TheSurvivalStrategiesofSMEsintheDigitalAgeAbstractThedot.comcrashdoesnotrelieveSMEs(SmallorMediumEnterprises)ofitsresponsibilitytohooktheneedsthatprovideabusinessenvironmentsuitableforthedigitalage.TherapidgrowthofwideareanetworksinrecentyearshasopenedupanewavenueforSMEstomarketproductsandservicesanddisseminateinformationaboutthemtopotentialcustomers.Thewideareanetworksbringnewformsofrapidlychangingelectroniccommercetechnologiesandincreasingknowledgeintensityforcustomers.Customersaredemandingmorevalue,atlesscostandasquicklyaspossible.TheSMEsthatwillsurviveinthedigitalagewillneedtorethinknewwaysofcreatingvalueandwillrequirenewarchitectures.ThisarticlepresentssomestrategiesforSMEstopreparethemselvestofunctionmoreeffectivelyintheelectroniceconomy.ItalsosuggeststhetransformingarchitectureandITinfrastructuretosupportnewwaysofcreatingvalueone-BusinessStrategyforSMEs.Finally,thisarticleshowssomeelementsofthenewvalueofE-BusinessStrategyforSMEs.TheSurvivalStrategiesofSMEsintheDigitalAgeThenatureofSMEs(Small/MediumEnterprises)hasbeenthetopicofbothgovernmentalcommitteefindingsaswellasresearchinitiatives.Walker(1975)andDelone(1988)foundthatSMEstendedtobemoreriskythanthelargercompanies.Cochran(1981)foundthatSMEstendedtobesubjecttohigherfailurerateswhileRotch(1967)suggestedthatSMEshadinadequaterecordsoftransactions.BarnettandMackness(1983)mentionedthatSMEsarenotminiatureversionsoflargerfirms,butquiteuniqueintheirownright.WhentheintroductionofITintoSMEswasconsidered,thereweredifferencesbetweenSMEsandthelargercounterparts(BarnettandMackness,1983).KhanandKhan(1992)andChen(1993)suggestedthatmostSMEsavoidedsophisticatedsoftwareorapplications,whichwerethebasicofE-Business.CraggandKing(1993),HolzingerandHotch(1993)andDelVecchio(1994)statedthatSMEsoftenlackedthenecessaryexpertisetofullyutilizeIT,whichisalsothebasicofE-Business(electronicbusiness).However,thisshouldnotbethereasonforSMEstoavoidE-Business.Moreover,thedot.comcrashdoesnotgetSMEsoffthehooktoprovideabusinessenvironmentsuitableforthedigitalage.TherapidgrowthofwideareanetworksinrecentyearshasopenedupanewavenueforSMEstomarketproductsandservicesanddisseminateinformationaboutthemtopotentialcustomers.Thewideareanetworksbringwithnewformsofrapidlychangingelectroniccommercetechnologiesandincreasingknowledgeintensityofcustomers.E-Businesshasemergedasanincreasinglyimportantwayoforganizationstoreachpotentialcustomers.Chen(2001:2)defineE-Businessasfollows:E-Businessisbusinessthatisconductedusingelectronicnetworksorelectronicmedia.Sometimesusedmoresynonymouslywithe-commerce,sometimesusemorewidelytoincludeotherbusinessactivitiesinadditiontobuyingandselling.E-Businessmovestheworkplacetothecustomer’ssite(Lasseter,Houston,WrightandPark,2000;Porter,2001).Itincreasesknowledgeintensityandunprecedentedsensitivityfortime-to-marketforcustomers.Customersaredemandingmorevalue,customizedtotheirexactneedsandasquicklyaspossible.Theycanalsochooseamongmanyoptionsfromwhichtobuy,notjustlocaldealersbutalsovarioustypesofInternetreferralnetworks(Porter,2001).E-Businesscanbeseenasameanstoimplementcompetitivestrategiesinstartupcompanies,smallbusinessesandlargecorporations(Applegate,Holsapple,Kalakota,RadermacherandWhinston,1996).Forexample,itaidsacompanytoincreasecashflows,enhancecustomerrelationsanddecreaseinventory.However,itpresentsmanychallengestotheorganizations.Forexample,organizationsmustlinkE-Businesstotheirownbusinessstrategy.Theymustprovidebothmeaningandqualitytoavarietyofusersindifferentcontexts(Madnick,1995).SMEsthatwillsurviveinthedigitalagewillneedtoinventinnovativenewwaysofcreatingvalueandwillrequiredifferentarchitectureandITinfrastructuretosupportonE-Businessstrategies.ThisdemandingenvironmentpresentsnewchallengersandprovidesnewopportunitiesforSMEs;theonesthatwillsurvivewillneedtocontinuouslyinventnewwaysofcreatingvalue(KimandMauborgne,1997).ThefollowingfactorsaresomeofthechallengingfactorsforSMEsinoredertostayonthedigitaledge:1.!Strategicdiscontinuities:BettisandHitt(1995)mentionedthatmajordiscontinuitiesarehappeningwithtechnologyadvances,timecompressionandcomplexglobalinterdependencies.Intheenvironmentofrapidandunpredictablechanges,SMEshavetocompeteontheedgeofchaoswheresuccessandvaluecreationsarebasedontheexecutionofcontinuousreinvention(BrownandEisenhardt,1998).Inaddition,SMEsshouldconsiderthatdiscontinuitiesmightquicklychangesomecorecompetenciesintocorerigiditiesandneedtobedevelopedrapidlytotakeadvantageofnewopportunities(Prahalad,1998).2.!Knowledgeintensity:HitchingthevalueofknowledgeontoinformationsystemsisbecomingkeytovaluecreatingandlearningfortheSMEs(ELSawyandBowles,1997).Knowledgeisimportanttoimproveproductsandservicesforsatisfyingcustomers’needs(DavenportandKlahr,1998).3.!IT-intensivestrategicoptions:SMEsshouldconsiderusingnetworkingtechnologiesintensivelytoform“virtualkeiretsus”toaddvaluetoeachother(Reinhardt,1998).TheInternetbasedintermediariesthreatentodestroythevaluepropositioninthephysicalworld(Ghoshe,1998).Insummary,theabovefactorschallengetheconceptsandassumptionsofvaluecr