British SMEs’ e-commerce technological investments and firm performance: an RBV perspective

Abstract

Despite the heated debate on the Information Technology (IT) investment–performance paradox, the resource-based view (RBV) has received relatively little attention as an approach to explain such phenomena, particularly in the small and medium enterprise (SME) and e-commerce context. This study draws on the RBV perspective to empirically examine the association between SME e-commerce investments and firm performance. We collected firm-level data from 430 British SMEs across 16 industry sectors. Results demonstrate that RBV provides strong theoretical support, that is, business resources, human resources, and external resources (i.e. e-commerce readiness) strongly contribute to enhanced firm performance. The sophistication of SMEs' e-commerce websites contribute to firm performance, but those firms' capital investments in IT and e-commerce training per se are not significant performance drivers. Our findings suggest that UK SMEs can and do differentiate themselves on the basis of their e-commerce capability, which is created by the synergistic combination of e-commerce resources with other organisational resources and capabilities.

Keywords:

• competitive advantage
• Information Technology
• SMEs
• e-commerce
• resource-based view

Acknowledgements

The first author acknowledges the helpful comments on an earlier draft of this paper from David Feeny, Emeritus Professor of Information Management, and Dr Chris Sauer, Associate Fellow, both at Said Business School Oxford University.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Tan Yang (D.Phil., Oxford) is a post-doc researcher in School of Economics at Beijing University, China. He was a research affiliate at Oxford Institute of Information Management. His research focuses on the role of IT as a strategic enabler of firm competitive advantage.

Jiyao Xun (Ph.D., Nottingham) is Associate MBA Programmes Director for Manchester Business School (Asia-based). His research has been published in Business Strategy and the Environment, Behaviour & Information Technology, among others.

Xiaofeng He is an economist and Professor in Finance at School of Economics, Beijing University, China. He is Deputy Dean of Beijing Institute of Economic Development at Beijing University and Deputy President of China Private Equity Association.

Notes

1. Final questionnaire is available upon request. Responses from the pilot study companies were not included in the final sample.

2. E-commerce budget and IT budget are log-transformed when computing,

3. Bootstrapping based on 430 cases, maximum iteration 3000 times, 500 re-samples, therefore, P values based on t(499), two-tailed test.