Adoption of internet in Malaysian SMEs

Journal of Small Business and Enterprise Development Adoption of internet in Malaysian SMEs Syed Shah Alam

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To cite this document: Syed Shah Alam, (2009),"Adoption of internet in Malaysian SMEs", Journal of Small Business and Enterprise Development, Vol. 16 Iss 2 pp. 240 - 255 Permanent link to this document: http://dx.doi.org/10.1108/14626000910956038 Downloaded on: 22 October 2015, At: 21:36 (PT) References: this document contains references to 70 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 3494 times since 2009*

Users who downloaded this article also downloaded: Khong Sin Tan, Siong Choy Chong, Binshan Lin, Uchenna Cyril Eze, (2009),"Internet-based ICT adoption: evidence from Malaysian SMEs", Industrial Management & Data Systems, Vol. 109 Iss 2 pp. 224-244 http://dx.doi.org/10.1108/02635570910930118 Morteza Ghobakhloo, Daniel Arias-Aranda, Jose Benitez-Amado, (2011),"Adoption of e-commerce applications in SMEs", Industrial Management & Data Systems, Vol. 111 Iss 8 pp. 1238-1269 http:// dx.doi.org/10.1108/02635571111170785 Khong Sin Tan, Siong Choy Chong, Binshan Lin, Uchenna Cyril Eze, (2010),"Internet-based ICT adoption among SMEs: Demographic versus benefits, barriers, and adoption intention", Journal of Enterprise Information Management, Vol. 23 Iss 1 pp. 27-55 http://dx.doi.org/10.1108/17410391011008897

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Adoption of internet in Malaysian SMEs Syed Shah Alam

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Faculty of Economics and Business, Universiti Kebansaan, Bangi Selangor, Malaysia Abstract

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Purpose – This paper aims to investigate empirically the decision of small to medium-sized enterprises (SMEs) to adopt the internet in their businesses. Design/methodology/approach – Using a survey of 465 sampled SMEs from Klan valley area in Malaysia, this study tests seven hypotheses about the factors that influence internet adoption. Findings – The findings show that manager’s characteristics, perceived benefits, organisational culture, technological competency and cost of adoption have significant relationships with internet adoption. The results of the study of highly educated managers of SMEs also revealed a non-significant relationship between language, growth of web and internet adoption. Originality/value – The study provides more understanding of managers’ perceptions about internet adoption in their businesses. Those interested in promoting the web may find these results helpful in guiding their efforts. Keywords Internet, Small to medium-sized enterprises, Malaysia Paper type Research paper

Journal of Small Business and Enterprise Development Vol. 16 No. 2, 2009 pp. 240-255 q Emerald Group Publishing Limited 1462-6004 DOI 10.1108/14626000910956038

Introduction The increased use of technology has brought about numerous changes in the business world. According to Scull et al. (1999) the internet is increasingly recognised for the vast array of information, services, meeting places, and communities-of-interest that it offers. Although studies on internet adoption by businesses have proliferated in the last few years, this kind of research has, however, been limited in some developing countries like Malaysia. Small and medium-sized enterprises (SMEs) (Small and Medium Industries Development Corporation (SMIDEC)) are playing a significant role in the country’s economic development, particularly in the manufacturing sectors (Ramayah and Koay, 2002). As of December 2005, a total of 600,000 SMEs were registered in Malaysia (SME bank), of which their contribution to the manufacturing sector was 29.3 per cent of total output or RM75.2 billion to gross domestic product (GDP). Adoption of the internet is considered to be a means to enable these businesses to compete on a global scale, with improved efficiency, and closer customer and supplier relationships (Chong et al., 2001). Malaysian businesses, SMEs have been relatively slow in web adoption. The Economist Intelligence Unit (2006) reported that although SMEs in Malaysia can apply for soft loan through SMIDEC to use information and communications technology (ICT) to improve competitiveness, efficiency and productivity, but only about 20 percent of Malaysia’s manufacturers have an online presence and use information technology (IT) extensively in their daily operations. This reflects a poor rate of IT adoption among the estimated 600,000 local SMEs. Most SMEs perceived the barriers

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of implementing IT into their business operations as: expensive initiative; risk; complex procedure; technical expatriate; and customer services (Yeung et al., 2003; Chong et al., 2001; Pires and Aisbett, 2001). According to Soh et al. (1997), if SMEs in Malaysia implement the internet in their company, potential commercial functions can be performed, which include: marketing themselves both locally and globally; gathering business information and consumer’s feedback; providing customer support; and conducting electronic transactions. On the other hand, if internet implementation is successful, it will have severe repercussions on small businesses with their limited resources (Chong et al., 2001). Malaysia has been recognised as having a high potential and prospect for EC implementation in South East Asia in the future and is expected to be a role model for developing countries in terms of ICT implementation and establishment within the next five years. According to the Economist Intelligence Unit (2006), Malaysia has been ranked 37 in the world ranking in terms of e-readiness accessibility. In spite of having better opportunities and encouragement in terms of technological, business and organisational resources as well as the government e-readiness towards its implementation, empirical research on internet adoption by SMEs has been very limited. Furthermore, because of the competitive and dynamic environment of businesses, there is a need to conduct a study on internet adoption among Malaysian SMEs. Therefore, this research tries to fill the gaps on internet adoption research by attempting to identify the factors which predict the rate of adoption of the internet in Malaysian SMEs. Objectives of the study This research study has two objectives: (1) To determine some aspects that influence internet adoption, i.e. language, manager characteristics, perceived benefits, growth of the world wide web (WWW), organisational culture, technical compatibility and cost of adoption. (2) To determine which, among language, manager characteristics, perceived benefits, growth of the WWW, organisational culture, technical compatibility and cost of adoption, is the most influential factor of the internet. Theoretical perspective According to Molla and Licker (2005) and Tan et al. (2007), the literature on technology adoption by businesses suggests that most researches are based on the following frameworks: . The Diffusion of Innovation (DOI) (Rogers, 1995; Zhu and Kraemer, 2005). . Technology Acceptance Model (TAM) (Davis, 1989). . The Technology-Organisation-Environment Model (TOE) (Kuan and Chau, 2001; Tornatzky and Fleischer, 1990; Zhu and Kraemer, 2005). . Institutional Theory (Chatterjee et al., 2002; Scott, 1995). . Resource-based Theory (Barney, 1991; Zhu and Kraemer, 2005). These models have differences in term of their focus and are designed to examine different aspects of business technology adoption. Some models examine only the

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external environment of firms (Gibbs et al., 2003; Hempel and Kwong, 2001; Kshetri and Dholakia, 2002), while some are focused on technological aspects (Claycomb et al., 2005; Tornatzky and Klein, 1982; Bajaj and Nidumolu, 1998; Igbaria et al., 1997). DOI (Rogers, 1995) and TAM (Davis, 1989) have been widely used in previous studies (Rogers, 1995; Tornatzky and Klein, 1982; Bajaj and Nidumolu, 1998; Igbaria et al., 1997; Davis et al., 1989; Riemenshneider et al., 2003). However, these models tend to ignore other important factors influencing technology adoption. SMEs do not adopt the internet because of the negative attitude of entrepreneurs on ICT. By assessing owner’s characteristics, we provide empirical evidence on how owner/manager characteristics have a significant effect on internet adoption in businesses. In studies of technology adoption in SMEs, researchers have emphasised the owners/managers of SMEs especially their characteristics, behaviours and attitudes (Damanpour, 1991; Fichman and Kemerer, 1997; Grover and Goslar, 1993). This is because such individuals usually directly and/or indirectly involved in all decision making in their organisation. According to Lakhanpal (1994), study reveals that individual characteristics i.e. innovators, leaders and other individuals in key positions have been found to have significant impacts on explaining differences in the degree of innovation adoption. As internet adoption is the preliminary process of ICT adoption for business purposes, the ICT and technology adoption literature would be a good place to start identifying factors that might affect the individual adopting the internet in SMEs. Van Akkeren and Cavaye (1999) summarise some factors that are identified as affecting IT adoption in SMEs. They can be classified into owner/manager characteristics such as perceived benefits, firm characteristics such organisational readiness and other factors. These factors are used to explain the adoption patterns of the internet by SMEs in Malaysia. Most SMEs do not adopt ICT if the benefits do not outweigh the costs of developing and maintaining the system (Vatanasakdakul et al., 2004). According to them SMEs are generally concerned about the costs of establishing and maintaining ICT since they generally suffer from budget constraints and are less sure of the expected returns on the investment. Indeed, SMEs, especially those that outsource web page design and updating, have found it difficult to contain site development costs that are more or less beyond the firm’s control (Ernst & Young, 2001) Indeed, this study is focused on the adoption and utilisation of the internet in developing countries. Therefore, it is replete with references to the adoption of IT in small business (Hazbo et al., 2006; Ratnasingham, 1997; Premkumar and Roberts, 1999; Thong and Yap, 1996). Hypotheses Seven hypotheses are developed based on the review of the literature on various studies done in other countries in the world. The model identifies seven factors as independent variables influencing internet adoption. Language concern Language is an important negative factor affecting the adoption and utilisation of the web in non-English-speaking countries (Bazar and Boalch, 1997). This is because

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English is a gateway of information and knowledge transfer in the digital age (Gloor, 2000). According to a survey by the online marketing research firm Global Reach, the dominance of English language on the internet continues. The IDC eWorld 2001 survey revealed that about 43 per cent of all web sites are multilingual, although English is still included for multilingual sites (38 per cent). English is a primary language used in many Western countries where new technologies originate (Vatanasakdakul et al., 2004). According to them it is the predominant language for the development of ICT and it is also the main language used on the web (Chieochan et al., 2002). A Nua Internet survey found that English still dominates as the language of the internet with 56 percent. However in Malaysia, the most commonly used language in the country is Malay instead of English. If it is possible to overcome the language barriers, the adoption and utilisation of the web will increase and hence benefit companies in Malaysia because the web contains more information compared with other media of communication such as radio and television: H1. There is a positive relationship between proficiency of English language and the adoption of the internet. Managers’ characteristics It can be summarised from the previous research that managers’ characteristics are important factors affecting the adoption and utilisation of the web. The manager is an entrepreneur figure who is crucial in determining the innovative attitude of a small business (Rizzoni, 1991). This is because managers determine the management style of the company. Managers’ characteristics, which include prior experiences, resistance to change, education level and training, are important factors that affect the adoption and utilisation of the web (Trocchia and Janda, 2000; Larsen and Wetherbe, 1999; Woodcock and Chen, 2000; Nutt, 1995; Folger and Sharlicki, 1999; Mick and Fournier, 1998; Kennickel and Kwast, 1997; Thong and Yap, 1996): H2. There is a positive relationship between manager characteristics and the adoption of the internet. Perceived benefits Companies may gained many perceived benefits in adoption and utilisation of the web provides lots of information on the web. A company will adopt a new innovation such as the web if there are more benefits than existing methods. Perceived benefits, which include reduced transaction costs, improved cash flow, increased productivity, better customer service, competitiveness, reaching new customers, better relationships with existing customers and improved operational efficiency, are the benefits that effect the adoption and utilisation of the web (Beatty et al., 2001). H3. There is significant relationship between the perceived benefits of the internet and adoption of the internet. Growth of the internet One of the fundamental factors affecting the potential for internet adoption by the SMEs is the number of people connected to the internet. The internet is growing rapidly and it means the information on the web have also increased rapidly. Since the launch of the internet service in 1994, the internet plays an ever-increasing role in the

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vast information market in many countries (Srikantaiah and Dong, 1997). The ease of the use and open standards of internet are the factors that affect the growth of the web. The web has greatly revolutionised the way business is conducted. Compared to the diffusion of other technologies, the internet is the fastest technology to be adopted. As of December 31, 2005, documented internet world usage, according to the Internet World Stats database is 1,018 million people are now using internet. This figure corresponds to a 15.7 per cent penetration rate. As a result, the web contains varied information and ideas that are able to help companies in daily business application and decision making:

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H4. There is significant relationship between growth of the internet and the adoption of the internet in the SMEs. Organisational culture Organisational cultures describes the fundamental assumptions people share about an organisation’s beliefs, values, norms, symbols, language, rituals, and myth that give meaning to organisational membership and are collectively accepted by a group as guides to expected behaviours (Cook and Hunsaker, 2001). Organisational culture is an important factor that affects the adoption and utilisation of the web (Cook and Hunsaker, 2001): H5. There is significant relationship between organisation culture and adoption of the internet. Technical compatibility Technical compatibility is also an essential factor that affects the adoption and utilisation of the web (Beatty et al., 2001; Rogers, 1995; Frambach, 1993; Bazar and Boalch, 1997). When the companies have adequate infrastructure for the adoption and it is compatible then the adoption and utilisation of the web is usually high because the companies are not require to invest large sum on the infrastructure (Bazar and Boalch, 1997). However lack of compatibility cause low adoption and utilisation (Beatty et al., 2001): H6. There is significant relationship between technical compatibility of and adoption of the internet. Cost of adopting the internet The cost of adoption is an important factor in the adoption and utilisation of the web (Ernst & Young, 2001). The cost factor can be divided into two types, which are the access fees of internet and the income of the company (Guadagni and Little, 1983; Gupta, 1988; Gattiker et al., 1996). The lower the cost of adoption, the higher the new innovation such as the web will be adopted by the company and vice versa. Besides that, company with high profit and income will be more likely to adopt new innovation compared with a low earning company: H7. There is significant relationship between costs of adoption and the adoption of the internet.

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Methods Participants and procedure A questionnaire survey was conducted in 2005. The sampling frame used was drawn from SMIDEC-listed members in Klang Valley region in Malaysia. The target groups were SMEs, considered based on the number of employees in the industry is most commonly used in management research (Ghobandian and Gallear, 1996; Haksever, 1996; Terziovski and Samson, 1999). The SMIs industries are classified as those industries with total workforce of less than 150 employees (SMIDEC, 2002). The population under study consists of 465 managers representing the private sectors small and medium industries (SMI) in Malaysia. Out of 465 questionnaires distributed, 368 were collected and returned to the researcher. This consequently provided an effective overall response rate of 79.13 per cent. SMEs were the focus of the study for two reasons. First, there is little research conducted in the area using these types of organisations. Second, on of the aims of the study sought to assess the adoption rate of internet in this sector. By the nature of the industrial structure of the Malaysia, the majority of the firms are SMEs (SMIDEC, 2002). A study concentrating solely on larger organisations may be well known and familiar with the term of the internet. On the other hand, concentrating on SMIs will not necessarily identify areas of “IT usage”. The database comprised private sector and manufacturing and service organisations. This was seen as an advantage as much of the work on IT usage has focused on Electrical and Electronics manufacturing sectors (example, Alam et al., 2004). Questionnaire was targeted at the individual having responsibility for making decisions in the company. The reasons choosing managers to the subjects for the study: managers are involved in decision leading to the adoption of technology in their business settings (Rogers, 1995), managers are responsible for most of the decision making in the firm such as finance, budget and plant maintenance. Managers also have the ability to recognise complex and dynamic issues and to resolve problems for the benefits of the organisation (Bateman and Snell, 1999). Justification of choosing Klang valley For this study Klang valley area in Malaysia was selected for data collection. Because Klang Valley is the main business centre in the country and it is on the advantageous edge in this study as it is equipped with modern facilities, such as fast internet connections and advanced telecommunications systems, compared to other states in Malaysia (Siwar and Kasim, 1997). Besides that, the study will face difficulties if it is made throughout Malaysia because there are shortages of local databases on business information, and we are required to have a large sample to reflect the study. Klang Valley area has great facilities for businesses, for example, advanced telecommunications system, modern business facilities, excellent roads systems and fast internet connections (Siwar and Kasim, 1997). As a result, Klang Valley is a real model business in Malaysia. Therefore, many large corporations try to maintain business presence in that area. Dependent and independent variables The dependent variable is the adoption and utilisation of the internet among SMEs in Klang Valley area in Malaysia. In this study, the adoption and utilisation of the web is

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defined as using the computer hardware and software to access the internet and use the internet to support operations, management and decision making in business (Davis and Olson, 1985). The main purpose is to identify the factors that lead to the adoption and utilisation of the internet. However, it is not possible to study or research on all the factors that cause the adoption and utilisation of the internet. As a result, selected factors that are more suitable to the adoption and utilisation of the web are chosen in the SMIs business context. These selected factors are language, manager characteristics, perceived benefit, growth of the internet, security, technical compatibility and cost considered as the independent variables for this study. Data analysis The data collected were coded and keyed into the computer before analysis was carried out using SPSS. Pearson correlation was then used to measure the magnitude or strength of relationship through the numerical value of 2 1 to þ 1. The conversion of measurement is as shown below: . r is 1.0 – magnitude is perfect; . r is 0.7-0.9 – magnitude is high; . r is 0.5-0.69 – magnitude is substantial; . r is 0.3-0.49 – magnitude is moderate; . r is 0.1-0.29 – magnitude is low; and . r is 0.01-0.09 – magnitude is negligible. To describe the population of the respondents, descriptive statistics were used. Frequency distribution and measurements were also utilised to show whether other selected statistical method fulfilled the basic assumptions in terms of the distribution and linearity between dependent and independent variables. Measurement of variables Dependent variable The purpose of this study is to investigate the factors that would likely to influence the level of WWW adoption. The adoption and utilisation of the web is defined as using the computer hardware and software to access the internet and use the web to support operations, management and decision making in business (Davis and Olson, 1985). Dependent variable for this study was measured and modified the scale developed based on the study by Kinyanjui and McCormick (2002). The respondents were asked to rate the statements on a five-point scale. One question therefore contains seven possible responses that address how frequently the respondents were used WWW to their business (1 ¼ never, 2 ¼ very rarely, 3 ¼ rarely, 4 ¼ occasionally, 5 ¼ frequently, 6 ¼ very frequently, 7 ¼ always). The study depended on an overall weight rating that was based on the responses received from the following statements: . Internet is used to get information about input market. . Internet is used to obtain information for product market. . Internet is used to obtain information about specific customers. . Internet is used to obtain information about specific suppliers.

.

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.

Internet is accept to orders from international business customers Internet is used to place orders with international suppliers.

Independent variables Some of the indicators were developed by the researcher, while some were adopted or modified from previous scholars. In cases where a previous measure is good, the researcher adopts or adapts the items and due credit was properly given. The questionnaire comprised three sections. The first section presented respondents with a list of 20 statements on innovation adoption tendency, language concern, manager characteristics, perceived benefits and security fears. Respondents were required to rate the agreement and disagreement on a Likert scale (1 ¼ disagree very strongly, 2 ¼ disagree strongly, 3 ¼ disagree, 4 ¼ neutral, 5 ¼ agree slightly, 6 ¼ agree strongly, 7 ¼ agree very strongly). The second segment of the questionnaire was made up of a list of five statements on technical compatibility. The respondents were asked to rate the statements on a seven-point scale. On question therefore contains five possible responses that address how they were agreeing with the statement. (1 ¼ disagree very strongly, 2 ¼ disagree strongly, 3 ¼ disagree, 4 ¼ neutral, 5 ¼ agree slightly, 6 ¼ agree strongly, 7 ¼ agree very strongly). The cost of web adoption is an important factor was developed on the basis of previous studies (Vatanasakdakul et al., 2004; Ernst & Young, 2001), measuring on a seven-point Likert scale was used in the empirical testing (1 ¼ disagree very strongly, 2 ¼ disagree strongly, 3 ¼ disagree, 4 ¼ neutral, 5 ¼ agree slightly, 6 ¼ agree strongly, 7 ¼ agree very strongly). Managers were asked to assess each statement in terms of their agreement. A list of four statements made up on growth of web in the final selection of the questionnaire. Managers were required to assess each statement in terms of their agreement to them in adoption of WWW. Rating was likewise carried out on a seven-point Likert scale (1 ¼ disagree very strongly, 2 ¼ disagree strongly, 3 ¼ disagree, 4 ¼ neutral, 5 ¼ agree slightly, 6 ¼ agree strongly, 7 ¼ agree very strongly). Validity The questionnaire was send to three academicians and three practitioners in the industry to test the validity of the questions in term of sentencing, phrasing and conception. After receiving the comments from the six experts, the amendments were made. Then, a pilot study was conducted with 20 SMEs to check for the relevancy and clarity of the questions before it could be sent out on a large scale to the targeted respondents. Reliability and validity of data The internal reliability of the items were verified by computing the Cronbach’s alpha and it suggested that a minimum alpha of 0.7 was sufficed for early stage of research (Nunally, 1978). The Cronbach alpha estimated for WWW adoption scale was 0.8495, language scale was 0.7139, managers’ characteristics scale was 0.7783, perceive benefits scale was 0.7123, growth of the web was 0.7312, organisation culture was 0.7829, technical compatibility scale was 0.8539, and cost of adoption scale was 0.7631.

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As the Cronbach alphas in this study were much higher than 0.7, the constructs were therefore deemed to have adequate reliability. Sample characteristics More than 70 per cent of the respondents for this study are operating in the manufacturing sectors (272 companies and 73.91 per cent) and 96 (26.09 per cent) are service oriented (see Table I). Of the sample firms only 152 SMEs (41.33 per cent) have internet access to their business. In terms of length of internet access, 253 SMEs (68.75 per cent) have been connected to internet for less than three years and the remaining 115 (31.25 per cent) have been connected to internet at least three years and more. In this study we tried to identify whether the language is one of the factor that influence WWW adoption or not? For this reason respondents education level was considered as one of the demographic variable. The survey results show that the majority of the respondents have at least a Bachelor degree (202 managers, 54.89 per cent). Followed by 119 managers (32.33 per cent) who have Master degrees and the rest with either a diploma or a STPM qualification. According to Abdulai, (2001) companies in Malaysia prefer to employ well-educated managers as they can acquire critical thinking skills. Results and discussion Normality of data and multicollinearity This study involves a relatively large sample (368 companies) and therefore, the Central Limit Theorem could be applied and hence there is no question on normality of the data. An adequate examination was conducted to ascertain whether the linearity assumptions are met in order to use correlation and regression. In investing the normality of the data, non-existence of multicollinearity is an important assumption to be examined. A tolerance test was carried out for each independent variable by selecting collinearity diagnostics in SPSS (Kleinbaum et al., 1988). None of the tolerances for each of the independent variables is, 0.01 or less than 0.01 (Table II). The results of collinearity test show that the data are not seriously multicollinear. Another method to test multicollinearity is estimating the variance inflation factor (VIF) for each independent variable. Kleinbaum et al. (1988) also suggest that, as a rule No.

Demographic variables

1.

Primary sectors Manufacturing Service Internet access Yes No Length of internet access Less than 3 years Above 3 years Education level of the manager/owner Below 150 employees Above 150 employees

2. 3. 4. Table I. Samples characteristics

No. of respondents

%

Cumulative %

272 96

73.91 26.09

73.91 100.0

152 216

41.33 58.77

41.33 100.0

104 48

68.42 31.58

68.42 100.0

123 71

63.4 36.6

63.4 100.0

of thumb, if the VIF of a variable exceeds ten, that variable is said to be highly collinear and will pose a problem to regression analysis. This condition is adopted to check for multicollinearity among independent variables. Table II shows the variables together with their respective VIF values. From the table, all of the VIF values are well below ten, ranging from 7.255 to 2.238. Therefore, there is really no problem of multicollinearity.

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249 Testing of hypotheses To test the hypotheses, correlation and multiple regression analysis was utilised. The strength of the proposed relationships is summarised in Tables III and IV. The results of testing H1 indicate that, there is no significant relationship between the proficiency of English language and the adoption of the web in SMEs in Klang Valley. Correlation analysis shows language having (r ¼ 0:274; p , 0:05) and multiple regression having (beta ¼ 0:031; p-value ¼ 0:268). This suggests that the proficiency of English language is not a barrier to the adoption and utilisation of the web. Since Variable Language Manager characteristics Perceive benefits Growth of the internet Organisation culture Technical competency Cost of adoption of the internet

Tolerance

VIF

0.138 0.216 0.318 0.442 0.441 0.447

7.255 4.626 3.148 2.265 2.267 2.238

Variables

Table II. Test of collinearity

Internet adoption (R)

Language Manager characteristics Perceive benefits Growth of the internet Organisation culture Technical competency Cost of adoption of the internet

0.274 0.446 0.683 0.120 0.728 0.741 0.660

Table III. Pearson correlation coefficient between internet adoption and other factors

Variables

Beta

t-value

p-value

Language Manager characteristics Perceive benefits Growth of the internet Organisation culture Technical competency Cost of adoption of the internet

0.031 0.126 0.179 0.048 0.296 0.321 0.161

1.110 4.321 4.907 1.792 8.123 8.794 4.558

0.268 0.000 0.000 0.074 0.000 0.000 0.000

Table IV. Regression results

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most of the managers of SME hold Bachelor or Master Degrees (see Table I), their command of English is thus sufficient for them to understand and use the web. Managers of SMEs are therefore facing no hardship with the English language used in most of the information obtained from the internet. This is consistent with previous research in which the education system in Malaysia plays an important role in building up the standard of English and thus reaps benefits from the web. Therefore, H1 is not accepted, that is the proficiency of English language does not influence the adoption of the internet in SMEs. The managers play important roles in the adoption and utilisation of the internet among SMIs. Spearman correlation was used to analyse the data. It shows that managers’ computer experiences have a strong correlation of , r ¼ 0:475 . at 0.01 level (two-tailed). Regression analysis showed managers characteristics having (beta ¼ 0:126, p-value ¼ 0:0001), indicating that managers who possess computer skills will adopt the internet at a faster rate. This suggests that managers with hands on experience are able to influence the adoption rate of the internet. This is consistent with the study done by Trocchia and Janda (2000) in which it was concluded that managers with prior experience in computing and hands on experience influence the adoption of web. Managers who have been using the internet for some time are able to know the advantages and disadvantages of the internet. Consequently, the managers are able to use the information of the web effectively expressed comfort with the internet. This is consistent with these studies done by Trocchia and Janda (2000) and Larsen and Whetherbe (1999), in which researchers concluded that computer skills and internet usage in jobs by managers might increase the efficiency and effectiveness of adoption and utilisation of the internet. Therefore, H2 is accepted. This further confirmed the consolation made by Thong and Yap (1996) that the manager is the main decision maker of the company and he/she has the power to determine the adoption of new technology. The support of H3 (perceived benefit) is in line with the results found by Hoppe et al. (2001). With a positive correlation of 0.386 at the 0.05 level and multiple regression analysis shows perceived benefit having beta ¼ 0:179, p-value ¼ 0:0001 as another predictor that influences internet adoption positively. This is consistent with the study done by Beatty et al. (2001) which concluded that companies tend to adopt when the new innovation brings greater benefits in terms of information to the company. Although the findings show that growth of web has a positive relationship with internet adoption, this relationship is not significant (beta ¼ 0:048, p-value ¼ 0:074). One possible reason is that, to date only 37 per cent of SMEs found to have web presence. This is not enough influence to adopt internet by the SMEs. Small-scale industries are now believe that failure of internet business is very high. In Malaysia only 37 per cent of the SMEs have a web site, but there is enough evidence that in Malaysia online business is increasing. These conditions can consequently lead to an unimportance of world wide growth. Studies like that carried out by Cook and Hunsaker (2001), in which they concluded that organisations tend to adopt the new innovation, are coherent with the organisational cultures. Regression analysis showed organisation culture having (beta ¼ 0:296, p-value ¼ 0:001). This research therefore further proves the earlier findings that showed, if the web application is similar to the innovation adopted by the

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company, tendency for the SMEs to adopt and utilise the internet is higher. This is because when the norms of the organisation are suitable with the new innovation then the adoption rate will be greater. Finally the acceptance of both H6 (technical compatibility) and H7 (cost of adoption) is in agreement with a wide range of previous studies (Bazar and Boalch, 1997; Tan and Teo, 2000; Hoppe et al., 2001; Gattiker et al., 1996). Multiple regression analysis shows results of technical compatibility (beta ¼ 0:321, p-value ¼ 0:0001) and cost of adoption (beta ¼ 0:161, p-value ¼ 0:0001), indicating that technical compatibility and cost of adoption have a positive effect upon internet adoption among Malaysian SMEs. This finding is consistent with the research of Beatty et al. (2001) in which they concluded that organisation are more likely to adopt the web if it is persistent with the preferred work practices. Tan and Teo(2000); Hoppe et al., (2001); Cooper and Zmud (1990); Tornatzky and Klein (1982) have generally shown that perceived compatibility of an innovation has a positive influence on the adoption of the innovation. Conclusion and recommendation The finding of the research may have implication for IT consultants, vendors and government agencies responsible for promoting innovation adoption and utilisation. Therefore IT consultants and vendors are advised to target their marketing at SMI with positive attitude toward innovation adoption. They ought to look out for indicators of innovated behaviours such as adoption of new technology and participation in trade organisations and exhibitions. Whereas from managers of SMEs that are more reluctant to response to innovations, consulates and vendors should take steps to create awareness among them so as to educate them about the benefits and importance of the web adoption and utilisation to their companies. With a better understanding of the potential benefits that the web applications can bring, managers may develop more favourable attitudes and become more receptive the idea of adopting the web. Government ministries and agencies that are responsible for promoting IT adoption should focus their effort on resting the literacy, especially in terms of web adoption. This is because findings of the study showed that computer knowledge and experience of a manager drive the adoption and utilisation of the web. This can be achieved through subsidised seminars and training programmes specially designed for managers and employees in the company in order to create a strong innovative culture within the company. Although this study has investigated factors such as language concern, manager characteristics, perceived benefits, organisational culture, cost of adoption, technical compatibility and growth of the web, there may be other potential determinants of web adoption and utilisation SMEs. Hence, future research should examine this possibility. In addition, it would be useful to study managers from SMEs in different geographic areas. This would provide some interesting trending information allowing us to see if the adoption and utilisation of the web is influenced by geography, and if that geographic influence is significant. This would allow IT consultants and vendors to tailor their service and products based on geographic issues, and would allow them a greater opportunity of increasing the level of the web adoption. Our research shows that personal perception plays a large part in influencing a manager to adopt the web, and it would be useful to see if that held true across different geographic areas.

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Finally, further studies need to be carried out knowing that developing countries have different cultures those in developed countries. This would provide insights into the way of using the web in these countries.

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