Information and communication technologies (ICT) are radically changing the competitiveness of
organizations (Cohen and Kallirroi, 2006). Brian (1998) defined electronic commerce as the use of
electronic methods, means and procedures to conduct various forms of business activity in cyberspace,
which he stated has become a priority for many corporations within the context of ICT, since managers
see it as a way to overcome certain limitations of the traditional distribution channels.
There are many studies which showed that e-commerce development offers a promising way for
business to meet the challenges of this dynamic environment. Electronic commerce provides effective and
efficient ways such as gathering information rapidly about the availability of the products or services,
evaluate or negotiate with vendors and so on (Jetol, Obit, Asing and Tanakinjal, 2005).
SMEs face many challenges especially in a globalized environment, including a lack of financing,
low productivity, a lack of managerial capabilities, access to management and technology, and a heavy
regulatory burden. In the Malaysian context, APEC Survey (1994), the SMI development Plan, 2001-
2005 (SMIDEC, 2002), Ting (2004), the UPS survey (2005) and others showed that SMES face major
problems such as lack of access to loans, limited adoption of technology, lack of human resources and
competition from MNCs and globalization.
The purpose of this paper is to highlight issues pertaining to e-business, particularly with relation to
SMEs in Malaysia. The specific objectives of this paper are stated below:
a) To present a brief overview of e-commerce and SMES in Malaysian context;
b) To highlights issues of internet businesses among SMEs in Malaysia; and
c) To explain the advantages of disadvantages of e-business for SMEs in Malaysia.
Internet Commerce – An Overview
The millennium era of the 21st century embraces a new way of doing business – the virtual trading or
E-commerce, as defined by Wigand (1997), is about the use of electronic
connection to conduct economic activities while others. Turban, Lee, King and Chung (2002) added that
e-commerce is about use of computer networks and the Internet infrastructure as a medium of business