A framework to assess the factors affecting success or failure of the ...

European Journal of Information Systems (2005) 14, 417–433 & 2005 Operational Research Society Ltd. All rights reserved 0960-085X/05 $30.00 www.palgrave-journals.com/ejis

A framework to assess the factors affecting success or failure of the implementation of government-supported regional e-marketplaces for SMEs Denise E. Gengatharen1 and Craig Standing1 1 School of Management Information Systems, Edith Cowan University, Joondalup, Western Australia.

Correspondence: Denise E. Gengatharen, School of Management Information Systems, Edith Cowan University, 100 Joondalup Drive, Joondalup 6027, Western Australia. Tel: þ 61 8 6304 5335; Fax: þ 61 8 6304 5988; E-mail: [email protected]

Abstract Regional electronic marketplaces (REMs) have been used to promote ecommerce uptake by small and medium enterprises (SMEs). However, the community and regional economic development motives underpinning REM creation can cause complexities. While REM development and management can be informed by existing theoretical frameworks, there is no comprehensive framework that can be used to examine the factors affecting the success or failure of government-supported SME-REMs. The objective of this paper is to construct such a framework that can be used to examine these factors. The literature on e-marketplaces and IT/IS/e-commerce adoption by SMEs is examined to determine the appropriateness of existing theoretical frameworks, the key constructs of which are synthesised to form an integrated theoretical framework. The value of the framework is confirmed by content analysis of published case studies and empirical results from in-depth case studies of two SME-REMs. The most significant factors affecting success or failure of government-supported SME-REMs are as follows: SME-owner innovativeness; REM ownership structure and governance that engender trust and build critical mass by including SMEs in REM development and management; matching REM focus and structure with regional profile by leveraging community ties and existing business relationships; adopting a staged approach to REM development; and ensuring REM benefits are understood by SMEs. European Journal of Information Systems (2005) 14, 417–433. doi:10.1057/palgrave.ejis.3000551 Keywords: regional e-marketplaces; small and medium enterprises; digital divide; IS adoption theories; unified model; success; failure

Introduction

Received: 3 March 2005 Accepted: 21 September 2005

The relative importance of small and medium enterprises (SMEs) in many economies has prompted government measures to ensure that this sector is not marginalised in the move to the digital age. In fact, the Internet and e-commerce are viewed as a way for SMEs to compete with their larger counterparts in accessing global markets by overcoming distance and size. Much research has investigated the uptake of Internet e-commerce by SMEs (Poon & Swatman, 1997; Walczuch et al., 2000; Daniel et al., 2002), but most of these studies indicate that despite growing levels of awareness and enthusiasm for e-commerce, only a small proportion of SMEs are realising substantial benefits from the Internet. The majority of SMEs use the Internet mainly for communication and research, and e-commerce is

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Regional e-marketplaces for SMEs

not integrated with their business processes (Walczuch et al., 2000). Some of the major challenges faced by SMEs in adopting e-commerce stem from a lack of technological expertise and uncertainty about the benefits offered by e-commerce. This has moved government authorities at the state and regional levels in some countries to take a direct role in SME uptake of e-commerce by developing or sponsoring regional electronic marketplaces (REMs), especially for SMEs (SME-REMs), in the hope that they will spearhead the creation of e-business communities and contribute to regional economic development. Zimmerman (1998) defined REM as a regionally focused virtual marketplace that fulfils both commercial (supply, demand and pricing mechanisms) and communication functions, and is created in an attempt to accelerate diffusion and acceptance of modern telematic services and applications among participants in a region. The Zimmerman model (1998) is an Internet regional community portal catering for C2C, G2C, B2G, B2C and B2B relationships, with a shopping mall being the trading hub of the REM. Few REMs follow the Zimmerman model and most focus only on commerce and the business community, although some call themselves REMs within a wider regional portal or gateway. While some REMs can span cross-national boundaries like the Electronic Mall Bodensee (Zimmerman, 1998), most are either at the country level or cover a region within a specific country or state. In this paper, we focus on the latter category of REMs, which are used to encourage participation of SMEs in the local economy by providing them with a low-cost, low-technology-compliance introduction to e-marketplace participation. Western Australian examples of government-sponsored SME-REMs are the Albany GateWAy Online Shopping Mall (http://www.albanygateway.com.au/ ECommerce/Shopping.asp) and the South West Internet Marketplace (http://www.mysouthwest.com.au/). While it is conceivable that government-sponsored REMs can be one of the ways to motivate SME participation in e-marketplaces, the abandonment of some REMs and the failure to meet objectives by others indicates the need for theoretical guidance (Gengatharen et al., 2004). To date, little is available in either the business or academic literature on the issues relating to the development, management and success of these types of REMs and the extent to which they are meeting their objectives. In the absence of a comprehensive or definitive theoretical framework, researchers and practitioners in this area depend on picking and choosing relevant constructs of existing best practices, theories and models from related areas to study the success and failure of SME-REMs. We are of the view that in using SME-REMs as a tool to bridge the digital divide, a broader-based theoretical framework is necessary to examine as many factors affecting success or failure as possible, in line with the ‘conceptualisation of local or regional e-commerce as a form of commerce that is embedded in the social, political, cultural, technical and economic structures’ (Steinfield & Klein, 1999, p 49).

European Journal of Information Systems

Denise E. Gengatharen and Craig Standing

To create our framework, a review was first conducted of best practices, theoretical frameworks and models in the area of e-marketplaces. The review indicated that while there are existing frameworks for the successful deployment of e-marketplaces, they do not consider the not-for-profit and regional economic and community development motives underpinning SME-REMs. Given that SMEs are normally further along the innovation adoption curve compared to their larger counterparts, it is also pertinent to examine if there are SME contextspecific factors that could affect deployment of SMEREMs. A review of the literature on IT/IS/e-commerce adoption by SMEs was then conducted. From these studies, constructs relevant to the deployment of SMEREMs were selected and duplicates eliminated. These were combined with the constructs from the literature on e-marketplaces to form an integrated framework of factors affecting the success or failure of governmentsupported SME-REMs. The value of the framework was then assessed using content analysis of published cases on SME-REMs and two in-depth case studies conducted by the authors of government-supported SME-REMs in Western Australia. Results indicate that the final framework provides a comprehensive and integrated catalogue of constructs with which to study the success or failure of government-supported SME-REMs, and identifies the determinants of success and failure. The contribution to regional authorities considering SME-REMs is a synthesis of the factors that need to be considered when implementing REMs as an economic development tool.

Theoretical perspectives on E-marketplaces E-marketplaces can be classified according to the exchange mechanism used (Timmers, 1998), their focus (Grieger, 2003) or their ownership structure (third-party neutral e-marketplaces, consortia e-marketplaces and private exchanges, etc.). In the last few years, the profusion of e-marketplace models with various ownership structures and the resulting shake-up and contraction (Sawhney, 2002; Day et al., 2003) has left potential adopters with a confused picture of e-marketplace participation. The potential benefits of e-marketplaces include reduced costs typically in procurement, communication, inventory holding and search activities (Bakos, 1991; Benjamin & Wigand, 1995). E-marketplace participation can also result in improved customer service, better quality goods and services through transparency, valueadded information and new levels of innovation arising from network externalities and knowledge sharing (Raisch, 2001; Braun, 2002; Brunn et al., 2002; Le, 2002), and the income generated from participation, transaction and advertising fees for neutral owners. While there are business reports on the benefits actually reaped from e-marketplaces (see, for example, www. emarketservices.com), empirical evidence of the benefits of e-marketplaces and the measurement of e-marketplace participation is sparse in the academic literature.


The critical success factors for e-marketplaces identified in both the business and academic literature are critical mass or liquidity (Brunn et al., 2002; Raisch, 2001); strategic partnering in B2B marketplaces (Lenz et al., 2002); identification and recruitment of experts or key players who will motivate others to join (Grewal et al., 2001); provision of value-added services; provision of revenue streams; and governance, trust and privacy. Dai & Kauffman (2002) also view buyer–seller relationships, matching and providing expertise as important issues to be considered in e-marketplace development. Several perspectives have been identified in the literature in assessing the theoretical foundations of e-marketplaces. A relational or network perspective views an e-marketplace as a mechanism to foster inter-organisational relationships (Koch, 2002), which can be developed into more sophisticated communities of practice (Braun, 2002). Le (2002) examined e-marketplaces from a value proposition perspective. Brunn et al. (2002) attempted to provide a holistic framework of e-marketplace success. However, their model, which was tested on a single e-marketplace, does not consider the effect of financing on e-marketplace success and considers an e-marketplace a success only if it is profitable. Raisch (2001) describes e-marketplace activity as evolutionary, evolving in phases from early matchmaking models to inter-connected value trust networks, alluding to a stages of growth theoretical basis. Kurnia & Johnston’s (2000) model to study EDI adoption in the Australian grocery industry uses the constructs of external factors (e.g. demand, competition), the nature of the technology (e.g. relative advantage, compatibility), capability of the organisation (top management commitment, IT infrastructure) and the supply chain or industry structures (relationships in terms of power, economics, etc.). However, their model only looks at a vertical e-marketplace. Grewal et al’s (2001) motivation–ability framework to examine organisational participation in B2B e-marketplaces uses constructs from institutional theory (legitimacy as a motivation) and resource-based theory (ability or competences). However, they do not consider other effects like the motivation and competences of the market maker or financial aspects of e-marketplaces. Kambil & van Heck (1998) developed a processstakeholder analysis framework of trade processes (search, valuation, logistics, payments and settlements, authentication) and trade context processes (product representation, legitimation, influence and dispute resolution) that was used to evaluate the successes and failures of e-markets in the Dutch flower auction marketplace. In examining e-markets in China, Khalifa et al. (2003) extended the Kambil & van Heck (1998) model to include a socio-political context (government support and environmental factors like the political and cultural scenario, infrastructural adequacy, technical sophistication of e-market providers) and strategic processes (financial backing, support services like training and consultancy,


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alliances) in a framework for the successful deployment of e-markets. In SME-REMs that are used to promote SME uptake of e-commerce and regional economic development, there is a need to identify specific needs and characteristics of SMEs that may impact on their uptake of e-marketplace trading. We thus examine the current literature on SME adoption of IT, e-commerce and e-marketplace trading to determine relevant theories and constructs that can be used.

Theoretical frameworks to examine IT/IS, e-commerce and e-marketplace adoption by SMEs Research on adoption of IT/IS and e-commerce use the popular theories and models of IT adoption like the diffusion-of-innovation theory, resource-based theory, the technology acceptance model, the theory of planned behaviour and stage theory. Given the inter-organisational aspect of SME-REMs, SME participation in emarketplaces should also be examined through the lens of institutional theory and inter-organisational relationships. Table 1 summarises these theories in terms of their key constructs and identifies SME studies that use them. Table 1 shows that not only do the different theories on IT/IS/e-commerce adoption have areas of overlap, in the SME context most studies are not based entirely on any one framework. The regional, community and economic development motives underlying the creation of government-supported SME-REMs introduce additional significant constructs (like the not-for-profit motive of the market maker, ownership structure of the SME-REM and community involvement, the regional profile), which cannot be explained or satisfactorily dealt with by existing theoretical frameworks or adoption models individually. It is therefore proposed that an integrated theoretical framework, which can be used in evaluating the factors affecting the success or failure of governmentsupported SME-REMs, can be created from a synthesis of relevant constructs of existing theories and best practices in e-marketplaces and IT/IS/e-commerce adoption by SMEs. The next section deals with this integrated framework.

An integrated theoretical framework of factors affecting the success or failure of SME-REMs In Figure 1 and Table 2, factors affecting the success or failure of SME-REMs have been synthesised from the literature on e-marketplaces and IT/IS/e-commerce adoption by SMEs. These factors are sorted into four broad categories, viz. market-makers’, e-marketplace, participants’ and environmental characteristics, with an indication of their theoretical basis and the implications of each factor. The categorisation of factors is based on innovation diffusion models like the Tornatzky & Fleischer (1990) and Rogers’ (1995) models and is adapted to include the effect of market-makers’ characteristics on successful deployment of government-supported SMEREMs.


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Theoretical frameworks used to examine IT/IS/e-commerce adoption by SMEs Core constructs

Sources

Diffusion of innovation theory (DOI). DOI throughout organisation and adoption by single users

Five broad factors affect adoption: Innovation factors – (relative advantage, compatibility, complexity or ease of use, trialability, observability and communicability), Individual, Task, Environmental and organisational factors

Rogers (1995) and Tornatzky & Fleischer (1990) SME studies using hybrid DOI models – Iacovou et al. (1995), Cragg & King (1993), Thong & Yap (1995) and Scupola (2003)

Resource-based theory (RBT)

Exploitation of core competences to gain competitive advantage Core IT/IS capabilities (Feeny & Willcocks, 1998) among others: IS/IT governance, business systems thinking, relationship building, making technology work, informed buying and vendor development. Other resources, for example, financial

Feeny & Willcocks (1998), Mata et al. (1995), Grewal et al. (2001) and Braun (2002) SME IT adoption and RBT:

Stage theory (based on stages of growth theory to describe the process by which IS/IT evolves in an organisation)

Adoption of IT progresses in stages. Stages have distinct benchmark variables. DTI e-commerce adoption stages: messaging, on-line marketing, on-line ordering, on-line payment, order progress/on-line sales support, e-business

SME-e-commerce stage adoption: DTI (2001), Daniel et al. (2002), Poon & Swatman (1997), Prananto et al. (2003) and Rao et al. (2003)

Theory of planned behaviour (TPB). Intention/behavioural model – general theory of behavioural decision-making

An ‘active deliberate decision process within constraints of social expectations and limited resources’ Harrison et al. (1997). Perceived behavioural intention is a function of attitude, subjective norm and perception that one has the ability and resources to perform the behaviour. Moderators: firm size, perceptions of internal and external constraints

SME IT adoption and TPB: Harrison et al. (1997)

Technology acceptance model (TAM)

The intention to use a new IT is determined by two beliefs, perceived usefulness of IT and perceived ease of use Includes social norms, which are likely to have a greater effect on perception and behaviour when a user does not have firsthand experience of an IT Four core determinants of intention and usage: (a) performance expectancy, (b) effort expectancy, (c) social influence, (d) facilitating conditions. Four moderators: gender (moderator to a–c), age (moderator to all four determinants), Experience (moderator to b–d), voluntariness of use (moderator to social influence)

Davis et al. (1989)

TAM2

Unified Theory of Acceptance and Use of Technology (UTAUT) – integrates determinants from TRA, TAM, TPB, combined TPB/TAM, DOI, model of PC utilisation, motivational model and social cognitive theory

Caldeira & Ward (2003), Chau (2001), Commission of the European Communities (2003), EBPG (2002), Iacovou et al. (1995) and Thong & Yap (1995) Van Akkeren & Cavaye (1999) and Thong (2001)

Venkatesh & Davis (2000) SMEs and IT adoption using TAM: Igabria et al. (1997) Venkatesh et al. (2003) These theories are included because the size of SMEs means that in many cases, the decision to adopt IT/IS/ e-commerce is dependent on an individual’s (CEO, owner) attitude and experience


Theory



Table 1

Table 1 Continued Sources

Institutional theory

Firms face coercive, normative and mimetic pressure to adopt IT Set of six determinants of the formation of IORs: Necessity, asymmetry, reciprocity, efficiency, stability and legitimacy

Teo et al. (2003)

1. A study of the impact of external context (local and regional governance intervention)

Evans (2002) – no fundamental change in relative economic status of the region. In some industries, potential to develop e-commerce services dependent on higher order skills (competences in RBT) Poon & Swatman (1997) – key drivers of Internet use: perceived benefits (relative advantage in DOI theory) and management involvement (organisational context of DOI theory or managerial IT skills in RBT) Chau (2001) – factors classified under DOI theory constructs. Suggests the most significant inhibitors are related to constructs of RBT Riemenschneider et al. (2003). Main determinant – improved social contact with customers (relative advantage under DOI theory) Stockdale & Standing (2004). Barriers to SME participation in e-marketplace trading: lack of support from market-makers who may not understand the specific needs of SMEs; lack of standards; lack of SME-understanding about the Internet and e-marketplace trading; SMEs lack of understanding of perceived immediate benefits from e-marketplace trading (perceived relative advantage in DOI); an industry environment that does not support innovation (institutional theory); financial constraints (RBT) and the difficulties associated with trading in an online global environment (competences in RBT)

Inter-organisational relationships (IOR)

Partial, hybrid and integrated models of IT/IS/ e-commerce adoption used to examine adoption by SMEs

2. A four-stage model of SME Internet use during different stages of business relationship development

3. A study of inhibitors to EDI adoption by SMEs

4. Integrated TPB/TAM model to examine IT adoption decisions of small business executives regarding having a web presence 5. A study on a SME perspective to the benefits and barriers of e-marketplace trading

Oliver (1990). Some studies show that the main factors affecting SME adoption of e-commerce are customer demand and competition. According to Steinfield & Whitten (1999), community culture, the nature of the local economy and the extent to which a community is geographically isolated can affect uptake of e-commerce at a local or regional level

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Core constructs


Theory

422


E-marketplace characteristics (Technology Context)


Market Makers’ characteristics

Successful Adoption & Implementation of SME-REMs

Participants’ characteristics (Organisational Context)

Figure 1

Environmental Factors (External or Environmental context)

Factors affecting success or failure of government-supported SME-REMs.

Methodology The framework was then used in a qualitative content analysis of published case studies of SME-REMs and as a theoretical framework in two in-depth case studies of government-supported SME-REMs (TwinTowns and RegWa, pseudonyms) conducted by the authors in Western Australia. Content analysis is a systematic examination of a particular body of material (in this instance, the published case studies) to identify patterns or themes. It can be quantitative where counting and ranking of specific manifest content is conducted, or qualitative, which seeks to categorise latent content. In this case, the approach differs form a normal literature review in the sense that the published case studies are used as data to uncover predetermined themes or constructs. The choice of published case studies for the content analysis was subject to availability in the academic literature of in-depth information on SMEREMs. Data from TwinTowns (who partially funded the research) was collected from a variety of sources, viz. the REM website, historical documents, minutes of meetings, internal memos, e-mail communications, meetings with REM staff and via observation by attendance at board meetings. The data from RegWa was collected via the REM and portal website, published documents and anecdotal evidence. The integrated framework of factors affecting success or failure of government-supported SME-REMs was used to design a case protocol for the next stage of data gathering from TwinTowns and RegWa.net, which involved semi-structured interviews of 1 to 112h duration with 13 REM owner representatives and 15 SMEs between February and November of 2004. The interviews were audiotaped, transcribed and transcripts were confirmed by participants. Field notes and transcripts were made within 24 h of each interview. All project and case data were maintained in a database, were coded according to the constructs in the integrated framework and a second researcher checked the coding. A summary of the case studies can be seen in Table 3.


The following cases are published case studies of SMEREMs used in the content analysis: Case 3: Lonxanet (Dans & Freire, 2002) is an emarketplace set up to address issues of fragmentation, inefficiencies, income inequalities, and economic and biological sustainability in the Galacian artisanal fisheries industry in Spain. It was established in July 2001 and its shareholders and founding members include academics in anthropology and biology with close links to the industry, an academic involved in e-marketplace research, a management executive formerly from the logistics area, a logistics company and a technology partner. Four fishers’ guilds were non-financial stakeholders, contributing the use of infrastructure and personnel at ports to the Lonxanet. The REM mechanism is an ‘anticipated auction’ or an ‘electronic implementation of a sealed envelope, first-price auction with multiple items’, where buyers submit their orders via the Internet (or a call centre) before fishermen leave the ports and on their return bidders are allotted the lots according to the previously established orders. The Lonxanet began commercial activities in December 2001. As at 2002, the amount invested in the Lonxanet was h510,000. Case 4: The Regional Electronic Trade Facilitation Centre (RETFC) in Victoria, Australia (Wilkins et al., 2003) is a vertical e-marketplace within the agricultural export sector. It was designed to provide low-cost and efficient electronic trading facilities by reducing the cost and complexity of compliance with export/import requirements, thus encouraging the smaller players in the region to participate. The RETFC is expected to ‘improve supply management in the region and assist in export marketing by presenting clustered products and services to a broader buyer market’ (Wilkins et al., 2003). All players had access to common interfaces, infrastructure and investment, and the project was initially funded by the state government. Case 5: The fifth case deals with VicPortal (a pseudonym), a horizontal B2B portal for SMEs in Victoria, Australia (Fisher & Craig, 2004), which was state-government-

Table 2

Integrated theoretical framework of factors affecting success or failure of government-supported SME-REMs Factors/constructs

Implications and effect on SME-REM implementation

Market-maker’s characteristics (constructs in this category are based on emarketplace literature and resource-based theory (RBT))

Ownership structure and Governance

Single vs multiple stakeholders. Latter has potential for collaboration and larger funding and also for conflict. Community or user input to ensure a sense of ‘ownership’ Motive affects market mechanism and services offered, benefits and success and the time taken to achieve it Has implications for issues like proper needs analysis, level of funding, ongoing support, which can directly affect success Research shows large investments needed

Motivation/focus Competences (IS/project management skills) Financial resources

E-marketplace characteristics (nature of technology or innovation characteristics. Constructs are based on e-marketplace literature, diffusion of innovation theory, RBT, technology acceptance model (TAM), unified theory of acceptance and use of technology and stage theory)

Perceived benefits, relative advantage and usefulness Critical mass/liquidity Value-added services/Strategic partnering (e.g. logistics, financial) REM training and technical support Compatibility (with users’ systems)

A system perceived to be difficult will have negative effect on participation Creates awareness of REM within/outside region

Top management commitment/ innovativeness Internal IT/IS/e-business (readiness) Size of firm Financial resources/Return on investment

Direct effect on decision to participate in REM. May need to target SMEs with strong owner-innovativeness Greater proportion of e-ready SMEs can lead to quicker liquidity May need to target larger SMEs first Need for clear idea of returns. May need demonstration or one-on-one consulting

Environmental factors (constructs of Institutional theory, inter-organisational relationships and RBT)

Regional SME profile Local consumer needs and behaviour Regional profile

Determines exchange mechanism and type of benefits. Geographical location of a region (e.g. are competitors to local SMEs within relatively easy reach of buyers?). Are there strong off-line relationships in the region or strong community ties? Depending on e-readiness of SMEs, there may be a need to provide one-on-one low cost consultancy on e-business process re-engineering to ensure liquidity and success of the REM Tax breaks for participation/e-business training and consultation could positively affect uptake Can positively affect participation via bandwagon effect. Can have a negative effect if market is created purely for legitimacy reasons and other factors are not given proper consideration

Government support and incentives Normative, coercive and mimetic pressure/ existing trading relationships

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Participant’s (owner/manager firm) Characteristics (constructs of RBT and TAM)


Trust REM development and timing of features offered Perceived ease of use Good marketing plan

Need to convince participants of benefits to facilitate adoption. May require one-on-one consultation Critical factor. Low entry fees alone not sufficient to guarantee success Value-added services provide convenience and/or trusted services and knowledge networks, which can enhance attractiveness of participation and therefore success Can be critical if technology is complicated or if SMEs do not use the Internet Promotes participation in SME-REM by improving efficiency and lowering costs for participants Critical factor. Trust in owners and in the technology Need to match sophistication/e-readiness of SMEs to ensure liquidity


Category

Cases of SME-REMs in Western Australia

Year initiative first conceived and by whom

1999. Mooted by the business enterprise centre of one of the towns, supported by some people in the two Local governments and a local university

1999. Committee of a few people in the chamber of commerce of the largest town in the region, resident website developers and ISPs, a couple of the larger businesses in the region, interested community members

Ownership structure

Not for profit organisation comprising Local governments of two neighbouring towns, their business associations and a university in the region

The Chamber of Commerce of the largest town. Managed by the above-mentioned committee. In June 2003, it was purchased by the Development Commission of the Region and a not-for-profit organisation was formed to own it

Location to be served by the REM and demographics

Two neighbouring towns in metropolitan Western Australia covering 900 km2, having about 220,000 residents and 7,000 small businesses. Major industries include manufacturing, agriculture, retail trade, services and tourism

A regional area of Western Australia (about 2 h drive from the metropolitan area) covering 24,000 km2, having a population of 123,000 and 10,500 small businesses. Major industries include manufacturing, mining, agriculture, tourism, retail trade and services

Funding/year/source

Au$ 20,000 (2000) (State government) Au$ 90,660 (2001) (Federal government) Au$ 108,000 (2001) (Local governments of the two towns and University) Au$ 92,000 (2002) (State government – for training SMEs on REM use) Au$50,000 (2003) (Local governments of the two towns) *Request for further Federal and State government funding was declined in 2002

Au$6,000 (pre-2000) (regional development corporation) Au$3,000 (pre-2000) (State government) Au$90,000 (2001) (Federal government) Au$126,000 (2001) (State government) Au$2,200,000 (2003) (State government, however, only a portion of this will be directly for the portal; REM upgrade contract awarded for about Au$200,00; other use will be for training, etc.)

Technical development

Portal and REM technical development outsourced at a cost of Au$70,000

The portal and REM developer was a local IT company who hosted RegWa without any charge. Exact amount paid for the initial development of the portal not available. Development of REM about Au$30,000

Date portal/REM launched

December 2002 portal and REM launched simultaneously

Regional portal and business directory launched March 2000 REM launched November 2002 Technical upgrade in November 2004 – new platform and REM offerings (shopping cart facilities)

Portal/REM features

Internet-based community portal. Horizontal REM with business directory. Request-for-quote (RFQ) mechanism. Quotes can only be received by registered users. Notification of quote by e-mail, fax or SMS, but user has to log onto system to retrieve quote and reply Community groups can have information listed for free Businesses listed for free but pay Au$199 for RFQ-enabled REM link and an additional Au$99 for a flyer page. Live links to user’s websites if registered REM member

Internet-based community portal. Horizontal REM with business directory. Request-for-quote (RFQ) mechanism. Quotes can only be received by registered users. Notification and RFQ sent by e-mail, fax or SMS. User does not have to log onto the system to retrieve the quote. Community groups can have information listed for free Businesses listed for free but pay Au$22 for an e-mail link Au$66 for e-mail and web link


(Case 2) RegWa


(Case 1) TwinTowns

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Table 3

Continues to operate

1790 of which 419 had full e-mail, web and REM links

The owners of the portal offer free IT and e-business training/ consultancy for SMEs; free Internet training for seniors in the community; assist people to get ADSL connections

Ceased operations late 2004 Current status

157 Number of paying clients (early 2004)

Nil

Corporate sponsorship (advertising fee) of site is available


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funded to the extent of Au$247,000 but eventually closed 2 years after being launched. It was a business-to-business portal potentially accessible to the 18,000 small- to medium-sized enterprises in the region comprising six local councils. The case study indicated that, among others, the critical issues to be considered for successfully deploying B2B portals for SMEs were as follows: technological readiness of business owners, the need to understand the nature of the businesses, ensuring that the value of the portal is clearly articulated, ensuring that the technology works as envisaged at the launch and having strategies for effective communication between those building and those participating in the portal, identified. The following section comprises the results of a content analysis of the published case studies, which attempts to determine the extent to which the factors in Table 2 have been addressed or discussed and the authors’ perceptions of their impact on the successful implementation of the SME-REM concerned. This is compared to the empirical data of cases 1 and 2 to determine if the integrated framework is useful in research on success and failure of government-supported SME-REMs and as a tool to advise practitioners considering similar initiatives, of the factors that need to be considered in deployment of SME-REMs.

The analysis

Value-added services

(Case 2) RegWa

Table 3 Continued (Case 1) TwinTowns

Au$149 for e-mail, web and REM link (plus and additional Au$11 if they wish to be listed in more than one business category) Corporate sponsorship (advertising fee) of site is available


Table 4 shows that in all the case studies, factors classified under market-maker’s characteristics were thought to have a medium to high impact for successful deployment of the REM. In RegWa, Lonxanet and RETFC, the actual businesses trading in the region were either owners or were closely involved in the planning and development of the REMs. RegWa received additional government funding in 2003 because it was showing encouraging initial results. However, prior to that a lot of the effort put into the project was on a voluntary basis by ‘champions’ from the community: So I was getting paid for 15 hours but was doing 40 with the baby in the officeyput it this way, if I hadn’t done what I did, we wouldn’t be herey.It would have fallen because the portal was very much a volunteer-based thing & without that we wouldn’t be here (RegWa Portal Administrator).

Wilkins et al. (2003) found that governance procedures required to implement a REM are not well understood. Their study revealed that the greater the sensitivity of management working directly with users, the better the new service outcomes will be for the sponsors and their implementation. Fisher & Craig (2004) reported that one of the contentious issues raised by the participants of the failed VicPortal was their lack of communication and involvement with the portal sponsors. In TwinTowns, the wide ownership base enabled a bigger source of initial funding, but the alliances were unstable. There was evidence of distrust between the owners, and while the business associations were included to cater for the interests of the SMEs in the region, their membership


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Table 4


Case studies of SME-REMs and the significance of market-maker’s characteristics on success or failure

Market-maker’s characteristics Ownership structure and governance Motivation/focus Competences (IT/IS) Financial resources

TwinTowns

RegWa

Lonxanet

RETFC

VicPortal

H H H H

H H M H

H H M M

H H M M

H M M M

H ¼ high impact; M ¼ medium impact.

represented o10% of businesses in the two towns. It was therefore felt that the initiative was a ‘top-down’ one and that the businesses were not sufficiently consulted. This was evidenced by some of the interview responses from the SME participants of TwinTowns: yit did smell of local government. People knew they were dealing with the local government & it wasn’t a player in the commercial world and didn’t have credibility. There’s always going to be this friction between the two towns and to mix the two of them together in a business association type of relationship is never going to work. I think if they did it again, if they tried to resurrect the REM, they would have to consult first and act last; not in a typical government fashion of acting first and then consulting.

Motivation or focus is also an important factor in SMEREMs, especially where funding is limited. According to Brunn et al. (2002, p 289), an e-marketplace without a clear focus ‘runs the risk of trying to sell everything to everybodyy[and is] ylikely to result in selling nothing to anybody’. Lonxanet and RETFC were more focused in that they were vertical REMs in specific industries and thus could provide demonstrable benefits for all stakeholders in the value chain. In TwinTowns and RegWa, there appears to have been a lack of focus, with the project expecting to impact on four distinct types of local relationships, B2B, B2C, B2G and C2C. However, while RegWa overcame this by introducing the features in stages, first building membership and creating awareness of the portal before introducing the REM exchange mechanism, TwinTowns tried to launch the community portal and REM together despite their limited resources and resulted in not being able to sell anything to anyone. IS and project management competences of the owner/ sponsor to manage REM development themselves or to manage the vendor selected is important. Feeny & Willcocks (1998), view IS governance and vendor development as core IS competences. This is evident in TwinTowns and VicPortal where lack of internal IT expertise and problems with the vendor led to a delay in the project. The promised functionality of the product was not available at the launch, having a negative effect on the trust of participants in the technology. With the RETFC, the software was developed by the technology partner without real cost to the recipients and was one of the keys to the success of the e-marketplace, as the local councils and growers could not have afforded it otherwise. In RegWa, the developer was a local ISP who was


involved in the planning of the project, hosted the portal for free and offered development services at a huge discount. The funding required to implement SME-REMs is an important issue. Regional development authorities should not be fooled into thinking that the ubiquitousness of the Internet means that a REM will be an inexpensive tool to increase SME uptake of e-commerce. Research points to SMEs being more cautious in adopting new technology (Craig, 2002). According to Evans (2002) preliminary evidence shows that despite intervention via local and regional governance, e-commerce had not yet fundamentally changed the relative economic status of the Greater Manchester and Merseyside regions of the United Kingdom. These and other studies indicate that socio-economic initiatives attempting to influence innovation adoption by SMEs are often long processes involving extensive resources and can be expected to have long payback periods. However, in the case of both TwinTowns and VicPortal, the platforms were expected to be self-sustainable within a relatively short period, without much consideration given to issues like building the competences of the participants or providing them with a competitive advantage, and a seemingly simplistic view of the resources required to get SME participation on a commercial basis. In RegWa, the additional funding of Au$2.2 million received in 2003 has enabled it to move on to its next stage of development, that of providing value-added services and a better technological platform: Something had to happen; something had to give, because we were not going forward. We had stagnatedy. If it was just the portal and REM itself, I feel it will be strugglingy. there were a lot of voluntary & hidden costsy. we are now able to provide value-added services like the one-on-one training, training money, assisting people to get ADSL connections with the broadband ADSL register, giving community groups free web sites, by providing community-type things like seniors training, IT coaching by the e-business advisor. If we didn’t have all those outside our core services, it wouldn’t be successful (RegWa Portal Administrator).

The successful implementation of e-marketplaces is also dependent on features and services offered. In Table 5, in all the case studies, the perceived benefits, relative advantage and usefulness (constructs of diffusionof-innovation theory and the technology acceptance model) of the REM have been extensively discussed as having a significant impact on successful implementation


Table 5

427


Case studies of SME-REMs and the significance of e-marketplace characteristics on success or failure

E-marketplace characteristics Perceived benefits, relative advantage and usefulness Critical mass/liquidity Value-added services/strategic partnering Training in REM use and technical support Compatibility (with users’ systems) Trust Development of marketplace, timing of features Perceived ease of use Good marketing plan

TwinTowns

RegWa

Lonxanet

RETFC

VicPortal

H H M M L H H M H

H H M M L H H M H

H H M M L H H M H

H H M *** H H *** M ***

H H N *** *** H H M H

H ¼ high impact; M ¼ medium impact; L ¼ low impact; *** ¼ not discussed.

of the e-marketplace. Indeed, the absence of any perceived value of TwinTowns and VicPortal by businesses after the launch was one of the reasons critical mass could not be achieved, causing the ultimate demise of these REMs. In Lonxanet and RETFC, benefits were perceived to be available for all players in the supply chain. In RegWa, the benefits were experienced in stages, community or regional benefits first (like increasing e-commerce awareness and raising the profile of the region), followed by strategic benefits (legitimacy) and finally economic benefits (lower search, communication and advertising costs). Value-added services and strategic partnering were perceived to have a medium impact in four of the cases. In Lonxanet and RETFC, strategic partners were part of the supply chain (a logistics provider in the former and the Australian Quarantine Inspection Services in the latter). In RegWa, the REM enhanced its value by taking on the role of representing the regional businesses in talks with ISPs for better access to broadband as well as discussing with the postal authorities the possibility of aggregating expenditure to reduce distribution costs for everyone involved in the portal. The owners of RegWa also saw the free e-commerce consultancy and Internet training provided to the community as part of the valueadded services that helped sustain interest and participation in the REM. We are of the opinion that the regional economic and community development motives underlying government-supported SME-REMs should be strongly tied to the building of e-commerce competences in SMEs. Therefore, the presence of the REM alone will not guarantee the uptake of e-commerce in the region by this sector. Other accompanying efforts are needed to build e-commerce competences in SMEs, like subsidized or free one-on-one consultancy and training. In RegWa and TwinTowns, SME participants interviewed were asked for their views on value-added services and if these would be attractive to them. Most of the interviewees in TwinTowns were sceptical about the value of such services; however, their views could have been clouded by their negative experiences with the REM at that time. In RegWa, the SME participants thought the free IT advice was a good value-added service, provided it did not

compete with other regional IT consultancy businesses in the region. Some of the interviewees felt that value-added services would be more relevant or easier to provide if specific industry clusters were targeted. Others felt that they would be useful at a later stage and some thought feedback from the data mined on the REM would be useful to identify traffic patterns on the portal and REM for marketing purposes. Training on REM use in TwinTowns, RegWa and VicPortal was not a major issue with SME participants. The majority of SMEs interviewed in TwinTowns and RegWa were satisfied with the level of training provided given the simplicity of the system. However, technical support provided by the REM was an issue of some importance. The SMEs interviewed in RegWa were happy with the level of technical support provided. In TwinTowns, while the majority of participants interviewed had no complaints about technical support, they had not actually used the REM or portal for some time. Of those who had used it, the following were responses to the question of satisfaction with the technical support provided: ywhenever I went on to that site I got frustrated (I’ve got an email to them about that), to the point where I just thought forget it, just go to the local paper-based directory & it was quicker, because of the complications & a lot of them were technical complications and he was always ‘Oh yeah, we’re looking into it; we’re fixing that; fixing this (SME in the printing trade). ySupport was offered but again it’s the marketing officer who did thatyhere’s a phone number, if you need support you just call the number and that was it. I suppose the problem is that one person is trying to do all the things. Specifically, what should have been set up was some form of help desk that is equally business related, as it is technical. That doesn’t appear to be there. We can’t get tender results. Even if its just technical support and stats or tech issuesyThere’s some things that are absolutely fundamentally wrong (SME in IT business).

Compatibility of REM technology with the systems of the participants did not appear to have a significant impact on the successful deployment of TwinTowns and RegWa, as the technology was kept as simple as possible to attract any business in the region that had Internet access. In Lonxanet, a call centre was set up to connect


428


non-Internet-enabled players to the e-marketplace. In RETFC, one of the major perceived benefits of the REM was that it offered common standards of operations to all players. It would appear that compatibility or streamlining of technology among players can provide benefits, but that these are more important in vertical REMs. Trust is a significant factor in the success or failure of SME-REMs. In TwinTowns, there were trust issues on many levels. There was evidence of distrust between the owners, between the SME participants and the REM operators, and distrust of the REM technological platform by users, contributing to the ultimate demise of the REM. In RegWA, trust in the REM was achieved because community representatives ran it and there was satisfactory technical support. In Lonxanet, trust in the project was engendered by having experts in the management team and by including the major players (the fishing guilds) as shareholders (albeit non-financial ones) in the REM. In VicPortal, the researchers reported that trust in the portal sponsors was responsible for the initial support of the portal, but there was no effort to bring together the participants during the portal development to engender trust among them. In the case of the RETFC, the governance process and trust between stakeholders ensured that all parties had a sense of ownership of the e-marketplace and were therefore committed to its success. While the development of the e-marketplace (in terms of timing of the features offered) was considered to have a high impact in four of the cases, it was of greater importance in TwinTowns and RegWa given that they were horizontal REMs that were part of broader community portals and therefore had very broad focuses. The staged development in RegWa appears to have contributed to its better fortune compared to TwinTowns. Perceived ease of use had a medium influence on the success or failure of the SME-REMs. In the case of RETFC, one of the reasons for the success of the project was a system that was ‘so simple it is almost foolproof to operate’ (Wilkins et al., 2003). Interview responses from SMEs in RegWa also indicated that they found the technology easy to use. In TwinTowns, although the majority of interviewees found it easy to use, again these people had not used the system for some time. Those who had actually tried to use the system to retrieve quotes found that it was complicated and this was aggravated by technical problems with parts of the system and the slow response rate.

Table 6


A good marketing or awareness-building plan is also a significant factor in the successful implementation of SME-REMs. In TwinTowns and VicPortal, the lack of marketing efforts was one reason for the lack of success, while in the Lonxanet, online visits to the e-marketplace increased after heavy promotion. In RegWa, a significant amount of funding was spent on advertising and awareness building. Characteristics of participants can also affect the success or failure of SME-REMs (Table 6). Research has shown that SMEs with high owner-innovativeness and top management commitment to IS changes have a better chance of successfully adopting IS (Thong & Yap, 1995). In TwinTowns and RegWa, the interview participants were businesses already on the Internet, had their own internal systems and were ready to take a gamble on the new way of trading offered by the REMs. In most cases, it was the business owners’ decision to join the REMs. In VicPortal, the results of the study suggest that business participants who were technologically innovative were more likely to join the portal. The question of e-readiness of participants in the successful implementation of a government-sponsored SME-REM is a controversial one. Targeting e-ready players could mean early liquidity, but it could also mean that the REM has to demonstrate immediate benefits over and above that which participants can already obtain by their own online endeavours. In an SME-REM where the objective is increasing e-commerce uptake by regional SMEs (and especially in horizontal REMs), if early liquidity were to be achieved in this manner, the REM would require huge resources to offer varying levels of services to SMEs with different levels of e-readiness. This would mean examining the focus of the SME-REM and matching that focus to the resources available for the development, implementation and maintenance of the REM as well as for the building of e-commerce competences in SMEs. RegWa appears to have achieved this by a staged development. Previous studies of SME uptake of innovation point to firm size as a factor in successful adoption. Our study and that of the published case studies reveal that with SMEREMs, even small firms were willing to be participants as long as there were demonstrable benefits for them. All the SMEs interviewed in the Western Australian REMs had o20 employees and only a handful had revenues exceeding Au$1 million per annum. The profile of players targeted by the e-marketplace (whether they are predominantly B2C, B2B or both) will

Case studies of SME-REMs and the significance of participants’ characteristics on success or failure

Participants’ characteristics Top management commitment/owner-innovativeness Internal IT/IS/e-business competences (readiness) Size of firm

TwinTowns

RegWa

Lonxanet

RETFC

VicPortal

H M L

H M L

H L L

*** M L

H M L

H ¼ high impact; M ¼ medium impact; L ¼ low impact; *** ¼ not discussed.



Table 7

429


Case studies of SME-REMs and the significance of external factors on success or failure

External factors

TwinTowns

RegWa

Lonxanet

RETFC

VicPortal

H M H

H M H

H *** H

H M H

H M H

Participant and regional profile Government incentives Normative, coercive and mimetic pressure H ¼ high impact; M ¼ medium impact; *** ¼ not discussed.

mean that e-marketplace operators need to ensure that the e-marketplace not only provides the right solution for the majority of players but also is flexible enough to incorporate changes or additional functionality as and when the changing environment demands it (Table 7). In VicPortal, the authors reported that there was no indication that the portal sponsors fully understood the diversity of backgrounds, cultures and size of the businesses they were trying to attract and the impact this would have on acceptance of the portal (Fisher & Craig, 2004). In TwinTowns, the horizontal nature of the REM meant that the scope of the project was wide covering B2C, B2G and B2B business. A survey prior to the project showed that SMEs in the region were as good as or better than the national average in terms of buying and selling online. However, there did not appear to be any in-depth study of the trading relationships in the region to determine if these relationships could be migrated online given that suppliers on the REM were restricted to SMEs within the region only. There was also no evidence that the REM owners had given much thought to the B2C aspect in terms of online buying behaviour of the consumers in the region. The profile of the region (in terms of industries, culture and location) served by the REM can also be a significant factor in the successful implementation of SME-REMs. In comparing TwinTowns and RegWa (the two horizontal SME-REMs catering for both B2B and B2C business), we found that only RegWa had strong off-line community ties and was ‘physically isolated’ from the nearest competitors outside the region. TwinTowns served a region that was part of the metropolitan area where the nearest competitors outside the region were within close proximity and in some areas actually physically nearer to the buyers. The region served by TwinTowns also lacked a strong sense of community between businesses and citizens and the general perception was that the two towns were actually in competition with each other. External or environmental factors in the form of government intervention can also affect the implementation of a REM. Khalifa et al. (2003) who studied 8848.net, a leading e-marketplace in China serving state-owned enterprises, are of the opinion that government intervention may force these enterprises to adopt the e-marketplace for trading, causing a knock-on effect of participation by their smaller trading partners. In TwinTowns, many of the participants joined the REM because it was supposed to be one of the sources through which the governments of the two towns would procure.

In RegWa, the owners approached the local government agencies in the region to use the REM. However, in both cases most of the purchasers were locked in to contracts and quotes were not issued. The REM would therefore only be used for the occasional ‘discretionary-spend’ item. Although most purchasing officers of major buyers in the regions agreed in principle with the concept and supported the buy local idea, both TwinTowns and RegWa were too small to be used when requesting for quotes for their big contracts. Our research also indicates that when both TwinTowns and RegWa were at the conceptual stages, it was the chief executive officers of the big players who were approached about supporting the REM by trading on it, and not the purchasing officers. Finally, e-marketplace operators may need to consider the effect that coercive, normative and mimetic pressures can have on early liquidity. In RegWa one of the reasons participants quoted for joining the REM was that their competitors were participants. Some of the participants in TwinTowns, RegWa and VicPortal joined to show their support for the REM sponsors. In REMs like Lonxanet and RETFC, involving the participants themselves in the planning and development of the REM ensured that trading via the REM had become the norm within the industry in that region.

Discussion Many of the constructs synthesised in the framework developed in Table 2 have been discussed in the study of the five cases, albeit with varying degrees of significance in affecting the success or failure of SME-REMs. This gives support to the usefulness of the framework in SME-REM research. A further analysis of the cases reveals that some factors appear to be more significant than others (i.e. those with four or more ‘high’ ratings of significance on success or failure). These factors are as follows: the ownership structure and focus/motivation of the marketmakers; the perceived benefits, relative advantage and usefulness of the REM; trust in the sponsors and the technology; critical mass or liquidity, the development process and timing of features offered on the REM, SMEowner innovativeness, the profile of the SMEs and the region; and institutional factors like mimetic and normative pressures and a good marketing plan. The analysis also reveals that within the framework, there is some overlap of factors (e.g. the varying levels of trust) and that there are relationships between the factors themselves, depending of the context of the REM. For example, in RegWa critical mass on the community


430


portal was achieved because of the trust in the portal sponsors/managers, arising out of the ownership and governance. This was achieved because the profile of the SMEs and region meant that there were already strong off-line community and business ties (‘trust embeddedness’ according to Steinfield & Whitten (1999)) on which the REM capitalised to build support for the initiative. The community aspect was absent in TwinTowns. In the cases of the Lonxanet and RETFC, the community aspect was present in the vertical nature of the REMs (communities of practice), which determined the most suitable ownership structure, governance and REM structure that would provide benefits for all players in the value chain and lead to success of the REMs. What is clear from the analysis of the case studies is that although the cases involve different business and ownership models and may have had differing motives behind their creation, the implementation of the SMEREMs are dependent on the complex interplay between technical (or system) factors, social factors (e.g. alliances and relationships) and economic factors (e.g. including reduced costs and increased efficiencies). In trying to tease apart these factors and identify which are determinants, which are moderators, how they affect each other and ultimately the success or failure of governmentsupported SME-REMS, we arrive at the following refined model (Figure 2): In developing a REM for SMEs, authorities should first determine if the profile of the SMEs and the region are suitable for this type of initiative and can be leveraged to achieve success. SMEs with high owner-innovativeness need to be identified and their trust and support garnered. Market-makers need to identify strong off line relationships, which can be migrated to the REM. The profile of the SMEs and the region will also determine the effect of normative and mimetic pressure on participation, critical mass and eventually the success of the REM. In RegWa, the SMEs interviewed joined the REM to support the local initiative because of their ‘community spirit’ and ties with the chamber of commerce; some of them still remain participants despite lack of financial

Owner Innovativeness

Figure 2

benefits because that is what their competitors are doing. The profile of the SMEs and the region should thus determine the focus of the REM (will it be vertical, horizontal, part of a community portal?) and the motivation for its development (to raise e-commerce uptake by SMEs, to introduce cost effectiveness in strategic regional industries where SMEs are involved, to raise the general level of Internet use in the region?). The ownership structure and governance of the REM will depend on the SME and regional profiles and the focus of the REM. If the focus is on a specific industry within the region, then players in that industry need to be part of the REM development process to ensure their specific needs will be catered for. If the focus is wider (as in RegWa and TwinTowns), then the ownership structure and governance of the REM will need to reflect the involvement of diverse groups of stakeholders (the general community, the business community, regional development authorities) in order for the initiative to be widely accepted and supported. The motivation behind the REM creation and its focus will also determine the development process and the timing of the REM features and benefits offered. In vertical REMs (like RETFC), the adoption of common standards would be one of the first outcomes sought so that reduced communication costs and efficiency gains can be achieved early. In horizontal government-supported REMs (and especially those involving the general community as well), a staged approach to the development of the REM will mean that it progresses incrementally in tandem with the sophistication of the participants and is able to properly consider if conditions are suitable for the next phase or the next offering. For example, in RegWa had the portal and business directory not received the support of both the general and business communities, there may not have been good grounds for the introduction of the REM. In TwinTowns, the simultaneous introduction of the REM and portal strained resources, prevented building of critical mass and led to failure. The focus of the REM and the development process will also determine the perceived benefits that SMEs hope to

Perceived Benefits

Trust

SME Profile & Regional Profile


Motivation/ Focus

Staged REM Development

Ownership Structure/ Governance

Community Benefits

Critical Mass/ Liquidity

Good Marketing Plan

Significant factors affecting the success or failure of government-supported SME-REMs.


Strategic Benefits

Economic Benefits


gain from participation and this will have an effect on the building of critical mass and trust in the initiative. The growing of critical mass can be moderated by a good marketing or awareness-building plan. In vertical REMs, economic benefits are easy to perceive as common standards reduce costs and improve efficiencies. In government-supported REMs that are horizontal in nature, the wide focus and the community motivation behind REM creation mean that community benefits are the first to be perceived. In TwinTowns, although the initiative failed, one of the positive outcomes was that for the first time various parties in the region attempted to collaborate for the benefit of the community. In RegWA, the first few years of participation on the REM and portal were perceived to offer community benefits like a sense of belonging and a need to demonstrate support in building the image of the region. Once the community benefits have been realised, participants begin to look to the REM for perceived strategic benefits. The participants in RegWa who have currently not received any direct business from the REM claim to still be there because their competitors are and because the wide regional acceptance and use of the portal make it a good advertising channel. However, with time, RegWa participants are beginning to view REM participation in terms of how it is going to affect their bottom line (perceived economic benefits).

Limitations The integrated theoretical framework presented in Table 2 and the model of significant factors affecting the success or failure of SME-REMs, while representing a synthesis of constructs from current theories, models and best practices in related areas, do not answer the question of how success of a government-supported SME-REM can be measured. We deem it to be beyond the current scope of


431

this paper to derive a model for REM success measurement, although models like the Gengatharen-Standing REM Success Model (2004) may be useful. However, the integrated framework and model do provide starting points from which such cost–benefit evaluation tools can be devised as they highlight the factors that need to be considered for the successful implementation of such REMs.

Conclusion Having an integrated theoretical framework or model on which to assess the factors affecting the success or failure of government-supported SME-REMs allows practitioners and researchers in the field to have their own frame of reference from which to work. As the framework and model have been synthesised from theories and best practices in related areas as well as from insights from actual case studies of SME-REMs, they provide a good grounding for future research in this area. They form a basis upon which to study the success or failure of individual REMs and can be used to determine if indeed an SME-REM is a suitable tool to increase uptake of e-commerce by SMEs and promote regional economic development. The integrated theoretical framework and model of factors affecting the success or failure of governmentsupported SME-REMs argue that such an e-marketplace is a much broader concept than merely an inter-organisational information system. The system alone will not lead to increased uptake of e-commerce by SMEs and economic regional development without recognition of the market maker, participant and environmental factors needed to support it and make it a success. As such, SMEREM development and management need to be viewed through a multi-focal lens, which encompasses social, economic and technical or system perspectives.

About the authors Denise E. Gengatharen is a Doctoral candidate in the School of Management Information Systems at Edith Cowan University. She is currently researching the promotion of e-commerce among SMEs via government-sponsored regional Internet trading platforms. Craig Standing is Professor in Strategic Information Management in the School of Management Information Systems at Edith Cowan University. He has published

widely in Information Systems Journals and has presented at many international conferences. He has published two books in the information systems field. Craig is currently managing a number of funded research projects related to electronic marketplaces. He is Chief Editor of the Journal of Systems and Information Technology and has a number of other associations with information systems journals.

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