Preface to the Focus Theme Section 'SMEs and E-Business'

Small and medium-sized enterprises (SMEs) play a pivotal role in virtually all the world economies. For example in the US and Europe they typically constitute over 98% of all businesses by number, provide more than half of the work force and generate about 50% of GDP. In terms of new employment their role is dominant – in the 1990s some 80% of the new jobs in Europe were generated by the SME sector. Unsurprisingly in the context of the ‘information society’ governments see the adoption of e-business technologies by SMEs as central to their economic development. The UK is a case in point, but the experience is general. The UK Government set three clear targets for the engagement of SMEs in ebusiness by the year 2002. The first was to ensure the connectivity of 1.5 m SMEs, which was achieved. In contrast the second target of 1 m SMEs ‘trading online’ was not met with just 490,000 trading by mid 2002 – a decline from the previous year. The third target of reaching parity with the best world practice was expressed in terms of SMEs’ progress up a five stage ‘adoption ladder’ with each stage representing increasing complexity and increasing benefits. For this third target the adoption rate beyond online trading to the higher complexity applications such as e-marketplaces, supply chains or inter-organizational collaborative networks was too low to be reliably measured. It is these higher complexity applications that have the potential to provide the major economic and competitive benefits and raises the important question of what this relative lack of engagement will mean not only for SMEs, but also the larger organizations that have significant numbers of SMEs in their supplier networks. This low adoption rate was unexpected by both academics and policy makers alike. The anticipation was that large-organization e-practices would diffuse and influence the practices and behaviours of SMEs but this is slow to happen. From a theory perspective the issues are profound and suggest that our understanding of small firm behaviour and in particular their adoption of e-business, either alone or within sector aggregations, is too limited. It is against this background that this special issue seeks to contribute to our understanding of the engagement in e-business by small to medium-sized enterprises, largely defined in the following contributions as firms with less than 250 employees. In putting together the selection of papers we recognized C op yr ig h t 2 0 0 5 El ec tr on ic M ar ke ts