Factors Impacting the Adoption of the Internet among SMEs

The Internet can extend market reach and operational efficiency of small and medium enterprises (SMEs) and enhance their contributions to the U.S. economy. This paper reports an empirical study conducted to identify the factors that impact SMEs' involvement with the Internet. Internal and external variables such as firm size, self-efficacy, prior technology use, etc. are used to predict the level of Internet involvement. This involvement is examined in terms of ownership of a web site (adoption) and use of the Internet for selling purposes (routinization). Logistic regression is used to examine the relationships between internal and external factors and SMEs' involvement with the Internet. The results suggest that specific factors contribute to the SMEs' involvement with the Internet -- prior technology use and the customer service subscale of perceived competitive pressure influence both stages of Internet adoption. Moreover, the relative importance of some of these predictor variables decreases as the level of Internet involvement increases. Past media use does not explain SME behavior -- in terms of adoption or routinization. These findings can be used to develop strategies to build SME involvement with the Internet.