Electronic copy available at: Applied Economics , 2006, 38 , 1905–1916 Determining factors for the adoption of e-business: the case of SMEs in Korea Bang Nam Jeon a, *, Kyeong Seok Han b and Myung Jin Lee c a Department of Economics and International Business, Bennett S. LeBow College of Business, Drexel University, 32nd and Market Street, Philadelphia, PA 19104, USA b Soongsil University, Sangdo-5 dong, Dongjak-gu, Seoul, Korea and The Wharton Entrepreneurial Program, University of Pennsylvania, Philadelphia, USA c Soongsil University, Sangdo-5 dong, Dongjak-gu, Seoul, Korea and The Korea Chamber of Commerce, Seosomoon-dong, Jung-gu, Seoul, Korea This study investigates the determining factors of the successful adoption of e-business by small and medium enterprises (SMEs) in Korea using survey data. After the major determining factors were identified from the innovation adoption literature and were extracted by applying the principal component analysis to the survey data and by adding the country-specific characteristics of Korea, we conducted empirical analyses to determine the critical success factors for the adoption of e-business by Korean firms. The empirical results which are based on t -tests of the differences between adopters and non-adopters, the linear probability model, and the logit model, all suggest that the important determinants of the successful adoption of e-business by SMEs in Korea are: the CEO’s knowledge of information technology (IT)/e-business, relative advantages and benefits from implementing e-business, governmental support, globalization strategy and the North Korean factor. Business size, the cost of e-business adoption and competitive pressure of the industry do not seem to play an important role in the adoption of e-business by Korean SMEs. The policy implications of this study on promoting e-business adoption by SMEs in emerging economies, such as Korea, are also discussed. I. Introduction The purpose of this study is to identify the major determinants of the successful adoption of e-business by small and medium sized enterprises (SMEs) in Korea. Although the Internet boom has been drasti- cally affecting ways of doing business in Korea, especially for traditional brick-and-mortar SMEs *Corresponding author. E-mail: [email protected] Applied Economics ISSN 0003–6846 print/ISSN 1466–4283 online ß 2006 Taylor & Francis 1905 DOI: 10.1080/00036840500427262
Electronic copy available at: and dotcom start-ups alike, the available empirical evidence on the major determinants of e-business adoption by Korea’s SMEs is scant in the literature. 1 We aim to fill this gap by investigating the association of the major determining factors with the successful adoption of e-business by Korean SMEs, using recent survey data for Korea.
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