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An integrated model of the adoption and extent
of e-commerce in firms
Jordi Vilaseca, Joan Torrent, Antoni Meseguer and Inma
Rodríguez-Ardura
Internet Interdisciplinary Institute,
Open University of Catalonia (Universitat Oberta de Catalunya, or UOC)
Avda. Tibidabo 39-43, 08035 Barcelona, Spain
Author Posting. (c) 'Copyright Holder', 2007.
This is the author's version of the work. It is posted here for personal use, not for redistribution.
The definitive version was published in International Advances in Economic Research, Volume 13 Issue 2, 2007.
Introduction
Since the mid-1990s researchers have sought to understand why some firms embark on e-commerce
operations on the Internet while others prefer to wait and see how events unfold. We still have to
determine which variables contribute to explaining the extent to which firms use e-commerce, given
that to date the literature has not yet offered conclusive evidence on this question. The current work
aims to provide an integrated vision of the set of factors influencing the e-commerce adoption
process. We use a sample of 2,038 firms of all types that trade their products either with other
organizations or with end-consumers.
For this purpose, we first identify and evaluate the impact of the internal and external factors leading
firms to opt to develop an Internet-based e-commerce capacity. Given that little empirical evidence
exists about how companies are managing change in the context of e-commerce [Cope & Waddell,
2001], we also aim to identify the types of factors that, once firms adopt e-commerce, help them to
generate a certain volume of business, allowing this medium to achieve a particular importance
compared to the other marketing channels that the organization may use. Finally, we aim to evaluate
to what extent the types of factors influencing e-commerce adoption and those influencing the
subsequent development of e-commerce operations coincide. This will allow us to determine if firms
are taking into account in their adoption decisions those elements that will influence the subsequent
performance of their e-commerce operations.
Previous studies on adoption of Internet as a marketing channel
We have been able to identify up to 26 works, described in 30 different articles, which have aimed to
study either the factors leading firms to adopt the Internet and e-commerce or those elements
influencing its development once the firm has adopted these technologies (see Appendix 1).
Much research has focused on specific sectors of the economy, such as commercial distribution
[O’Keefe et al., 1998; Doherty et al., 1999], industry [Chan & Swatman, 2000; Chaston & Mangles,
2002; Kula & Tatoglu, 2003], the communications sector [Vadapalli & Ramamurthy, 1997], the
banking and finance sector [Corbitt, 2000], or tourism [Raymond, 2001; Wang & Cheung, 2004].
Researchers have often examined the specific problems faced by SMEs when they adopt and use e-
commerce on the Internet [Auger & Gallaugher, 1997; Poon & Swatman, 1997, 1999; O’Keefe et al.,
1998; Chappell & Feindt, 2000; Jeffcoate et al., 2002; Feindt et al., 2002; Walczuch et al., 2000;
Chaston & Mangles, 2002; Daniel et al., 2002; McGowan & Durkin, 2002; Sadowski et al., 2002;
Kula & Tatoglu, 2003; Matlay & Addis, 2003; Fillis et al., 2004]. And while some studies analyze the
determinants of B2B e-commerce operations [Chan & Swatman, 2000; Bertschek & Fryges, 2002;
Eid et al., 2002; Eid & Trueman, 2004], others have preferred to focus on B2C e-commerce [O’Keefe
et al., 1998; Doherty et al., 1999; Corbitt, 2000; Raymond, 2001].
The different studies have contemplated numerous and varied factors or determinants: characteristics
of the innovation; organizational characteristics; those linked to the firm’s competitive environment;
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managers’ characteristics; managers’ involvement in the implementation of the innovation, etc.
Studies even differ in their definition of the object of study. Thus, a first group of studies aims to
explain the decision to adopt e-commerce [Auger & Gallaugher, 1997; O’Keefe et al., 1998, etc.].
Another group of studies attempts to explain the adoption process as a whole, from taking the decision
to adopt the innovation to the implementation and full development of commercial operations on the
Internet. In turn, in this second group we can distinguish between some studies focusing on the
process of adopting Internet-based e-commerce [for example, Bertschek & Fryges, 2002], from other
(more common) works that focus on the general process of Internet adoption. This latter group of
studies contemplates e-commerce as just one of the possible uses of the Internet in the firm [for
example, Raymond, 2001; Arnott & Bridgewater, 2002, among others]. A third group of studies,
meanwhile, analyzes the final result of the adoption process, for which they identify and explain the
factors contributing to e-commerce success [Chappell & Feindt, 2000; Eid et al., 2002; Eid &
Trueman, 2004; Feindt et al., 2002; Jeffcoate et al., 2002; Sung & Gibson, 2005]. Finally, we might
mention a few studies that analyze the relation between a specific variable and e-commerce
implementation [Chaston & Mangles, 2002; Matlay & Addis, 2003].
With regards to the methodologies employed, we note that some of the works (relatively few) are
exclusively theoretical in nature [Eid et al., 2002; Fillis et al., 2004; Kim & Galliers, 2004], while
others have opted to use case studies and qualitative methodologies of analysis [Poon & Swatman,
1997, 1999; Chan & Swatman, 2000; Chappell & Feindt, 2000; Corbitt, 2000; Feindt et al., 2002;
Jeffcoate et al., 2002; Matlay & Addis, 2003]. Empirical works are consequently the most frequent.
But with the exception of Bertschek & Fryges [2002], Daniel et al. [2002] & Doherty et al. [1999],
who use samples of 3000, 678 and 330 firms, respectively, all the other authors employ samples of
under 300 firms. Moreover, some studies obtain their data exclusively from those firms that have
adopted Internet or e-commerce, ignoring those companies preferring not to adopt this marketing
channel [Auger & Gallaugher, 1997; O’Keefe et al., 1998; Bertschek & Fryges, 2002; Daniel et al.,
2002, among others].
In view of all this, research need to continue advancing in the study of e-commerce adoption, and
make contributions that offer broad conclusions about the role played by the characteristics of the firm
and its competitive environment, both in the decision to adopt (or not) e-commerce, and in the extent
to which e-commerce subsequently develops in the firm. Likewise, it would clearly be useful to cut
the varied number of determinants identified up to now to a smaller number of critical factors.
Conceptual framework
Works that have studied the diffusion and adoption of relatively complex technologies like IT have
frequently been framed in the analysis of processes of innovation diffusion and adoption [for example,
Grover & Goslar, 1993; Premkumar et al., 1994; King & Teo, 1996; Ramamurthy et al., 1999; Thong,
1999]. This theoretical basis has allowed researchers to examine the relation between the
characteristics of the IT, of its potential adopters, and of the environment, on the one hand, and the
speed and extent that firms adopt or implement these innovations, on the other [Premkumar et al.,
1994]. Hence it is hardly surprising that many studies on the adoption of Internet and e-commerce
systems have also resorted to innovation diffusion theory [for example, Kim & Galliers, 2004;
Corbitt, 2000; Raymond, 2001]. However, it is equally true that researchers have paid relatively less
attention to the diffusion of Internet and e-commerce [Kim & Galliers, 2004] than they have to the
diffusion of other information and communication technologies. Conceivably, this is largely due to
the fact that firms started to use the Internet more recently.
At this point, we might ask if the adoption of e-commerce on the Internet needs to be examined in
isolation, as various authors propose [Poon & Swatman, 1997, 1999; Chan & Swatman, 2000; Kim &
Galliers, 2004]. In this respect, we should note that some researchers [such as Downs & Mohr, 1976;
Fichman & Kemerer, 1993; Kimberly & Evanisko, 1981] have questioned the possibility of
developing a single theory on adoption and diffusion that can be applied to all types of innovation.
According to this stream of opinion, we cannot expect a single theory to adequately explain the
adoption of different innovations, with their extremely different contexts of adoption [Thong, 1999].
It is precisely this interest in establishing a general theory of innovation diffusion that has, in the
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opinion of authors such as Fichman & Kemerer [1997], led many researchers to take a theoretical
approach, ignoring specific innovations and their particular adoption contexts. As a consequence of
this, scholars seem to have put less emphasis on obtaining solid and consistent empirical findings
about the specific determinants affecting each type of innovation. Furthermore, this trend seems to
have been particularly strong in the area of IT adoption [Fichman, 1992]. In view of this lack of a
single general theory on innovation adoption, some authors [for example, Fichman & Kemerer; 1997;
Thong, 1999; Raymond, 2001] propose an alternative approach that involves designing specific
theories [Fichman, 2000] that take into consideration the distinctive characteristics and contexts of
each type of technology.
Even if we accept the need to study IT adoption in isolation, the question still arises of whether we
should study the assimilation of Internet and e-commerce specifically and separately from the other
technologies of this type. But it seems clear that although the Internet is an information and
communication technology, it has characteristics that distinguish and differentiate it from other such
technologies. Thus, and unlike the e-commerce technologies that preceded it, which were based on
closed networks, the Internet allows different agents to intervene in the transactions (firms, end-
consumers, public administrations), admits an unlimited number of participants, is open to the global
market, and requires the introduction of additional systems to ensure the transmission of information.
Researchers do debate, however, whether the particular characteristics of the Internet as a commercial
environment make this medium a radical innovation or not [Lee, 2001; MacGregor, 2004]. While
authors such as Hoffman & Novak [1996] consider that the “paradigm shift” in marketing caused by
the appearance of the Internet is bigger than any previous communications medium has generated,
others consider that the Internet has not made such a big difference to the way people do business.
Authors such as Chaffey et al. [2003] and Strauss et al. [2003] take an intermediate position, which
holds that most of the principles guiding business practice remain valid on the Internet, but that some
strategies and tactics do need to be adapted before they can be applied in this medium. In any case, it
seems increasingly accepted that Internet-based e-commerce has certain differentiating attributes,
such as the following:
• Interactivity and connectivity. On the one hand, the Internet’s high degree of interactivity allows
firms to intensify their relationships with their customers, by means of more direct communications
adapted to their individual characteristics and behaviors. And on the other, the Internet’s open and
global nature is the source of its connectivity, offering a shared global space for communications and
commercial exchanges [Dutta et al., 1997]. The combination of both characteristics facilitates 1:1
segmentation [Blattberg & Deighton, 1991], consumers’ participation in new product development,
the possibility of offering dynamic and personalized prices, communication with large audiences but
tailored to each particular interlocutor, and the use of direct and continuous links in distribution
[Benjamin & Wingand, 1995].
• Network externalities. As the number of people and organizations using the Internet and e-
commerce grows, so does the utility of the set of users [Vilaseca & Torrent, 2004].
• Knowledge goods. Knowledge is increasingly being seen not only as a productive resource but
also as a product that is exchangeable and hence a source of income. E-commerce seems to be
becoming a commercial format that is particularly suited to trading knowledge goods, since this type
of product is so easy to copy and distribute through the medium, and the variable costs of doing so are
so low [Shapiro & Varian, 1999].
• Convenience and low prices. Unlike what had been happening in conventional commercial
distribution, e-commerce allows firms to exploit the competitive advantages of low prices
simultaneously with high levels of convenience. On the one hand, the absence of physical
establishments and the automation of certain functions of presentation and sales reduce operational
costs. On the other, firms can offer customers broader and deeper product ranges, full information
about the products and with absolutely no physical or temporal constraints hampering their purchase
decisions [Rodriguez & Ryan, 2000].
Consequently, we aim to define a specific model on the adoption and extent of e-commerce on the
Internet, without forgetting that the Internet is an IT. Hence we have taken into account the specific
literature on Internet and e-commerce diffusion, together with the literature on the diffusion of IT in
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general. And since current empirical findings on e-commerce adoption have thrown up some
contradictions, while leaving some gaps at the same time, we have also needed to examine the
literature on e-marketing to help us identify the determinants and discover their relations with the
adoption and extent of e-commerce. As a result of our review of the literature in these three areas
(Internet diffusion, IT diffusion and e-marketing), and considering the different works that have
offered classifications of the determinant factors of e-commerce adoption [e.g., Grover & Goslar,
1993; Avlonitis et al., 1994; Thong, 1999; Fillis et al., 2004], we have considered six different types
of factors that conceivably influence the adoption and extent of e-commerce on the Internet: the
characteristics of the competitive environment; the organizational characteristics of the firm; its
strategic orientation; its innovative capacity; its managers’ characteristics; and the IT equipment
possessed and the uses the firm makes of it.
The competitive environment in which a firm operates conceivably influences the firm’s propensity to
adopt e-commerce. Indeed, the literature provides empirical evidence that firms operating in particular
competitive environments use IT innovations more intensively [Yap, 1990; Thong, 1999], or even are
more predisposed to adopt the Internet [Chappell & Feindt, 2000]. However, the evidence is weaker
when the object of analysis is the adoption of the Internet for commercial purposes [Sadowski et al.,
2002]. Indeed, some authors have actually failed to demonstrate the existence of such a relation
[Arnott & Bridgewater, 2002]. One aspect of the competitive environment that researchers have
considered particularly relevant in decisions to adopt e-commerce is the level of internationalization
of the sector in which the firm operates [Bertschek & Fryges, 2002]. Indeed, domestic firms
competing against firms from other countries may feel more threatened by the presence of foreign
competitors, encouraging them to explore new ways of maintaining or extending their competitive
advantages by adopting innovations. However, we still lack arguments capable of explaining how the
presence of foreign competitors in the sector affects the extent of e-commerce in the firm, or the
results from such operations. In accordance with this, we formulate the following hypotheses:
H1a. Firms operating in more complex competitive environments are more highly predisposed to
adopt e-commerce.
H1b. The firm’s competitive environment is not significantly related to the extent of e-commerce.
Work on the diffusion of IT, and particularly that of e-commerce on the Internet, has studied the
influence of various characteristics of the firm’s organizational structure on the adoption of these
innovations. Among these we might mention: the firm’s level of internationalization [Arnott &
Bridgewater, 2002; Bertschek & Fryges, 2002; Daniel et al., 2002; Kula & Tatoglu, 2003]; its level of
decentralization [Grover & Goslar, 1993]; the methods the firm establishes for controlling work
[Avlonitis et al., 1994]; the flexibility and adaptive capacity of the work teams [Durkin & McGowan,
2001; Arnott & Bridgewater, 2002]; the degree of collaboration or establishment of external alliances
[Coviello & Munro, 1995; Hsieh & Kowang, 1996; Knight & Cavusgil, 1996; Chen, 1999; Cagliano
et al., 2003]; as well as the extent to which the firm outsources activities that are not critical to the
running of its business [Webster, 1992; Achrol & Kotler, 1999]. Taken together, it seems that
companies with more complex and advanced organizational structures (those that are present in
multiple markets, are more decentralized, non-hierarchical and flexible in structure, and build
collaboration networks with other firms) adopt and implement e-commerce more easily. And it is
logical to assume that those firms that have developed beyond simple and linear organizational
models and adopted designs facilitating information flows will find it easier to take decisions aimed at
adapting more closely to the evolving market (for example, adopting e-commerce), and subsequently
leading, coordinating and supervising the implementation of the changes they have decided.
H2a. Firms with a higher degree of organizational complexity and orientation towards the network
design are more highly predisposed to adopt e-commerce.
H2b. Firms with a higher degree of organizational complexity and orientation towards the network
design use e-commerce to a greater extent.
The firm’s strategic orientation can play an important role in the adoption and extent of e-commerce
[Raymond, 2001], and this in spite of the fact that we lack solid and pervasive conclusions about the
influence of the market, marketing and relationship orientations [e.g., Chaston & Mangles, 2002; Lee-
Kelley et al., 2003] on the results of e-commerce operations. This is largely due to the positive role
that these strategic orientations clearly play in general business performance [Narver & Slater, 1990;
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Achrol & Kotler, 1999; Avlonitis & Gounaris, 1999; etc.]. Specifically, we can presume that those
firms that strive most to follow the evolution of the market, identify the unmet needs of their
consumers and use elements to strengthen customer relationships, will be more highly predisposed to
adopt new commercialization channels like the Internet, since these channels are being used by an
increasing proportion of consumers and customers. At the same time, we would suggest that this type
of firm will use e-commerce more intensively, since this medium provides companies with excellent
mechanisms and instruments to adapt their products to the needs of each segment and strengthen links
with each customer.
H3a. Firms with a more complex strategic orientation (market, marketing or relationship oriented)
are more highly predisposed to adopt e-commerce.
H3b. Firms with a more complex strategic orientation (market, marketing or relationship oriented)
use e-commerce to a greater extent.
It is conceivable that more innovative firms will be more predisposed to discover or develop novel
technological systems allowing them to design new products, processes or ways of organizing before
their competitors [Shaw, 2000]. We still lack evidences demonstrating that once the decision to adopt
e-commerce has been taken, this predictor will continue to have a role in explaining the performance
of the e-commerce operations. But despite this, we might assume that given that electronic markets
are dynamic and unstable, firms that are the best prepared to operate in them will introduce the
changes required at each moment in time, and hence achieve the best results in this channel.
H4a. Innovative firms are more highly predisposed to adopt e-commerce.
H4b. Innovative firms use e-commerce to a greater extent.
Research has shown that the educational background of the firm’s managers has a key role in IT
adoption [Fichman & Kemerer, 1997; Grover et al., 1997]. Similarly, and since the qualities of the
firm’s managers are determinant in their management practice [Rothwell, 1977], we might expect
those firms with a more highly-qualified management team to extract the best returns from e-
commerce [Chan & Swatman, 2000; Bertschek & Fryges, 2002]. However, we still lack evidence
about which particular managerial characteristics are directly related to the firm’s decision to adopt e-
commerce, and this in spite of the fact that there is a demonstrated link between people’s educational
level and their individual predisposition to start using the Internet [GVU Center, 1999].
H5a. The educational level of the firm’s managers is not significantly related to the predisposition to
adopt e-commerce.
H5b. The educational level of the firm’s managers is related to the extent to which the firm uses e-
commerce.
An aspect that also conceivably influences the decision to adopt e-commerce is the organization’s
“openness” to IT in general [Bertschek & Fryges, 2002], or digital literacy. Thus, firms employing
technologies of this type (CRM, ERP, etc.), and management teams that are familiar with and use the
Internet, may more easily be able to identify the implications that this medium will have for their
organization, and understand the urgent need to adopt it. Hence they may be more ready to allocate
resources to exploit the advantages of the medium [Poon & Swatman, 1999; Chan & Swatman, 2000;
Matlay & Addis, 2003; Wang & Cheung, 2004]. However, this will not necessarily guarantee, on its
own, the extent to which the firm engages in commercial operations in electronic markets, or the
success of such initiatives.
H6a. Firms with more IT equipment and which use it more are more highly predisposed to adopt e-
commerce.
H6b. The amount of IT equipment firms possess and use is not significantly related to the extent to
which they use e-commerce.
FIGURE 1
Types of determinant factors of adoption and extent of e-commerce
