A qualitative study of business-to-business electronic commerce adoption within the Indonesian grocery industry: A multi-theory perspective

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Abstract

This study explores the business-to-business electronic commerce (B2B EC) technology adoption experience of organizations within the supply chain of the grocery industry in Indonesia using a multi-theory perspective. Through a multiple case study with eight organizations, it provides a comprehensive understanding of the influence of adoption factors. This study shows the usefulness of complementarily deploying several adoption theories and offers important theoretical and practical implications for organizations as they extend their supply chains globally.

Introduction

Electronic Commerce (EC) is a broad concept that refers to the exchange of products/services and information via computer networks, including the Internet, Extranet and Intranet [1], [2]. Within the B2B EC context, a diverse range of technologies and initiatives have been introduced. Examples of technologies include Electronic Data Interchange (EDI), automatic product identification (barcode, RFID tags), and Electronic Funds Transfer, and examples of initiatives include cross docking, Vendor Managed Inventory (VMI), Continuous Replenishment Program (CPR), and Collaborative Planning, Forecasting and Replenishment (CPFR) [3], [4]. Organizations can obtain substantial benefits from their investment in EC technologies, as EC generally enables organizations to improve reach, richness and affiliation [2], [5]. Due to the potential of EC, many countries worldwide have rapidly adopted it [6], resulting in a significant growth of EC in developed countries during the last two decades and, more recently, in developing countries [7], [8].

In the era of globalization, developing countries have played an important role in world trade and commerce because of their large market potential and low cost of labor [9]. Developing countries are defined as countries with a low to middle income level, a low standard of living, restricted technology infrastructure and limited access to products and services [9], [10]. With advancements in information and communication technologies (ICT), large global organizations are increasingly extending their supply chains across multiple continents in order to cut costs and increase their reach [11], [12]. Through ICT adoption, developed countries can trade with developing countries more efficiently and, in turn, help those developing countries achieve more sustainable economic growth.

However, due to differences in their social, cultural, economic, political, legal and technological conditions, developing countries encounter a set of problems and concerns that vary considerably from those faced by developed countries [2]. For example, Hofstede's national culture theory suggests that developing countries and developed countries differ greatly in their characteristics, which may affect their organizational behavior toward technology adoption [10], [13]. Cultural differences captured by Power Distance and Uncertainty Avoidance dimensions suggest that organizational technology adoption behavior is constrained socially as a result of the attachment of meanings and interpretations relevant to that cultural context. Thus, organizations operating in developed countries (with a low Uncertainty Avoidance index) tend to stress both technological development and technological adoption more than organizations operating in countries with a high Power Distance and low tolerance for ambiguity and uncertainty [14]. In another study, Guo et al. [15] find that the way organizations use e-mail, phone and fax in China (a developing country) and Australia (a developed country) is largely influenced by the difference in the Uncertainty Avoidance dimension of cultural difference between these two nations. As a result, different sets of approaches to technology adoption are required to suit the cultural and contextual conditions of developing countries [16], [17].

However, at this stage, there remains a relatively limited number of in-depth studies and understanding regarding the adoption of EC technologies by developing countries, despite a growing number of technology penetrations that have taken place in these countries in recent years [7], [16]. An understanding of the adoption of ICT, in particular EC technology, by developing countries is thus important for both researchers and practitioners [18]. Moreover, the contextual situations of countries are arguably different in nature. For example, the maturity of the ICT infrastructure, e-commerce readiness, degree of government support, and extent of business competitiveness vary greatly, not only between the developed and developing countries but also among developing countries. Furthermore, it would be inappropriate to assume that various dimensions of national culture remain somewhat similar across all developing countries. In fact, distinct cultural differences are noted among developing countries. Hence, it could be argued that qualitative studies focusing on e-commerce adoption in some developing countries are not necessarily reflective of the e-commerce trends and adoption dynamics of all developing countries across the globe.

In addition, some noticeable gaps have been identified in the existing EC literature. First, in the context of developing countries, there are limited empirical studies on EC technology adoption by large organizations. By contrast, many studies explore the diffusion of EC technologies among small and medium-sized enterprises (SMEs), primarily using surveys [19], [20], [21], [22]. Second, most of these studies, especially in the Southeast Asia region, explore only general EC technology and practices (including Business-to-Customers EC and general e-mail practices). Only a handful of studies assess a broad range of EC technologies such as EDI, e-auctions, EFT, and other B2B EC initiatives [10], [11], [23]. Furthermore, due to the exclusion of the study context, there have been some conflicting findings regarding the impact of adoption factors on actual adoption [21], [24]. In addition, several existing studies aggregate the adoption experience across multiple industries within a country using quantitative methods. Therefore, a detailed understanding of organizations’ adoption experience is lacking [21], [25], [26], [27], [28]. Only a few authors focus on a specific industry and employ a qualitative method, for example, Utomo and Dodgson [29], who concentrate on Indonesia's manufacturing of industrial products, and Kurnia [30], who focuses on the Chinese grocery industry. The existing qualitative studies on EC adoption are also generally descriptive in nature. Typically, they identify a number of adoption factors, which are often grouped into technological, organizational and environmental contexts but generally lack theoretical explanations of the underlying mechanisms of the influence.

Thus, in summary, we argue that there is currently a lack of rich understanding of the B2B EC adoption phenomenon in developing countries due to the dominance of quantitative studies and the limited application of adoption theories [31]. In fact, the adoption process involves dynamic interactions among social, legal, economic, political and technological factors that call for more studies involving several theoretical perspectives to better understand the adoption phenomenon in different contexts of developing countries. Each developing country may have specific contextual factors involving different dynamics and interplays, which may have differing effects on the adoption phenomenon. In-depth studies of how B2B EC technology is adopted in a context that has not yet been thoroughly investigated thus contribute to the current knowledge in this area.

To address the identified knowledge gaps, the main objective of the current study is to develop a rich understanding of B2B EC technology adoption through a qualitative study that adopts a multi-theory perspective. In this study, we investigate how the adoption factors identified in the existing studies influence organizations’ actual EC adoption. As EC adoption is complex and heavily negotiated by contexts within which organizations operate [32], we have employed a multi-theory perspective involving Tornatzky and Fleischer's Technology, Organization and Environment (TOE) framework, Rogers’ Diffusion of Innovations (DOI) Theory, resource dependence theory (RDT), institutional theory (IT) and Hofstede's national culture theory (NCT) to help us better understand the underlying mechanism of the influence of various adoption factors. As global EC was dominated by B2B initiatives with total revenue of $559 billion in 2013, which is double the revenue of B2C EC [33], we have restricted our focus to B2B EC to maximize the depth of the exploration. The specific research questions we address are as follows:

  • 1.

    How is B2B EC adoption by organizations affected by the technological, organizational and environmental contexts?

  • 2.

    To what extent can DOI, RDT, IT, NCT and TOE be used complementarily to better understand the influence of technological, organizational and environmental factors on B2B EC adoption?

To address these questions, we conducted a multiple case study involving eight organizations with different backgrounds, sizes and positions in the supply chain within the Indonesian grocery industry. These participating organizations represent typical manufacturers, distributors and retailers within that industry. The grocery industry was chosen because it is characterized by high transaction volumes and low profit margins and, therefore, often pioneers technology adoption [25], [34]. The study focuses on a single industry rather than multiple industries to allow for thorough and detailed investigations into the interplays among the contextual factors and their influence on technology adoption by organizations within the industry. Indonesia was selected as an example of a developing country because it reflects typical characteristics of developing nations, especially in the Asia Pacific region [23], [35]. Although Indonesia enjoyed a steady economic growth at an average of 7% between the period between 1987 and 1997, it has only devoted a small percentage of its GDP to ICT implementation and has a low score on the Network Readiness Index (NRI) and E-Readiness Index (ERI) [36]. Therefore, the findings of this study are likely to be relevant for other developing countries, especially those with similar cultural, political, technological, legal and socioeconomic conditions as Indonesia. At present, there has been no comprehensive study employing a multi-theory perspective to investigate how contextual factors influence the adoption of B2B EC in Indonesia or other countries with similar conditions.

The following two sections briefly discuss the underlying theories used in this study and provide a summary of the observations that we drew from a comprehensive EC literature review. Then, we provide an overview of the multiple case study and the presentation of the findings. Finally, we discuss the findings by reflecting on the existing studies and conclude the paper by outlining the contributions of this study and proposing future studies.

A rigorous literature review reveals that adoption issues relating to B2B e-commerce have been explored in a number of developing countries across several continents. An in-depth summary of the studies reviewed is shown in Appendix A. The studies were selected based on searches of Google Scholar and multiple online databases using ‘Electronic Commerce adoption in developing countries’ as the main search keyword. We only included studies concerning B2B technologies. The list of studies is by no means exhaustive, but it is adequate to provide a general picture of existing related studies. Several important observations deduced from the review are briefly highlighted below.

First, our literature synthesis shows that B2B e-commerce adoption has been reported for various developing countries spanning the Asian, Middle Eastern, African, and South American regions. Most studies have focused on multiple EC technologies. However, a few studies examined the adoption of a single EC technology. For example, Seyal et al. [37] examined EDI adoption only. The most widely cited EC technologies identified by the reviewed studies include EDI, bar code, e-procurement, and online B2B marketplaces, among others. Interestingly, several studies did not specify the type of EC technologies that organizations have adopted [20], [38]. Overall, no preference for a particular industry segment was noted across the studies. A few scholars examined e-commerce adoption for a specific industry. For example, Kim [39] focuses on EC adoption in the Korean fishery industry, while Chen [40] focuses on the IT industry in Taiwan. The majority of the reviewed studies examined EC adoption across multiple industry segments.

Second, although the case study method has been used by a number of scholars, a preference for the quantitative survey research method is clearly observed. Studies employing a quantitative method use a number of statistical techniques, including various non-parametric techniques [41], parametric statistical analysis techniques [42], Structured Equation Modeling [26] and regression analysis. There is currently a lack of in-depth qualitative studies involving large organizations, as confirmed by Oliveira and Martins [31].

From a theoretical perspective, our literature analysis indicates that the TOE framework has been widely deployed in the existing studies. Rogers’ DOI theory appears to be a popular theory that has been used in a number of studies [31]. Institutional theory, national culture theory, and resource-based view [43] have also been used by scholars to help explain EC adoption in the context of developing countries but to a lesser extent than TOE and DOI. Interestingly, we do not identify any study in this area that employs the RDT, which confirms the observation of Casciaro and Piskorski [44] regarding the limited number of studies using RDT as a theoretical lens despite its merit in understanding organizational action when power imbalance and dependency are involved.

Furthermore, we identify a trend among EC scholars; specifically, they developed their research models by combining the TOE and other theories such as DOI, institutional theory and RBVF [23], [31]. They also included a number of additional factors from the broader IS/IT adoption literature in their research model and then expressed their model in three broad groupings of factors, in line with the spirit of the TOE framework. For example, Seyal et al. [45] developed a model that is rooted in the TOE framework to investigate EC adoption in Pakistan and included constructs from culture theory, motivation theory and DOI. Intriguingly, a few studies (e.g., [41], [46]) are purely descriptive and do not refer to the constructs from a specific theory.

Moreover, a wide range of factors affecting B2B EC adoption have been identified in previous studies. These factors are generally grouped into three broad categories in terms of the TOE framework. However, due to the contradictory findings reported by researchers, we note that no established pattern of findings concerning the influence of factors affecting technology adoption has emerged from these studies. For example, organization size was found to be a significant differentiator between e-commerce adoption and non-adoption [21], [41]. However, other researchers [24] did not find organization size to have a significant effect on B2B e-commerce adoption. Likewise, government support was found to have a positive influence on EC adoption in Pakistan [42], whereas it was not found to have an influence in Malaysia [38]. In a similar manner, another much-debated factor is management support. Management support was reported to be important for affecting e-commerce adoption in countries such as Kenya [47], but was not found to be relevant in Brunei, Pakistan and Malaysia [32], [38], [45]. Arguably, these inconsistencies stem from the lack of exploration of the study context, prohibiting researchers from investigating the underlying mechanisms of the influence of those factors. Deep exploration of the study context can only be done through in-depth qualitative studies such as through the case study research method [48], which is currently lacking in the literature on EC adoption by developing countries. Therefore, in this study, we address the identified gaps by conducting a qualitative study of B2B EC adoption involving a multiple case study with eight organizations within the Indonesian grocery industry; this study is guided by multiple adoption theories. The theories used in this study and the research framework are described in the next two sections.

Section snippets

Theoretical background

In this study, we adopt Tornatzky and Fleischer's (1990) Technology, Organization and Environment (TOE) framework, complemented by Rogers’ (1983) Diffusion of Innovations Theory [49], resource dependence theory [50], [51], institutional theory [52], [53] and Hofstede's national culture theory [54]. The TOE framework is a useful lens that has been employed in many studies [31]. However, because our study focuses on understanding how adoption factors identified from the extant literature affect

Research framework

Our literature review reveals that the TOE framework, which originated from the work of Tornatzky and Fleischer [70], has been widely used in many technology adoption studies within developing countries to identify various contributing factors that have affected the adoption process of EC technologies at the organizational level. This framework is a general, comprehensive and well-received theoretical lens [71], [72] that focuses heavily on the examination of an organization and its context

Overview of the Indonesian grocery industry

Indonesia is an archipelago consisting of over 17,000 islands and is located in Southeast Asia. Its population is estimated to be over 250 million, and it is the fourth most populous country in the world [36]. Indonesia has 33 provinces, and the capital city is Jakarta. In terms of the national culture, Indonesia has a relatively high Power Distance index (78), low Individualism index (14), and moderate Masculinity index (46) and Uncertainty Avoidance index (48) [54]. Therefore, Indonesians

The research method

This study employs a multiple case study approach [48] to explore the B2B EC adoption by organizations within the Indonesian grocery industry. Case study research enables researchers to conduct in-depth investigations of a phenomenon of interest over a period of time, which is currently lacking in the literature on B2B EC adoption by developing countries. This study is at the theory building stage, contributing to the accumulation of knowledge related to EC technology adoption, particularly in

The case study background

Table 2 lists the participating companies and the interviewees involved in each case study. A brief profile of each company is provided in Appendix B. Overall, we involved two large foreign consumer product manufacturers, one large local manufacturer, three local distributors and two retailers, one of which is foreign. For the foreign players, IT has always played a key role in the strategic direction of their organizations since the very beginning of their establishment in Indonesia.

There are

The study findings

In this section, we describe how the adoption factors captured in our research framework drive or inhibit the adoption of various B2B EC technology initiatives currently adopted by the organizations involved in our study. Table 4 summarizes factors affecting the adoption of B2B EC by the participants. Each factor is discussed below.

Discussion

By employing the TOE framework complemented with four adoption theories, this study has investigated the impact of technological, organizational and environmental factors on the adoption of various B2B EC technologies by organizations within the Indonesian grocery industry. The most salient factors that are found to affect EC adoption negatively in this industry are related to the external environment rather than technological or organizational in nature. This observation confirms the findings

Conclusion and implications

Motivated by the need to better understand the underlying mechanisms of the influence of technological, organizational and environmental factors on the adoption of B2B EC in developing countries, our study employs a multiple case study involving eight organizations to explore the adoption of various B2B EC technologies by organizations within the Indonesian grocery industry. Due to the richness of the interplay among contextual factors affecting EC technology adoption by an organization, we

Acknowledgement

This study is part of a project that is funded by the Australian Research Council, project number DP0664342.

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