Diyan Ivanov

The impact of e-commerce on

small-size companies in Sweden

Business Administration
Master’s Thesis
15 ECTS

Term: Spring 2012

Supervisor: Maria Åkesson
Acknowledgements
I would like to sincerely thank my supervisor Maria Åkesson for her valuable
guidance and advices. I would also like to express my truthful appreciations to
the respondents who have answered this study’s interview question.

Diyan Ivanov
Karlstad, June 2012
Abstract
The purpose of this thesis is to examine the influence of e-commerce on the
small-size companies in Sweden. This thesis describes the drivers for e-
commerce adoption and investigates the barriers and benefits faced from the
companies when starting the process of implementation. A qualitative research
was performed and an abductive approach was used, where the research
findings and the theoretical background were connected by going back and
forward in the process of analysis. Interviews with small companies in
Värmland Country, Sweden were conducted in order to answer the research
questions. This study shows that Swedish companies have relatively well-
developed e-commerce strategies comparing to other counties, but the gap
between small and large companies is still visible. The decisions for e-
commerce adoption are dependent on the knowledge of the owner /manager
and e-commerce is extensively used as a marketing tool. Main benefits of e-
commerce adoption are improved internal efficiency and increased
information exchange. The results suggest that companies value less than
before the cost factor and consider the lack of knowledge as a main barrier. At
the same time many companies are not motivated enough to make
improvements, because of lack of customer demand.

Key words: e-commerce, impact, barriers, benefits, small-size companies

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CONTENTS
1. INTRODUCTION .............................................................................................. 6
1.1. BACKGROUND ................................................................................................................................................................................ 6
1.2. RESEARCH PROBLEM.................................................................................................................................................................. 7
1.3. AIM AND OBJECTIVES ..................................................................................................................................................... 8
1.4. THESIS OUTLINE ....................................................................................................................................................................................... 9
2. METHODOLOGY ........................................................................................... 10
2.1. RESEARCH APPROACH ........................................................................................................................................................... 10
2.2. RESEARCH METHOD................................................................................................................................................................ 11
2.3. DATA COLLECTION .................................................................................................................................................................. 12
2.3.1. Secondary data............................................................................................................ 12
2.3.2. Primary data ................................................................................................................ 13
2.4. RESEARCH MODEL OUTLINE .................................................................................................................................. 15
3. THEORETICAL BACKGROUND .................................................................. 16
3.1. INTRODUCTION .......................................................................................................................................................................... 16
3.2. DEFINITION OF E-COMMERCE .............................................................................................................................. 16
3.3. DEVELOPMENT OF E-COMMERCE AND PROCESS OF ADOPTION...................................................... 17
3.4. E-COMMERCE AND MARKETING STRATEGY ....................................................................................................... 20
3.4.1. Product ....................................................................................................................................... 21
3.4.2. Place .............................................................................................................................................................21
3.4.3. Price .............................................................................................................................................................22
3.4.4. Promotion .................................................................................................................................. 22
3.5. BENEFITS OF E-COMMERCE ADOPTION IN SMALL COMPANIES ..................................................... 24
3.6. BARRIERS FOR E-COMMERCE ADOPTION IN SMALL COMPANIES ................................................... 27
3.7. SUMMARY OF LITERATURE REVIEW ................................................................................................................... 30
4. FINDINGS ........................................................................................................ 31
4.1. ELECTRONIC DEVELOPMENT IN SWEDEN ............................................................................................. 31
4.2. E-COMMERCE USAGE IN SMALL-SIZE COMPANIES......................................................................................... 33
4.3. DEVELOPMENT OF E-COMMERCE IN THE INTERVIEWED COMPANIES..................................... 35
4.4. THE REASON BEYOND E-COMMERCE DEVELOPMENT............................................................................... 36
4.5. THE IMPACT OF E-COMMERCE ON MARKETING ....................................................................................... 37
4.6. BENEFITS FROM E-COMMERCE ADOPTION................................................................................................... 39
4.7. BARRIERS FOR E-COMMERCE ADOPTION ....................................................................................................... 39
4.8. BENEFITS AND BARRIERS – BEFORE AND NOW...................................................................................................... 40
5. DISCUSSION .................................................................................................... 42
5.1. E-COMMERCE DEVELOPMENT IN SMALL-SIZE COMPANIES IN SWEDEN .................................... 42
5.2. DRIVING FORCE FOR E-COMMERCE ADOPTION ....................................................................................... 43
5.3. THE IMPACT OF E-COMMERCE ON MARKETING ....................................................................................... 44
5.4. BENEFITS FROM E-COMMERCE ADOPTION................................................................................................... 45
5.5. BARRIERS FOR E-COMMERCE ADOPTION ....................................................................................................... 46
6. CONCLUSION ................................................................................................. 48
LIMITATIONS AND FURTHER RESEARCH................................................................... 49
REFERENCES ..................................................................................................................... 50
APPENDIXES ...................................................................................................................... 53

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List of figures

FIGURE 1: RESEARCH MODEL ............................................................................................................................................. 15

FIGURE 2: E-COMMERCE ADOPTION LADDER IN SMALL COMPANIES ............................................... 19

FIGURE 3: EXPENSES ON IT ................................................................................................................................ 32

FIGURE 4: LEVEL OF E-COMMERCE DEVELOPMENT IN THE INTERVIEWED COMPANIES...... 42

List of tables

TABLE 1: INTERVIEWED COMPANIES ............................................................................................................................ 14

TABLE 2: DRIVERS OF E-COMMERCE ADOPTION .................................................................................................. 18
TABLE 3: TANGIBLE AND INTANGIBLE BENEFITS FROM E-COMMERCE.............................................. 24

TABLE 4: BENEFITS FOR SMALL-SIZE COMPANIES FROM E-COMMERCE ADOPTION .................... 26

TABLE 5: BARRIERS FOR E-COMMERCE ADOPTION ............................................................................................. 30

TABLE 6: ENTERPRICES SELLING ONLINE ................................................................................................................................. 32
TABLE 7: E-COMMERCE DEVELOPMENT IN THE INTERVIEWED COMPANIES................................. 35

TABLE 8: REASONS FOR E-COMMERCE ADOPTION............................................................................................. 37

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1. Introduction
This chapter presents the research background and the purpose of the thesis. The most
important reasons why to study e-commerce are mentioned briefly. Then, the aim of the
research is described and research questions are set. Finally, overview of the content of the
thesis is presented.

1.1. Background

Electronic commerce is reshaping many aspects of the business and the social
life. Companies need to adapt their strategies to the new realities if they want
to be competitive in the marketplace. E-commerce is a new way of conducting
business and its influence is increasing every year (Chong 2008). The term “e-
commerce” is described by Chaffey (2009) as all electronically mediated
transactions between the company and third party. At the same time e-
commerce not only provides the companies with a huge amount of
information, increases the speed of the transactions and decreases costs, but
also reshapes their marketing strategies and practices (Dou & Chou 2002). The
reasons for implementing an e-commerce strategy can vary from company to
company. According to Xu and Quaddus (2009), while in the big companies
the leading motives are to improve efficiency in their internal processes; small
companies are more concerned with the competiveness. Successfully adoption
of e-commerce is a slow process and it cannot be completed at once, but
rather in small series of adoption processes in which the company moves
gradually from simple to more complex stages o f e-commerce (Brand &
Huizingh 2008). Obviously, any firm beginning the process of adoption will
face many problems and barriers. Managers in the small companies need to
overcome the barriers and realize the benefits from e-commerce in order to
prevent the risk of competitive disadvantage in their businesses (Abid et al.
2011; Stockdale & Standing 2004). This study will try to describe the impact of e-
commerce on Swedish small-size companies. The reasons why the small
companies have started the process of e-commerce adoption will be described.
Attention will be put on the benefits and barriers related to this process. In
order to do this, an extensive review of the literature and secondary data will
be performed. Second, three interviews with small-size companies based in
Värmland region of Sweden will be made. The accessed companies can be
described as small, with numbers of employees from 10 to 49 and annual

6
turnover below 5 million euro. Company A is a producer of gardening tools
and equipment and operates mainly in the local Swedish market. The products
are distributed within the country by well-developed network of industrial
distributors and retailers. Company B produces ergonomically chairs and high
quality ergonomic seating solutions. High volume of company’s sales is
generated in the international market. Company C produces equipment and
products for industrial labelling, coding and identification. The company sales
its products mainly in Sweden and have few clients in the other Nordic
countries.

1.2. Research problem

This paper will investigate the impact of e-commerce on small companies in

Sweden by identifying the perceived barriers and benefits for e-commerce
adoption. The study is important, because it throws lights on the unique and
ever changing factors influencing the companies. Additionally, in European
Union (EU) most of the enterprises are small and medium sized (SMEs),
corresponding to 99.8% of all enterprises. These SMEs enterprises employed
around 67% of all employees; generate 58% of the total turnover in EU and
they are the engine of the economy (Calogirou et al. 2010). Due to the
dynamism of the market and ever developing technology, e-commerce
implementation from the small companies is becoming necessary. The natural
process of transition toward collaboration exchange and customer-centred
business which large companies firstly understood can now be seen as a
tendency in the small companies. E-commerce creates possibilities of better
connections with customers and partners, extensive information exchange and
unique customer’s solutions. At the same time, small size companies are still
behind the largest in adopting new technologies due to different motives,
vision and resources. For example, while for the big companies the leading
driver for e-commerce adoption can be expected improved efficiency, small
companies can have different motives – customer demands or to improve
competitiveness (Xu & Quaddus 2009). Very important for the small
companies is the ability to benefit from that new strategy. If they do not have
any benefits or managers are not being able to realize and estima te them
properly, the incentives for future improvements and reaching more
sophisticated levels of e-commerce are low. Obviously, many different barriers
for adoption are and will be faced from the managers within the small firms.

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An attempt to describe the impact of e-commerce and to capture the unique
problems and benefits faced from the small companies in Sweden will be
made in this thesis.

The significance of the topic “The impact of e-commerce on small-size

companies in Sweden” and reasons why I decided to explore this field are
given shortly below:

 I decided to focus my thesis on Swedish companies, firstly because

Sweden is a country among highly developed in ICT (Information and
communication technology), and secondly, the trends accessed here
can be faced in the future by companies from less developed countries.

 Many studies have examined the influence of different factors and

proposed theoretical framework and critical elements for future
analysis. The rapid development on Internet and new technologies
presupposes continuously monitoring the changing conditions.
Therefore the need of studies to monitor the current status is necessary
and can be of interest for companies or future researchers.

 I decided to concentrate on small companies, firstly because they are

relatively in the middle of the process of e-commerce implementation
and experience now all the problems and benefits which largest
companies have already faced and solved. But due to the differences
between the small and the large companies, the motives, barriers and
benefits are expected to be different. Secondly, the influence of the
small companies in Europe is increasing and they are considered as
very important for the economy.

1.3. Aim and objectives

The aim of the research is to investigate the influence, barriers and benefits of e-
commerce adoption in small size companies in Sweden. In order to do this, the
following tasks will be performed:

1. Critically review past publications about the influence of e-commerce.

2. Review the literature about the perceived benefits and barriers from
small size companies.

3. Make interviews with small size companies in Sweden.

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The following research questions have been set:
1. What is the level of development and the impact of e-commerce on
small sized Swedish companies?
2. What are the perceived benefits from e-commerce adoption?
3. What are the perceived barriers for e-commerce adoption?

1.4. Thesis outline

Chapter 1: Introduction. The chapter introduces the basic concept of the

study, the importance of the topic and the aim and objectives. Research
question are set.
Chapter 2: Methodology. The chapter introduces the methodology approach
and the steps for conducting the research. The author explains which method
is used in the thesis and why it is chosen over the others research methods
from the literature. Attention is put on the different data collection techniques
used. Secondary and primary data are described and the reason why they are
used is given. Finally, the author presents his own research model where the
main points of the thesis and working process can be seen.
Chapter 3: Literature review. This chapter introduces the concept and gives
theoretical background necessary for the next parts. Explanation of the
concept and the influence of e-commerce over the traditional marketing
strategy are given. Barriers and benefits from e-commerce adoption are
thoroughly examined. Summary of the literature findings is given.
Chapter 4: Research. The chapter presents the author’s findings as a result of
primary and secondary data research. Firstly, the author examines the
secondary data sources to access the current level of development of e-
commerce in small size companies in Sweden. Secondly, the findings from the
author’s own research are presented. They are based on primary data obtained
from interviews with small companies.
Chapter 5: Discussion. The chapter presents the empirical findings in terms
of the literature about the problem and tries to answer the research questions
set earlier. Empirical findings are related and compared to the theory in order
to answer the research questions.
Chapter 6: Conclusion. This chapter concludes the thesis by summarizing
the findings from this research and literature. Finally, limitations and
recommendations for further studies are given.

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2. Methodology
This chapter describes the research methodology used in the thesis. First, the research
approach and method are discussed. Then, the two types of data used are described –
secondary and primary. Finally, the research model outline is presented and the methodology
used is summarized.

2.1. Research approach

Literature distinguishes three main research approaches – deductive, inductive

and abductive. A deductive method can be characterized with scanning and
analysing of past literature, deriving on logical conclusions from the theory in
form of hypotheses and prepositions. On the later stage, hypotheses and
prepositions are empirically tested and conclusions are presented in order to
proof or reject the allegations. The deductive approach follows the pattern –
case / results / rule. On the other hand, the inductive approach is based on
opposite techniques – observation lead to theoretical framework or following
the pattern – results /case /rule (Kovács & Spens 2005).

In this paper an abductive method was used. An abductive approach can be

seen as a mixture between deductive and inductive and follows different
process – from rule to result to case. An abductive approach is suitable for this
research first, because e-commerce has been examined extensively and certain
theoretical framework has been developed. According to Kovács and Spens
(2005) an abductive approach can lead to better interpretation of the
phenomena within a certain theoretical framework and examine it from the
new perspective. Second, the new insights about the impact of e-commerce
can be described. In the abductive approach, the case presents admissible, but
not necessary logically conclusions, where the empirical event is related to the
rule and gives new insights about the problem (Kovács & Spens 2005).

Therefore, in my thesis, first I will examine the literature, and then conduct my
own observation and present the results. Afterwards, the facts will be
correlated and explained in wider context, referring again to the previously
examined literature in order to answer the research questions set earlier.

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 2.2. Research method

The literature distinguishes different research methods – qualitative,

quantitative and mixed. The quantitative method is primary focused on the
deductive component of the research or hypothesis and theory testing. The
method includes collection and analysing of numerical data. On the other
hand, the qualitative method is described as subjective emphasising on the
expression, meanings and description and is less concerned with numbers.
Qualitative method supposes broader approach to the research question
(Bryman & Bell 2007).

Many researchers use a mixed method, which combines the qualitative and
quantitative techniques in order to improve the reliability of the research
outcome. In this study qualitative method was applied and primary and
secondary data were used. The reasons to use a qualitative method are
numerous. First, the human factor in small companies is very important for
the strategic decisions. Therefore, by approaching the persons who have the
power to make decisions and by conducting interviews, I can obtain more
accurate information in order to answer to the research questions. Second,
because the purpose of the thesis is to describe the phenomena of e-
commerce rather than to confirm or reject hypothesis, the qualitative method
is more suitable. Third, the method supposes more flexibility and adjustments,
and it is more appropriate for an inexperience author. Fourth, qualitative
researches have already been made. For example, Statistics Sweden publishes
every year an extensive data about e-commerce usage from the enterprises.
Therefore, I decided to conduct interviews rather than a questionnaire survey.
At the same time, the results from the secondary data sources will be taking
into the account. Finally, a qualitative research can be performed in relatively
short time period. On the other hand the time frame to write the thesis makes
hard to complete an extensive quantitative research. At the same time, some
limitations of this research can be depicted. The limitations of the thesis are
described in the last chapter.

For the purpose of the thesis, a definition of “small companies” is necessary.

When targeting companies for interviews the definition of European
Commission for small companies was used. Small company is considered as an
independent company with from 10 to 49 employees and less than 10 million
euro annual turnover. Independent is considered a company which is not
owned by other enterprises and has more than 25% of the capital or voting
rights (European Commission 2012; Xu & Quaddus 2009).

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 2.3. Data collection

Data collection can be divided into two types – secondary and primary. While
secondary data is available before, the primary data is new data collected from
the researcher (Bryman & Bell 2007). For the purpose of this work a
combination of the both techniques will be used in order to increase the
validity. According to Yin (2004), the results from the research are more
accurate when they are based on several data sources.

2.3.1. Secondary data

Secondary data is collected by researchers or agencies often for other
purposes, but can be used for the purpose of the author’s paper. In business
and management the role of the secondary data is increasing (Bryman & Bell
2007). The advantages of secondary data analysis are numerous. According to
Crawford (1997) is less time consuming to obtain secondary data than primary,
and by doing this, the researcher can receive far better picture of the problem,
than relied entirely on own sources.

Receiving a good overall picture of e-commerce is necessary for the chosen

qualitative method. Theoretical review and past researches gives possibilities to
increase the knowledge and formulate better the interview questions. At the
same time, the analysis and conclusion will be more accurate. That was the
first reason to use secondary data in my thesis.

Additionally, secondary sources of information can present more accurate

data, especially when they are published by governmental and trading
organizations. The presented data is high-quality and the samples covering
wide variety of regions (Bryman & Bell 2007). Using Official statistical data,
presented by governmental organizations can also complement the better
understanding of the research problem.

At the same time, well–developed procedures for data collection and the
highly experienced researchers lead to far more accurate data than any student
can obtain. For example “Statistic Sweden” presents every year an extensive
amount of research comprising samples which is not possible to achieve for a
single researcher. As Bryman and Bell (2007) stated, governmental or trading
organizations have well-developed procedures for control of the quality of the

12
data, hence the outcome is far more accurate than any single researcher can
achieve.

Drawback from using secondary sources is that the data could not be
appropriate for cross-national comparisons, when different criteria and
definitions are used. Since in this thesis, the purpose in not to compare
different countries but to explore only one, using secondary data is considered
favourable.

In this paper multiple secondary data sources were used – official statistic and
public documents, journals, articles, international statistic from “Eurostat” as
well as information from companies’ web sites. Reviewing the secondary data
in this thesis was performed before the collection of primary data, consistent
with Crawford (1997) who stated that this is the right approach - first to
examine secondary data and then to collect and analyse primary sources.

2.3.2. Primary data

Primary data in this thesis was obtained from face-to-face and telephone
interviews conducted with preliminary selected companies. Interview, as a
source of primary data has many advantages and disadvantages. In this paper,
the main benefits are the possibilities to collect valuable data critical for
answering the research questions. On the other hand, the interviews are time
consuming and needs greater preparation. That’s why semi-structured
interview technique was used in this thesis. Positives from this approach are
that they were performed in a short time period and are more appropriate for
an inexperienced researcher. Semi-structured interview is suitable when the
author has already sufficient knowledge about the topic and it supposes little
variation of the questions and their sequence, or altering of the wording
(Crawford 1997). While the interviews in quantitative research must be highly
structured to maximized the reliability and validity of the data, in qualitative
research the emphasis is on the generality of the primary research ideas and
interviewees’ own perspective (Bryman & Bell 2007).

In this thesis three interviews were conducted among small manufacturing

companies in Värmland Country, Sweden. Two of the interviews were carried
out by telephone due to the long distance, while one interview was performed
face-to-face. The interview consists of two parts. The first part is in form of
Yes/No questions in order to obtain information about the current level of e-

13
commerce development in the companies. This data helps mainly to answer
the first research question and to obtain clear picture of the companies and
their e-commerce usage. The second part of the interview consists of nine
open questions clarifying the influence, barriers and benefits from e-commerce
adoption. The interviews were 35-45 minutes long and the responses were
recorded and then transcribed in order to not lose valuable information and to
allow more thorough examination. Being aware for the possible disadvantages,
the questions were sent to the companies by e-mail in order for them to get
familiar with the research problem. Disadvantages of doing this is that the
respondents could be too prepared or previously influenced, affecting the
outcome of the interview.

Table 1 below shows the interviewed companies and their main activities, the
respondent’s role, the length of the interviews and their type:

Table 1: Interviewed companies

Company Main activity Respondent’s Time taken Type
role
A Manufacturing CEO 40 min Phone
Garden products
B Manufacturing CEO 35 min Phone
Ergonomically Chars
C Labelling equipment CEO 45 min Face-to-
and products face

Next follows a model of the research.

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 2.4. Research model outline
An abductive approach is used in this thesis. Therefore, the research findings
and the theoretical background are connected by going back and forward
between data, theory and analysis. Because the purpose of the work is to
describe rather than measure, the qualitative method is used. The interviews
with small companies in Sweden are performed in order to answer the
research questions. Regarding the data collection, primary data used is
obtained from the interviews, while secondary data is obtain from Internet,
journals, books, articles, and official statistical publication. Figure 1 below
summarizes and illustrates my methodology approach; the main points of the
thesis and the working process can also be seen.

Figure 1: Research model (authors own model)

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3. Theoretical background
The aim of this chapter is to give a theoretical base for better understanding of the e-commerce
concept. The chapter begins with a definition of the term and outlines the different forms of e -
commerce. The development of the concept is being described. Attention is put on the influence
of e-commerce on the traditional marketing strategy it the terms of the four Ps – product,
place, price and promotion. The second part is focused on the benefits and barriers of e-
commerce participation in the small companies.

3.1. Introduction

In the last two decades due to the increased development of the technology
and the emergence of the Internet and World Wide Web (www) the new
term– e-commerce was born. From the mid-1990s e-commerce began to grow
rapidly and to reshape many industries. The marketplace and the way the
business is conducted will never be the same (Chong 2008).

The importance of the topic has been increasing every year since the very
beginning, and nowadays e-commerce is considered as a promising tool for
reaching companies’ goals – increased sales and revenue. At the same time
there are still some prejudices and negatives for adoption of this new strategy.
This is especially highly visible in the small companies which are the target of
this study. Before beginning to explore the influence of e-commerce, a
clarification of the meaning of this term according to different authors is
given.

3.2. Definition of e-commerce

The increasing number of the publications past few years leads to greater
variation of the definitions of e-commerce. The first definitions were simple – e-
commerce has been defined as a process of buying and selling of goods over the
Internet. The term was developed later and it was added “exchange of
information” in addition to “buying and selling of goods” (Chong 2008,
pp.470).

Rainer and Cegielski (2011, pp.201) defines e-commerce as a “process of

buying, selling, transferring, or exchanging of products, services, and/or
information via computer networks, including the Internet”. Moreover, this

16
supposes continuous flow of information, before and after the process of
sales. Rayport and Jaworski (2002) add that the process of exchange is
technology mediated and that it is based on inter and intra organizational
activities for facilitating such exchange. In this context, Chaffey (2007, pp.8)
considers e-commerce as “all electronically mediated transactions between an
organization and any third party”.

Summarizing, e-commerce is not restricted to buying and selling, and it has

become a more open term than before. Therefore the following description of e-
commerce based on the literature will be used:

E-commerce is a process of integration of all company’s processes, activities

and services toward buying and selling of products and exchange of
information and funds with the company’s partners via computer networks
and electronic technologies (Adapted from Chong 2008; Chaffey 2007; Rainer
& Cegielski 2011; Rayport & Jaworski 2002).

The term e-commerce and e-business are interchangeable (Rainer & Cegielski
(2011, pp.201). Many people use e-business or even e-marketing, talking
about e-commerce in a broader sphere (Schneider 2011, pp.4). Good
illustration of the closeness between the two terms can be found in the IBM
definition of e-business: “the transformation of key business process through
the use of internet technologies” (Schneider 2011, pp.4; Chaffey 2007, pp.14).

3.3. Development of e-commerce and the process of adoption

Before digging into the main problem of the thesis (the influence, the barriers
and benefits from e-commerce), I feel that it is necessary to describe how e-
commerce has evolved during the years and what prompt the managers to
adopt more technology in their business es.

Schneider (2011) divides the development of e-commerce into two stages: first
wave and second wave. “First wave” of e-commerce was adopted by large
enterprises in USA with easy access to capitals, primarily from external
sources. Evans and Wurster (1999) refer to e-commerce in this early stage as a
“landgrab”. At once, the whole new marketplace was created and companies
who had sufficient resources and willingness could “grab from the land”.
These large companies firstly understood the possibilities that e -commerce can
offer and started exploring and developing them. Since most companies were

17
dependant on external investors, achieving the profit was relatively rare. The
pressure to the smaller companies was far more intensive, and many of them
suffered losses. In the beginning, the technology was simple, inexpensive and
internet connection slow, the websites were mainly English based, e -mails
were used unstructured and the integration of e-commerce with other
processes were not efficient (Evans & Wurster 1999).

“Second wave” is characterized with the technological boom after 2001,

mobile broadband development, and increased speed of Internet on low cost
price. The land was already captured and the key players shifted their attention
from capturing to defending the land. Companies started to focus more on
competitive advantage and developing strategies to achieve it (Evans &
Wurster 1999). This was a prerequisite for development and adoption of e-
commerce from smaller companies using their internal resources. At the same
time, certain difficulties arising from using new technologies should be
overcome. Stockdale and Standing (2004) stated that the benefits using e-
commerce should be visible and substantial so that the companies are
encouraged to climb to the ladder from a simple to a more complex stage of e-
commerce.

The driving force for improvements and innovations of any company is the
aim to increase the revenue. Theoretically, e-commerce can improve the
performance by two ways: first, by increasing the customer base and number
of purchases, and seco nd, with cost reduction by implementing e-commerce.
Cost reduction like material savings, decrease of transport, storing cost, or by
reduction of personal expenses (Chaffey 2009).

Table 2: Dri vers of e-commerce adoption (Chaffey 2009)

Cost / efficiency drivers Competitiveness drivers
Improved efficiency of process of Customer demand
ordering/dispatching
Increased speed of information exchange Improving the quality and range of
with suppliers products and services
Decreasing of operational costs Way to prevent losing market share
Decreasing of sales and purchasing costs

As illustrated in table 2 above, the drivers for e-commerce adoption can be

divided into two main categories – cost/efficiency drivers and competitiveness
drivers (Chaffey 2009). Results from an international research shows that
cost/efficiency drivers and competitiveness drivers are equally important for
companies. Furthermore, the study reveals that there are differences between

18
adopters and not adopters. Overall, none or early stage adopters rates all the
benefits lower (Chaffey 2002).

According to Brand and Huizingh (2008), the process of adoption of e-

commerce consists of a series of adoption processes. Of course, the big
companies with huge resources and knowledge can skip or implement some
stages together but for small-size companies the process is long and follows
logical consequences. Brand and Huizingh (2008) describe it as a process
where companies moves consequently from simple to more sophisticated e-
commerce, reaching more and more complex levels of innovation. At the early
stage the firm can decide just to build a web-site to present the products and
services. Later, the management can decide to give the customers possibilities
to interact and participate actively and customize the information according to
their needs (Brand & Huizingh 2008). Companies can also benefit from the
increased information exchange. For example, it can better understand the
individual customer preferences and offer appropriate products.

Importantly, Brand and Huizingh (2008) proved that there is a correlation

between the adoption level and the intention to innovate. With the increased
knowledge and satisfaction, the intention to future innovation is increasing.
Xu and Quaddus (2009) also describe the development of e-commerce in
small companies as a series of processes in which the company moves
gradually and increase its electronic capabilities (figure 2). According to Xu
and Quaddus (2009), there are four stages of development, where level 1
means no online capabilities and level 4 – fully developed e-commerce
strategy.

Figure 2: E-commerce adoption ladder in s mall companies (Xu & Quaddus 2009, pp.304)

19
The adoption ladder in figure 2 shows the logical process companies follow
when implementing e-commerce. At the beginning, companies have few or
non e-commerce capabilities. Level 2 supposes more intensive use of online
communication, mainly e-mails for internal and external communication. In
the next stage, level 3, companies start to use e-commerce as a marketing tool,
mainly to communicate their products through online brochures and
catalogues, but they still do not conduct business transactions. The most
sophisticated level of development can be characterized with intensive
information exchange and interaction with customers and partners with
increased speed. Companies also make and receive orders, and make payments
online. While advanced e-commerce adoption is far more costly and
complicated, the initial stages can be completed relatively i nexpensive and
easy. Furthermore, the adoption decisions are described as less controversial
(Xu & Quaddus 2009).

At the same time different reasons for e-commerce adoption are mentioned in
the literature. On the other hand, commonly reported motives for small
companies are the necessity to compete more effectively, while the large
companies adopt e-commerce because of their more complex internal
processes and operations (Xu & Quaddus 2009).

3.4. E-commerce and marketing strategy

As I mentioned in the previous section, one of the most common reasons for
small companies to adopt e-commerce strategies in their businesses according
to the literature is to enhance competiveness (Xu & Quaddus 2009). At the
same time e-commerce presupposes new possibilities and difficulties as well as
certain changes in the marketing strategy. But according to Stockdale and
Standing (2004), electronic technologies and e-commerce are not the reason
for the market to exist. The basic principles of the marketing are the same and
the technology only facilitates the businesses (Stockdale & Standing 2004).

When companies apply technologies to achieve their marketing objectives, we

can use the term ”e-marketing” (Chaffey 2002).

Allen and Fjermestad (2001) suggest that the impact of e-commerce can be
better understood in the contexts of the traditional marketing mix of the four
Ps - Product, Price, Place and Promotion. Therefore they will be described in
details in order to obtain a clearer picture of the impact of e-commerce.

20
 3.4.1. Product
Traditional marketing considers “product” as anything which can be offer in
the market for satisfying customer needs. In e-commerce, information can be
regarded as equal to the product itself (Evans & Wurster 1999). Enterprises
providing clear relevant information can increase the attractiveness of their
products. Technology improvements give possibilities for decreasing the cost
of searching, collecting, and disseminating of information from the company
and from the customers. Buyers can access information instantly, and even
virtually test the product, which in traditional marketing concept would be
time consuming. E-commerce changes even the way of delivering the product
(Alrawi, 2007). For example a software company can offer the purchased
product to be downloaded directly from their website after the payment. Or
the physical distribution can be replaced with online distribution. This can
decrease the overall costs. The possibilities for innovation are also increasing. E-
commerce provides better access and communication with customers, which
can be used for a better understanding of customer needs and finally offering a
product which fully satisfy those (Allen & Fjermestad 2001). Moreover, e-
commerce gives possibilities for shortening the product’s life cycle, as well as
the process of testing and development. At the same time, companies can expand
their product line, offering additional interactive or physical services around the
core product (Chaffey et al. 2000). As value-added product characteristics
influence the customer’s perceptions, and brand is dependent on these
perceptions, e-commerce can be used to create strong brand identity and
enhance brand awareness (Chaffey 2002).

3.4.2. Place
Marketing channels or “the place” has changed due to e-commerce. The effect
of e-commerce is higher on the “place” than on the other three elements.
Why? Because e-commerce changed rapidly the marketplace and offered
tremendous opportunities for expanding the customer base and increasing the
market share (Allen & Fjermestad 2001). According to Chaffey (2002) digital
channels gives opportunities to selling more existing products on the same
markets (market penetration).

Furthermore, Internet gives premise for more a global reach and creating of
larger marketplace or market development. E-commerce gives new
possibilities for distribution of the product and international expansion with
relatively lower costs (Allen and Fjermestad 2001). Before, companies needed

21
to invest huge amount of money to establish local supporting structures. Now,
they create virtual market space, which can complement their traditional
marketing channels. Chaffey (2002) stated that this is a big opportunity
especially for small and medium size companies. Moreover, the large variety of
choices is available 24h per day and buyers can at the same time consider
different offers from a variety of sellers (Alrawi 2007). Additionally, companies
can shorten their supply chains and bypass some of the parts of the value
chain (Allen & Fjermestad 2001).

3.4.3. Price
Price is the most flexible of the four elements of the marketing mix. At the
same time it is the only element which generates revenues, that’s why
companies should be aware of possibilities and threads exposed on (Allen &
Fjermestad 2001). With the increased exchange of information, customers can
easily compare different prices on a global scale and quickly make their choice.
The price competition is increasing, companies are pressured to decrease the
prices, and turn to other sources of competitive advantage. This can lead to
price standardization across borders (Allen & Fjermestad, 2001).

At the same time, there are possibilities for decreasing the overall costs for
storing, and also administrative costs. By better coordination of production,
distribution and sales, companies can decrease the overall costs of their
products (Alrawi 2007). Moreover, companies selling online can offer special
discounts in order to meet its objectives. The lower overhead of electronic
transactions than telephone or personal sales gives possibilities for these price
reductions (Chaffey 2002).

3.4.4. Promotion
E-commerce provides a new way to communicate company’s messages to the
customers. Enterprises can connect the traditional method for obtaining
information, like product testing and focus groups with the information from
their e-commerce website to build a unique profile for every customer. By
doing this, they can develop more precisely advertising messages to targeted
groups or individuals using such tools like e-mails, web media, blogs, social
media adds and others (Allen & Fjermestad 2001). Performed well, the low-
cost promotion over the Internet leads to competitive advantage for the
companies over these competitors who did not succeed it. Companies can
either create web site with the idea of communicating messages to the

22
customers, or use external internet advertisement to attract visitors to their
home page. Sales promotions can be established quickly, and customers can be
better informed. Direct marketing, which in traditional strategy is too costly
and time-consuming, now can be performed faster using direct e-mails. Of
course, this cannot fully replace the “old way” but supplement the overall
marketing strategy. For example, direct e-marketing can be used to identify
and establish the relationships with customers, and then face-to-face approach
can be performed (Allen & Fjermestad 2001). However, there are some
negatives of relying entirely on online promotion. For example, customers are
still unwilling to share information fully, feared for their privacy because the
information can be used with unclear intentions. Evans and Wurster (1999)
suggest that if marketers used the information to create additional value,
customers will be more willing to share the information. Therefore e-
commerce and internet promotion suppose more efforts for satisfying
customer needs and predispose the customers to share information.

Summarizing, the traditional marketing strategy is changing due to the

development of the technology and e-commerce. Companies are not limited
on the marketplace in which they operate, can offer more products,
communicate and receive more information. A good illustration of the
difference between traditional business and e-commerce is given by Evans and
Wurster (1999). According to them, the main points are: reach, richness and
affiliation. Reach, means the access and connection with customers and how
many products can be offered to them. It is the main visible difference
between e-commerce and traditional business. Richness is connected with the
information which has been exchanged and the possibilities for building
strong lasting relationships. Companies start using this information to
customize their offerings according to the individual needs. Traditional
business experienced difficulties in collecting and using this information. That
was too costly and time consuming. According to Evans and Wurster (1999),
while traditional businesses need always to make trade-offs between reach and
richness, with e-commerce this could be avoided. With relatively low
investments customers can get access to lots of information and receive many
products. The possibilities for the company to collect information and use it
after to improve its performance are increasing. The third element is affiliation,
or the effectiveness of the links with partners and customers (Chaffey 2009).
While traditional commerce is centred on the company, e-commerce is shifting
more attention to customers and the information offered is regarded as an

23
important element for building a competitive advantage (Evans & Wurster
1999).

3.5. Benefits of e-commerce adoption in small companies

Research among small size companies about the perceived e-commerce

benefits have increased in recent years. However, due to the differences
between the countries, the character of the companies and type of business
they are into, the results are different. As illustrated in table 3, Chaffey (2009)
divides the benefits from e-commerce into tangible and intangible. While
tangible are connected with increased sales, decreased cost and market
expansion which can be measured, intangible benefits are hard to identify and
access. But they obviously are connected with the tangible. For example, if the
company shorten its product development lifecycle, this could lead to costs
savings and better satisfying customer needs and finally increased sales
(tangible benefits).

Table 3: Tangible and intangible benefits from e-commerce (Chaffey 2009)

Tangible benefits Intangible benefits
Increased sales (new customers, new Increased brand awareness
markets, repeat selling, cross-selling)
Marketing cost reductions (reduced time Better corporate image
for customer service, online sales,
reduced distribution costs, reduced
advertising costs)
Supply-chain costs reduction (reduced Improved marketing communication
inventory, increased competition,
shortening the process of ordering)
Decreasing the administrative costs Improved product development process
Finding new partners
Improved effectiveness of market
information
Feedback from customers

Digging into the problem and examining other publications gives a more
detailed picture about the problem. For example Abid et al. (2011) stated that
the most important benefits are connected with the competitive environment
rather than just cost savings. The following major benefits have been reported:
increased sales and increased ability to compete. Next to them, companies
highlight increased customers service and reaching large number of customers
(Abid et al. 2011).

24
Xu & Quaddus (2009) state that the increased ability to obtain information
about customers and suppliers is one of the major benefits for small
companies. Moreover, they can benefit from expanding their covering beyond
the regional or even national borders. With the global nature of the
technologies, companies can increase their market presence by penetrate in the
global market (Xu & Quaddus 2009; Turban et al. 2008). The authors suggest
that in the near future e-commerce will become a necessity for survival in ever
increasing market competition.

Nevertheless, through e-commerce small businesses can increase their ability

to communicate with customers, suppliers and competitors to the same degree
as many of the largest companies, leading to greater ability to compete by
being more flexible (Fillis et al. 2003). Stockdale and Standing (2004) also
support that. They suggest that because of the size, the small companies will
be more adaptable to the changing conditions and can gain from the increased
speed and flexibility which e-commerce offers.

At the same time, most small companies nowadays are primarily concerned
with short term and tangible benefits like cost savings than the long term
indirect benefits, like better corporate image (Duan 2011). The explanation of
the author is that even if e-commerce leads to some intangible benefits for the
small business, these perceived benefits are far below the initial expectations
(Duan 2011).

Cost savings are also being commonly reported as a result of e-commerce

implementation. Abid et al. (2011) propose that these saving are mainly
because of the improved customer service, leading to less stuff and time to
maintain the customer operation as well as decreased material expenses. Going
online gives possibilities for low cost day-to-day operation and improved
access to products and services from customers. For example, a purchase and
payment of digital product can be made online, and the product then can be
downloaded from the customers. This leads to reduced operational costs for
the company. Nevertheless, more efficient and less expensive way of looking
for suppliers or customers can be expected (Stockdale & Standing 2004).

It is being reported that e-commerce gives opportunities for small business to

increase their service offerings and improve the quality. Moreover, the benefits
of the customer service and support online are big and this leads to better
satisfaction, increased communication and interaction (Abid et al. 2011; Xu &
Quaddus 2009).

25
 Additionally, it is being stated that the perceived benefits of e-commerce
among small companies are more than the larger, when talking about the
customer service and customer relationships. According to Stockdale and
Standing (2004), the ability to tailor unique customer products and services to
individuals leads to better customer satisfaction and e-marketplace facilitates
this ability. Due to the transparency of information, companies can easily
identify where and how to differentiate their product from the other
companies on the same marketplace (Stockdale & Standing 2004).

Summary of the benefits for the small companies of participation in the

electronic marketplace according different authors are given in table 4 below:

Table 4: Benefits for small-size companies from e-commerce adoption

Benefits Description source
Improved day- low cost day-to-day operation and Duan (2012), Turban et
to-day efficiency improved access to products and services al.(2008)
from customers
Cost saving By improved customer service, less Duan (2012), Stockdale &
personnel and time to maintain customer Standing (2004)
operation; decreased material expenses
Reaching large Companies can reach new markets in Duan (2012), Abid et.al
number of other regions and countries. Firms can (2011), Xu & Quaddus (2009),
customers broaden their marketplace or widen the Turban et al.(2008), Stockdale
supplier base & Standing (2004)
Improved The companies can offer variety of new Abid et.al (2011), Xu &
customer service services offerings and improve the Quaddus (2009), Oh K-
quality, with decreasing the time Young et al. (2012)
Stockdale & Standing (2004)
Increase ability Through e-commerce small business can Abid et. Al(2011), Xu &
to compete compete at the same level as the largest Quaddus (2009), Fillis et
by being more flexible al.(2003), Stockdale &
Standing (2004)
Increased sales E-commerce leads to increased sales Abid et.al (2011)
Improved Small companies can broadened their Abid et.al (2011), Fillis et
distribution supplier bases through the use of al.(2003), Stockdale &
channel e-marketplaces Standing (2004)
Increased E-commerce possess new possibilities for Abid et.al (2011), Turban et
flexibility of communication between partners al.(2008), Fillis et al.(2003)
communication
Better access to increased ability to obtain information Abid et.al (2011), Xu &
information about customers and suppliers, increased Quaddus (2009), Oh K-
information exchange Young et al. (2012)
Better customer tailor unique customer products and Stockdale & Standing (2004)
satisfaction services to individuals leads to better
through unique customer satisfaction
products

26
In conclusion, the benefits from e-commerce can be numerous but not all of
them can be expected to appear in every company. Due to the differences
within the industries, countries, and type of the business, different perceived
benefits can be expected. According to Stockdale and Standing (2004) the
process of achieving and realizing these benefits is slow and reaching
sustainable advantages from e-commerce should be expected in long-term.

3.6. Barriers for e-commerce adoption in small companies

According to Arendt (2008), the small companies experienced greater

difficulties in finding e-commerce solutions than larger firms. Companies
should carefully measure the risk and potential benefits of implementing e-
commerce. Moreover, their new strategy needs substantially changes in all
aspect of companies business. If the plan is not in accordance with the overall
company mission, the result could be disastrous – bad customer experience
and low return of investments. The risk for small firms is particularly higher
since they suffer from lack of capitals and knowledge. There are also many
problems with the security, problems with ordering and delaying of orders
(Arendt 2008).

However, the barriers for adoption of e-commerce are numerous but they are
different in small than the large companies. Arendt (2008) states the opinion
that even with the similar level of connectivity to Internet the gap between
small and large companies still exists. According to Arendt (2008) the barriers
can be split into two major categories: macroeconomic and microeconomic.
One of the major macroeconomic barriers is the lack of innovation culture.
Due to the insufficient reward from the market companies are not stimulated
enough to introduce innovation (Arendt 2008).

In addition, Stockdale & Standing (2004) stated that many small companies
operate in an environment that does not encourage the process of innovation
and development of the strategy. At the same time e-commerce can be
irrelevant to the business and managers feel that it is not appropriate to
participate in the e-marketplace (Chaffey 2002).

This factor, together with the low access and increasing cost of capitals is a
major obstacle. According to Arendt (2008) the very first microeconomic
barrier is insufficient awareness and skills in the company and the level of
implementation of e-commerce is dependant in higher degree of that factor

27
than the financial/costs factors. However, even if the financial barriers still
exist in some degree, we are observing a major shift from resource driven
toward management driven factors (Arendt 2008). In other words, the process
of decreasing the influence of the costs factors and increasing the influence of
the internal factors is irreversible. Most researches select lack of knowledge
and skill as a major obstacle.

To illustrate the differences of the major barriers then and now, I examined
some past research about the problem. Studies made among small and
medium size companies show that the leading barrier is the initial set-up costs
and followed by the running costs. Because the small companies did not have
easy access for capitals, this was a major obstacle. But with the development of
the technology, the initial investments are decreasing and other factors
emerged as most important –lack of skills and knowledge (Fillis et al. 2003;
Arendt 2008).

Other important obstacle is unwillingness of top management to implement

new strategy. The strong correlation between the top management support
and the level of adoption has been proved by Duan (2012). In small
companies, the power decisions are concentred in the owner or the manager
and their understanding of the potential benefits is crucial for implementing
more sophisticated levels of e-commerce (Fillis et al. 2003; Duan 2012).

The results obtained from Arendt (2008) and Duan (2012) are constant with
the research from Abid et al. (2011) among Australian small-size companies.
The authors stated that the internal barriers are more important, and the
external takes the lowest position in the ranking. Lack of knowledge and skills
is the most important barrier for the Australian companies, and after that is
the cost factor (Abid et al. 2011)

Major barrier is also the lack of compatibility between the company’s technical
infrastructure and e-commerce technology. Moreover, Abid et al. (2011)
additionally examined the expected barriers and compare them with the
perceived after starting to implement e-commerce strategies. The result
showed that small firms are bad prepared for the introduction of e-commerce.
They make insufficient planning process and underestimate the technological
sophistication and complexity of the process.

The lack of long term business strategy is also indicated by Arendt (2008).
Companies also need to adapt their strategy with the transition to more

28
relationship oriented strategy, which is inevitable with e-commerce (Arendt
2008). But according to O’Toole (2003) this requires people and substantially
changes in the way of doing business. People and knowledge are becoming
more important and companies need to invest more on training programs to
overcome this barrier and to be successfully implementers of e-commerce
strategy (O’Toole 2003).

The security risk is increasing with the openness of the company to the world
and with that, the fears that the company could be more vulnerable to attack s.
This in turn can affect negatively the internal environment and the company
can terminated the process of e-commerce adoption on very early stage (Oh Ka-
Young et al. 2012).

Moreover, Oh K-Young et al. (2012) showed that the perceived business risk
has double effect on the company. The perceived business risk is defined from
Oh Ka-Young et al. (2012) as apprehension about an organization’s business
security when using e-commerce systems. First, the business risk has an overall
negative effect towards implementation to e-commerce strategy, and second,
positive effect towards improved innovation capabilities. The results show
that the greater the risk is, the more likely the firms are to strengthen their
innovation capabilities. But overall, security risk is a major obstacle. The fear
of possible negatives of information exchange between partners remains (Oh Ka-
Young et al. 2012). According to O’Toole (2003), security of information
exchanged between the partners and the fear that strategic data can be
accessed by competitors is a major obstacle for the small companies.
Moreover, customers are also concerned about the data collection about them
and the security of electronic financial exchange (O’Toole 2003).

More recent publications presented the security problem more general,

describing it as a lack of trust. Because e-commerce interaction is a virtual and
the personal contact is missing, the parties are suffered from lack of trust,
which could be a barrier for further adoption (Oh Ka-Young et al. 2012)

A good classification of the barriers is given from Arendt (2008), where they
are classified into six main categories. Summary of the barriers from my
literature research based on the Arendt’s model is presented in the table 5.

29
Table 5: Barriers for e-commerce adoption (Adapted from Arendt, 2008)
Category Barriers Source
Management Lack of awareness Arendt (2008), Abid et.al
and strategy Lack of long term business strategy (2011), Duan (2012)
Lack of innovation culture
Resistance of top management
Cost and Lack of finance resources Arendt (2008), Abid et.al
financing Long process of return on (2011), Fillis et al.(2003)
investments
Skills and Lack of experience and knowledge Arendt (2008), Abid et.al
training (2011), Oh Ka-Young et al.
(2012)
The Supply Unsuitability for the type of Arendt (2008), Chaffey
chain business (2002)
Lack of consumer demand
Technology High level of complexity Abid et.al (2011), Fillis et
Choices Lack of time al.(2003)
Security and Business risk Arendt (2008), Oh K-
reliability Security factors Young et al. (2012), Abid
et.al (2011), O’Toole, 2003,
Oh Ka-Young et al. (2012)

3.7. Summary of the literature review

According to the literature, the impact of e-commerce on small size companies

is substantial. The marketplace is different and in a global world, more
companies begin to realize that the implementation of electronic technology is
a necessity. At the same time it’s clear that the e-commerce does not change
the business itself but it is a complementary tool that supplements the overall
strategy and enhances the business performance. The main issue for the small
sized companies is to overcome the barriers and realise the benefits, but this is
a slow process with no universal recipe how to solve. Due to the different
driving force for electronic commerce adoption, small firms can face different
barriers. Some of them are more common, like lack of knowledge and skills,
while others can appear due to the character of the company – lack of long
time business strategy. The realising of the potential benefits can be reached in
relatively long-term. In the small companies in higher degree there is a lack of
understanding of the potential benefits. The degree of understanding is very
important. According to Stockdale and Standing (2004) this is a desirable
prerequisite for future development. If the benefits are not realized, the effect
on the company performance can be negative.

30
4. Findings
This chapter presents the findings from primary and secondary sources. First, information
regarding the IT / e-commerce development in Sweden and other European countries will be
presented. This helps to receive a more accurate picture of the problem and answer to the
research questions. Then, data regarding the small companies in Sweden will be presented.
Differences between small/medium and large companies in Sweden will be examined. The
second part of the chapter presents the findings from the interviews conducted with small size
companies. The data about e-commerce usage from the enterprises are presented in a table
and shortly commented. Then the responses to the open questions from the interviews are
summarized.

4.1. Electronic development in Sweden

According to the latest study of Economist Intelligence Unit (2010) Sweden

occupies the first place in the digital economy rankings, while Denmark and
USA are second and third. This is a ranking which asses the quality of the
county’s IT-infrastructure and the ability of individuals and enterprises to use
electronic technologies for their benefits (Economist Intelligence Unit 2010).

There is a visible tendency among companies in Sweden to spend more on

telecommunication equipment, computers and software. For example, the
overall investments in 2010 comparing to 2009 have increased from 32 456
million SEK to 34 072 million SEK, which is an increase of 4,9% on year’s
base. Examining the detailed information about industries, it is interesting to
notice that despite the overall increase, some industries have decreased the
investments. This process can be seen in manufacturing and energy and
recycling sectors. It is interesting to see that the increasing investments for
information and telecommunication technology from small companies are
more than the average. Companies have invested 28,5% more in 2010
comparing to 2009. As can be seen in figure 3, the overall investments made
from the small companies (10-49 employees) accounts for 5 993 million SEK
in 2010 (Statistic Sweden 2012).

31
 Figure 3: Expenses on IT (Source: Statistics Swe den 2012)

The statistical office of Eurostat (2012) presents data about the spreading of e-
commerce and electronic technologies among the enterprises in EU. The
broadband internet connectivity among the enterprises in Sweden is well
developed. In 2011, 95% of companies with 10 or more employees are
connected to Internet. Comparing to the previous year there is an increase of
4%. Overall, Sweden is on sixth place of all EU members’ countries, while the
average broadband connectivity in EU is 89%. Online selling in 2010 is highly
spreaded in Norway (34% from enterprises), Belgium – 26%, Denmark – 25%
and Sweden – 24%, while at the same time the average percent for all EU
members countries is 13 %, as can be seen in table 6 below.

Table 6: Enterprises selling online

Country Enterprises selling online (at
least 1% of annual turnover), %
1.Norway 34
2.Belgium 26
3.Denmark 25
4.Sweden 24
5.Germany 22
6.Lithuania 22
EU 27 average 13
Source: Eurostat (2012)

The average turnover from e-commerce in Sweden in 2010 accounts for 18%
from the total turnover, while the average level for European Union is 14%.

35% of all companies in Sweden use electronic technology to share

information between different functional areas within the company in 2010.
By this criteria Sweden again is among the leading countries – it is ranked on

32
third place after Belgium and Greece. On the other hand, Eurostat shows
different picture regarding the external data exchange with suppliers,
customers and partners. Sweden takes 21-st place out of 27 members’
countries with 43%, while the leading country is United Kingdom with 77%.
At the same time companies in Sweden interact intensively with public
authorities. 90% have reported that in 2010 (Eurostat, 2012).

Concerning purchases companies make electronically, Denmark (65%),

Norway (65%) and Sweden (63%) occupy the first positions in the list for
2009, while the average percent for all EU members is only 33%. In 2010,
Sweden took the second position with an increase of 6% comparing to the last
year. Denmark retains in leading position with 70% (Eurostat, 2012).

4.2. E-commerce usage in small-size companies

A survey made in 2008 among small manufacturing companies in Sweden

shows that 92% of them used e-commerce to exchange information by e-mails
and 91% use e-commerce in their marketing, mainly by their web-site
(Eriksson et al. 2008). This reveals that Sweden in among the leading countries
in terms of e-commerce development. A more detailed picture presented from
Statistic Sweden (2012) reveals that 88% of all small enterprises have built a
Web site, while among micro size companies the percentage is low – 58%. The
differences between industries are insignificant, only transportation and
warehouse companies have relatively small level of web adoption – 69% of
web presence while the average level is 89%.

The most sophisticated level of e-commerce can be characterized with

possibilities for customers to make orders and payments electronically.
Despite the high level of IT development in Sweden, the share of enterprises
offer an electronic way of ordering and payment is low. The adoption of small
companies is 25%, and can be seen that it is in relation to companies’ size. In
contrast, 47% of the big companies use online payments. Differences
between the industries can also be observed. In some sectors the possibilities
for ordering and payment are high. For example in Finance sector – 62%, in
Real estate sector -52%, and Energy sector – 48%. On the other hand, among
construction companies the level is 12% and among manufacturing companies
is 16% (Statistic Sweden 2012).

33
Electronic technologies and Internet are used to manage different
administrative procedures. 50% of all companies with 10 or more employees
perform procedures electronically, or 48% of small, 59% of medium, and 58%
of the large companies. Only 35 % of small companies have reported that they
offer electronic services to their employees. At the same time there are
differences between the industries. While manufacturing companies show
average adoption level – 40%, in IT and finance sector the percentage is high
– 79% and 77% respectively. Small enterprises actively seek information
(90%), download forms (90%) and also fill and submit electronics forms by
Internet (82%). At the same time companies interact limitedly with
governmental organizations. According to Statistic Sweden ( 2012) the most
significant factor for that is the insignificant knowledge of the services and
possible benefits of them.

By using electronic data exchange companies can more efficiently

communicate with customer, suppliers and authorities. The automated
information exchange allows sending and receiving of orders and invoices,
shipping documents and others in a standardized format with an increased
speed. The interaction with partners among small companies is on a
significantly lower level than the larger enterprises. While only 28% of the
small firms use electronic systems to order and receive payments, larger
enterprises show much higher level of adoption – 53% among medium, and
77% among biggest firms. Only 25% of small size companies send or receive
product information, 22% send and receive transport documents and 26%
perform data exchange with agencies. Electronic invoices send only 29% of
the small companies, while among the largest enterprises the percentage is
53%. At the same, electronically control of inventory levels have reported
20%, information sharing regarding control of distribution channel – 18% of
all small companies. All these applications are significantly lower adopted of
smaller comparing to the larger companies. Regarding the industry sectors, the
companies in manufacturing and retail and wholesale business are among the
highest users of electronic technologies for sharing information about sales.
Information exchange in terms of controlling the inventory levels is used from
20% of small companies, while 27% use it for the purpose of accounting.

Other applications of e-commerce within the Swedish companies can be seen

in Appendix A, which summarizes the results from Statistic Sweden (2012).

34
 4.3. Development of e-commerce in the interviewed companies

Table 7 below, presents the aggregates of my findings about e-commerce

development in the interviewed small-size companies:

Table 7: E-commerce de vel opment in the inter vie we d companies

E-commerce applications Company: A B C
Have an internet connection Yes Yes Yes
Have a website Yes Yes Yes
Other language version of the website or information No Yes No
in different language than Swedish
Email communication inside the company Yes Yes Yes
Email communication with partners and customers Yes Yes Yes
Publishes information on web page such as products, Yes Yes Yes
catalogues, brochures
Using Internet and website to promote companies Yes Yes Yes
products
Using internet to search for new suppliers Yes Yes Yes
Electronically interaction between the company and Yes Yes Yes
government agencies
Company fill in and send electronic forms Yes Yes Yes
Send electronic invoice Yes Yes Yes
Receive electronic invoice No Yes Yes
Using electronically technologies to share information No Yes Yes
about sales for use for inventory control, accounting or
distribution channel
Customers can place orders by website No No Yes
Customers can place orders by other forms, like e- Yes Yes Yes
mails, EDI type messages or others
Customers can pay electronically No No No
The company can order electronically from suppliers No No Yes
Using electronic technologies for administrative No Yes Yes
procedures inside the company

All companies are connected to Internet and have websites. At the moment
only company B has a different than Swedish version of the website. The
company has four language versions additionally to Swedish. Company A is
now building an English version of their web page, while company C has only
a Swedish version. Company B has allowed their customers to participate
actively in the information exchange by integration with the social media like
Facebook and Twitter. The other two companies have not adopted these
applications. E-mails are used actively from all firms to communicate inside
and outside the companies. All companies use web pages to publish

35
information such as products, catalogues and brochures. Additionally, e-
commerce is used as a tool to promote the companies’ products. Internet is
used also for searching for new suppliers and to interact with the government.

Company A sends electronic invoices but does not receive. They do not use
electronic technologies to share information about sales in terms of inventory
control, accounting or distribution. Online ordering and payment are not
possible. At the same time, there is a possibility for receiving orders from
customers by other methods – emails, EDI or others. Company A does not
order electronically from suppliers. Electronic technologies for administrative
procedures are not used.

According to the responses, Company B sends and receives electronic

invoices. Electronic technologies are used for inventory control, accounting
and distribution as well as for manage administrative procedures inside the
company. Similarly to company A, the possibilities for online ordering and
payment do not exist and company A does not order electronically from
suppliers. Different methods of receiving orders from customers are also used.

Company C has a well developed web-shop. They have a more sophisticated

level of e-commerce than the other two companies. All their products are
included in the web shop and customers can make orders electronically. It is
not possible for customers to pay online by credit cards. The company has
tried this method but abandoned it since most of the customers prefer to
receive an invoice and pay by other methods. The company actively use and
manage information according to customers’ needs. Interaction between
partners electronically is largely used.

4.4. The reason beyond e-commerce development

The CEO is the leading force of e-commerce development and improvements

in Company A. His visions and ideas for the future are the main reasons for
the adoption of e-commerce. According to the responses, they took the
decision to engage more technologies in order to improve efficiency and cut
costs. He explains that they felt the necessity to do what other companies do.
Similarly, in the other two companies the leading force for e-commerce
adoption is again CEO.

36
The respondent from Company A describes the reasons for starting using
electronic technology in their business. He believes that both competitiveness
and cost/efficiency factors are important, but according to him, they were
leaded by the cost/efficiency motives. The CEO adds:

“We believed that we can cut expenses, because we have many partners and by using Internet
we can save money and time”.

Additionally they believed that through e-commerce they can improve

efficiency like cutting the time for sending and receiving orders or filling and
sending electronic forms. On the other hand, the CEO of company B says
that they started e-commerce primary to improve competiveness. He also
believes that during the time this would affect their cost of marketing and
decrease the communication expenses since they have a large distributor
network around the world. Company C started e-commerce leaded by
cost/efficiency factors. The leading force for that was the CEO of the
company, who sees their web-shop as very important for cutting cost and
improve efficiency. Before 2,5 years the company did not have the knowledge
about e-commerce but because of the CEO’s long term vision the company
managed successfully to get this knowledge inside - by hiring an experienced
employee from a firm operating in the same industry.

Summary of the findings regarding reasons for e-commerce development can

be seen in the table 8 below:

Table 8: Reasons for e-commerce adoption

Company A Company B Company C
Driving force for e- CEO CEO CEO
commerce adoption
Reason beyond starting Cost / Efficiency To improve Cost /
electronic technologies factors competiveness Efficiency
using

4.5. The impact of e-commerce on marketing

According to the first respondent (Company A), the e-commerce has not
changed their marketing strategy much. The most visible result they see in the
possibilities to inform customers for the products via company’s website.
Importantly, they use Internet to advertise the products and to inform the
customers where they can find the products in Sweden. The prices are not

37
published and customers have to send additional requests if they want more
information. They cannot pay online. The respondent summarizes that via e-
commerce his company managed to increase the advertisement and reach
more customers. However, they are not so relied on finding customers by
Internet, and are more dependent on their distributaries around the country.
Asked if they have changed company’s long time business strategy because of e-
commerce, CEO replies negatively. He adds that e-commerce helps them a lot
but they have not made any significantly changes in the strategy.

Similarly, CEO of Company B states that the company did not change the
business strategy influenced by e-commerce. Additionally, direct sales are
generated only in Sweden due to the high credit risk. Due to the specificity and
complexity of their products and their high price the necessity for online
ordering from their website is low. The markets out of Sweden are covered by
the distributors with which Company B has established close connections. The
company can offer extensive information to their foreign customers by the
web page; information is published in four additional languages beside
Swedish.

On the other hand, in Company C the changes is the long term strategy are
more visible. The CEO explains that they have realised the possibilities which e-
commerce offers, and changed dramatically their vision and strategy for the
future. As a part of their new image the CEO highlights different graphical
profile of the company, a new logo, a redesigned web site and a changed
marketing strategy. Now they manage to operate with a far broader product
line than before and manage to optimise it internally. The CEO explains:

”Before we had also a huge product line, but it was hard to handle with. Now, when
everything is in the web shop it is much easier to have this range because of the structure to
sell it. So, we also helped ourselves internally by optimising our product line”.

Moreover e-commerce gives them possibilities to put products in the web

shop which are not physically produced and even sometimes they have never
seen. CEO adds that now with e-commerce, the possibilities for cooperation
with partners are increasing. Company’s advertisement activities have been
very influenced by e-commerce since the company managed to reduce the
expenses and now is dependant to a large extent on their new web page. By e-
commerce, the company managed to cover far larger customers’ area, while
the price strategy is still the same - not influenced by e-commerce.

38
 4.6. Benefits from e-commerce adoption

CEO of Company A, describes the main benefits in terms of convenience and

easiness for customers and partners. He explains that the new technologies
give possibilities to improve communicativeness between company and
partners /customers. That leads to the feeling of more closeness. Other
important positive result is the possibilities to find new customers. He explains
that the information published on their web site help them to attract more
clients.

The sharing of information and the possibilities it gives is also among the most
valuable benefits, according to Company B. The respondent states that sharing
of information with distributors is very important for their company since
many of them are outside Sweden. At the same time, the company uses
actively Internet to promote its products. Besides, they have created five
language versions of the company’s web page to cover the need of
information from non-Swedish clients.

The respondent from Company C explains the main positive effect from e-
commerce in terms of cutting costs for advertisement. Before, his company
generated huge costs to reach and inform customers – for printed catalogues,
exhibitions and other forms of advertising. The respondent explains:

”Before we had huge expenses for advertisement – for catalogues, to do our exhibitions and
others. That was the only way to reach new customers. And that was too costly”.

Now, they have reduced dramatically the advertisement budget and attend
only few exhibitions. Through the web site they have a virtual exhibition open
24h per day, 7 days a week, 365 days per year, as CEO adds.

4.7. Barriers for e-commerce adoption

The CEO of Company A summarizes that the cost factor is very important to
his company. He explains that at the moment they would not invest more
money in software or technologies since they are still not sure of the positive
results from their initial investments. Being asked how important the cost
factor is from 1 to 5, the CEO responses with 4.

39
On the other hand, the CEO of Company B describes that among the main
barriers for their company is the risk of card payments together with the
higher cost. He states:

”We have a lot of international payments but accepting them in the form of foreign credit
cards is too expensive and risky. We only accept international bank transfers.”

According to the respondent, the cost factor is also very important to adopt
more e-technologies – he gives it the highest grade.

On the contrary, company C highlights the knowledge as a most important

barrier and considers cost factor as not important at all, giving it the lowest
priority. The CEO explains that the company was aware of the need to have
certain knowledge in-house and not rely entirely on external sources.
Moreover, he assumes that the knowledge would continue to be very
important in the future for the company. If this knowledge drops out of the
company they will need more resources to buy it to satisfy the need for
constantly improvements. The reasons why they consider cost factor as less
important is that they can see the actual positives from e-commerce and it is
clear that the expenses have paid off.

4.8. Benefits and barriers – before and now

The CEO of Company A answers that they were less aware of the potential
benefits. He explains that due to the little experience in this area the company
had not big expectations, except to improve efficiency and reduce costs. And
these expected benefits were visible as results. Concerning the marketing side
and competiveness the respondent states that they were not aware of the
possible outcome. The CEO states:

”We had some positive expectations for the potential benefits in terms of cost efficiency, but
for example the positives for the competiveness and marketing were not clear for us”.

However, during the time they have realised the benefits of e-commerce in
terms of competiveness. On the other hand, they were more aware of the
potential barriers which may occur. From all the barriers, the company was
most aware of the need to educate people and higher costs. Little experience
causes the need for some education and company was aware of the cost
connected with software and hardware upgrading.

40
The respondent of Company B says that the initial expectations regarding the
possible outcomes have been met. The company has started to use social
media (Facebook and Twitter) and this effect has been greater than expected,
according to the CEO of the company. Regarding the awareness of the
potential benefits, the respondent adds that his company was aware of the
benefits mostly in terms of sharing of information. On the other hand, the
company faced unexpected difficulties in setting up a web shop. They have
still not set up their online store due to the payment and credit risk.

Company C was not aware of the huge positive effect of e-commerce

nowadays. The CEO explains:

“We knew we had to do this to be competitive but we did not expect to be so good”.

For his company, the benefits are far more than their initial expectations. As
an example of the impact, the CEO mentions that almost all new customers
have found them through Internet and most of their clients have already been
informed about the products before making a request. Regarding the barriers,
the CEO explains that they were aware of the need for continuous work.
Every day the company have had discussions about some issues around e-
commerce. The CEO adds that knowledge and the continuously improvement
are very important. Regarding the possibilities for online payments by cards,
CEO explains that they have already tried it, but at the moment the need for
that is low, since most of their clients prefer to receive an invoice and pay by
bank transfer.

41
5. Discussion
This chapter presents the author’s analysis based on the theoretical chapter and the results
obtained from the interviews with companies. The author compares the finding from the
literature with his empirical study and in the form of a discussion tries to answer the research
questions.

5.1. E-commerce development in small-size companies in Sweden

First, based on the theoretical model presented by Xu and Quaddus (2009) for
the different stages of e-commerce adoption and according to the data
obtained from the interviews it is visible that the three companies are on
different level of e-commerce development:

Figure 4: Level of e-commerce development in the inter vie we d companies

If I try to align the data about e-commerce development obtained from

Statistic Sweden (2012) with the model proposed from Xu and Quaddus
(2009), most of the small companies in Sweden would fit into the level 3 in the
graph. According to Xu and Quaddus (2009), in this stage of development
companies use e-commerce primary as a marketing tool and they do not
conduct business transactions. At the same time e-commerce is used for
communication inside and outside the company and electronically sending and
receiving of forms. This was commonly reported from the interviewed
companies. The most sophisticated level of development can be characterized
with an extensive information exchange, receiving of orders and payments
online and optimization of the internal processes (Xu & Quaddus 2009). One

42
of the respondent companies can be placed in level 4 in the graph, since they
have implemented more sophisticated applications as a web-shop. Having
looked at the data presented from Statistic Sweden (2012) it is clear that not
many of the small companies offer possibilities for online ordering – only 18%
of the respondents have developed a web-store. In contrast, in largest
companies the share is 39%. Other more complex solutions like having in-
house software developers are not visible among the small companies.

Summarizing, most of the small size companies are still developing its e-
commerce and are using it primary for communication and as a marketing tool
– level 3. Many companies are still in the level 2, they are present online, but
not use e-commerce intensively. The usage is mainly through e-mails usage
and searching of information.

5.2. Driving force for e-commerce adoption

From my research I found first, that the driving force for e-commerce
adoption is the CEO / owner of the company. This is in accordance with the
results from the literature review - the decisions for adoption of e-commerce
strategy are concentrated in the owners/managers. Their visions and ideas can
be realized in a relatively short period of time, because they can benefit from
more flexibility than the bigger companies. All of the interviewed companies
have made some improvements leaded by a single decision from the manager.
On the other hand, the lack of knowledge from the managers can lead to
ignoring some good ideas within the company.

Having understood that the leading force for e-commerce development comes
from the manager of the company, I will describe what prompts him/ her to
start this process. Speaking about the different motives for implementation,
Evans and Wurster (1999) explained, the main driver for small companies is
the need to “defend the land”, or in other words to be more competitive. On
the other hand, two of the interviewed companies claimed that the reason
beyond e-commerce adoption is to improve efficiency and decrease costs. In
the literature there are not consensuses about which factors are more
important. For example, while Chaffey (2002) says that the cost/efficiency and
competiveness factors are equally important for the small companies, Xu and
Quaddus (2009) state that the big companies start e-commerce primary to
improve efficiency while small size companies adopt e-commerce primary to

43
improve competiveness. Results from my research do not support the ideas of
Xu and Quaddus (2009) and Evans and Wuster (1999), since two of the
companies put much importance on efficiency factors.

5.3. The impact of e-commerce on marketing

Stockdale and Standing (2004) state that e-commerce facilities the business
and the basic principles of marketing are the same. According to my empirical
study, this is true for companies using not so sophisticated forms of e-
commerce – in the early stage of the adoption ladder. Two of the examined
companies have not made any significant changes to their strategy and this is
constant with Stock and Standing (2004). But I think that for companies using
more advanced e-commerce, there is a need to adapt the long-time strategy so
that they can benefit in higher degree from e-commerce.

Evans and Wurster (1999) put much importance on the information, regarded
as equally important to the product itself. From the empirical study, I have
found out that small companies excessively use the electronic technologies to
exchange information and to inform customers about their products.
Companies who are in stages 1, 2 and 3 in the adoption ladder, the impact on
the marketing is primarily seen in increased advertisement, attracting more
customers and sharing of information. Eriksson et al. (2008) state that over
90% of the Swedish small-size companies use e-commerce in terms of
information exchange and as marketing tool. The importance of the
information is largely described in the literature (Chaffey 2002; Chaffey et al.
2000; Evans & Wurster 1999). According to Allen and Fjermestad (2001) e-
commerce offers a new way to interact with customers and by connecting with
the traditional advertising techniques the effect can be doubled. I found that
nowadays it is possible for the companies to rely almost entirely on e-
commerce, and to reduce to minimum the old forms of advertising. Of course,
this cannot be done without a new way of thinking and a vision for the future.

On the other hand, the possibilities for expanding the product line are not
much covered from the literature. Chaffey et al. (2000) mention that
companies can add additional products and services around their core
products. Results from the interviews highlight one important possibility for
the small companies - to expand the product line by cooperating externally

44
with partners. This is possible through e-commerce and a virtual store, where
the products can be placed, even if they are not yet manufactured.

Regarding the price as an element of the marketing mix, I found that prices are
less influenced from e-commerce than the others elements. All of the
interviewed companies have not changed their price level because of e-
commerce. Allen & Fjermestad (2001) state that e-commerce can lead to price
standardization, but due to the specificity of the examined companies this is
not applicable. The impact of e-commerce on prices would be visible when
the competition is higher and the product is not complex. On the other hand,
any company can expect some costs savings because of the decreased
administrative, storing and selling expenses.

According to the literature the effect of e-commerce on the “place” should be

more visible than the other three elements of the marketing mix. Chaffey
(2002) explains the big opportunities for covering large customer area and
international expansion. This effect was commonly reported from the
examined companies. However, I have found that companies who are not
using sophisticated forms of e-commerce are still dependant in higher degree
on their distribution channels. On the other hand, companies who use e-
commerce in a more advanced way are more likely to find their customers on
the Internet. This in turn can lead to a decrease of the administrative and other
related costs.

5.4. Benefits from e-commerce adoption

From my empirical study I have found that the possibilities for finding and
attracting customers are one of the main benefits for the co mpanies. At the
same time, companies value higher the increased information exchange and
improved internal efficiency. Both the theory and the empirical study show
that this is far more important than just cost savings. According to the
literature, the increased ability to exchange information and cover larger
customer area is among the main benefits (Xu & Quaddus 2009; Turban et al.
2008). From the empirical study I have found that companies are dependent in
higher degree than before on electronic technologies as a way to find
customers. Moreover, by e-commerce, companies can replace the traditional
way of advertising to more modern and advanced way, leading to decreasing
of the advertising expenses. Regarding the costs, the literature describes only

45
decreasing of day-to-day expenses and operational costs as a result of e-
commerce, but do not describe the huge impact on the advertisement costs.
Interestingly, I have found that companies were not fully aware of the
potential benefits from e-commerce adoption. For example, while the positive
effect of e-commerce in terms of improved efficiency, information exchange
and decreasing costs was expected, companies were not aware of the huge
impact on the competiveness and the effect of the social media. One of the
respondent companies cannot even imagine their business now without e-
commerce. From my study it is clear that most of the small companies start e-
commerce with limited expectations but during the time they start to realize
the bigger impact and possibilities from e-commerce. According to Brand and
Huizingh (2008) if the benefits are realized, the managers are more likely to
continue to innovate. Of course here the knowledge is important both for
implementing of the strategy and for realising the benefits.

5.5. Barriers for e-commerce adoption

According to the responses from the interviews, the cost factor is still very
important for two of the companies. They see costs as a main obstacle for
future developments. The reason for that is that managers are not sure of the
positive outcome as a result of the e-commerce improvements. According to
Arendt (2008), the main difference between the small and large companies is
in their innovation culture, and if companies do not have sufficient rewards
from the market, the stimuli for future development are low. That is the
explanation, why many companies consider cost factor as very important.
Moreover, from the literature review I have found that the companies should
changed their long term strategies in order to overcome the barriers (Stockdale
& Standing 2004). From my study it was examined that companies who have
not changed their strategy, experience greater difficulties and the cost factor is
a main issue. Therefore, innovation culture and knowledge are crucial. To
illustrate, one of the examined companies highlights the knowledge as a most
important barrier before and now. This company for example do not give
much importance of the cost factor. The results from the experimental part
lead to one important conclusion: small companies consider the cost factor
very important if they do not have sufficient knowledge and cannot see the
positive results from the new strategy. On the other hand, Arendt (2008)
explains that the influence of the cost factor is decreasing because of the

46
developing of the technologies and decreasing the initial investment needed.
Therefore, even if the companies consider the cost factor as most important, I
think that the lack of knowledge is with utmost importance. Importantly, the
CEO of one company states that this knowledge should be inside the
company and the company should put much attention not to lose it. Overall,
the main barriers nowadays can be found inside the companies – first, in
categories management and strategy, and second, in skills and training.

Additionally, another barrier according to the empirical material is the security

risk regarding credit cards payments. O’ Toole (2003) stated that customers are
still concerned about the security in this kind of payments. Credit card
payments can be abandoned if there is no customers demand – this was
reported from one of the companies. According to Stockdale and Standing
(2004) if the environment does not encourage the innovation process, small
companies can abandon on stop the e-commerce improvements. Statistic
Sweden (2012) shows that only 18% from the companies have received orders
generated by their websites. Additionally, many companies are operating
primary in B2B market, which does not encourage this kind of payments. This
reason was also stated from one of the responded companies.

Speaking about the awareness for the potential barriers, managers explained
that they were aware for the costs and the need for education and increasing
the knowledge. On the other hand, one company did not succeed in setting up
a web shop since the implementation was more difficult than the initial
expectation. One company faced unexpected difficulties in setting up card
payments, and another see it as a too costly and not efficient.

From the literature I have found that the awareness of the companies for the
necessity of increasing the knowledge is closely connected with their intention
for innovation and improvements (Brand & Huizingh 2008). Therefore, the
more aware the companies are, the more sophisticated levels of e-commerce
adoption can be expected. This was observed in the interviewed companies.
The company which had a clear vision of the barriers and especially of the
need of knowledge managed to improve their e-commerce capabilities in a
short period of time and to benefit from it.

47
6. Conclusion
This chapter concludes the thesis. Based on the theoretical, empirical and analytical findings
previously presented, the author answers the research questions. The chapter further points
out the limitations and gives recommendation for further studies.

This study shows that Swedish companies can be characterized with relatively
well developed e-commerce strategies comparing to other countries. At the
same time, differences between small and big companies in Sweden are being
observed. As expected, the biggest company have reached more sophisticated
levels of adoption. The decisions for e-commerce adoption in small-size firms
are dependent on the knowledge of the owner/manager. Today, most of the
small companies use e-commerce as a marketing tool and putting much
importance on the information exchange and informing customers for the
products and services.

This study shows that the improved internal efficiency and increased
information exchanges are the main benefits from e-commerce for the small
companies. By increased information exchange companies are able to cover
much larger customer area and attract new customers. Being more informed
for the characteristics of the products, customers are more satisfied and more
willing to make orders. This study highlights that companies are shifting to a
new way of finding customers which allows decreasing of their expenses for
advertisement. At the same time companies experience cost saving by
improved day-to-day operations.

The most important barriers for the small companies are the lack of
innovation culture and knowledge. Even if some companies still consider the
cost factor as most important this is because of insufficient understanding for e-
commerce and the positive effect of it. This in turn leads to non-consistency or
stopping the process of innovation. Other important barrier is the lack of
customers demand. Further, the study shows that many of the small
companies will not gain substantial benefits from these improvements because
of the character of their businesses or market which does not encourage the
process of innovation.

48
Limitations and further research
This thesis has its limitations. The major drawback in this thesis is the limited
number of interviewed companies, therefore the findings cannot be taken as
representative for all small-size companies in Sweden. At the same time, the
results in this thesis are highly dependent on the research interpretation;
therefore the ability to reproduce these results is questionable. This thesis does
not draw conclusions about differences between industries or regions in
Sweden. The examined companies have already started the process of e-
commerce adoption. Therefore, this thesis does not explore in details the
barriers experience from non-adopters.

Further studies can be carried out in many areas. A more detailed research
focused on a specific industry would provide valuable information and show
the differences between industries. It would be interesting to conduct a
quantitative research and explore if there are any differences between
companies in different stages of e-commerce development. It is also
interesting to analyse the influence of e-commerce on the process of
internationalization in the small companies.

49
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Appendixes

Appendix A: E-commerce application in enterprises according

their size

Activity, year 2010 Micro Small Medium Large

(% of all enterprises) 0-9 10-49 50-249 Over 249
employees employees employees employees
Companies using computers 89 96 100 100
Employees can access human resource services 23 35 64 87
electronically
Have access to Internet 88 95 100 99
Have a website 58 88 98 98
Customers can make orders or bookings online 15 25 37 47
Seeking information from governmental agencies 82 90 98 96
Download forms 80 90 97 95
Fill and send electronic forms 69 82 93 89
Fully manage administrative procedures 37 48 59 58
electronically
Used the Internet for accessing tender documents 26 26 36
and specifications in
electronic procurement systems of public
authorities
Make offers in the government electronic 15 18 28
procurement systems in Sweden
Make offers in the government electronic 2 3 8
procurement systems in EU
Use automated data exchange with ICT systems 38 64 83
outside the enterprise
Use automated data exchange to order payments 28 53 77
Use automated data exchange to send or receive 25 35 58
product information
Use automated data exchange to send or receive 22 41 59
transport documents
Use automated data exchange to send/receive 26 46 64
information from agencies
Sends e-invoices suitable for electronic processing 15 31 56
Sends e-invoices not suitable for electronic 29 47 53
processing
Receive e-invoices suitable for electronic 14 27 53
processing
Share information about sales orders 20 33 52
electronically and automatically with the software
used for inventory control
Share information about sales orders 31 44 66
electronically and automatically with the software
used for accounting
Share information about sales orders 19 40 64
electronically and automatically with the software
used for production/service governance
Share information about sales orders 18 34 55
electronically and automatically with the software

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used for distribution
Share information about purchase orders 20 36 53
electronically and automatically with
the software used for inventory control
Share information about purchase orders 27 41 63
electronically and automatically with
the software used for accounting
Have received orders via a website during 2010 18 26 39
Annual % of total turnover from orders received 4 8 7
electronically via a website
Received orders for products or services placed 7 19 35
via EDI-type messages
percentage of total turnover resulting from orders 3 7 20
received
electronically via EDI-type messages
Placed orders for products or services 47 59 74
electronically via EDI-type messages orwebsites
Placed orders (via websites or EDI-type 45 57 70
messages) to suppliers located in Sweden
Placed orders (via websites or EDI-type 11 25 38
messages) to suppliers located in EU country
Have in-house software developers 12 27 44
Use an IT solution as a way of reducing their 16 36 51
energy consumption

Source: Statistic Swe den, 2012

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Appendix B: Interview Questions
Respondents Position:……………..

1. How do you use e-commerce in your company?

E-commerce applications Yes /No
Have an internet connection
Have a website
Other language version of the website or information in different language than
Swedish
Email communication inside the company
Email communication with partners and customers
Publishes information on web page such as products, catalogues, brochures
Using Internet and website to promote companies products
Using internet to search for new suppliers
Electronically interaction between the company and government agencies
Company fill in and send electronic forms
Send electronic invoice
Receive electronic invoice
Using electronically technologies to share information about sales for use for
inventory control, accounting or distribution channel
Customers can place orders by website
Customers can place orders by other forms, like e-mails, EDI type messages or
others
Customers can pay electronically
The company can order electronically from suppliers
Using electronic technologies for administrative procedures inside the company

2. Who is the driving force for e-commerce adoption in your company?

3. What’s the reason beyond starting electronic technologies in your business?
Is it the reason cost /efficiency or the need to improve competiveness?
4. Which are the biggest barriers to future e-commerce improvement in your
company?
5. To which degree is the cost factor important to adopt more e-technologies?
How would you rank it on a scale from 1 to 5, where 1 means less important
and 5 means very important?
6. What do you consider is the most beneficial for your company from e-
commerce?
7. Did the actual benefits meet your initial expectations?
8. Were you aware of the potential benefits and barriers before you started
using e-commerce?
9. Have you made changes to your long term business strategy because of e-
commerce?
10. How is your marketing strategy influenced by e-commerce?

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