Factors Affecting the Adoption of E-Commerce by the Manufacturing Sector SMEs in Sri Lanka: An Empirical Study in Colombo District

Abstract

In the Sri Lankan context, SMEs are identified as an essential strategic sector for enhancing social development in Sri Lanka. The research studies that have been done in other developing countries highlighted that the growth and expansion of SMEs are inhibited by problems coming out from the product, markets and the regulatory system they operate in. The use of e-commerce is one of the most significant developments in the past decades for conducting business activities. The objective of the research is to determine the barriers faced by Sri Lankan SMEs in adopting to e-commerce. The population of this study is the SMEs which operate in the manufacturing sector. 200 manufacturing sector SMEs in Colombo district were selected as the sample by using the simple random sampling method. A questionnaire was used as the survey instrument. Technical characteristics, organizational characteristics, environmental characteristics and knowledge characteristics are independent variables and the perceived risk is the moderating variable. Willingness to adapt to e-commerce is the dependent variable of this study. SPSS was used to analyze the data. Findings revealed that technical characteristics and environmental characteristics positively affect the willingness to adapt to e-commerce while organizational characteristics are not having a significant impact on the dependent variable of willingness to adopt to e-commerce. Perceived risk moderates the relationship between environmental characteristics and adoption of e-commerce and knowledge characteristics and willingness to adapt to e-commerce. Implications for technology vendors are to create a positive strong e-commerce environment to SMEs in order to quickly adapt to e-commerce. The government and policy makers should formulate policies to avoid the barriers from technological characteristics and environmental characteristics faced by SMEs through motivating SMEs to adapt to e-commerce by conducting workshops and exhibitions which give them knowledge about new technologies.