E-business competencies in SMEs Conceptual model and empirical results HØGSKOLEN I AGDER Agder University College Dr. Dag H. Olsen Agder University College

Overview The ANTRA project Motivation E-business and Small and Medium sized Enterprises (SMEs) IT competence Empirical findings HØGSKOLEN I AGDER Agder University College

The ANTRA project Project to assist SMEs in the strategic use of e-business technology January December 2002 Identify critical competencies Identify supply of training related to e- business Establishment of a dynamic tool to assist SMEs in self-assessment of ICT (e- business) competence and training needs HØGSKOLEN I AGDER Agder University College

Motivation National and international programs to help SMEs adopt e-business –Leonardo (EU), eNorge, VeRDI The success of SMEs is important for tomorrows economy Competitiveness of Norwegian economy, European economy HØGSKOLEN I AGDER Agder University College

E-business and IT investments IT is the most important tool for restructuring and increased productivity –innovativity and competitiveness Large potential benefits from IT-investments are not achieved –critical competence is missing The largest productivity gains from IT investments come in organizations that combine it with training and process redesign This subject is still too little investigated and understood HØGSKOLEN I AGDER Agder University College

IT competence in SMEs European companies’ lack of knowledge and competence is the most important inhibitor of adoption of e-business (Forrester Research, 1999) SMEs have little access to training due to low capacity and inability to define relevant training needs. One important reason is the missing overview over the need for IT competence (European report 1224, 1997) HØGSKOLEN I AGDER Agder University College

HØGSKOLEN I AGDER Agder University College

HØGSKOLEN I AGDER Agder University College

Conceptual work Literature reviews on: –the e-business concept and models to find ways to classify e-business. We proposed an E- business model hiererchy –E-business competence –Competence in general and competence related to the use of IT in organizations Synthesized a e-business competence model and operationalized it HØGSKOLEN I AGDER Agder University College

Previous research on IT competence No consensus about: –what IT competence consists of –whether it should be seen as a general and normative concept or context dependent –whether we should address the individual or the organizational level HØGSKOLEN I AGDER Agder University College

The concept of competence Competence Comptence in the use of IT/IS in organizations Skills -- Capabilities -- Know-how Explicit -- Tacit Organisation levelStrategic Individual level IS/IT managers Business managers HØGSKOLEN I AGDER Agder University College

HØGSKOLEN I AGDER Agder University College

E-Business competence in SMEs Strategy and vision IT-Business integration IT Management Systems and Infrastructure Sourcing and Alignment E-Business SMB HØGSKOLEN I AGDER Agder University College

HØGSKOLEN I AGDER Agder University College

Interviews with SMEs in Norway Interviews as a relevance test, and to guide the focus of the items under each category of competence. The responses pointed to the same competencies Increased level of detail and additional items for the categories Strategy and vision, Sourcing and alignment and IT-business process integration Lower level of detail for the other categories. HØGSKOLEN I AGDER Agder University College

STRATEGY AND VISION The concept of e-business Our company has a high level of knowledge: totallytotally N/A 6. about how e-business technologiesdisagreeagree can be of value to our business  7. about how our main competitor(s) use IT to support similar business areas  8. In general, the concept of e-business is well understood by our company  Strategic planning Our company has:totallytotally N/A 9. a high level of knowledge in disagreeagree strategic planning  10. a well developed set of strategic planning techniques  11. in general, strategic planning is well understood by our company 

HØGSKOLEN I AGDER Agder University College SOURCING AND ALIGNMENT Sourcing competencies in our company we have a high level of knowledge: totallytotally N/A 12. on issues related to outsourcing of disagreeagree activities to business partners  13. on how to use competencies in our business partners  14. in general, we are very skillful in utilizing competencies in our business network 

Alignment competencies in our company:totallytotally N/A 15. business and IT managers very much agreedisagree agree on how IT contributes to business value  16. there is effective exchange of ideas between business people and IT people  in general, we are good at using: 17. the competencies we already have in my company  18. the competencies represented in our business partners 

HØGSKOLEN I AGDER Agder University College IT-BUSINESS PROCESS INTEGRATION Competencies in Process Integration 19. in our company we are actively working totallytotally N/A with the impact of e-commere ondisagreeagree our business processes  20. in general, we are good at working smarter to utilize new information technology in my company 

MANAGEMENT OF IT in our company: 21. our IT resources are effectively managed  22. we are good at achieving the anticipated benefits from IT investments  SYSTEMS AND INFRASTRUCTURE in our company: 23. our systems infrastructure is very flexible in relation to future needs  24. our IT systems make us able to effectively cooperate electronically with business partners 

HØGSKOLEN I AGDER Agder University College E-BUSINESS SUCCESS Efficiency As a result of our e-business strategy:totally totally N/A 25. we have reduced costs by using electronic, disagree agree online order taking  26. we can deliver faster  27. we have a more efficient market communication  Complementarities As a result of our e-business activities:totally totally N/A 28. our products or services complement disagree agree those of our business partner  29. our business partner offer products or services that complement ours  30. our supply chain has been strongly integrated to our partners’ supply chain 

Lock-in As a result of our e-business activities:totally totally N/A 31. business partners have high switching costsdisagree agree (i.e. replacing us creates extra costs)  32. products and services offered to customers are personalized  Novelty As a result of our e-business activities:totallytotally N/A 33. our company is recognized as a pioneer indisagreeagree utilizing e-commerce solutions  34.we cooperate with our business partners in a new and innovative way  General 35.in general, we have very positive effects from our e-business efforts in our company 

HØGSKOLEN I AGDER Agder University College OTHER/CONTROL Leader vs. Followertotally totally N/A 36. our company has to adjust to what our majordisagree agree partners decide in relation to e-business  37. our company is good at implementing changes in our organization  38. overall, my company’s competence for utilizing e-business technology is very good 

Preliminary findings Our research model is supported General theory is supported We find relations between competence and success in the adoption of e-business HØGSKOLEN I AGDER Agder University College

Preliminary findings and implications Success factor: Efficiency 65% varaince explained by: –Working with the impact of e-business on business processes –Ability to cooperate effectively electronically with business partners HØGSKOLEN I AGDER Agder University College

Preliminary findings Success factor: Complementarities 54% of the variance explained by: –competence about competitors’ use of IT to support similar business areas –the understanding of the e-business concept –the ability to implement changes in the organization. HØGSKOLEN I AGDER Agder University College

Preliminary findings Success factor: Lock-in 33% of the variance explained by: –investments in systems that makes it possible for suppliers to see information about supply and demand –ability implement changes in the organization HØGSKOLEN I AGDER Agder University College

Preliminary findings Success factor: Novelty 29% of the variance explained by: –size (number of employees) –effective exchange of ideas between business people and IT people HØGSKOLEN I AGDER Agder University College

Preliminary findings Sourcing and Alignment –both factors were found to have positive correlation with e-business success Size positively correlated to success Governance negatively correlated to alignment HØGSKOLEN I AGDER Agder University College

Implications SMEs must be treated different from bigger companies Some SMEs may see less e-business success due to dictates from dominant business partner More research needed Stimulation programs must take SME characteristics into account