STRATEGIES FOR ENHANCING UTILIZATION OF ELETRONIC COMMERCE OPERATIONS BY SMALL AND MEDIUM SCALE ENTERPRISES IN BAYELSA AND RIVERS STATES, NIGERIA

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ABSTRACT

This study investigated strategies for enhancing utilization of e-commerce by small and medium scale enterprises in Bayelsa and Rivers States, Nigeria. Five research questions and five null hypotheses were developed to guide the study using descriptive survey research design. The population for the study was 2,535 which comprised 2,273 Managers of registered SMEs in the two states, 150 ICT experts from recognised private and public tertiary institutions from the two states and 112 Business education lecturers from the seven tertiary institutions in the states. The sample for the study was 490 respondents comprising 228 randomly sampled SMEs managers representing 10% of their total population, the entire 150 ICT experts and 112 Business education lecturers from the two states. The instrument for data collection was a structured 65-items questionnaire titled “Strategies for Enhancing E-Commerce Operations Questionnaire” (SEE-COQ). The instrument was face validated by five experts. To obtain the reliability of the instrument, Cronbach Alpha reliability method was used which yielded clusters coefficient of 0.73, 0.82, 0.70, 0.85 and 0.84 respectively, and an overall coefficient of 0.80 for the entire instrument. The data for this study were collected by the researcher with the help of six research assistants. Out of the 490 copies of the questionnaire administered, 475 copies were duly filled and retrieved representing 96.9% return rate. The data collected were analysed using mean and standard deviation for answering the research questions while the hypotheses were tested using analysis of variance (ANOVA) at 0.05 level of significance. From the data analysed, the study identified 20 challenges facing small and medium scale enterprise operators in the utilization e-commerce; 10 operator-based strategies, 12 organization-based strategies, 13 technology-based strategies and 10 environment-based strategies for enhancing the utilization of e-commerce by operators of small and medium scale enterprise. There were no significant (p < 0.05) differences among the mean ratings of SME operators, ICT experts and Business education lecturers on 52 out of the 65 items of strategies for enhancing utilization of e-commerce by small and medium scale enterprises, whereas there were significant (p < 0.05) differences in the mean ratings of the three groups of respondents on the remaining 13 items. Based on these findings, the study, among others, recommended that: the federal and state government should adopt the identified strategies and package them into a training programme for training small and medium scale enterprise operators; government should guarantee small and medium scale organizations security and reliability, trust, and access to capital for improved adoption of e-commerce in Nigeria, and that there is need to incorporate issues of trust, privacy, and security, in the whole process of online ordering, payment, and delivery of e-commerce products and services to motivate the operators to adopt e-commerce.

CHAPTER ONE

INTRODUCTION

Background of the Study

Small and medium scale enterprises (SMEs) are a significant component of the economies of countries all over the world. These SMEs are centres of innovation and create employment and facilitate regional growth and development (Jones & Beynon-Davies, 2011). Due to the remarkable roles of SMEs in the growth and development of various economies, SMEs have aptly been referred to as the engine of growth and catalysts for socio-economic transformation of any country (Onogu, 2005). SMEs have become a focal point of considerable attention to many international and government institutions in the emerging economies. Governments in these countries have instituted measures to support SMEs as a strategy to achieve sustainable economic development and poverty reduction (Ihua, 2009).

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The meaning and scope of small and medium scale enterprises, differ across the globe (Olagunju, 2000). Various authors, bodies, organisations and institutions have defined SMEs differently on the basis of labour capacity and capital base. Sharing this view, Olagunju (2000) described small scale business as all ventures set up to provide satisfaction (utility) for a defined market target and with capital and asset base as low as N5,000 and as high as N1,000,000. According to National Institute of Management (NIM, 2005), small scale enterprises are those enterprises employing between 1-35 people, while the medium scale enterprises employ more than 35 but less than 100 people in the business. The Small and Medium Industries and Equity Scheme (SMIES, 2005) described SMEs as any enterprise with a maximum asset base of less than N2million excluding land and working capital, and with the number of staff employed not less than 10; and not more than 300 (Sanusi, 2004). However, this study adopts the Central Bank of Nigeria, definition which describes small and medium scale enterprises (SMEs) in relation to asset base of N1million to N500 million and the  number of staff employed ranging from 11 to 300 employees (CBN, 2004).

The United Nations Industrial Development Organization (UNIDO, 2005) reported that several Non-Governmental organisations such as: Fate Foundation, the Nigerian Investment Promotion Commission (NIPC), as well as individual Development Finance Institutions (DFIs) have been promoting the growth of small and medium scale enterprises in Nigeria through advocacy and capacity-building initiatives, and have continued to canvass for better support structures for operators in the small and medium scale enterprise subsector. This is because of the numerous economic benefits such organisations accrue from SMEs (Shemi, 2012). For instance, Siaka (2005) highlighted the benefits of SMEs in nations’ economy to include but not limited to the stimulation of economic activities such as supplies of various items and distributive trades for items produced. These economic activities enhance standard of living of the employees of the SMEs.

Small and medium scale enterprises (SMEs) are therefore inextricably linked to economic growth, job creation and income generation within the poor and disadvantaged communities in developing countries. According to Vuuren and Groenewald (2007) SMEs in any nation help increase gross domestic product (GDP), reduce unemployment rates and levels of poverty in the countries. Grandon & Pearson (2004) asserted that SMEs contribute to the development of healthy and dynamic economies and to the introduction of economic innovations within most countries of the world. Thus, SMEs have vast potentials for growing into large businesses through the application of effective and efficient strategies in the utilization of e-commerce operations. Similarly, Zhao (2013) while commenting on the significance of SMEs in a nation’s economy noted that, SMEs are the driving force behind a large number of innovations for the growth and development of national economies through employment creation, investments and exports. SMEs constitute the major providers of new jobs and contribute positively to economic growth, make significant contribution to a nation’s economy. Small and medium enterprises represent over 99% of enterprises in a nation’s economy, employing about 80% of the nation’s total workforce in urban areas and providing more than 50% of tax revenue (Vuuren & Groenewald, 2007). The SMEs always key into any innovation that can improve their business operations, one of such ideas where the SMEs are currently involved in is the electronic commerce, otherwise called e-commerce.

Electronic Commerce is an all-embracing concept. It is described by the e-commerce Innovation Centre, EIC, (2001) as any form of business or administrative transaction or information exchange between a company and the outside world, which is executed using Information and Communication Technology resources. This all important e-commerce marketing tool is provided by ICT, particularly through the services of the Internet. According to Turban, King, McKay, Marshall, Lee, and Viehland (2008), e-commerce is the process of buying, selling, transferring, or exchanging products, services, and or information through e-mail, internet, and the World Wide Web (www). Euro Info Correspondence Centre (2008) reported that electronic based transaction (e-commerce) refers to business transactions in which the parties involved interact electronically to exchange information. In this study therefore, e-commerce means the transaction of businesses online using the internet, World Wide Web (WWW) and social media platforms.

The rapid development of electronic commerce economy has brought about a lot of changes in the world, both in developed and developing countries (Jones & Beynon-Davies, 2011). E-commerce is considered as a marketing tool that has created new industry structures, changing intensity of rivalry, threats of new entrants, bargaining power of suppliers and buyers, and threats of substitutes (Hoft & Stegwee, 2001). This implies that every organisation, including small and medium enterprises, can be a major player in the new global market through e-commerce operations. For small and medium scale businesses, that have the motivation to expand their commercial activities beyond the physical boundaries of the organisations into distant geographical regions, the utilization of e-commerce via computer networks, telecommunications, satellite broadcasting, digital television and the internet which are domains of e-commerce operations should be an imperative for progress (Chaston, 2004).

E-commerce entails the use of electronic communications and digital information processing technology to create, transform, and redefine relationships for value creation between organizations as well as individuals. According to Shemi (2012) the adoption of e-commerce has proven to be a potential approach for enhancing the effectiveness of business activities and practices. The advantages inherent could boost operational efficiency of SMEs in Nigerian by widening her marketing network. The rapid changes brought about by e-commerce have offered new opportunities as well as threats for business organizations (Fraser, Fraser, & Macdonald, 2000). The opportunities and bottlenecks consist of four perspectives: internal organization; dyad (supplier-buyer relationship); business chain; and business network. The first level refers to the internal business process of an organization. The dyadic level refers to the value-adding relationship between two organizations, a seller and a buyer. Business chains are formed and broken off within the business network, forming temporary business chains. The most encompassing, the business network level incorporates relationships between the organization and competitors or other stakeholders, for example governmental organizations in the network.

Business organisations are under increasing pressure to adopt e-commerce if they want to remain competitive (Henderson, 2002). Almost 90% of large corporations in Nigeria use the internet as an integral part of their businesses, but SMEs have been slower to do so (Central Bank of Nigeria, 2009) because of inadequate power supply and other essential facilities. E-commerce does not only permit but facilitates an increase in productivity by enabling the creation of new relationships with customers, distributors, suppliers and other strategic partners. Some forms of e-commerce activities, according to Scupola (2010), are accomplished through newer ICT such as cloud computing; mobile commerce applications and social networking services.

Apparently, the SMEs in Nigeria according to previous researchers encounter many challenges in their course to utilise e-commerce. Inadequate ICT infrastructure constitutes the major challenge confronting SMEs in effective use of e-commerce in business transactions (Zhao, 2009). This makes ICT experts important stakeholders in the utilization of e-commerce by any business organisation. An ICT expert, according to World Economic Forum (2011), is a trained individual in configuration, installation and maintenance of ICT facilities for modern business transactions in the global world. Information and communication technology experts are those rendering information technology (IT) support services to business organisations. In this study, information and communication technology (ICT) experts are those with strong computer background particularly computer education lecturers, and computer skill-based personnel in the management information system (MIS) offices of tertiary institutions. The service rendered by ICT experts within a modern business outfit helps to boost its performance in e-commerce. This is made possible through the owners of these business enterprises, be it in the academic institutions or otherwise.

Small and medium scale enterprises are organised, controlled, managed and operated by small business owners. In this study, operators of SMEs are the sole-traders, managers, owners and entrepreneurs. Entrepreneurs conceive business ideas, create business opportunities and take advantage of it to create awareness, increase sales and maximise profit (National Institute of Management, 2005). The operators of SMEs are therefore the owner-managers of small and medium scale enterprises with different years of working experience on the job. Due to years of experience, operators of SMEs can develop strategies or approaches that can suit their business operations in the changing business environment.

Small and medium scale enterprises in Nigeria are seen as a solution for employment creation, generation of income-earning opportunities, economic development and poverty reduction. However, empirical studies show that the SMEs in Nigeria are failing to achieve their business objectives, especially in e-commerce operations. Therefore, in a bid to determine the strategies for enhancing utilization of e-commerce operations, the study also identifies critical challenges that confront SMEs in Nigeria. The obvious challenges to SMEs in the utilization of e-commerce include cost, maintenance, electricity, illiteracy, poor technical know-how, inadequate ICT infrastructure and expertise, low business coverage, poor acceptability of products and services, and poor quality of products and services (World Bank, 2010). These factors had made developing countries such as Nigeria relatively slow in using online platforms, thereby still creating a huge e-commerce operation gap. In order to help small and medium scale enterprises in Nigeria to utilize and enjoy the full scale benefits of e-commerce, certain strategies must be employed.

Utilization of resources is where a firm is able to plan, organize, direct, coordinate and control the resources within its reach to advance the course of its establishment. Mugure (2012) pointed out that resources based view uses a company’s value, rare, inimitable and organization’s strengths and competitive capabilities to deliver value to customers in an approach that rivals find it difficult to imitate. Similarly, Ngurukwem (2005) said that utilization is the proportion of the available time a system is operating.  It then means that SMEs can earn sustainable returns when they utilize ICT resources and platforms like e-commerce to transact business. Utilization can also be viewed as a fraction of a specified time period that is actually used to produce quality work. By this description, e-commerce can be used for various purposes, especially for achieving the objectives for establishing SMEs. It therefore becomes imperative that strategies for enhancing utilization of e-commerce operations be explored by small and medium scale enterprises to determine their applications for knowledge and service delivery.

Strategies are plans of action designed to achieve a specific goal or series of goals within an organizational framework. According to Riley (2015), strategy is the direction and scope over a long-term through its configuration of resources to meet the organisational needs and expectations. According to Freedman (2013), strategy is a high level plan to achieve one or more goals under conditions of certainty. In the context of this study, strategies are important approaches that can be adopted to enhance the utilization of e-commerce by small and medium scale enterprises. The report of Zhao (2013) identified four major strategies for stimulating the utilization of e-commerce by business organisations to include: operator-based, organisation-based, technology-based and environment-based strategies. 

Operator-based strategy recognizes the significance of the owner or manager of the business in the adoption and use of ICTs and e-commerce in business transactions (Bharati & Chaudhury, 2006). Operator factors relate to executive decisions that the SME operator must make; the financial commitments to take in relation to the overall direction of the firm; acquisition of new e-commerce infrastructure, whether the SME must consider e-commerce adoption or not, their appreciation or non-appreciation of ICT and new technological developments, and the like. Operator-based strategy is based on the education, ICT and e-commerce knowledge, social and cultural attributes of the business owner (Zhao, 2013). Therefore, operators are urged to acquire requisite ICT education, and imbibe socio-cultural tenets relevant for the adaption of e-commerce in the organisation.

Similarly, organisation-based strategy deals with factors inherent in the nature and characteristic of the firm. Under organisational strategy, a number of factors are cited that enhance the use of e-commerce approach within the boundary of the organisation. These include security, trust, and privacy concerns, financial ability and cost implications, size of the organisation, perceived benefits of ICTs and organisational culture (Montazemi, 2006). In the context of this study, an organisation-based strategy is the sum of the actions a small and medium scale enterprise intends to take to achieve its objective of e-commerce utilization based on the nature of the enterprise. Tan, Tyler and Manica, (2007) described and identified organisational culture as a key approach for addressing the adoption and use of e-commerce by SMEs.

Apart from the organisation-based strategy, technology-based strategy plays a major role in enhancing the utilization of e-commerce and other forms of innovative technologies.  Scupola (2009) stated that technology-based strategies are those that are obtained from the nature and characteristic of the ICT that SME employs or intends to use in e-commerce operations. These, according to Zhao (2013), deal with the availability and speed of internet, friendliness of technology, payment of facilities and cost, reliability of power supply, friendliness of electronic commerce language and internet address space. Therefore, technology-based strategy is the overall plan which consists of objectives, principles and tactics relating to use of technologies within a particular SME environment.

In addition to the other strategies explained is the environment-based strategy focuses on the external environment of the SME organisation which also has some impact on e-commerce adoption and utilization (Scupola, 2009). Environment-based strategies dwell on government role, business partner affiliation and preferences, nature and characteristic of value chain, logistics and telecommunications infrastructure, economic and political instability, human-rights issues, business culture, macro-economic policies, safety of the internet in terms of natural disasters; floods and earthquakes which could impose some threats on the ICT gadgets. Environment-based strategy, therefore, is a sustainable tool for fostering economic growth and development using the SMEs platform through the utilization of e-commerce operations. In this direction, SMEs are to establish best practices by luring the government and its agencies to create an enabling conducive environment for businesses to strive. This could actually be made possible by personnel knowledgeable in the ICT and e-commerce. Those with the requisite competencies include but not limited to Business education lecturers, ICT experts.

Business education lecturers with their experience and knowledge in e-commerce can be of significant assistance in suggesting strategies for enhancing the utilization of e-commerce by SMEs. A business education lecturer is an individual that is trained professionally in the art of teaching the knowledge and skills of business for vocational and personal use. Sharma (2004) views a lecturer as someone who has undergone the necessary and recommended training in a higher educational institution and is charged with the full responsibility of managing, teaching and learning of business education in a classroom situation in such a way as to enhance the behaviour of the learners. In the context of this study, a Business education lecturer is an individual who had been trained both in knowledge and skills, as well as pedagogy to impact knowledge, practical and attitudinal skills to Business education students in order that they succeed in the world of business and to use the goods and services of business. 

In like manner, ICT experts are the professionals responsible at the Management Information Systems (MIS) office in the tertiary institutions. Though, the nomenclature may differ, they do virtually the same work in every tertiary institution. For instance, at the Niger Delta University, Wliberforce Island, Bayelsa State, the MIS office is termed a Resource Centre and does the information and communication technology functions.  Whereas, SME operators are the owners of businesses duly registered with the respective state governments and has operational permit to do business in the study area. In light of the above, SME operators are those running businesses with asset base of N1m to N500m, and number of staff employed from 11 to not more than 300 employees. Therefore, these group of persons would be competent and experienced enough do justice to issues of e-commerce and SMEs.

The advent of e-commerce offers SMEs a new frontier of opportunities and challenges. An understanding of the drivers that enhance the adoption and utilization of e-commerce can allow small and medium enterprises to create solutions and plans to attract consumers to their products and services, thus enabling them to gain a greater representation in both local and global market. Despite the avalanche of existing and upcoming small and medium scale enterprises, there is not enough literature about the acceptance and utilization of e-commerce in business transactions in the two states. That is the reason such strategies to enhance the utilization of e-commerce by SMEs needed to be determined.

However, the inadequate utilization of e-commerce by small and medium scale enterprises in Nigeria and South-south in particular has resulted in several problems such as business failure, low patronage, low competitive advantage, bankruptcy and consequently increases unemployment arising from collapse of small and medium scale enterprises. This was known through a pilot visit on the ground assessment to select SMEs in the study area. To address this problem therefore, the researcher deems it necessary to identify strategies for enhancing utilization of e-commerce by small and medium scale enterprises in Rivers and Bayelsa States.

Statement of the Problem

The technology driven economy, which emerged from globalisation and the development in Information and Communication Technology (ICT), has given rise to electronic commerce (e-commerce) innovation in marketing. Electronic commerce, otherwise known as e-commerce is the fastest growing technology in the business world. For instance, it is a known reality that the Nigeria Stock Exchange, Banks, Newspapers, and others mostly situated in Lagos, have adopted e-commerce in marketing. Unfortunately, the utilization of e-commerce by SMEs in Nigeria is relatively slow maybe owing to some challenges faced by the managers or operators of the SMEs.

The perceived poor utilization of electronic commerce may lead SMEs to business failure. This will inadvertently decrease internally generated revenue for governments. Consequently, it will come with its attendant adverse effects of scanty and low quality capital development, decay of public facilities, irregular maintenance of infrastructure, and staff retrenchment. The employees that are retrenched by the failed SMEs resort to anti-social activities like fraud, armed robbery, oil bunkering, kidnapping, militancy and political thuggery among others as presently experienced in Bayelsa and Rivers States. This is the current scenario in Nigeria and particularly south-south geopolitical zone despite ample evidence that suggests that e-commerce has the capacity to facilitate improved business practices in all the sectors including the SMEs.This is owing to the fact that inhabitants of the area patronize and transact business with established Lagos-based online marketers like Konga, Jiji, Jumia and soon instead of strengthening theirs by using e-commerce. Hence, this study is aimed at identifying strategies for enhancing utilization of e-commerce by small and medium scale enterprises in Bayelsa and Rivers States, Nigeria.

Purpose of the Study

The major purpose of the study was to find out the strategies for enhancing utilization of e-commerce by small and medium scale enterprises in Rivers and Bayelsa States, Nigeria. Specifically, the study determined:

  1. challenges to utilization of e-commerce operations of small and medium scale enterprises.
  2. operator-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises.
  3. organisation-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises.
  4. technology-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises.
  5. environment-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises.

Significance of the Study

            The findings of this study would be of great benefit to small and medium scale enterprise operators, business educators, federal and state ministry of commerce, and industry, curriculum planners and future researchers. Small and medium scale enterprise operators will benefit from the results that will emanate from this study as it will help them to understand the strategies that can be employed to enhancing the utilization of e-commerce for their business expansion. This will create awareness to the customers, increase sales, and the SMEs will maximise profit.

            Also, business educators would benefit from the findings of this study as they will expose both the educators and the students to all the challenges to SMEs and the required strategies for tackling them for effective use of e-commerce in their marketing operations. The findings that will emanate from this study when published will provide the required information that will further equip the business educators for the teaching of online trading to students who are the prospective SMEs operators.

            Furthermore, the findings of the study would be of immense benefit to the governments of Bayelsa and Rivers States. This is because, when the small and medium scale operators in the states have a boom through the enhanced utilization of e-commerce in their business transactions, their competitive advantage and economic returns would be improved. Therefore, the two State Governments would benefit through increased revenue, building of social amenities and the teaming unemployed youth who would be gainfully employed. Also, the state governments would benefit through income tax that would be collected from the workforce. This will invariably increase internally generated revenue of the two states. The findings would also lead to increased use of ICT infrastructure in the states as young people would be desirous of acquiring ICT skills to be employable.

Similarly, curriculum planners would benefit from this study, through the operator, organization, technology and environment-based strategies for enhancing the utilization of e-commerce by SMEs. The knowledge of these strategies would assist the curriculum planners in curriculum review and update to meet societal needs. This will help to make Business education curriculum more employment-driven to produce graduates with saleable skills, who can establish and manage private business outfits on e-commerce platform either as paid employee or self-employed.

Finally, the findings of this study would be of significant benefit to researchers with interest in e-commerce as it would help to cover the deficiencies in utilization.

Research Questions

Based on the specific purposes of the study, the following research questions were answered: 

  1. What are the challenges to utilization of e-commerce operations by small and medium scale enterprises?
  2. What are the operator-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises?
  3. What are the organisation-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises?
  4. What are the technology-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises?
  5. What are the environment-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises?    

Hypotheses

Based on the specific purposes of the study, the following null hypotheses were formulated and tested at 0.05 level of significance.

H01: There is no significant difference among the mean ratings of SME operators, ICT experts and Business education lecturers on the challenges to utilization of e-commerce operations by small and medium scale enterprises in Bayelsa and Rivers States.

H02: There is no significant difference among the mean ratings of SME operators, ICT experts and Business education lecturers on operator-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises in Bayelsa and Rivers States.

H03: There is no significant difference among the mean ratings of SME operators, ICT experts and Business education lecturers on organisation-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises Bayelsa and Rivers States.

H04: There is no significant difference among the mean ratings of SME operators, ICT experts and Business education lecturers on technology-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises in Bayelsa and Rivers States.

H05: There is no significant difference among the mean ratings of SME operators, ICT experts and Business education lecturers on environment-based strategies for enhancing utilization of e-commerce operations by small and medium scale enterprises in Bayelsa and Rivers States.

Scope of the Study                                                                                          

            The study was delimited to the challenges facing operators of small and medium scale enterprises in the utilization of e-commerce operations, and operator-based, organisation-based, technology-based and environment-based strategies for enhancing utilization of e-commerce operations of small and medium scale enterprises. Geographically, the study is delimited to Port-Harcourt in Rivers State, and Yenagoa in Bayelsa State in South-South Nigeria. Data were collected from the registered SME operators, ICT experts and Business education lecturers from the selected tertiary academic institutions in the two states to accomplish the objectives of the study. 


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