158 Scupola

Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without writtenpermission of Idea Group Inc. is prohibited.

Chapter VIII

GovernmentIntervention in SMEs’

E-Commerce Adoption:An Institutional Approach

Ada Scupola, Roskilde University, Denmark

Abstract

This study investigates the role of government in the adoption and diffusionof e-commerce in small and medium size enterprises. Institutionalinvolvement, and especially the role of government, has historically beendeterminant in the adoption and diffusion of technological innovations.King, Gurbaxani, Kraemer, McFarlan, Raman, and Yap’s (1994) frameworkof institutional factors in information technology innovation is used toanalyze what is actually done and what SMEs would like to be doneregarding government intervention to foster the adoption and diffusion ofe-commerce. The findings show that the government could mostly influenceadoption and diffusion through knowledge deployment, subsidies, andmobilization and that a convergence between companies’ wishes andgovernment initiatives is starting taking place.

IDEA GROUP PUBLISHING

This chapter appears in the book, Global Electronic Business Research: Opportunities and Directionsedited by Nabeel Al-Qirim © 2006, Idea Group Inc.

701 E. Chocolate Avenue, Suite 200, Hershey PA 17033-1240, USATel: 717/533-8845; Fax 717/533-8661; URL-http://www.idea-group.com

ITB11881

Government Intervention in SMEs’ E-Commerce Adoption 159

Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without writtenpermission of Idea Group Inc. is prohibited.

Introduction

Innovation and technological change has been considered an important factor foreconomic development. Freeman (1990, p. 1) specifically states that “all schoolsof thoughts in economics have always recognized the importance of technologi-cal innovations and of organizational innovations for the competitive perfor-mance of firms and nations and for the long term growth of the world economy.”Innovation is characterized by three stages: invention, innovation, and diffusion.An invention is a new idea or product, which becomes an innovation when itstarts diffusing in the society or move into a usable form. Diffusion is the spreadof the capacity to produce and/or use an innovation, and its use in practice.Innovations are normally divided into radical and incremental innovations(Freeman & Perez, 1998; Pavitt 1984). The definition of innovation itself impliesthat dealing with innovation means dealing with management and reduction ofuncertainty. Generally, the greater the changes introduced, the greater theuncertainty about technical performance, the market response and the ability ofthe organization to absorb and utilize the requisite changes effectively (Rosenberg& Kline, 1988).Information technology has been among the fastest growing innovations in bothproduction and use in the second half of the last century. In the last decade, aparticular type of information technology, the Internet, has been changingbusiness processes, organizational, and industrial structures and has given formto new communication and business forms as for example e-commerce (Zwass,1996).The institutional environment created by governments in the form of policies andinterventions is very important for the economic development of developed aswell as developing nations. Often the economic performance of a country isinfluenced by the promotional and proactive policies of governments (e.g.,Coase, 1992; North, 1991; Teubal, 1979). Also the importance of social andinstitutional factors such as the involvement of government and the role of thesingle entrepreneur as enablers and stimulators of innovation have emerged(Sørensen & Levold, 1992). Furthermore, several authors have found that theexternal environment, including industry associations and the government, isvery important in the adoption and diffusion of technological innovations such astelecommunications and more recently e-commerce (e.g., Tornatzky & Fleischer,1990).Especially government intervention has been historically important in creatingeconomic growth and in fostering diffusion of technological innovations (North,1991; Teubal, 1979). For example, Reinert (1999) highlights the role of the stateas promoter of economic growth by getting the nation into the “right business,”creating a competitive advantage in “the right business,” setting standards, and

19 more pages are available in the full version of this document,

which may be purchased using the "Add to Cart" button on the

publisher's webpage:

www.igi-global.com/chapter/government-intervention-smes-

commerce-adoption/18903

Related Content

Still Watching Other People's Programmes? The Case of Current TVTheodoulos Theodoulou and Savvas Papagiannidis (2009). International Journal of E-Business

Research (pp. 55-67).

www.irma-international.org/article/still-watching-other-people-programmes/37437/

Web Designers, Social E-Value Creation and E-Business Planning: Understanding

Resistance from Conflicting DemandsRonan de Kervenoael, Christophe Bisson and Mark Palmer (2012). Strategic and Pragmatic E-

Business: Implications for Future Business Practices (pp. 330-351).

www.irma-international.org/chapter/web-designers-social-value-creation/66016/

Mobile Services for Development: An Opportunity for Academic Co-CreationAlan Hartman (2017). Handbook of Research on Strategic Alliances and Value Co-Creation in

the Service Industry (pp. 342-354).

www.irma-international.org/chapter/mobile-services-for-development/175051/

The Business of Online EducationDirk Baldwin and Bradley Piazza (2009). Electronic Business: Concepts, Methodologies, Tools,

and Applications (pp. 263-276).

www.irma-international.org/chapter/business-online-education/9288/

Essential Functionalities for Commercial Internet Presence: A Portuguese StudyAlexandre Ferreira and Francisco Antunes (2015). International Journal of E-Business Research

(pp. 56-83).

www.irma-international.org/article/essential-functionalities-for-commercial-internet-presence/124255/