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JOURNAL REVIEW (An Empirical Study of E-Commerce Implementation among SME in Indonesia)

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JOURNAL REVIEW

Heading :	An Empirical Study of E-Commerce Implementation among SME in Indonesia
Author :	Ihwana As’ad , Faudziah Ahmad Universiti Utara Malaysia Ilham Sentosa Limkokwing University of Creative Technology Email: dr.ilhamsentosa@limkokwing.edu.my
Year :	2012
Journa :	International Journal of Independent Research and Studies Vol.1 No.1 Jan 2012 ISSN 2226-4817
Page :	13-23
Reviewer :	Sholihin
Date :	December 5^th , 2015

INTRODUCTION

The emergence and the popularity of the internet allow business firms to get more customers and increase public awareness of their firms, services, and products. The use of ICT that range from mainframe to personal computers, from word processing to sophisticated application and system have made considerable inroads into large, medium and even small organizations (Doukidis et al., 1996). SMEs are critical to the economies of all countries, including development ones. They cannot be left behind and many are already demonstrating their entrepreneurial strength by grasping opportunities offered by e-commerce (Payne, 2001). In most development countries SMEs constitute a highly dynamic and importance sector of the economic activity that, nevertheless, has to deal with high competitive pressure and scarcity of resources.

As a country that comprised of many islands with a land area as large as the United States, Indonesia has encountered a lot of problems in preparing its population for global competition in the new era of the digital economy. In the last few years, the Indonesian government has recognized the importance of having modern SMEs as an important element in creating a sophisticated economy, especially through their role in developing inter-industry linkages, or as supporting industries producing components and parts for large enterprises (LEs) either, via market mechanisms or subcontracting systems or other forms of production linkages. Currently there are about 48.9 million SMEs in Indonesia, where out this amount less than one percent (1 %) have started conducting business electronically.

LITERATURE REVIEW

The rapid rise of the Internet has made the potential of e-commerce more promising. It is now widely stated that the Internet and e-commerce will transform traditional business and consumer life, The primary participants of e-commerce are: Businesses (B), Consumers (C) and Government (G). According to Orbeta (2000), there are nine e-commerce transactions. This research will focus on B2C. B2C is known as the act of doing commerce or business between companies and consumers.

Basic elements of e-commerce are e-visibility, e-shop, online payments, delivering goods, after-sales service and internet e-commerce security. And the benefits of e-commerce from divided benefits into these benefits to organization, benefits to consumers and benefits to society. SMEs have special needs because of their limited resources in terms of personal, finances, and knowledge pertaining to management, commercialization, or information technology.

This research focuses on SMEs for two key reasons:

1. They are important to economic development in developing countries.

2. They are in a very good position to adapt to new technology; they may be able to adapt faster than larger companies that can be slowed by bureaucracy and stricter staffing hierarchies.

METHODOLOGY

The methodology of the study has consists of 4 phases; preliminary study, questionnaire design and data collection, analysis and documentation. Technique of analysis mainly survey instrument used these subject are also investigated and compiled. From the researchers studied, factors used in surveys have been collected for questionnaire design. The e-questionnaire has been constructed by adopting a similar survey instrument conducted by Stransfield and Grant (2003). In this survey online we use server UUM (http://www.lamanweb.uum.edu.my/wana/content.php). Internet Explorer is the most widely used Web browser on the market. In this phase, data have been analyzed using SPSS 20 version. Statistical method specifically descriptive statistics have been used for analysis.

FINDING AND DISCUSSIONS

The initial part of the analysis focuses on the descriptive statistics of the respondents. Based on the profile, business ownership tended to be highest between 25-34 years of age group with 62.5 % and 25.0 % are in the 35-44 age group. In their study on Internet café entrepreneurs in Indonesia, Kristiansen, Furuholt, & Wahid (2003) found a significant correlation between age of the entrepreneur and business success. The older (>25 years old) the entrepreneurs are more the on successful their business would be. based on the age SMEs in Indonesia are owners of age between 25-44 years. Based on gender, 81.3 % of the SMEs ownership are males.

Based on the types of business of SMEs, it has been found that most of them are involve in the Clothing (31.3 %) area. 18.8% of SMEs are in an Entertainment business, and 12.5% are in Electronic, Souvenirs and Supply, Equipment and Florist & Gifts. Results of this survey are similar to the research conducted by 9.4% UCLA (2003) that stated the highest sale is Clothing’s (Apparel). Next highest are Books $136,567, Health and Beauty and Office Supplies. Based on location, most (53.1%) SMEs reside in Jakarta, 12.5% Central Java & Jogjakarta and Bali 12.5%. The total area of the country is 9.8 million square kilometers, with the land area of 1.9 million square kilometers and a sea area of 7.9 square kilometers (81 %) (Minges, 2002).

In summary, the findings concerning objective: 81.3% SMEs are owned by males whom are of mostly of age 25-35. Most (81.3%) have Bachelor’s Degree. SMEs mostly conduct e-commerce business in Clothing’s, and most of their businesses are located in Jakarta. Most SMEs (41-60%) obtain sales revenue via online. In comparison turnover at the time before having website and after having website 50 % and more experience higher turnover sales after having websites. In comparison turnover at the time before having website and after having website 50 % and more experience higher turnover sales after having websites. Although there are many constraints such as connectivity, goods furnish, administration of bank and delivery, the SMEs are more motivated through the use of e-commerce and they hard to overcome the constraints.

The result of this study based on the survey, the problems can be divided into 3 namely:

1. Internet connectivity, out of 32 respondents most of them mentioned that the internet connectivity is Indonesia a big problem.

2. Bank administration, administration of bank is problematic.

3. Goods distributions to buyers, goods deliverance are expensive especially to other countries.

CONCLUSION AND RECOMMENDATION

Conclusion

1. Implementation of c-commerce in SMEs in Indonesia has grown in the last 2 years.

2. There are some problems in execution of e-commerce at SMEs in Indonesia.

3. there are some catalysts that encourage implementation of e-commerce at SMEs in Indonesia, these increase in sales revenue, low expenses in developing and maintenance a website, and increase in numbers of customers.

4. The study shows that most SMEs are located in Jakarta, a big city with good infrastructure.

5. the governments should incorporate IT awareness and skill development program in educational institutions.

6. The use of e-commerce has been shown to provide many advantages such as increase in sales revenue, and customers.

Recommedation

1. a study on how to make implementation of e-commerce effectively in SMEs is necessary in order to ensure the growth of e-commerce business.

2. the impact of e-commerce on SMEs performance and diffusion of e-commerce in Indonesia should be investigated in detail.

3. Implementation of e-commerce needs support from the government to prepare infrastructures so that it can make the diffusion of e-commerce effectively.

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Judul: JOURNAL REVIEW (An Empirical Study of E-Commerce Implementation among SME in Indonesia)
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