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This is a preprint of a work to be published in Technology Analysis & Strategic Management (c), 2005. Aragón-Correa, J.A. and Cordón-Pozo, E.

Vol. 17(2): 205-218. DOI: 10.1080/09537320500088856

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THE INFLUENCE OF STRATEGIC DIMENSIONS AND THE ENVIRONMENT ON

THE INTRODUCTION OF INTERNET AS INNOVATION INTO

SMALL AND MEDIUM-SIZED ENTERPRISES

J. Alberto Aragon-Correa 1

University of Granada (Spain) & Rotterdam-Erasmus University (The Netherlands)

Address for mailing: Faculty of Economics and Business

Campus Cartuja, s.n.

18071 Granada

Spain

E-mail: [email protected]

Tel: +34 958 24 37 05. Fax: +34 958 24 62 22

Eulogio Cordon-Pozo 1

University of Granada (Spain)

E-mail: [email protected]

Tel: +34 958 24 23 41. Fax: +34 958 24 62 22

1 The authors are grateful to the European project SEC 2003-07755 for the partial funding of this re-search.


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Abstract:

The expansion of the Internet has been spectacular, but only limited research has analysed how envi-

ronmental and strategic variables simultaneously influence its organisational implementation and how

small firms decide to adopt the use of the Internet. This study simultaneously examines the influence of

three environmental dimensions (hostility, complexity and dynamism), and the three strategic dimensions

proposed by Miles and Snow (entrepreneurial, technological and administrative), upon the decision to in-

troduce the use of the Internet into small business enterprises. We base our conclusions upon the data ob-

tained from interviews with the managers of a sample of 94 small and medium-sized Spanish enterprises.

Our results support a multidimensional view of environmental and strategic characteristics and show that

all these variables constitute significant factors in deciding whether to introduce the Internet into compa-

ny use. Logistic regression also shows the greater influence exerted by internal (strategic) factors and size

rather than by environmental factors.

Key Words: Internet, innovation, strategy, environment, size, small and medium enterprise (SME).


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1. Introduction

The expansion of the Internet is one of the most spectacular demonstrations of modern advances in in-

formation technology. The number of sites, users and the information being transmitted via the net are all

increasing exponentially and the European on-line market was worth over 45 billion euros by 2002,

though this is only a tenth the size of the US market1. Although 87% of the western companies used In-

ternet in 2003, official statistics show significant differences in the rates of Internet penetration for firms

in different European countries, and between European and American companies2. The importance of

small and medium enterprises (SMEs) in each group has been often proposed as a factor influencing those

differences and, for instance, surveys reveal that 98% of European large enterprises have adopted Inter-

net, but only 75% of small firms have done so.

Many experiences and reports show that the Internet offers SMEs very appealing opportunities to ob-

tain competitive advantage3. However management research has paid very limited attention to the organi-

sational and contextual rationale behind Internet adoption for small firms. SMEs comprise over 95 per-

cent of U.S. and European businesses, accounting for approximately 47 percent of the gross domestic

product in the United States and 55 percent in Europe (around 49% of the employment in the U.S., and

70% in the case of Europe)4. However it is only very recently that a few papers have begun to analyse the

adaptation of the Internet in SMEs, mostly focusing on very restricted relationships and/or using explora-

tory samples with very few cases. We are specifically interested in a greater understanding of factors that

might influence the Internet adaptation by SMEs.

The majority of previous literature analysing the adoption of the Internet accepts that it can be viewed

as an organisational innovation5. We also accept this view defining innovation as “any idea, practice, or

material artifact perceived to be new by the relevant unit of adoption”6. The introduction of the Internet or

of related information technology implies a technological, administrative, and/or business innovation for

those firms that decide to conduct their activities, either partially or wholly, via Internet. Additionally, the

implementation of the Internet has a series of characteristic features reinforcing organisational innova-

tions: 1) It encompasses a wide range of technologies and related services (ftp, e-mail, www, etc.); 2) It is

constantly evolving, both in terms of physical expansion and also in the possibilities it offers; 3) Internet


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installations of similar technical characteristics can be used with completely different aims and thus result

in distinct types of innovation in each enterprise.

Analysis of the implementation of the Internet was mostly absent from previous literature on innova-

tions and, in any case, analysis of the implementation of innovations was usually focused on the im-

portance of certain internal or external variables. We now propose a framework simultaneously including

external and internal variables to understand the introduction of the Internet into an organisation. Addi-

tionally, papers analysing the relationship between the size of an organisation and its response to innova-

tion have often included only large companies and theirs results have been contradictory both with regard

to the extent of innovation and its course. Thus, we find some authors postulating a positive relationship

between size and innovation, whilst others find a negative relationship and some believe that there is no

direct relationship at all between the two factors7.

This inconsistency in the results concerning the relationship between size and innovation generates

doubts about the mechanics of SMEs to adopt innovations, and even about the role of size when we are

facing relatively homogeneous samples of small firms. The doubts lead the various researchers in ques-

tion to resort to a wide range of arguments to justify the nature of this relationship. Small organisations

can be more innovative due to their greater flexibility and because they have less difficulty in accepting

and introducing change. However, lack of resources and expertise may hinder SMEs’ innovation capabil-

ity. Our aim is to systematically analyse a wide sample of SME top management executives to better un-

derstand the Internet adoption and simultaneously check if organisational size plays any role for this

group of relatively homogeneous small firms.

Our analysis includes data from interviews with the managers of 94 SMEs and the following explana-

tory variables: Three environmental dimensions (hostility, complexity and dynamism), the three strategic

dimensions put forward by Miles and Snow in 1978 (entrepreneurial, technological and administrative),

and the size of the organisation itself. Future works will have to confirm if this mixed model (including

internal and external variables) is also useful for better understanding the implementation of the Internet

in bigger firms. Therefore, we contribute in at least three aspects:

Firstly, organisational innovation has been widely analysed in previous papers, but empirical analyses

were often based on samples of big organisations and mostly only alternatively used external or internal

variables. Very few papers have tried to offer empirical evidence about whether a mixed model was ap-

propriate to study adaptation of innovations, and SME innovations have received very minor attention.


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Secondly, in spite of the Internet’s importance nowadays, only a few papers have systematically ana-

lysed the reasons behind understanding the implementation of the Internet. No known literature on the

topic has analysed a large sample of SMEs and systematically used a multivariate methodology in order

to obtain statistically significant conclusions.

Thirdly, we assume that small and large firms possess fundamentally different resources and capabili-

ties. However, at the same time, we will show that propositions relatively well accepted for larger compa-

nies are also useful for SMEs (and for a new kind of innovation [the Internet]). It remains for future re-

search to analyze how different capabilities comparing larger firms and SMEs are affecting the chance of

showing the appropriate characteristics to adopt the Internet.

2. Theory Development and Hypotheses

2.1. Business Strategy and the Introduction of the Internet

Anderson and King8 distinguish between innovations generated within the organisation itself, those

imported voluntarily from outside, and those imposed by external forces. Voluntary innovations may

function as a form of strategic adaptation and the strategic intentions of the organisation as a prime factor

in its introduction. Researchers into information technology have pointed out important links between

strategy and the characteristics of the innovation itself9.

We use Miles and Snow's strategic patterns10 to analyse the relationship between innovation and strat-

egy. Miles and Snow's typology is normally interpreted as being a continuum in which "prospective" and

"defensive" organisations represent the extreme points in the three dimensions of the strategy which they

propose: entrepreneurial, engineering, and administrative.

The “entrepreneurial” dimension refers to the choice of products and markets and the forms of compe-

tition between them. The "engineering" dimension refers to the technology used to develop competitive-

ness. The "administrative" dimension refers to the choice of organisational structures and processes in the

face of reducing uncertainty and permitting the introduction of innovation. According to Miles and

Snow’s typology, prospective organisations analyse all the aspects of their environment and grow by de-

veloping their products and markets, frequently changing their technological and administrative processes

in order to generate competitive advantage.

The first SMEs to introduce the Internet were engaging in a highly proactive innovation. At present

the introduction of the Internet is also developed to try to gain some kind of competitive advantage (im-

age, improvement in communications with customers or suppliers, sales, and so on). Whatever the reason,


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it must be emphasised that the introduction of the Internet is often a voluntary and strategic move for

SMEs11. Numerous authors tend to relate greater effort and risk in time and expenditure invested in in-

formation technology with those firms that are more proactive in their business ventures12.

Empirical contributions concerning the relationship between innovation and strategy have usually

shown the relationship between proactivity and innovation. Some papers have shown the importance of a

marketing orientation and proactive strategic formulation in successful small high-tech firms13. However

the vast majority of these works were focused on big firms. Here are some examples: Nicholson, Rees

and Brooks-Rooney14 discovered a link in British wool manufacturers between their approach to innova-

tor behaviour and their business strategy. Lee and Miller15 have shown empirically that in uncertain envi-

ronments a readjustment between strategies based upon innovation and marketing (characteristic of pro-

spective strategies) and the use of new technologies is generally positive in its effects. Tavakolian16 found

a close relationship between the business strategies proposed by Miles and Snow and the management of

information technology, which turned out to be more decentralised in the more proactive companies. Fi-

nally, Özsomer, Calantone and Di Benedetto17 examined the effects of environmental hostility and uncer-

tainty on the organisation structure and strategic posture - and the subsequent effect of these two internal

variables on firm innovativeness -, concluding that proactive strategic postures make firms significantly

more innovative. Thus we are able to put forward the following hypotheses:

Hypothesis 1: Greater proactivity in the entrepreneurial domain of organisational business strategy

will be positively related to the introduction of the Internet by SMEs.

Hypothesis 2: Greater proactivity in the technological domain of organisational business strategy will

be positively related to the introduction of the Internet by SMEs.

Hypothesis 3: Greater proactivity in the administrative domain of organisational business strategy

will be positively related to the introduction of the Internet by SMEs.

2.2. Environment and the Introduction of the Internet

The organisation's understanding of its environment is one of the most important factor taken into ac-

count in organisational studies. However “environmental factors have usually been absent from innova-

tion papers”18. SMEs generally have little control over their environment, and the use of information

technology in SMEs may then be particularly affected by environmental conditions19.

Although the variable most normally borne in mind is that of the uncertainty of the environment, the

treatment and definitions of this factor have been both diverse and sometimes contradictory. Duncan20 de-


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scribed uncertainty using the dimension of "complexity" (a large number of relations and influencing fac-

tors requiring a high capacity for abstraction on the part of management) and “dynamism” (frequent

changes in the relevant factors). Dess and Beard21 proposed to complete these two dimensions with “hos-

tility” (difficulty in adapting to its environment) in order to obtain a systematic delimitation of environ-

ment.

General agreement exists in that rapid change in the environment stimulates organisational innovation.

This relationship is reciprocal, and complex and dynamic environments generate greater opportunities for

innovation, whilst at the same time this in itself creates an ambience of greater uncertainty22. The impact

of information technology change (including the Internet), while essentially considered from its instru-

mental value, also induces radical doubts and changes in the area of human conduct23. Empirical studies

on this subject are few, but they usually confirm the positive relationship between innovation and envi-

ronmental uncertainty24.

On the other hand, different works25 have shown that a positive relationship exists between competi-

tion in a given sector and the speed with which companies introduce changes into their products and mar-

kets. In particular, there is a link between technological dynamism in the environment and innovations

generated by organisations. Additionally, when the environment is hostile, SMEs should seek market

niches defined along any of three dimensions: product, customer, and technology26. Implementing the In-

ternet may be useful to obtain a viable niche for SMEs when the environment is uncertain.

Thus, in the light of the findings in the literature cited above, the hypotheses support the idea that the

higher the number and frequency of changes (dynamism) and the more difficulty an organisation experi-

ences in understanding (complexity) and adapting itself to its environment (hostility), the greater the in-

centive to introduce the Internet into that organisation. Thus:

Hypothesis 4: The greater the degree of perceived dynamism, the more positive is the tendency to

introduce the Internet by SMEs.

Hypothesis 5: The greater the degree of perceived complexity, the more positive is the tendency to

introduce the Internet by SMEs.

Hypothesis 6: The greater the degree of perceived hostility, the more positive is the tendency to in-

troduce the Internet by SMEs.

3. Methodology


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3.1. Sample and procedure

The sample of 94 analysed organisations was chosen as random representatives of present-day busi-

ness conditions in the Spanish economy. One of the main characteristics of this sample is that the majori-

ty of the firms belong to the commercial and services sectors, reflecting accurately the Spanish situation,

where over 99% of the companies are SMEs generating around 90% of the total employment of the coun-

try27. By controlling for geographical effects we limit the potential to draw generalised conclusions, but

also minimise confusing influences and focus on our variables of interest. In any case, the region and the

SMEs analysed have basic similarities with other European regions and SMEs. Besides, although imple-

mentation of the Internet in large Spanish firms (99%) is equal to similar firms in the EU, implementation

in small and medium enterprises is lower (79% for small firms in Spain versus 84% in the EU). Therefore

this context is particularly appropriate to better understand SMEs’ reasons for implementing (or not) the

Internet 28. Table 1 shows a description of the principle features of the sample.

The data upon which our conclusions are based were obtained via structured interviews. The interview

was designed to evaluate certain of the dimensions that characterise the strategies employed by the organ-

isation and also the nature of its business environment. We, therefore, considered it very important to

choose carefully the individuals who were to be interviewed. Thus we first telephoned all the prospective

companies to be included in the sample to find out who the key people were that might be relevant to our

study. All of those finally chosen for interview were executive directors of the companies (some of them

were simultaneously executives and main shareholders).

Insert Table 1 about here

3.2. Variables

Introduction of the Internet. A wide variety of parameters related to innovatory capacity have been

used, including a dichotomous variable in which 1 represents the introduction of an innovation and 0 in-

dicates the contrary29. We will use this variable with regard to the introduction of the Internet, assigning 1

if the organisation adopts at least one of the following parts of the Internet for firm’s purposes (not per-

sonal): e-mail, Internet browsing, or a web site. The same procedure was previously used to analyse im-

plementation of the Internet for SMEs30.

Strategic Dimensions. Measurements of the three dimensions of business strategy suggested by Miles

and Snow (1978) [entrepreneurial, administrative and technological] were made via three items, each be-

ing related to one of these strategic dimensions, and Likert scales requiring an answer on the scale of 1 to


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7 along which the interviewee had to place his/her organisation. Details of the items used in this measure

are provided in the Appendix. This procedure includes Miles and Snow’s proposal that prospective and

defensive companies would locate themselves at different ends of the scale, firms who tended to analyse

situations would sometimes appear as prospective and sometimes as defensive, and reactionary compa-

nies would follow no consistent pattern. We used a scheme similar to that proposed by Shortell and

Zajac31, although they only included one item for a sample of multiple-size firms (including hospitals

from small to medium and large). Our measurement is also consistent with previous research on small

firms32.

Environmental Dimensions. We used six items based on the scale used by Tan and Litschert33 to ana-

lyse the three environmental dimensions of dynamism, complexity, and hostility. The questions referred

to the perception that management entertained of various factors of their business environment, such as

the number of changes that had taken place, whether these had been foreseeable or not and the extent to

which they had been economically beneficial. Our measuring of the business environment via manage-

ment perception is based on the idea that companies only respond to the environment as perceived and in-

terpreted by those who make the decisions and, as a consequence, unperceived aspects of the environment

affect neither the decisions nor the actions of management34. The six items required answers along a scale

from 1 to 5. Adding up the score for the two items most relevant to the dimension gave the score for each

of the three dimensions envisaged. The consistency of the scores thus obtained was checked via a con-

firmatory factorial analysis using LISREL 8. The results of this analysis were highly satisfactory (χ26df =

9,33, p = 0,156; GFI = 0,971; AGFI = 0,898; RMSEA = 0,066)

Control Variables. Studies into innovation have to take into account the nature of the business sector

because an awareness of this variable may well help researchers to understand possible differences be-

tween such sectors35. For example, the use of different technological equipment for each manufacturing

and service activity might explain differences in the willingness to adopt the Internet, while the direct in-

teraction with consumers of some activities might ease the perception of the Internet’s advantages. Bear-

ing this in mind, we included a control variable in our study that states the business sector of the compa-

ny. We allowed for six sectors, classified according to the IAE (Spanish tax upon business activities) code

of each organization (see Table 1).

The OECD36 recognises that a universally accepted definition of SMEs does not exist, but they pro-

pose that SMEs are non-subsidiary independent firms, which employ less than a given number of em-


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ployees. The OECD also recognises that the most frequent upper limit designating an SME is 250 em-

ployees. Therefore, significant differences in size might be found within SMEs (from 1 to 250 employ-

ees). Considering this wide delimitation of SMEs, we chose to use a logarithmic transformation of the

number of employees as our measure of company size and as the control variable.

4. Results

The main descriptive statistics and correlation coefficients are set out in Table 2. There is a relatively

close positive correlation between innovation and the set of independent variables, all of the correlations

turning out to be significant except for that for one of the environmental parameters (hostility).

Insert Table 2 about Here

We found that of the 94 companies interviewed, 35 (37.2 percent) were working with the Internet and

the rest (62.8 percent) were not. To test our initial hypotheses we relied on logistic regression, using the

SPSS statistic package for Windows (version 8.0). Logistic regression allows us to relate a dependent di-

chotomous variable with one or more independent quantitative and/or qualitative variables. This tech-

nique allows the user to evaluate the impact (both sign and magnitude) of a covariable upon the change in

a dependent variable. We then used a logistic regression pertaining to the size of the organisation, the

strategic dimensions and the business environment and the control variable on the introduction of the In-

ternet into a company.

We considered three models, each of which uses a different number of predictive variables to explain

the dependent binary variable: the first only includes the control variables (sector and organisational size),

to which is added organisational strategy in the second model, and perceived environment in the third

model. The parameters taken into account in each of the models, their level of significance and the main

indicators for the validity of the adjustment are all shown in Table 3.

Insert Table 3 about Here

There are many alternative indices to measure the validity of the model’s fit. The overall percentage

of correct classifications gives an initial approach to the validity of the approach. Table 3 shows that the

first model, which reflects the influence of size, includes a relatively high percentage of correct predic-

tions (79.79 percent). The addition of the other variables raises this percentage to 86.44 when all three are

included. Huberty’s statistical test shows that this percentage is statistically significant.

Another measure of the adequacy of the fittings is that known as Nagelkerke’s R2 test, which can be

compared to the R2 indicator in a linear regression model and tries to quantify the proportion of variation


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revealed in a logistic regression model. Table 3 shows that this indicator improves considerably as the co-

variables are introduced. Thus our final logistic regression model explains 72.4 percent of the variation in

the introduction of innovation into the organisations studied.

In our case the χ2 test turned out to be significant for all three of the estimated models (p <0.001),

which lead us to conclude that our models fit the data significantly better than a model including only one

constant. The significance of a variable in the model is gauged from Wald’s test, which is equal in con-

cept to the t-test of the coefficients estimated by linear regression. The data contained in Table 3 show

that our estimated parameters differ significantly from zero in all three models, with the general exception

of the “activity” sector (which is not significant in any of the models), and the coefficient estimated in

model 3 for hostility.

Thus our results confirm the proposed hypotheses. Furthermore, results show that the size of an organ-

isation is the most influential factor in the probability of its connecting to the Internet. As far as the other

two groups of variables are concerned, those related to business strategy impinge to a greater extent on

this probability than those referring to the business environment, one of which, as mentioned above, is not

even statistically significant.

5. Discussion, Limitations, and Contributions

The results of our logistic regression analysing small and medium-sized enterprises support the rela-

tionship and sign of our original hypotheses. The prospective nature of the three strategic dimensions (en-

trepreneurial, administrative, and engineering) and the environmental dynamism and complexity have a

significant and positive effect on the introduction of the Internet into a company. Only one of our hypoth-

eses (that concerning the relationship between the hostility of the business environment and the introduc-

tion of the Internet), though coinciding with the trend of our original prediction, was not statistically sig-

nificant. Therefore our results emphasise the simultaneous influence of both organisational and

environmental aspects. We will review below in detail each group of influences, highlighting the different

importance of each category and of the factors involved for each group.

Firstly, regarding strategic dimensions, our results empirically support the proposals of Miles and

Snow37, who argue that prospective companies find themselves in a better situation to take advantage of

innovations in products, markets, technology and administrative processes. An interviewed manager of a

four-employee firm in professional services illustrates this idea with his own experience:

“We believe that patience is not a virtue nowadays. We have to have an innovative philosophy be-


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cause we need to clearly show our understanding of all parameters linked to future, quality, and

services. What we try to do at our firm is make sure that we also follow this philosophy for the In-

ternet”.

Our results support previous studies showing the existence of a relationship between prospective

companies and promising innovative conditions38. Nevertheless, these previous studies did not usually of-

fer details concerning the different importance of the three strategic dimensions that we have taken into

account, nor about additional factors which might have influenced the introduction or not of innovation

(e.g. environment). Our results show that the administrative dimension exerts the greatest influence over

the introduction of the Internet for our sampled SMEs. This result would appear to be reasonable given

that the introduction of the Internet involved more administrative innovation in most of the companies in-

terviewed than productive changes. Besides, Miles and Snow also place major emphasis on the adminis-

trative dimension as that being related to those aspects of the company which most influence personal

communications. Anyway, the significant and positive influence of the other two strategic factors (entre-

preneurial and technological) underline the need for a firm to be able to rely upon overall planning to fa-

cilitate the introduction of the Internet.

Secondly, our results also provide empirical evidence concerning the influence of the perceived envi-

ronment upon the introduction of the Internet. Previous studies into innovation and most of those related

to the business environment have lumped all the characteristics of this aspect into one dimension, usually

under the label of “environmental uncertainty”, whilst we have chosen to divide it into three different di-

mensions: hostility, dynamism and complexity. This feature, together with the scarcity of any other em-

pirical studies into the matter, represents a new contribution to our understanding of organisational im-

plementation of the Internet.

The results support our original hypotheses. The greater the number and frequency of changes within

the business environment the more difficult it is for the business to understand and adapt to it and this in

turn has led to a greater tendency in the organisations interviewed to resort to the Internet. Business com-

plexity also has a high positive effect. Finally, the influence of hostility in the business environment is, as

we expected, a positive factor in the introduction of the Internet but is not statistically significant. One in-

terviewed manager illustrated the influence of environment in his firm:

“At the beginning we did not consider at all the possibility of using the Internet, but the majority

of our competitors began to offer their services over the Internet, and we had to change our mind.


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We just try to remain competitive in this high-speed race (...)”.

Thirdly, logistic regression also shows that the most important factor involved in a company’s connec-

tion to the Internet is that of size. Some previous studies also showed that size was the most important

factor both in technological and administrative innovation39. Our results reveal that size is the primary

factor involved in an SME’s decision to introduce the Internet into its daily routine and the larger compa-

nies tend more to introduce the Internet into their affairs. This result is especially interesting considering

the wide but relatively homogeneous delimitation of firms’ size for our study (all of them were SMEs)

and that previous papers were mainly focused on large and medium companies. No differences were

found for adaptation of the Internet in different business sectors for our sampled firms.

As far as the importance of the environmental versus internal organisational factors is concerned, our

results point to a greater influence exerted by the size of the company and its strategic attitudes rather

than the business environment itself. In particular, the size of the organisation, administrative strategy and

entrepreneurism seem to play a more important role with regard to the introduction of the Internet than all

the environmental considerations. These results, together with the fact that the variable referring to the

business sector turned out to be insignificant, underline the importance of the strategic attitude of the

companies involved. In general our results suggest a strategic and voluntary attitude towards innovation

management for our sample of SMEs.

It is worth mentioning two important limitations to this study. The characteristics of the companies

chosen (all small and medium-sized enterprises in a specific geographical context) lend a degree of ho-

mogeneity to the sample, but at the same time render it difficult to draw generalizable conclusions. We

should also have liked to be able to include a variable concerning the performance of the companies in-

volved, which would have given us an interesting insight into the relationship between company perfor-

mance and the introduction of the Internet. Nevertheless, we decided not to include this variable into our

interviews because of the high level of suspicion such questions often provoke to SMEs’ managers and

the general unreliability of the answers.

Our paper show that propositions relatively well accepted for larger companies are also useful for

SMEs, and for a new kind of innovation (the Internet). It remains for future research to analyze how dif-

ferent capabilities comparing larger and SMEs are affecting the chance of showing the appropriate char-

acteristics to adopt the Internet. We do not want to fall into the temptation of asserting that innovation per

se is necessarily beneficial to all businesses, but it is beyond doubt that the capacity to introduce new ide-


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12

as both into processes and products is important nowadays. Our study may help practitioners and policy

makers to provide a clearer vision about the strategic attitude influencing the introduction of such innova-

tions in SMEs.

Notes and References

1. Boston Consultin Group, The Race for Online Riches. E-Retailing in Europe (http:// www.bcg.com/ new_ideas/europe_download_report.asp, 2000)

2. Eurostat, E-commerce and the Internet in the European businesses, 2002 (Brussels, European Com-

mission, 2004); M. Ottens, “Internet usage by individuals and enterprises”, Eurostat-Statistics in Fo-cus, 16, 2004.

3. Morgan Stanley Dean Witter, The European Internet Report (http :// www.msdw.com/ techresearch/

euroinet/info.html, 1999); C. Zott, R. Amit & J. Donlewy, “Strategies for Value Creation in E-Commerce: Best Practice in Europe”, European Management Journal, 18(5), 2000, pp. 463-475. J. Mehrtens, P.B. Cragg, & A.M. Mills, “A model of Internet adoption by SMEs”, Information & Man-agement, 39, 2001, pp. 165-176; B.M. Sadowski, C. Maitland, & J. van Dongen, “Strategic use of the Internet by small and medium-sized companies: An exploratory study”, Information Economics and Policy, 14, 2002, pp. 75-93.

4. Observatory of European SMEs 2003, nº 7 http://europa.eu.int/comm/enterprise/enterprise_policy/

analysis/observatory.htm); European Commission, The European observatory for SMEs fifth annual report 1997 (Brussels, European Network for SME, 1999); US Small Business Administration Office, 1997 Small business economics indicators (Washington D. C, Executive Summary, 1998).

5. See ref. 3. 6. F. Damanpour & W.M. Evan, “Organisational Innovation and Performance: The Problem of Organisa-

tional Lag”, Administrative Science Quarterly, 29, 1984, pp. 392-409. G. Zaltman, R. Duncan, & J. Holbek, Innovations and Organisations (New York: Wiley, 1973).

7. R.D. Dewar & J.E. Dutton, “The Adoption of Radical and Incremental Innovations: An Empirical

Analysis”, Management Science, 31(11), 1987, pp. 1422-1433; J. Wade, “A Community-Level Anal-ysis of Sources and Rates of Technological Variation in the Microprocessors Market”, Academy of Management Journal, 39, 1996, pp. 1218-1244; M. Aiken, S.B. Bacharach & J.L. French, “Organisa-tional Structure, Work Process, and Proposal Making in Administrative Bureaucracies”, Academy of Management Journal, 23, 1980, pp. 631-652.

8. N. Anderson & N. King, “Innovation in Organisations”, in C.L. Cooper & I.T. Robertson (eds.): Inter-

national Review of Industrial and Organisational Psychology (New York, Wiley, 1993), pp. 1-34. 9. R. Drazin & C.B. Schoonhoven, “Community, Population, and Organisation Effects on Innovation: A

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12. J.C. Henderson & J. Sifonis, “Understanding the Value of IS Planning: Understanding Consistency, Validity and IS Markets”, MIS Quarterly, 12(2), 1988, pp. 187-200; F.W. McFarlan, J.L. McKenney & P. Pyburn, “The Information Archipelago: Plotting a Course”, Harvard Business Review, 63, Janu-ary, 1983, pp. 145-156.

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Journal, 12 (2), 1991, pp. 101-114. 27. Instituto Nacional de Estadística, Directorio Central de Empresas (DIRCE, 2003), http:\\www.ine.es\ 28. M. Ottens, “Internet usage by individuals and enterprises”, Eurostat-Statistics in Focus, 16, 2004. 29. M.K. Moch & E.V. Morse, “Size, Centralization and Organisational Adoption of Innovations”, Amer-

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Table 1. Profile of Response Sample

Activity Sector Nº % Size

(employees) Nº %

Annual Revenue (€)

%

Industrial 7 7.4 One-man

firm

6 6.4 - 150,000 33.7

Financial Institution and insurance 8 8.5 1 – 5 24 25.5 150,000-300,000 17.4

Transport and communication 12 12.8 6 – 10 19 20.2 300,000-451,000 8.1

Commercial 38 40.4 11 – 25 13 13.8 451,000-601,000 7.0

Building 7 7.4 26 – 50 12 12.8 601,000-901,000 2.3

Other Services 22 23.4 51 -100 - 5 5.3 901,000 - 31.4

101 - 250 15 15.9

Total 94 100.0 Total 94 100.0 Total 100.0

Table 2. Descriptive Statistics and Correlations a

1 2 3 4 5 6 7 8

1. INTERNET b -

2. SIZE 0.507** -

3. ENTREPRENEURIAL 0.264* 0.036 -

4. TECHNOLOGICAL 0.368** 0.248* 0.101 -

5. ADMINISTRATIVE 0.224* -0.144 -0.080 0.123 -

6. HOSTILITY 0.177 0.116 -0.018 0.109 0.032 -

7. DYNAMISM 0.319** 0.151 0.046 0.129 -0.037 0.269** -

8. COMPLEXITY 0.220* 0.036 0.108 -0.078 -0.038 0.179 0.027 -

Means - 2.768 4.351 3.840 5.426 6.915 6.67 8.128

Std. Dev. - 1.996 2.350 2.177 2.107 2.118 2.177 2.161 a Number of cases = 94 b This correlation is Rho Spearman, all others are Pearson product-moment statistics.

* p < .05; ** p < .01


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16

Table 3. Results of Logistic Regression Analysis a

Model 1 Model 2 Model 3

Constant -2.5403*** -10.953*** -21.273***

ACTIVITY SECTOR b Categorical Categorical Categorical

Industrial

Financial Institution and Insurance

Transport and communication

Commercial

Building

0.0349

0.1763

0.7978

-0.0027

-1.4690

0.0806

-0.6763

0.8019

0.1583

-1.2584

0.6101

-1.1158

0.5061

-0.4277

-0.5449

SIZE 0.6585*** 1.0373*** 1.1659***

STRATEGY

Entrepreneurial 0.4668*** 0.5580***

Technological 0.3364** 0.4241**

Administrative 0.6476*** 0.8585***

ENVIRONMENT

Hostility 0.099

Dynamism 0.4884**

Complexity 0.4962**

MODEL FIT

Overall hit rate c 79.79 85.11 86.44

-2 Log Likelihood 94.517 65.534 53.047

R2 Nagelkerke 0.369 0.633 0.724

Π2 Model

df

29.599***

6

58.581***

9

71.068***

12 a ** p < .01; *** p < .001 b A deviation coding scheme was used. The logistic regression coefficient contrasts each industry type to

the average effect of all types. c Random proportional chance model hit rate = 53.27 percent


Vol. 17(2): 205-218. DOI: 10.1080/09537320500088856

17

APPENDIX Strategic dimensions: You are kindly requested to place your firm on this scale for the following three questions:

1 2 3 4 5 6 7

Completely disagree

Completely agree

1. Our services are many and varied and we frequently change, looking for new opportunities. 2. The main technology of this firm is focused on having flexible and innovative technologies. 3. Our planning systems are very open and flexible.