E-commerce- Cause and Effect

E-commerce- Cause and Effect


(Instructors’ name)




The last few years have seen the integration of the internet in business operations as a business strategy. Specifically, the 20th century has seen the adoption of E-commerce in most businesses, both large and small, so as to assure continuity of business. As research studies explain, the adoption of E-commerce in businesses and enterprises has been advantageous to businesses but some businesses have failed in their adoption of this strategy. In their study of the issue, MacGregor and Lejia state, “Over the last decade, the Internet and Internet technologies such as electronic commerce have experienced phenomenal growth. However, research shows that small businesses have been slow to adopt and to implement e-commerce due to a variety of barriers or impediments.” (MacGregor & Lejia 1-24). Small family owned businesses have especially been slow in their adoption and implementation of E-commerce as a business strategy, and for that reason, they tend to fail in their business operations. Accordingly, researchers have focused their studies on identifying the causes and effects of E-commerce on small family owned businesses so as to discover the benefits of E-commerce on small businesses.

This paper examines the causes and effects of E-commerce on small family owned businesses.

Causes and Effects of E-commerce on Small Family Owned Businesses

Small family owned businesses have long been influenced by E-commerce since the introduction of this phenomenon in the business industry. As a business strategy, E-commerce has enabled most small businesses in their continuity of operations, thus ensuring the success of these businesses. To understand the importance of E-commerce in small businesses, one must first consider the causes and effects of E-commerce on small family owned businesses.


One main cause of E-commerce on small family owned businesses has been identified. Market penetration has been identified as the main cause of the application of E-commerce in small family owned businesses. The business market is hard to penetrate especially for small businesses, as they are forced to compete with other larger companies. The application of E-commerce as a business strategy allows small companies to market their products and services to a wide market range. This, sequentially, allows small businesses to penetrate their respective markets with minimal trouble arising from having to compete with the larger and bigger companies.


“…the key objectives of most businesses remain as follows: 1. improve productivity, 2. manage inventory more cost effectively, 3. improve cash flow, and 4. improve customer service. Electronic commerce is one of the few tools available that can favorably impact all 4 objectives. To fail to aggressively adapt this tool is to miss the opportunity to re-engineer an inter-organizational playing field that is becoming the successful business domain” (Boynton 126). Not only does E-commerce reduce the costs of marketing and advertising for the company, it also increases productivity for the businesses. E-commerce exposes companies to a broad environment, thus encouraging more productivity by both the employees and the business as a whole. E-commerce has also been identified as being a tool for the improvement of customer service. This is primarily so because it allows more personalized services with customers, as customers have direct contact with the company. This, therefore, allows customers to provide immediate feedback to the company regarding their products and services.


The identification and recognition of the causes and effects of E-commerce on small businesses is necessary for the recognition of its importance in small and medium business enterprises. “The article focuses on the effect of electronic commerce (e-commerce) on the business world. It says that e-commerce will play a vital role in the success of companies. However, there are several issues which need to be addressed to succeed the e-commerce including process creation and resolution of inherent channel conflict.” (International Journal Of Retail & Distribution Management 122-123) Small family owned businesses can use the information gathered regarding the causes and effects of E-commerce on small businesses to successfully run their business operations. Only through the identification of this can small businesses succeed in their operations in the industry, and to gain competitive advantage.

Works Cited

Boynton, Allan G. Electronic Commerce: Focusing on Success. Chain Store Age 70.1(2004):

126. ABI/INFORM Global. Web. 18 Dec. 2011.

MacGregor, Robert C., and Lejia Vrazalic. E-Commerce Adoption Barriers In Small Businesses

And The Differential Effects Of Gender. Journal Of Electronic Commerce In Organizations, 4.2 (2006): 1-24. Business Source Elite. Web. 18 Dec. 2011.

“The Realities Of Web-Based Electronic Commerce.” International Journal Of Retail &

Distribution Management 26.3 (1998): 122-123.Business Source Elite. Web. 18 Dec. 2011.