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Astagemodelanditsimplications11BusinessProcessManagementJournal,Vol.9No.1,2003pp.11-32,#MCBUPLimited1463-7154DOI10.1108/14637150310461378ElectroniccommercedevelopmentinsmallandmediumsizedenterprisesAstagemodelanditsimplicationsS.SubbaRaoandGlennMettsManagementDepartment,UniversityofToledo,Toledo,Ohio,USA,andCarloA.MoraMongeDepartmentofAccountingandBusinessComputerSystems,NewMexicoStateUniversity,LasCruces,NewMexico,USAKeywordsElectroniccommerce,Small-tomedium-sizedenterprises,ModelAbstractThe1990shavewitnessedtheproliferationandhypergrowthoftheInternetwhich,combinedwithtraditionalITtechnologies,iscreatingaglobal,andcost-effectiveplatformforbusinessestocommunicateandconductcommerce.Becauseoftoday’sshrinkingworld,companiesmustcreatenewsourcesofcompetitiveadvantagealmostonadailybasis.Thisfactbecomescriticalforsmallandmediumenterprises(SMEs)becausetheyareconsideredtobeamajorcomponentofalleconomiesandaregenerallyconsideredtobeflexible,adaptiveandinnovativeorganizations,whichappearstomakethemagoodfitforelectronic(e)-commerce.Thepresentstudypresentsanin-depthanalysisofthee-commercedevelopmentstagesandthefacilitatorsandbarriersforSMEsduringeachstage.1.IntroductionTheglobalizationofmarkets,growinginterpenetrationofeconomies,andincreasedinterdependenceofeconomicagentsarereshapingthenationalandinternationalcompetitiveenvironments(GhobadianandGallear,1996).Duetothis,organizationsmayhavetobuyrawmaterialsfromonecountry,usefinancesfromanothercountry,procurehumanresourcesfromyetanothercountry,andsellthefinishedproductswhereverpossibleinordertoachieveorsustaincompetitiveadvantage(Palvia,1997).Untilrecently,companieshavebeenabletoachievetheseabilitiesforthemostpartbytherolethatinformationtechnology(IT)hasplayedinpropellingandacceleratingtheglobalizationofbusiness.Further,ithasbeenpointedoutthatrecentITdevelopmentsarechangingandwillcontinuetochangethebusinessarenainthenearfuture(Palvia,1997).Inreactiontothisreality,businesseshaveinvestedheavilyinIT,primarilytoautomateinternalprocessessuchaspayroll,accounting,finance,humanresources,andmanufacturing.Also,the1990shavewitnessedtheproliferationandhypergrowthoftheInternetandInternettechnologies,whichtogetherarecreatingaglobalandcost-effectiveplatformforbusinessestocommunicateandconductcommerce.AlthoughthereisnoagreementintermsofaspecificTheEmeraldResearchRegisterforthisjournalisavailableat://($2.2trillionby2004accordingtoArthurAndersen,$1.3trillionby2003accordingtoLeggMasonWoodWalker,and$2.7trillionby2004accordingtoForesterResearch).ThisplatformisprovidingtheopportunityforlargeandmidsizebusinessestoleveragepastITinvestmentsandfundamentallyreengineerthewayinwhichtheydobusinessandinteractwithcustomers,suppliers,andpartners.Additionally,thisisenablingsmallerbusinessestogaintheefficienciesandcostsavingsthatoncewereaffordedonlytolargerbusinesses(Weller,2000).ThereisevidencethatshowshowSMEsaroundtheworldareembracingelectroniccommerceandspendingincreasingamountsofresourcesoninformationtechnology.Forexample,theUSSmallBusinessAdministration(2000)reportsthatSMEsinGermany,France,andtheUKspentaround$106billiononITandtelecommunicationsin1999.Similarstudiesshowthistrendinotherregionsaroundtheglobe,suchasNorthAmerica,EuropeandAsia(USSBA,2000;WebbandSayer,1998;LeandKoh,2001).Also,researchshowsthatSMEsthatutilizetheInternettoconductbusinesshavehigherrevenues(USSBA,2000).Propelledbyfactorssuchasfallingregulatorycountrybarrierstointernationaltradeandinvestment,anddecliningtelecommunicationscosts(Prasad,1999),amongotherfactors,globalizationismakingtheroleofsmallerfirmsprominent.GhobadianandGallear(1996)arguethatSMEsarefundamentalforcurrenteconomies,andtheirimportanceisbothatthemicroandmacrolevels.Forexample,theyfoundthatover99percentoftheenterprisesintheEUaremicro,smallandmediumenterprises,employingover70percentofthetotalworkforce.ThisisalsoevidentinJapan,where75percentofmanufacturingemploymentisinSMEs,incontrasttotheUSAwith35percent.Chapmanetal.(2000)alsostressedtheimportanceofSMEs,consideringthemasthethirdeconomyintheworld,aftertheUSAandJapan.TheimportantroleofSMEsintheUSeconomycanbesummarizedfromthefollowingquotefromtheUSSBAreporttothePresidentin1998:First,SMEsareanintegralpartoftherenewalprocessthatpervadesanddefinesmarketeconomies.Newandsmallfirmsplayacrucialroleinexperimentationandinnovationthatleadstotechnologicalchangeandproductivitygrowth.Second,smallfirmsaretheessentialmechanismbywhichmillionsentertheeconomicandsocialmainstreamofAmericansociety.Smallbusinessesenablemillions,includingwomen,minorities,andimmigrants,toaccessthedreamofeconomicgrowth,equalopportunityandupwardmobility.Further,intheUSA,smallbusinesseswithfewerthan500workersemploy53percentoftheprivatenonfarmworkforce,contribute47percentofallsalesinthecountry,andareresponsiblefor51percentoftheprivategrossdomest