Web 2.0 and SME E-commerce Adoption

Web 2.0, a term credited to O’Reilly (Bell & Loane, 2010; O’Reilly, 2007), is a set of economic, social, and technology trends that collectively forms the basis for the next generation of the Internet, widely known as a more mature, distinctive medium characterised by user participation, openness, and network effects (Bell & Loane, 2010). Key features of Web 2.0 applications highlight the following (Bell & Loane, 2010):

1. The Web as a platform;

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3. An architecture of participation that encourages users to contribute; 4. Software that is easy to build and use.

The advent of social networking websites (also known as social media) such as Facebook, Twitter, LinkedIn, MySpace, and others, has made organisations to re-think the role of e- commerce in SMEs. Other than the usual social aspects, firms and indeed SMEs can use social media and other web 2.0 features to market their products and services (Scupola, 2010; Constantinides, 2010). Studies on Web 2.0 applications in SMEs are still scanty globally, although they are bound to increase. Bell & Loane (2010) illustrate how Irish SMEs applied Web 2.0 tools and techniques to leverage their internal and external capabilities. This study extends this understanding to include other types of e-commerce activities as defined by Turban et al., (2004). As ICT developments keep on changing, new forms of e-commerce can be incorporated into the firm to make it more competitive in the local and international business environment (Constantinides, 2010; Porter, 2001; Luftman, Lewis & Oldach, 1993). Four aspects of Web 2.0 applications are discussed in the following sub-sections. These are: classification of Web 2.0 networked companies, online branding, search engine marketing or optimisation and cloud computing.

2.3.3.1 Classification of Web 2.0 Networked Companies

Bughin & Chui (2011) classify networked companies that capitalise on Web 2.0, into three distinct clusters. These are described in the following ways:

1. Those using the Web effectively for interactions with employees (internally networked organisations),

2. Those forging links with customers and suppliers (externally networked organisations), and

3. Those combining internal and external linkages at high levels of effectiveness (fully networked enterprises).

The authors further state that information flows faster to employees of internally-networked firms, while higher customer satisfaction and greater marketing efficacy are hallmarks of externally-networked companies. The application of Web 2.0 and its related applications in

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global business are confined to large corporations in mostly the developed and rich economies. The uptake amongst SMEs in developing countries is just beginning and thus very small, although there is some optimism that this will grow (Apulu, Latham & Moreton, 2011) due to the flexibility and cheaper way of deploying new features of modern ICT generations (Bell & Loane, 2010).

2.3.3.2 Online Branding

Researchers have noted the influence of social media in accentuating brands and company profiles (Booth & Matic, 2011; Rowley, 2009). Yan (2011) points out that the same principles of branding that apply in offline marketing may need to be enforced in e-commerce transactions. He argues that companies need to collaborate with consumers on everyday marketing purposes. The author further adds that the application of blogs and social networking in small organisations can be handy because people can understand the personalities behind the scenes. However, SME managers in developing countries continue to face challenges of incorporating such new forms of marketing enabled by the Internet. Some of their challenges still point to the lack of ICT personnel and managerial foresight, or perception of what kind of benefits their organisation can achieve (Caldeira & Ward, 2001; Jarvenpaa & Leidner, 1998).

2.3.3.3 Search Engine Marketing and E-commerce Adoption

In order for SMEs to maximise their potential on the Web, they may be able to apply search engine marketing (SEM) or optimisation techniques (Quinton & Khan, 2009; Murphy & Kielgast, 2008) to make them more visible among millions of websites in the Internet world. Quinton & Khan (2009) state that ‘organisations now regard having a website as mandatory but as more businesses create websites the real challenge lies in driving traffic to a specific website.’ The researchers address the issue of website traffic generation for SMEs which have limited resources to determine how they might make more effective use of SEM tools. They investigated specific SEM tools such as press release distribution and directory submission. Their findings indicate that a combined use of both press-release distribution and directory submission does increase traffic generation to a website.

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In a multi-case study to assess Swedish SMEs on how they exploited SEM techniques, Murphy & Kielgast (2008) found that although all hotels had a website, they did not exploit SEM, which they attribute to poor marketing planning and lack of control of their website through outsourcing key web development and optimisation activities.

2.3.3.4 Cloud Computing and SME E-commerce Adoption

Another trend in applying e-commerce for SMEs is the cloud computing phenomenon, which is defined by Poelker (2012) as ‘a transformational shift from buying hardware and software components and building out a data center, to leveraging a reference architecture built and managed by someone else.’ Since SMEs have limited resource they may be able to employ other organisation’s ICT infrastructure somewhere in the ‘cloud’ under a ‘pay as you go’ model (Bell & Loane, 2010). There are few studies that have researched the impact of cloud computing on SMEs. It would be interesting to discover the extent of SME motivation by new web applications in the developing world.