Firms Patterns of e‑Business Adoption: Evidence for the European Union‑27

Abstract

Research has shown that firms using e‑business achieve considerable returns through efficiency improvements, inventory reduction, sales increase, customer relationship enhancement, new market penetration, and ultimately financial returns. However, there is little systematic research in terms of e‑business adoption patterns in firms across countries and industries. This study addresses the research gap by analysing the pattern of e‑business adoption by firms across European Union (EU) members. For that, we used the survey data from 6,964 businesses in EU27 members (excluding Malta and Bulgaria). The choice of variables that we will use in our study is based on the technology‑organization‑environment (TOE) theory. In the TOE framework, three aspects may possibly influence e‑business adoption: technological context (technology readiness and technology integration), organizational context (firm size, expected benefits and barriers of e‑business and improved products or services or internal processes) and environmental context (internet penetration and competitive pressure). We performed a factor analysis (FA) of multi‑item indicators to evaluate the validity and to reduce the number of variables. We used the principal component technique with varimax rotation to extract four eigen‑value, which were all greater than one. The first four factors explain 72.4% of variance contained in the data. The four factors found are: expected benefits and obstacles of e‑business, internet penetration, technology readiness and technology integration. These factors are in accordance with the literature review. Afterwards, we performed a cluster analysis (CA) using variables obtained from the FA and the other variables were gathered directly (firm size, employees education, improved products or services or internal processes and competitive pressure) from the e‑Business W@tch survey. In the CA we used hierarchical and non hierarchical methods. We obtained four distinct groups of e‑business adoption. The pattern of these groups suggested that in the European context the most important factor to characterize e‑business adoption is the specific characteristics of the industry and is not the country to which the firms belong.