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Waikato Management School

University of Waikato Management School
Research Report Series
ISSN 1175-5571

Adoption and Implementation of E-Business
in New Zealand: Empirical Results, 2001

Delwyn Clark, Stephen Bowden, Patricia Corner,
Jenny Gibb, Kate Kearins and Kathryn Pavlovich

2001-1

Department of Strategic Management & Leadership
University of Waikato Management School
mailto:dnclark@mngt.waikato.ac.nz

April 2001

Contents

  Executive Summary
1.0 Introduction  
2.0 Methodology 
3.0 E-Business Adoption in New Zealand  
    3.1 Electronic Business Activities 
3.2 Website Features 
3.3  Motives for E-Business  
3.4 Impacts of E-Business 
  4.0 E-Business Implementation in New Zealand
    4.1 Resources   
4.2 Types of Advice  
4.3 Sources of Assistance
4.4 Inhibiting Factors 
4.5 Measures to Improve Uptake  
  5.0 E-Business Strategy  
6.0 Conclusions and Further Research    
Acknowledgements 
References
Appendix
Report Contact
  List of Tables
 

Table 2.1 Profile of Respondents 
Table 3.1  Frequencies of Electronic Business Activities 
Table 3.2 Website Features  
Table 3.3 Ten Most Important Impacts of E-Business 
Table 3.4 Ten Least Important Impacts of E-Businesas 
Table 4.1 Assistance with E-Business Implementation   
Table 4.2 Difficulties with E-Business Implementation 
Table 4.3 Measures to Improve E-Business Uptake 

  List of Figures
  Figure 3.1 Extent of E-Business Activities 
Figure 3.2 Scale of Website Activity 
Figure 3.3 Primary Motives for E-Business Initiatives  
Figure 4.1 Resources Needed for E-Business Implementation  
Figure 4.2  Advice Needed for E-Business Implementation
Figure 5.1 E-Business Strategy Development    
Figure 5.2  E-Business Strategy 


Executive Summary

This report outlines key results from a state-of-the-art empirical survey on E-Business practices in 1229 New Zealand–based organisations. The research focused on the adoption and implementation of E-Business in organisations with ten or more employees (from the November 2000 Kompass database), representing all seventeen of the ANZSIC industry codes.  A comprehensive four-page postal questionnaire was mailed to senior executives in late November 2000, a postcard follow-up was sent in December, and non-respondents received another copy of the questionnaire in mid-January 2001. A total of 1565 responses were received by March 2001, representing a 26.6% response rate; of these 20.94% were complete and usable for this analysis. 

E-Business Adoption

  • The results showed very high levels of computer use for basic activities e.g. email and information exchanges; and considerable scope for further development of E-Business activities.
  • Approximately half of the companies had websites.
  • Only 1 in 5 websites were capable of secure transactions and 1 in 7 websites were receiving payments on-line.
  • The scale of current activities was low for both on-line purchases and web sales.
  • 15% growth in on-line activities was expected by companies with websites by 2002.
  • Motivations for E-business activities reflected proactive strategic positioning to improve performance through efficiency, new markets and new sales channels.
  • Significant benefits from E-Business were identified by the website companies in line with their strategic aspirations; these included opportunities to improve efficiency, expand business scope, and improve service, communications and relationships with customers.
  • To achieve the potential value offered by E-Business, New Zealand organisations need to move beyond the introductory electronic activities such as listing their products and company data on websites.

E-Business Implementation

  • E-Business activities, although IT-based, require integrated business solutions and extensive managerial acumen for effective implementation.
  • Many different types of advisors, including web-page developers, software vendors, other technical support providers and business contacts, were consulted for assistance.
  • 40% of the companies with websites consulted their customers for assistance.
  • Utilisation of Government sources of advice on E-Business was limited.
  • A wide range of internal and external factors inhibit E-Business implementation.
  • For the website companies, the top inhibitors were low customer use of E-Commerce, limited knowledge of technologies and the high costs of computing and network technology.
  • Companies without websites were more concerned with viability issues, including uncertainty of the financial benefits, limited size of the target market, and lack of time for new projects.
  • The lack of readiness for E-Business by other key players, including partners, customers and suppliers, were perceived as major difficulties by the non-website businesses.
  • There were many structural and educational issues to be addressed at national, regional and industry levels to improve the uptake and effectiveness of E-Business in New Zealand.
  • Improving telecommunications infrastructure and consumer access to the Internet were considered most important by the website companies.
  • Improvements in security and the provision of training for E-Business were most important for non-website companies.
  • One quarter of the respondent companies had an explicit E-Business strategy; ¾ of these companies perceived that this would provide a source of competitive advantage, which was by nature temporary and expected to last 17 months on average.
  • Companies with an explicit E-Business strategy invested significantly more in their E-Business initiatives than did other respondents.

Further Analysis

  • Further analysis of this database will examine the impacts of scale and scope on E-Business activities, identify trends in each industry, explore adoption enablers and inhibitors, and valuate business strategies and competitive positioning of E-Business initiatives.
  • These results will provide an invaluable independent source of information for the government's emerging E-Commerce strategy; key findings will be summarised for policy developers and provide guidelines on E-Business for managers.

1.0     Introduction

Electronic business is a major force in the global economy. According to the Gartner Group, worldwide business-to-business (B2B) electronic commerce reached US$145 billion in 1999 and was projected to reach US$7.29 trillion by 2004, with a 155% growth rate in the Asia/Pacific region. The Boston Consulting Group estimated that B2B E-Commerce in Australasia would increase from A$17 billion in 2000 to A$235 billion in 2005; however New Zealand businesses are predicted to contribute only 9% ($21 billion) of this volume (Wetenhall, Sutherland & Boven, 2000).  Such phenomenal growth rates signal major changes in the way business is conducted, in the face of challenges from new types of electronic markets and electronic businesses. There is a need for research to describe and explain the impacts of these changes on managers and to develop theories incorporating the new E-Business practices.

Several major descriptive studies have been conducted on the nature of E-Business and its impacts.  PriceWaterhouseCoopers (2000) polled Conference Board executives in 78 leading multinational companies from many industries around the globe. Its recommendations for successful E-Business initiatives stressed the importance of planning and flexibility, the need for integrated solutions, and taking full advantage of business partner and alliance relationships. Commenting on E-Business growth opportunities, PWC noted: "The E-Business growth of the past year has raised the stakes so dramatically that it is more important now than ever that companies act proactively to address this exiting opportunity."

The Asia Pacific Economic Cooperation (APEC) Telecommunications Working Group study of E-Commerce focused on Small and Medium Enterprises (SMEs) in all 21 APEC member countries (TEL05/97T, 1999).  Noting the importance of SMEs for economic growth and productivity in APEC economies, this study emphasised the role and opportunities for smaller firms:

SMEs that can demonstrate their capabilities to use electronic commerce will have a competitive advantage in the B2B marketplace.  For example, most of the large firms currently developing and implementing B2B E-Commerce strategies typically engage SMEs in their supply chains. For these large firms, the rate at which SMEs adopt E-Commerce and enhance their capabilities could affect the scope and timing of their B2B E-Commerce implementation. Alternatively, SMEs that do not keep pace with electronic commerce may be marginalised as suppliers.

Reporting on emerging E-Business developments in Australia and New Zealand, the Boston Consulting Group observed that companies have rushed to set up e-marketplaces (Wetenhall, Sutherland & Boven, 2000). However, it cautioned that many of the 283 e-marketplaces would fail, as transaction fees fall and global players reach 'down under'.  Finding a dominant 'defensive' approach to E-Business initiatives in Australasia, BCG advised, "The real value of E-Commerce will derive from restructuring distribution and supply chains, and embracing deep collaboration with trading partners."

Contrary to the perception of New Zealanders as innovators with a 'can do' attitude, the Deloitte E-Business survey (2000) of 279 medium-sized firms concluded that "New Zealand organisations are laggards in adopting and embracing E-Business."  However, from its commissioned survey on business use of the Internet, the Ministry of Economic Development (MED, 2000) reported that "New Zealand small to medium businesses are ahead of their Australian counterparts in exploiting the potential of the Internet."   Finding a high level of awareness and use of activities such as email from this sample of 506 companies, but little integration with core business services, MED concluded: "Although New Zealand businesses are well prepared, they have yet to come to grips with the implications of E-Commerce."

The significance of E-Business activities was recognised by the New Zealand government in its E-Commerce Strategy for the country, released at the E-Commerce summit in November 2000. The need for further research in the broad area of socio-economic impacts of information and communication technologies (ICTs) was also signaled by the Foundation for Research Science and Technology (FRST). Detailed information on the status of E-Business in New Zealand was needed for policy development and decision-making at national, regional and industry levels.  More data was also needed for international benchmarking purposes of the economy and to provide guidelines for managers.

The large-scale survey reported in this paper seeks to address some of these needs.  Our research objectives are:

  • To identify the nature and extent of E-Business activities in New Zealand
  • To examine the motives and impacts of those E-Business activities
  • To explore the enhancers and inhibitors of those E-Business activities
  • This paper reports descriptive results on these objectives relating to the adoption and implementation of E-Business activities in New Zealand.

2.0     Methodology

A postal questionnaire was designed to collect empirical evidence of current E-Business practices.  The questionnaire was pilot tested in November 2000; 18 managers and 6 academics provided feedback to clarify and improve the questions.  Questionnaires, with personalised cover letters, were mailed in late November, and follow up postcards were sent out two weeks later. Non-respondents received a further letter and another copy of the questionnaire in mid-January 2001, after the traditional summer holiday period.

The sample of 5870 New Zealand-based organisations with ten or more employees was chosen from the updated version of the Kompass Database (November 2000).  The database provided identification of the senior executive in each organisation with the title of Chief Executive, General Manager, Managing Director or Senior Partner.  By 19 March 2001, 1562 responses were received and processed, representing a 26.6% response rate; of these 1229 were complete and usable, giving a 20.94% usable response rate.  This was a very good response given the complexity and comprehensiveness of the four-page instrument and the timing of the survey at a very busy time for many organisations.  Further data was collected via telephone survey to check for non-response bias.  We contacted 100 firms that had received questionnaires but chosen not to respond.  T-tests on key variables such as computer usage, website adoption and size, revealed no difference in adoption rates between respondents and non-respondents.

A profile of the respondents is provided in Table 2.1 showing key characteristics including the type of organisation, size, ownership, geographic scope and revenue sources.  The final sample was broadly representative of the population of New Zealand companies with ten or more employees. The multi-industry sample included organisations from all seventeen of the Australian and New Zealand Standard Industry Codes (ANZSIC) with a distribution that was similar to the industry distribution in the population (Appendix). 

Table 2.1 Profile of Respondents

Characteristics


Percentage %


Organisation Type

Listed limited liability company

Non-listed limited liability company

Partnership

Sole trader

Other

30.2

52.0

7.0

1.2

9.6

Organisation Size

10-49 full time equivalent employees

50-99 full time equivalent employees

100 + full time equivalent employees

67.2

13.9

18.9

Ownership

Family-owned or operated

Not family-owned or operated

New Zealand interests

International interests

41.9

58.1

84.4

15.6

Geographic Scale

Local

Regional

National

International

15.2

19.1

31.6

34.0

Revenue

New Zealand sources

International sources

82.9

17.1

Descriptive results on key issues influencing E-Business adoption and implementation are outlined and discussed in the next two sections of this report.

3.0     E-Business Adoption in New Zealand

The adoption of E-Business in New Zealand was considered in this survey by examining the use of computers for business activities, the types of business activities performed electronically, the existence of websites and their features, motives for involvement with E-Business initiatives, and the most important impacts of E-Business on firm performance

Computer use for business activities was found to be almost universal with over 92% of the respondents indicating involvement with computers in their organisations.  As illustrated in Figure 3.1, the proportion of New Zealand organisations with a website was much lower - approximately half of this sample (54%).  Using the number and types of website functions to gauge the level of E-Business capabilities (Berryman, 2000; PriceWaterhouseCoopers, 1999), only 21% of the organisations have websites capable of taking orders and 8% can also handle payments on-line.  However, 241 organisations (19.6%) reported involvement with B2B sales and 236 (19.2%) were doing business-to-customer (B2C) sales.  These results indicate that there is considerable scope for New Zealand organisations to increase their E-Business activities.

Figure 3.1 Extent of E-Business Activities


3.1       Electronic Business Activities

For the organisations using computers, the frequency of performing business activities electronically is summarised in Table 3.1.  External email was a key feature for all organisations with computers and it was an hourly activity for 62% of the respondents. Three quarters of the companies were also very frequent users (hourly/daily) of internal email.  Two other electronic information exchange/retrieval tasks were performed frequently by over 85% of the companies; i.e. sending/receiving data files and searching for information.   Two thirds of the companies reported checking prices on-line on a monthly, weekly, or daily basis.

Approximately half of the organisations were involved with electronic financial transactions on a monthly, weekly or daily basis; including 357 companies doing daily e-transactions.  Similarly, half of the organisations were purchasing supplies on-line and doing market research on-line on a monthly, weekly or daily basis.  For most frequent category for companies doing these activities, and others such as e-competitor intelligence and e-advertising/promotion, was monthly. Electronic links to partners via an extranet were reported by one third of the companies and 121 of these companies used these links on a daily basis.  After-sales service was provided on-line by 30% of the computer-using organisations and 25% were doing electronic delivery coordination.  Electronic HRM activities including staff recruitment and training on-line were practised in less than 25% of these organisations. While New Zealand organisations may not make it a high priority to undertake electronic HRM activities, it is interesting to note that leading IT companies, such as Cisco Systems, make extensive use of electronic business to employee (B2E) activities.

Table 3.1 Frequencies of Electronic Business Activities

 

Never

%

Yearly

%

Monthly

%

Weekly

%

Daily

%

Hourly

%

External Email

0.4

0.1

0.9

4.2

31.7

62.6

Internal Email

19.0

0.6

0.6

3.6

20.2

55.9

Sending/receiving data files

5.0

0.8

7.9

19.4

41.7

25.3

Searching for information

1.6

0.4

9.7

24.4

39.5

24.5

E-financial transactions

41.7

0.6

5.6

12.5

33.9

5.6

Internal Intranet

57.2

0.5

0.8

2.9

12.5

26.1

Checking prices on-line

23.8

3.9

16.4

25.6

21.3

9.1

Extranet links to key partners

66.4

1.4

4.6

8.6

12.1

6.8

E-advertising/promotion

57.8

5.4

12.1

6.2

10.3

8.2

After-sales service on-line

69.6

0.8

5.8

8.1

8.9

6.7

E-delivery coordination

74.3

0.8

4.7

5.7

8.3

6.1

Purchasing supplies on-line

44.4

4.8

19.4

17.1

10.7

3.6

Market research on-line

45.2

6.2

18.4

16.0

11.0

3.1

On-line sales to consumers

76.5

2.3

4.2

3.5

6.8

6.8

On-line sales to businesses

75.9

1.8

4.9

3.8

7.2

6.4

E-competitor intelligence

52.3

6.6

20.0

12.2

6.7

2.1

Staff recruitment on-line

74.0

7.5

11.1

4.0

2.0

1.4

Staff training on-line

80.2

3.7

8.2

3.4

3.1

1.4


3.2       Website Features

The features of websites were investigated and the importance of each function was rated by the active companies (i.e. those doing each website activity).  The proportions of the website companies implementing each function and the mean importance ratings are summarised in Table 3.2.  The most frequent website functions are clearly communication features that enable information-sharing on the company and create links to key stakeholders (e.g. customers and alliance partners).  A list of products or services was reported for almost every website and company data was provided on three quarters of the websites. Approximately half of the websites featured generic promotions, and one third reported having customised promotions.  Reflecting the importance of strategic alliances and networks, links to alliance partners were featured on half of the websites.  However, only 59 companies reported links to an electronic trading hub, which indicates that current levels of involvement in electronic marketplaces were very low.

Table 3.2 Website Features

Features

Percentage

%

Mean Importance1

Lists products/services

94.3

3.89

Provides company data

75.6

3.36

Provides generic promotions

54.9

3.36

Links to alliance partners

49.3

3.27

Receives customer orders

39.6

3.61

Provides after-sales support

33.7

3.54

Provides customised promotions

33.4

3.58

Provides secure transactions

23.1

4.06

Receives payments on-line

15.3

3.61

Maintains account records

13.0

3.81

Tracks delivery services

12.3

3.44

Links to e-trading hub

8.9

3.30

Sends bills on-line

7.8

3.32


Note       1 Importance ratings were made on a scale of 1 – 5, where 1 is very low, 3 is moderate and 5 is very high.

Although only one in five websites were capable of providing secure transactions, this feature received the highest mean importance rating. Listing products/services was the second most important website function for these organisations.  Other website features with relatively high mean ratings focus on transaction processing capabilities, including maintaining accounts, receiving payments and taking customer orders on-line.

Further data on the scale of website activities were collected. Specifically website companies were asked to estimate the proportions of total business activities conducted via websites in three areas: (1) on-line products, (2) on-line purchases, and (3) web sales. Figure 3.2 shows the estimated mean percentages reported for the current period (i.e. for the year 2000), and for the future (i.e. predictions for 2002).  The scale of current activities was low for both on-line purchases and web sales (approximately 6% of total purchases/sales).  However, website companies reported that 45% of their total product lines were on-line in 2000.  For all three of these key business areas, growth of 15% was expected (on average) by 2002.


Figure 3.2 Scale of Website Activity


3.3       Motives for E-Business

The primary motives for involvement with E-Business initiatives were examined for the organisations with websites.  Figure 3.3 shows the top five factors ranked according to mean importance values.  These factors reflect the broad spectrum of strategic positioning to improve performance through efficiency, new markets, and new sales channels.  Increasing efficiency was the most important motivation for these organisations (mean 3.91). A proactive stance to stay ahead of competitors was perceived to be more important than was the reactive approach of keeping up with competitors.  The factor that rated as the least important motivator for E-Business initiatives was providing employment (mean 1.60).  Staying in business was also not perceived to be a major motivator for adopting E-Business initiatives.

Figure 3.3 Primary Motives for E-Business Initiatives


3.4 Impacts of E-Business

The impacts of E-Business activities on the operations and performance of New Zealand organisations were evaluated by the companies with websites.  A comprehensive series of 41 potential benefits and opportunities were identified, including financial factors, market positioning, customer services, supplier relationships, communication issues and productivity measures.  Respondents rated all of the factors that were applicable to their organisations on a scale from 1 to 5 (where 1 is very low importance and 5 is very high importance).  The ten most significant impacts of E-Business activities are listed in Table 3.3 according to their mean importance rating.  Mirroring the strategic motivations identified above, five of these key factors focus directly on improving customer service, communications and relationships, and three represent opportunities to expand the scope of the business. Achieving gains from improving efficiency was also recognised by these website companies.  Enhancing company image was rated as the most important benefit of participation in E-Business activities.

Table 3.3 Ten Most Important Impacts of E-Business

Ranking

Factor

Mean Importance

1

Enhancing company image

3.93

2

Improving information exchange with customers

3.77

3

Faster response to customers

3.64

4

Improving competitive position

3.56

5

Creating new business opportunities

3.56

6

Providing access to new customers

3.55

7

Improving customer service

3.53

8

Increasing efficiency of business processes

3.49

9

Removing geographic barriers

3.48

10

Building customer relationships

3.43

To provide a contrast, the ten factors with the lowest mean importance ratings from the list of  41 evaluated by the website companies are provided in Table 3.4.  Participation in E-Business activities was perceived to have limited direct impact on these activities which include specific financial, staffing, and purchasing tasks.

Table 3.4 Ten Least Important Impacts of E-Business

Ranking

Factor

Mean Importance

1

Improving stock market valuation

1.59

2

Reducing the number of suppliers

1.79

3

Reducing staff levels

1.88

4

Increasing outsourcing of non-core business activities

1.93

5

Reducing financial risk

2.00

6

Attracting new investment

2.00

7

Increasing staff retention

2.02

8

Increasing buying power

2.14

9

Increasing flexibility to change product portfolio

2.39

10

Reducing procurement costs

2.42


4.0     E-Business Implementation in New Zealand

The implementation phase is critical for the effective uptake of any new IT-based business processes or systems.  Implementation of E-Business initiatives was considered in this survey by examining the specific resources required, the types of advice needed, the sources of assistance utilised, the major difficulties involved, and the measures required to improve uptake of E-Business. 

4.1       Resources

The importance of a series of specific resources for implementation of E-Business initiatives was examined for the website companies. Figure 4.1 shows the five resources with the highest mean ratings.  Not surprisingly, technological expertise scored the highest mean rating of 4.1.  Other key resources included a mix of management skills, technical resources, and administrative systems. These results indicate that implementation of E-Business initiatives depends upon a business solution that integrates across management, administration and technical systems. Clearly these companies are saying that implementation of E-Business requires much more than just technical and technological resources.

Figure 4.1 Resources Needed for E-Business Implementation


4.2 Types of Advice

The types of advice needed for the implementation of E-Business initiatives were evaluated by the website companies. Figure 4.2 shows the five most important types of advice which reflect the full spectrum of management expertise.  These results are consistent with the findings reported above on resources and also with the previous E-business survey by Deloittes (2000). Technology solutions rated as the most important type needed for E-Business implementation (with a mean of 4.08).  At the other end of the spectrum, supply chain management advice was ranked last with a mean importance rating of 2.32 (on a scale from 1-5).

Figure 4.2 Advice Needed for E-Business Implementation


4.3       Sources of Assistance

Twenty potential sources of assistance with implementation of E-Business initiatives were investigated.  Managers in the website companies indicated the advisors they had consulted, and rated the importance of these advisors to implementation of their E-Business projects.  Table 4.1 shows the proportions of the website companies consulting each type of advisor and the associated mean importance ratings.  The leading source of assistance, consulted by over two thirds of the organisations, were web-page developers.  Other key technical sources for approximately half of the website companies were software vendors, Internet service providers, hardware vendors and computers services companies. Contrary to the Deloitte findings, only 24% indicated that they used consultants (c.f. Deloitte 43.4%) or their current business advisors.  Interestingly, 40% of these New Zealand organisations consulted their customers for advice with their E-Business developments.  However, only 12 companies sought E-Business advice from government advisors, BIZ Info and Technology New Zealand; and 19 used assistance from Trade New Zealand.  While each of these public sources of information or support target different market segments, these findings suggest that government sources of assistance on E-Business could be utilised more widely.

Table 4.1 Assistance with E-Business Implementation

Source of Assistance Consulted

Percentage

%

Mean Importance1

Web page developers

70.8

3.97

Software vendors

58.3

3.97

Internet service providers

58.2

3.41

Computer services, solutions

49.9

3.78

Hardware, solutions vendor

49.9

3.69

Customers

40.3

3.87

Informal networks

28.8

3.22

Other companies doing E-Commerce

24.3

3.15

Consultants

24.3

3.58

Current business advisors

23.0

3.28

Parent or related companies

21.4

3.70

Current suppliers

19.7

3.33

Alliance partners

18.9

3.38

Distributors

14.7

3.45

Industry association personnel

12.7

3.27

Key investors

7.8

3.39

Trade New Zealand

3.0

2.56

Government advisors

2.0

3.60

BIZ or BIZInfo

1.9

2.27

Technology New Zealand

1.9

2.71

Note1 Importance ratings were made on a scale of 1 – 5, where 1 is very low, 3 is moderate and 5 is very high.

4.4 Inhibiting Factors

The effective implementation of E-Business initiatives is influenced by many organisational and environmental factors.  To investigate the difficulties involved with E-Business implementation, we asked all of the respondents from computer-using organisations to rate the importance of thirty potentially inhibiting factors on a scale from 1 to 5 (where 1 is very low importance and 5 is very high importance).  Table 4.2 lists the mean importance values for the top ten factors for the two major sub-groups: (1) companies with websites, and (2) companies without websites.  Although eight of the top ten factors were the same for both groups, they were ranked in a different order as shown in the table.  Furthermore, mean importance values from the non-website companies were higher than were means from the website companies for nine of these factors.  The differences for these nine factors, and thirteen others included in this question, were statistically significant.  

Table 4.2 Difficulties with E-Business Implementation

 

Mean Importance Rating1
and Ranking of Website Companies

Mean Importance Rating1
and Ranking of
Non-Website Companies

Probability:2
P-value for
F statistic

Low customer use of E-commerce

3.25   1st

3.14    5th

.172

High costs of computing & network technology

Limited knowledge of technologies

3.00   2nd

2.97    3rd

2.93   11th 

2.89 13th

.366

.266

Uncertainty of financial benefits

Concerns about security aspects

Lack of time to start new projects

Lack of experienced IT staff

Limited knowledge of E-Business models

Business partners not ready

Limited size of target market

2.88    4th

2.88    5th

2.86    6th

2.85    7th

2.81    8th

2.78    9th

2.77   10th

3.49     1st

3.05   10th

3.25     3rd

3.07    8th=

3.10    7th

3.19    4th

3.41   2nd

.000 *** 

.036 *

.000 ***

.005 **

.000 ***

.000 ***

.000 ***

Low supplier use of E-Commerce

Cannot see the benefits yet

2.72   11th

2.30   20th=

3.11   6th

3.07   8th=

.000 ***

.000 ***

Notes      1 Importance ratings were made on a scale of 1 – 5, where 1 is very low, 3 is moderate and 5

is very high.

             2 Anova F  test;  * p < .05, ** p < .01, *** p < .001.

For website companies, the top three difficulties were low customer use of E-Commerce and two technological issues (high costs of computing and network technology, and limited knowledge of technologies). The mean values for these three factors were in the moderately important range for both subgroups and the differences were not statistically significant.  For companies without websites, the top three inhibiting factors were viability issues linked to financial returns, market size and resources (specifically time).  The role of partners, customers and suppliers in E-Business implementation was recognised and the lack of readiness of these groups to do business electronically was perceived as a major source of difficulties by the non-website businesses.  These findings also indicate that the inhibitors of E-Business adoption and implementation extend beyond the technological resources required, to incorporate a wide range of internal organisational and external contextual factors.

4.5       Measures to Improve Uptake

The uptake and effectiveness of E-Business activities is influenced by many contextual factors beyond an organisation's boundaries and control.  All of the respondents from computer-using organisations were asked to rate the importance of twelve potentially key factors.  Table 4.3 lists the mean importance values for all of these factors for the two major sub-groups: (1) companies with websites, and (2) companies without websites.  Although the top four factors were the same for both groups, the factors were ranked in a different order as shown in the table.  Furthermore, differences in mean importance values were found to be statistically significant for half of these factors. 

As in the APEC study of E-commerce in SMEs (1999), improving the telecommunications infrastructure was rated as the number one factor by the website companies, with the highest mean importance; this factor was rated 3rd by the non-website companies.  Improving security and training for E-Business were the two factors found to be most important by companies without websites for improving E-Business uptake.  Consumer access to the Internet was perceived to be more important by the website companies, but business access to the Internet was not significantly different in both groups. Consumer protection legislation was more important for the non-website companies.  Legislative requirements for areas such as tax and legal issues, and the government's own e-services, were at the bottom of the rankings for both groups. Although perceived to be only moderately important for the uptake of E-Business, legal and tax policies were significantly more important for the non-website companies

Table 4.3 Measures to Improve E-Business Uptake

 

Mean Importance Rating1
and Ranking of Website Companies

Mean Importance Rating1
and Ranking of
Non-Website Companies

Probability:2
P-value for
F statistic

Telecommunications infrastructure

3.711st

3.48    3rd

.002 **

Consumer access to the Internet

Improved security

3.58 2nd

3.54    3rd

3.37    4th

3.70    1st

.007 **

.024 * 

Training for E-Business

Business access to the Internet

Promotion of E-Business use

Consumer protection legislation

National strategy for E-Business

Provision of web-page facilities

Legal issues

3.53    4th

3.42    5th

3.40    6th

3.13    7th

3.05    8th

3.03    9th

2.86   10th

3.67    2nd

3.29    7th

3.35    5th=

3.35    5th=

3.14    9th

3.22    8th

3.03   10th

.053 

.094

.516

.010 **

.327

.019 *

.026 *

Tax incentives

Government services on-line

2.82   11th

2.74   12th

3.02   11th

2.80   12th

.022 *

.441

Notes      1 Importance ratings were made on a scale of 1 – 5, where 1 is very low, 3 is moderate and 5 is very high.

2 Anova F  test;  * p < .05, ** p < .01, *** p < .001.


5.0     E-Business Strategy

E-Business involvement potentially impacts on both strategic and operational activities of organisations.  The strategic nature of E-Business decisions was examined by asking all of the companies surveyed if they had an explicit E-Business strategy.  From all of the respondent companies, 25.3% reported having an explicit E-Business strategy, and 74.2% of these companies believed their E-Business strategy would provide a source of competitive advantage.  Moreover, recognising that competitive advantages are mostly temporary, the average expected duration of the competitive advantage reported by these companies was 17 months.  On average, companies with an explicit E-Business strategy invested $1.13 million in their E-Business initiatives; this was on average fifteen times the investment made by other respondents.

Companies with explicit E-Business strategies reported on the types of people and processes involved in the development of the strategy, as shown in Figure 5.1.   Senior management reported having taken a strong leadership role in the development of their company's E-Business strategy.   A consultative approach was adopted for this strategy making process by 43% of these companies.  To assist with their strategy development, 40% of the companies used their own information technology staff. External assistance was also contributed by advisors or consultants (25%), E-Business specialists (15%) and/or alliance partners (8%).

Figure 5.1 E-Business Strategy Development


The basis for competitive positioning was examined for all of the organisations. The importance of three core E-Business activities were investigated including: E-Business processes, E-Business transactions with other businesses, and on-line sales to customers. They  were each rated on a scale of 1 to 5 (where 1 is very low and 5 is very high importance).  Figure 5.2 shows the mean importance values for each activity for (1) all respondents in the sample, (2) companies with websites, and (3) companies with explicit E-Business strategies.  Although the mean ratings were below the moderately important level for all of these activities, it is interesting to note the importance rating of each activity increases in accordance with the groups respective involvement in E-Business.

Figure 5.2 E-Business Competitive Positioning


6.0     Conclusions and Further Research

A series of key results from a state-of-the-art survey on E-Business practices in 1229 New Zealand organisations were outlined in this report.  These findings confirm and extend the previous telephone survey commissioned by the Ministry of Economic Development (2000).  Although the levels of computer use were very high for activities such as email and information exchanges, there was considerable scope for further development of electronic business activities. Approximately half of the companies had websites that performed a range of communication and transaction processing functions. Only one in five websites were capable of secure transactions and one in seven websites were receiving payments on-line.  While the scale of current activities was low for both on-line purchases and web sales, website companies were optimistic in expecting a 15% growth in on-line activities over the next two years (by 2002). Motivations for involvement with E-business activities reflected proactive strategic positioning to improve performance through efficiency, new markets and new sales channels. Significant benefits from E-Business were identified by the website companies in line with their strategic aspirations; these included opportunities to improve efficiency, expand business scope, and improve service, communications and relationships with customers.  However, to achieve the benefits identified for E-Business initiatives, the scale of electronic activities will need to increase significantly in most New Zealand organisations.

In terms of E-Business implementation, the results confirm the need for both technological and managerial knowledge and systems. Although E-Business activities are based upon technological transactions and communications, an integrated business solution, coupled with extensive managerial acumen, is required to maximise the return from electronic modes of business.  Many different types of advisors, including web-page developers, software vendors, other technical support providers and business contacts, were consulted for assistance with E-Business implementation.  Customers emerged as a very important source of assistance for 40% of the website companies.  However, only a small number of respondents reported utilising government sources for advice on E-Business implementation.

Inhibitors to E-Business implementation also extended beyond technological resources to incorporate a broad range of organisational and external factors.  For the website companies, the top inhibitors were low customer use of E-Commerce, limited knowledge of technologies and the high costs of computing and network technology.  However, companies without websites were more concerned with viability issues, including uncertainty of the financial benefits, limited size of the target market, and lack of time for new projects.  Furthermore, the lack of readiness for E-Business by other key players, including partners, customers and suppliers, were perceived as major difficulties by the non-website businesses.  

To improve the uptake and effectiveness of E-Business in New Zealand, many structural, socio-economic, and educational issues need to be addressed at national, regional and industry levels. For the New Zealand website companies surveyed, the two most important factors were improvements to the telecommunications infrastructure and consumer access to the Internet.  Companies without websites were more interested in seeing improvements in security and the provision of training for E-Business.

The nature and extent of E-Business strategies and their development was also investigated. One quarter of the respondent companies were found to have an explicit E-Business strategy. Three quarters of these companies perceived that this would provide a source of competitive advantage, which was by nature temporary and expected to last 17 months on average. Companies with explicit E-Business strategy invested significantly more in their E-Business initiatives than did other respondents.

Further analysis of this extensive research database will examine the impacts of scale and scope on E-Business activities, identify trends in each industry, and explore adoption enablers and inhibitors.  The business strategies and competitive positioning of E-Business initiatives will be further evaluated.  As this large sample represents such a wide range of New Zealand organisations, the results will provide an invaluable independent source of information for the emerging E-Commerce strategy.  In addition, key findings will be summarised for policy developers and to provide guidelines on E-Business for managers.

Acknowledgements

This paper was funded by the University of Waikato Vice-Chancellor's E-Commerce Fund (2000) and the Foundation for Research, Science and Technology grant, UOWX0016.

References

Berryman, E. 2000.  Getting on with the Business of E-Business. PriceWaterhouseCoopers www.pwcglobal.com/  retrieved 17/06/00.

Deloitte Touche Tohmatsu. 2000. Deloitte E-Business Survey: Insights and Issues facing New Zealand Business. 20 pp.

Dillman, D.A. 1978.  Mail and Telephone Surveys: The Total Design Method. Wiley: New York.

Ministry of Economic Development (MED).  2000. Electronic Commerce in New Zealand: A Survey of Business on the Internet, Information Technology Policy Group, Competition and Enterprise Branch. 13 pp.

PriceWaterhouseCoopers. 1999. SME Electronic Commerce Study (TEL05/97T). Asia Pacific Economic Cooperation (APEC) Telecommunications Working Group, 37 pp.

PriceWaterhouseCoopers. 2000. Electronic Business Outlook for the New Millennium. 40 pp.

Wetenhall, P., Sutherland, G. and Boven, R. 2000. After the Land Grab: B2B E-Commerce in Australia and New Zealand. Boston Consulting Group, 30 pp.

Appendix

Industry Distribution of Population and Sample (%)

Industry

Population

Our Sample

Agriculture, forestry and fishing

3.10

8.90

Minin

0.33

0.64

Manufacturing

18.32

21.91

Electricity, gas and water supply

0.24

2.00

Construction

7.81

9.27

Wholesale trade

8.97

13.54

Retail trade

12.14

4.36

Accommodation, cafes and restaurants

7.31

1.82

Transport and storage

4.66

6.18

Communication services

0.49

4.27

Finance and insurance

1.39

4.18

Property and business services

12.46

8.09

Government administration and defence

0.82

3.37

Education

10.39

3.27

Health and community services

6.99

1.73

Cultural and recreational services

2.17

1.09

Personal and other services

2.41>

5.36


Source: New Zealand Business Demographic Statistics 2000, Statistics New Zealand.







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University of Waikato Management School Research Report Series
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