eBusiness Policy Support Framework

Abstract

SMEs are slower than large firms to adopt new ICT unless effective use of ICT and performing operations electronically (eBusiness) across all sectors of the economy can act as a driver to increase competitiveness. Potential SME benefits and firm and sector-specific strategies drive the adoption and use of ICT. Furthermore, sectors are increasingly global and dominated by large firms and the structure of their values chains and operations shape opportunities for SMEs. Principal reasons for non-adoption are lack of applicability and little incentive to change business models when returns are unclear. SMEs also face generic barriers to adoption including trust and transaction security and IPR concerns, and challenges in areas of management skills, technological capabilities, productivity and competitiveness. The issues for governments throughout the European Union (EU) are to foster appropriate business environments for eBusiness and ICT uptake, and target programs to overcome market failures to the extent that they are needed in particular areas (e.g. skill formation, specialized information). Governments have a range of SME eBusiness and internet use programs. However, commercial considerations and potential returns are the principal drivers of SME adoption and profitable use. The key drivers for enabling eBusiness development are commitment and support of industry associations, in particular in sectoral initiatives, synergies by having access to resources from other initiatives or organizations, competitive pressure and ease of participation. The key barriers slowing ICT adoption are competition among companies in the target group, Lack of awareness, often combined with mistrust regarding ICT and ICT service providers, costs, lack of internal ICT and management knowledge, Network infrastructure issues: access and interoperability, Legal uncertainties. The European Commission has identified 3 factors that make it difficult for SMEs, in particular, to engage more fully with ICT and develop sustainable business practices: 1) the relatively high costs associated with investments in ICT; 2) the lack of technical and managerial skills and; 3) reluctance on the part of SMEs to network with other enterprises. The proposed framework summarizes the main policy directions derived from the analysis and the key areas of eBusiness support - Business environment, Skills upgrading, Network infrastructure, Trust infrastructure, Digital products and information services, Intangible investments and assets, Information, Government on-line. Finally the paper maps proposed key eBusiness support areas around key dimensions of eBusiness (functional, sectoral, and regional/spatial) on three distinct levels (micro: the level of the firm, meso: the level of the region, and macro: national/international).