Degree Name

Doctor of Philosophy


School of Information Technology and Computer Science


Using the Internet for electronic business has become an area of action for the Australian Government. Programs have focused on raising the awareness of small and medium sized enterprises (SMEs) to the opportunities offered by doing business on-line. Research into electronic business has reported adoption rates within particular industry sectors, but has not provided a theoretical framework for studying the process of diffusion of this dynamic interactive innovation, particularly in relation to explaining the levels of adoption and factors that affect the rate of adoption.

The goal of this dissertation was to address this limitation by proposing a framework, and testing it with a series of integrated empirical studies into the diffusion of electronic business in Australian manufacturing SMEs. Specifically, it answered the following question: Is the model of innovation adoption relevant to doing business on-line? Rogers' (1995) diffusion of innovation theory has been applied to attempt to account for the multiple pathways to adoption and the various multi-way communication channels. The role of the Model of Internet Commerce Adoption (MICA) (Burgess & Cooper, 1998b) was also explored within the total diffusion process.

A series of integrated studies was undertaken, using a triangular research methodology consisting of survey and case study interviews, to gather empirical data to apply to a theoretical study to test the research question. Business-to-business (B2B) dealings in the manufacturing industry in Australia was the focus of the studies. The manufacturing industry has experienced productivity improvements in recent years, and the outlook is strong. SMEs was the unit of study as these organisations are ideally placed to gain a competitive advantage in global trade, and therefore make valuable use of electronic business. In addition, SMEs were less likely to have dedicated information technology (IT) staff, which allowed the research to concentrate on the SMEs and their experiences in the diffusion process.

The initial and replication studies used the survey method and case study interviews with participating organisations in two equivalent manufacturing regions. A comparative study was undertaken to determine similarities and differences between the regions, and between small and medium organisations. Interviews were used to examine the role of national and regional industry associations as change agents in the diffusion process. Qualitative analysis of government initiatives provided a complete picture of what is available for manufacturing SMEs as a group in Australia. The findings from these studies was applied to the theoretical study, which tested the viability of existing models as evaluation tools for research into the dynamic interactive innovation of electronic business.

The results of the empirical studies indicated that while most manufacturing SMEs in regional Australia use computers, with a majority using email, only a small percentage utilise the Internet for transaction processing. Major barriers to becoming involved in electronic business were identified as concern about security and privacy of transactions, cost of consultants, and lack of IT expertise of staff. Examination of planned staff IT training methods revealed that employing people with appropriate knowledge has been added to current methods such as on-the-job training. Results from the comparative study found that the regions are consistent and equivalent in their use of e-business strategies. Some differences were found between small and medium organisations indicating a number of issues that need to be addressed. This forms part of the recommendations outlined for industry associations, government and the education sector in relation to their role in the diffusion process.

Results from the theoretical analysis, that applied the data from the empirical studies to Rogers' (1995) framework, demonstrated that extension and modification to the diffusion model is necessary to explain a dynamic interactive innovation within a global environment. Level of adoption is more appropriately measured with MICA (Burgess & Cooper, 1998b). Factors that affect adoption are more suitably defined by including additional elements such as barriers than inhibit involvement, and the management and coordination role necessary for the relevant change agents.

The research encompassed in this dissertation strongly suggests that diffusion of a dynamic interactive innovation, such as electronic business, can be explained using this modified diffusion model. The limitation of this research is that the results cannot be generalised beyond members of the Australian Industry Group, the national industry
association that was used as the population-sampling frame. However, future research, using this modified model, can test these findings in other industry sectors. The outcomes of the empirical studies have provided a profile of manufacturing SMEs, which can be used in the future for either comparative or longitudal studies.



Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.