Analysis of State of Electronic Commerce Adoption and Influencing Factors Among Small and Medium Enterprises in Kenya

Abstract

Small and Medium-sized Enterprises (SMEs) in Kenya contribute significantly to economic growth, social structure and employment as well as local and regional development. Consequently, they have become an important sector of the economy. The slow rate of electronic commerce (e-commerce) adoption and inadequate research on the same among SMEs in developing countries prompted this research. Many factors could be responsible for the present state of e-commerce adoption among the SMEs in Kenya. In order to understand the state of e-commerce adoption and determine the factors that influence the adoption, SMEs adopters of e-commerce were asked to indicate their status and factors influencing the adoption of e-commerce among SMEs in Kenya. The research was informed by the Technological-Organizational-Environmental (TOE) framework, which address the decision to adopt e-commerce, as well as the adoption and non-adoption of different e-commerce technologies at organization. The research design adapted for this research study was a cross sectional survey approach using a questionnaire. This was chosen because it was intended to gather information from a large number of respondents in different industry sectors which are located in selected regions over a wide geographical area. The population included all SMEs in Kenya that were already using some e-commerce technologies. The sample size was one hundred and nineteen SMEs selected from five different regions. The data was analyzed using descriptive statistics, correlation, factor and regression analyses. Several hypotheses were tested empirically. The result shows that SMEs have a moderate extent of e-commerce adoption at 59% and that a majority of them are at the two initial stages namely, promotion and provision. There are variations in e-commerce adoption among SME in different industry sectors. The SMEs rated the importance of the Attitude factors and the Social & cultural factors to e-commerce adoption as very high, showing that they were favorably disposed to adopt e-commerce in so far as attitude and social & cultural factors are concerned. In addition, five out of seven barrier factors studied were found to have a significant influence on e-commerce adoption including technical, financial, organizational, governmental and innovational barriers. Perceived risk and knowledge vi were the only moderating factors in the relationship between barrier factors and extent of e-commerce adoption. The research concludes that there are variations in e-commerce adoption among SME in different industry sectors and that there is need to promote industry specific e-commerce applications based on their suitability in meeting the industry needs. It also concludes that there is need to encourage SMEs in Kenya to move to transaction and integration stages of adoption, since majority of them are at promotion and provision stages. The results also imply that more efforts are needed address barriers to e-commerce adoption in order to help and encourage SMEs speed up e-commerce adoption. Key words:- E-commerce adoption, Small and Medium Enterprises, Surve