-commerce among

companies in the region. Employing a qualitative

approach, the research involved group discussions

among E-commerce specialists to refine criteria and

develop a questionnaire. Subsequently, a

combination of quantitative techniques such as linear

equation modelling, Cronbach's Alpha test, and EFA

tests were employed to analyse the gathered data and

categorize questions.

Several challenges impede the widespread

adoption of e-commerce among SMEs, including

reliance on traditional methods of buying and selling,

limited human resources, high investment costs, lack

of expertise, and inconsistent business strategies.

Nonetheless, certain factors support the integration of

e-commerce. Financial, technological,

infrastructural, and human resources all play crucial

roles in preparing a firm for e-commerce

implementation.

To overcome barriers and capitalize on

opportunities, it is imperative for employers and

employees to engage in training sessions focused on

e-commerce programmes. These sessions are

essential for equipping individuals with the necessary

knowledge and skills to navigate the complexities of

the e-commerce landscape effectively.

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