Electronic Business: Concepts, Methodologies, Tools, and Applications (4-Volumes) P133

1254 Chapter 4.17 Factors Affecting E-Business Adoption by SMEs in Sub-Saharan Africa: An Exploratory Study from Nigeria 3ULQFHO\,¿QHGR University of Jyväskylä, Finland ABSTRACT The use of information communication technolo-gies (ICT) especially the Internet by small- and medium-sized enterprises (SMEs) is on the in-crease in many regions of the world, including Africa. Nevertheless, empirical evidence from Sub-Saharan Africa (SSA) regarding the factors that affect the adoption of e-business is scarce. In that regard, the main objective of this chapter LVWR¿OOWKHUHVHDUFKJDSZLWKDQH[SORUDWRU\ study that is aimed at eliciting views from SMEs in Nigeria. This article made use of a theoretical framework encompassing organizational, external and technological contexts to deliberate the issue. A survey is conducted in three Nigerian cities DQGWKH¿QGLQJVRIWKHVWXG\DUHSUHVHQWHG7KH implication of the study is discussed and future research directions also given. INTRODUCTION The use of information communication technolo-gies (ICT) by small- and medium-sized enterprises (SMEs) is already an established way of life in the developed countries (Beck, Koenig, & Wigand, 2003; Bunker & MacGregor, 2002; Lockett & Brown, 2003) and has been extensively studied in extant information systems (IS) literature (see, for example; Beck et al., 2003; DeLone, 1988; Kalakota & Robinson, 2001; Montazemi, 1988; Pigni, Faverio, Moro, & Buonanno, 2004; Poon, 2002; Scupola, 2003). In contrast, only a few research have surfaced wherein e-business in the developing countries including Sub-Saharan Af-rica (SSA) are discussed (Chifwepa, 1998; Heeks & Duncombe, 2001; Masten & Kandoole, 2000; Okoli, 2003; Okoli & Mbarika, 2003; Travica, 2002). We want to add to these few available Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Factors Affecting E-Business Adoption by SMEs in Sub-Saharan Africa studies by looking at the possibility of e-business adoption by SMEs in Nigeria. In this chapter, a business with up to 250 employees is categorized as an SME according to the European Parliament’s GH¿QLWLRQ2(&`2QWKHZKROH60(VDUH characterized by informal and inadequate plan-QLQJVWURQJRZQHU¶VLQÀXHQFHODFNRIVSHFLDO-ists, small management team, heavy reliance on few customers, limited knowledge and so forth (Bunker & MacGregor, 2002, Reynolds et al., 1994; Yap, Soh, & Raman, 1992). Further, the term e-commerce is often used interchangeably with e-business by many, though some experts have pointed out a difference. For example, Tur-ban, Lee, King, and Chung (2000) assert that the former refers to buying and selling electronically and it is a subset of the latter, which is broader and includes the servicing of customers, collabo-rating with entities both within an organization DQGRXWVLGHLW=ZDVVGH¿QHGHEXVLQHVVDV ³WKHVKDULQJRIEXVLQHVVLQIRUPDWLRQPDLQWDLQLQJ business relationships, and conducting business transactions by means of the telecommunication networks” (p. 3). Here, both concepts are referred to as e-business. The adoption of ICT by SMEs reported widely is literature tend to focus attention on the developed West (see Beck et al., 2003; Bunker & MacGregor, 2002; Poon & Strom, 1997; Scupola, 2003). Examples of countries in the West include the US, Australia, and Italy. On the whole, these studies pertaining to ICT and SMEs or e-busi-ness in general have deliberated ICT deploy-ment, organizational and environmental factors concerning ICT use in business, success issues and so on (Abell & Lim, 1996; DeLone, 1998; Lockett & Brown, 2003; Poon & Strom, 1997; Walczuch, den Braven, & Lundgren, 2000; Yap et al., 1992). This chapter will attempt to look at some of those factors from the perspective of SSA. Importantly, many development research and reports have noted how ICT usage and adoption in the developing countries (and their by SMEs) could redress some of the inequalities resulting from WKHHPHUJLQJ³GLJLWDOGLYLGH´FXUUHQWO\H[LVWLQJ between the developed North and the developing South (Avgerou, 1998, 2003; Baliamoune-Kutz, 2003; Castells, 1999; Mbarika, Jensen, & Meso, 2002; Molla, 2000; Okoli, 2003; Singh, 2000; Travica, 2002; WSIS, 2004). Moreover, it is important to have some under-standing regarding the diffusion of e-business (if any) in SSA in light of the fact that some aspects of that society may impact the adoption of ICT in general and e-business, in particular. Further, among the few studies on e-business adoption in SSA, the work of Okoli (2003) has discussed the LPSDFWRIFXOWXUDOIDFWRUV+HDVVHUWVWKDW³$IUL-cans do not have the culture of buying a product without tactile contact … where the consumer can feel and examine the product before haggling…” (Ibid, p. 16). Thus, a research study of e-business in the SSA region may be useful for both theory and practice. Thus, the objective of this chapter is to present WKHSUHOLPLQDU\¿QGLQJVUHODWLQJWRWKHSHUFHS-tion and adoption e-business by SMEs in Nigeria. Primarily, this study is exploratory in nature and uses a survey. It is hoped that this article would contribute to knowledge as it seeks to assess e-business and/or the use of the Internet/IT by SMEs in Nigeria, and perhaps serve a base for further discussions and studies on the issue. Answers to the following questions will be provided in the chapter. Firstly, what are the state of preparedness and/or readiness of Nigerian SMEs for e-busi-QHVV"6HFRQGO\LQZKLFKVSHFL¿FZD\VGR60(V FXUUHQWO\XVHWKH,QWHUQHW"7KLUGO\ZKDWEHQH¿WV do SMEs in Nigeria seek as they contemplate using—or currently use—the Internet in their business operations? And, in generic terms, what are the main barriers to e-business adoption in Nigeria? 1255 Factors Affecting E-Business Adoption by SMEs in Sub-Saharan Africa Background Information about Nigeria and Sub-Saharan Africa Nigeria is the most populous country in Africa and has a population of about 140 million (World Bank Group, 2004). It is one of the fastest grow-ing economies in SSA, and has a large number of small businesses complementing its oil-run economy. According to Ojukwu and Georgiadou (2004), 97% of all businesses in Nigeria employ less than 100 employees. This fact is similar to other SSA countries, where SMEs also form the bedrock of their economies (Matambalya & Wolf, 2001; Mead & Liedholm, 1998). Unarguably, SMEs are viewed as the economy growth engine of many nations—be they developing or developed (Brouthers, Andriessen, & Nicolaes, 1998). Sadly, the use of ICT by SMEs in Nigeria does not appear to be pervasive; however, events on the ground in Nigeria such as the on-going liber-alization policy in the telecommunication sector are creating opportunities for the emergence of HEXVLQHVV $MD\L ,¿QHGR $OVR Nigeria is one of the best-performing nations in terms of ICT products use and diffusion in SSA (Hamilton, Jensen, & Southwood, 2004; Mbarika, Jensen, & Meso, 2002; Mbarika, Kah, & Keita, 2004; NITDA, 2001). Relatedly, the spread of cyber cafés in the country may be helping to popu-larize the Internet, which in turn could enhance e-business adoption (Ajakaye & Kanu, 2004). The teledensity (number of telephones lines per one hundred inhabitants) for Nigeria has been improv-ing; for example, it rose from 0.5 in 1999 to 2.0 in 2002 (Ajayi, 2003). The present teledensity rate is even better following the deregulation of telecoms industry with licenses being granted to several operators. The sector also received foreign direct investment (FDI) of U.S. $4 billion. Hitherto, the Nigerian government has been the sole provider of telephony to Nigerians (Ajayi, 2003; Hamilton HWDO,¿QHGR,QWKHVDPHYHLQWKH current Nigerian government is promoting e-busi-ness among SMEs in its National IT Policy, which ZDVLQDXJXUDWHGLQ$MD\L,¿QHGR 2004). All the aforementioned facts informed the choice of Nigeria as an intriguing county in SSA to investigate e-business adoption. Moreover, many parts of SSA have far less infrastructural and political support for IT-related initiatives or any e-business engagement (Mbarika et al., 2002, 2004; Odedra, Lawrie, Bennett, & Goodman, 1993; Woherem, 1996). Furthermore, the region of Sub-Saharan Africa (SSA) is home to 32 of the 48 least devel-oped countries in the world, it has a population of about 860 million people, and it is associated with poverty, high illiteracy rate, and chronic underdevelopment characterized by inadequate and poor telecommunications infrastructure, low teledensities, low level of technical skills and poor energy supply (Dutta, Lanvin, & Paua, 2003; ITU, 2004; Mbarika, et al., 2004). Usually, the republic of South Africa is excluded from SSA due to its superior indicators, so are countries in the northern part of Africa. Thus, the overview of the region in which this study is set, is highlighted. The rest of the chapter is organized as follows: The following section presents a review of litera-ture on e-business adoption and the theoretical framework of the study. After the Literature Re-view, the research method and context is discussed. 7KH¿QGLQJVDUHSUHVHQWHGLQWKHUHVXOWVVHFWLRQ The implications and discussions are dealt with in the Discussions and Implications section. The concluding part of the chapter is presented in the Conclusion section. LITERATURE REVIEW: E-BUSINESS ADOPTION BY SMES In the IS domain, Rogers’(1995) diffusion of in-novations theory has been used by researchers 1256 Factors Affecting E-Business Adoption by SMEs in Sub-Saharan Africa in studying the adoption of new innovations and RXVSUREOHPLQ1LJHULD,¿QHGR2MXNZX technologies and that theory forms the bedrock for the theoretical model used in this chapter. With respect to e-business adoption by SMEs, Scupola (2003) provides a summary of literature on such studies. Among the studies she discussed are those by Iacovou, Benbasaat, and Dexter (1995) wherein organizational readiness, external pressure and the SHUFHLYHGEHQH¿WVRIWKHWHFKQRORJ\DUHYLHZHG as factors affecting the adoption of ICT by SMEs. Also, Thong and Yap (1995) studies the impact of organizational and environmental factors on e-business adoption with emphasis on the role of &(2VFKLHIH[HFXWLYHVRI¿FHUV,QDVLPLODUYHLQ Walczuch et al. (2000) compiled a list of barriers to Internet commerce adoption by small business in Holland, by citing previous literature; includ-ing those by Abell and Lim (1996) among others. Some of the barriers discussed include unfamiliar-ity with the Web and lack of guidance about it, security issues and so on. Furthermore, Walczuch et al. (2000) also deliberated reasons why SMEs fail to adopt the Internet in their business; some of the reasons they mentioned include high costs, attitude, and so on. Also, Scupola (2003) highlights WKHEHQH¿WVRI,QWHUQHWFRPPHUFHHEXVLQHVVWKDW are similar with those in Walczuch et al. (2000). Examples include reduced costs, more customer satisfaction, distance barrier disappearance, and FRPPXQLFDWLRQHI¿FLHQFOf note, a majority of the literature review men-tioned above originates from the developed West DQGRIWHQWHQGWRIRFXVRQWKHVSHFL¿FFRQFHUQV of that society. This chapter is not suggesting, in any way, that some of the factors discussed in such literature do not apply in developing countries (including SSA). What we are attempting to point out in this chapter is that due to socioeconomic and cultural differences between the regions, other factors may in fact exist taken for granted, at least in the developed world. An example cited above relates to the prevailing attitude or culture towards commerce in general (see, Okoli, 2003); or even electric power generation, which is a seri- Georgiadou, 2004) and may not be seen as a threat to e-business in the developed West. Additionally, in contrast to many research on e-business/e-com-merce adoption and diffusion in the West, where organizations that have actually implemented e-business (or in the process of implementing) DUHVWXGLHGDQG¿QGLQJVRIVXFKUHVHDUFKGLVVHPL-nated; this study is not avail of that opportunity. The number of SMEs, for example in Nigeria HQJDJLQJLQUHDOHEXVLQHVV²E\GH¿QLWLRQ²LV limited; and, obtaining information about such companies is not an easy task. As such, the thrust of this article may appear dissimilar with those from the West, in what it sets out to investigate and how it approaches such issues. However, it is worth noting that the situation regarding e-busi-ness adoption and diffusion may be somewhat different in multinationals, banks and other large entities in Nigeria (and in the region) due to the availability of resources—human, technical and ¿QDQFLDO7LDPL\X Notwithstanding, empirical studies are begin-ning to emerge with focus on the adoption, use, and diffusion of ICT by African SMEs. Prominent amongst such work include those by Heeks and `XQFRPEHZKHUH¿QGLQJVDERXW,&7XVH by SMEs in Botswana is deliberated. Likewise, Okoli (2003) assesses e-business outcomes and values in SSA and concludes that the availability of ICT infrastructure amongst other factors af-fect e-business capabilities in the region. Other studies have investigated the impact of ICT on the performance and growth of SMEs in SSA and found positive relationships (Matambalya & Wolf, 2001; Ojukwu & Georgiadou, 2004). This present chapter adds to these few studies. The Research Framework The research model used for this study is modi-¿HGIURPWKHZRUNRI7RUQDW]N\DQG)OHLVFKHU (1990) and Chau and Tam (1997), which is shown in Figure 1. The model has featured in research 1257 Factors Affecting E-Business Adoption by SMEs in Sub-Saharan Africa Figure 1. Theoretical framework of the research (adapted from Chau & Tam, 1997; Scupola, 2003; Tornatzky & Fleischer, 1990) External Environment: Culture, role of government, infrastructural support Organizational Context: Employee IT skills, company size, financial and technological resources E-business adoption and growth Technological Context: E-business Barriers, E-business Benefits on e-commerce adoption elsewhere (see, for example, Lertwongsatien & Wongpinunwatana, 2003; Scupola, 2003). Tornatzky and Fleischer’s (1990) model has three components impacting the adoption and implementation of innovations; namely, factors or items from the technological, organizational and external environments. In this chapter, we are not dealing with the implementa-tion of e-business in SMEs, per se; rather we are interested in how some of the factors from the three mentioned contexts affect the adoption of e-business by SMEs in Nigeria. Importantly, the model is applicable to any organization, unit of analysis and region (Lertwongsatien & Wongpi-nunwatana, 2003; Scupola, 2003; Tornatzky and Fleischer, 1990). External Environment In Tornatzky and Fleischer’s (1990) model, the external environment in which organizations carry out their business is noted as being crucial. Factors such as customer-supplier relations, gov-ernment regulations and the attitude or the culture amongst others do impact the adoption of e-busi-ness. With regard to Nigeria, a vast majority of the population would, usually, buy its wares from sellers after having tactile contacts and haggling (Okoli, 2003). E-business adoption may face an uphill task here. In addition, there is no strong IT culture in the country (Ojo, 1996) as the country LV\HWWREHIXOO\LQWHJUDWHGLQWRWKH³QHWZRUNHG world” (Dutta et al. 2003; ITU, 2004). The role of the Nigerian government in setting policies for e-society (including e-government and e-busi-ness) is only emerging after the inauguration of the national IT policy in March, 2001 (Ajayi, 2003; NITDA, 2001). This effort, though belated, is nonetheless welcoming. Research has shown that government policies are vital in the diffusion of e-business (Damsgaard & Lyytinen, 1996). Moreover, Nigerians expect those in authority 1258 ... - tailieumienphi.vn