The Strategic Value of E-commerce Adoption in Small and Medium Enterprises in Nairobi, Kenya

Abstract

The study set out to determine the extent of e-commerce adoption, the factors influencing e-commerce adoption, and the strategic value of e-commerce adoption in small and medium enterprises in Nairobi, Kenya. The population of interest for the study was all small and medium enterprises with official premises in Nairobi County. The study is a descriptive survey and a sample size of 176 firms was used. Out of the 176 small and medium enterprises targeted, 163 firms responded which translates to 93% response rate. The study was successful in determining the extent of e-commerce adoption in small and medium enterprises in Nairobi, Kenya. The findings indicate that e-commerce is not widespread among small and medium enterprises in Nairobi. A meager 3% of the firms use the internet for online sales. On the other hand, the study established several factors that influence e-commerce adoption in the SME sector. The most important factors were the perceived cost of implementing e-commerce technologies and lack of awareness with regard to e-commerce. Nonetheless, the availability of a specific e-commerce strategy is a critical input. In addition, the study established that e-commerce is a critical part of business strategy for most adopters. Out of the original 163 respondent firms, only 93 firms exhibited some degree of e-commerce adoption. This group formed the basis for the determination of the strategic value of e-commerce adoption. Thus, for the adopters, e-commerce was found to provide strategic value in creating new business opportunities, sales, customer service, cost reduction, efficiency, new product development, innovation, access to international markets, linkages, marketing and communications. And while some small and medium enterprises in Nairobi have not adopted e-commerce, the study has established that generally there is a positive perception of the business value of ecommerce. The study thus recommends that comprehensive mechanisms be put in place by policy makers and practitioners to drive up adoption so as to realize the full potential of e-commerce among small and medium enterprises. More in-depth case studies should also be carried out regarding e-commerce adoption in small and medium enterprises. The study further recommends that efforts be initiated to quantify the tangible benefits of ecommerce in SMEs. In conclusion the researcher has predicted that a meaningful impact of e-commerce on the industry structure is to be expected as and when the level of adoption in small and medium enterprises attains the requisite critical mass threshold.