Unlocking e-commerce potential in SMEs: an integrative framework for adoption in emerging markets

UTAUT influences SMEs’ intention to adopt e-commerce technology

From four UTAUT constructs, performance expectancy, and facilitating conditions were found to significantly influence SMEs’ intention to adopt e-commerce technology. The rapid shift from offline to online shopping is partly due to the COVID-19 pandemic, which forced retailers to start conducting business online. Many found fruitful results in the online environment, thus encouraging SMEs to adopt e-commerce technology to get the desired performance. Multiple studies confirm that performance expectancy is a critical factor. For instance, research on SMEs highlights that performance expectancy significantly influences the intention to adopt e-commerce, as SMEs perceive that e-commerce can enhance their operational efficiency and sales growth (Kwarteng et al. 2024; Pobee 2021; Shahzad et al. 2020; Sombultawee 2020). This holds in various settings, suggesting that the possible performance advantages of e-commerce technologies drive SMEs’ adoption.

Facilitating conditions play a critical role in SMEs’ adoption of e-commerce, with findings confirming a strong effect size (f² = 0.129), making it one of the most influential factors in adoption decisions. The availability of financial resources, infrastructure, technical knowledge, and external support enables SMEs to overcome barriers and effectively integrate e-commerce into their operations. Often operating with limited resources, SMEs rely on external support systems, industry guidance, and financial accessibility to adopt digital technologies (Datta 2011; Pobee 2021). When adequate support structures, such as training programs, government incentives, or assistance from e-commerce platforms, are in place, SMEs are more confident in embracing digital transformation. Additionally, having internal financial and technical capacity reduces adoption hesitancy, allowing businesses to focus on leveraging e-commerce for market expansion and revenue growth. These findings underscore the need for ongoing investment in SME support programs, financial accessibility, and digital education initiatives to further enhance adoption rates.

Unlike performance expectancy and facilitating conditions, effort expectancy and social factors do not show a significant effect. This finding provides valuable insights into the dynamics of technology adoption among SMEs, particularly in Indonesia and Malaysia. While the UTAUT model traditionally considers effort expectancy and social influence as key predictors of adoption, recent research suggests that their relevance may vary across different contexts, particularly in mandatory adoption environments or digitally mature SME sectors.

Effort expectancy, which refers to the perceived ease of use of technology, is often considered a significant determinant in early adoption phases. However, in the SME context, its influence appears to be weaker. Studies from Indonesia and Iraq indicate that perceived ease of use does not significantly impact e-commerce adoption decisions (Khsroo et al. 2024; Rafinda et al. 2024). One possible explanation is that SMEs are becoming more familiar with digital technology, reducing the relevance of effort expectancy in decision-making. Additionally, the rapid shift to online commerce, accelerated by the COVID-19 pandemic, has forced SMEs to embrace digital platforms as a necessity rather than a choice. As a result, whether e-commerce is perceived as easy to use becomes secondary to its business benefits and survival potential. Even if SMEs perceive e-commerce as challenging to operate, the need to remain competitive overrides concerns about usability.

Similarly, social factors, representing peer influence and social network effects, do not significantly impact SMEs’ intention to adopt e-commerce. Prior studies from Mexico and Malaysia found that subjective norms and social influence had little to no impact on SME adoption of fintech and e-commerce technologies (Haces et al. 2024; Rafinda et al. 2024). This suggests that SMEs prioritize practical and financial considerations over peer recommendations. Unlike consumers, whose adoption decisions are often influenced by social trends, SMEs are driven by business needs, profitability, and operational efficiency. Additionally, digital infrastructure is expanding in countries like Indonesia and Malaysia, and e-commerce platforms are becoming widely accessible. Thus, participation in e-commerce is not perceived as a socially relevant decision but as a strategic business necessity.

Innovation resistance theory influences SMEs’ intention to adopt e-commerce technology

H8 examined the negative relationship between usage barriers and SMEs’ intention to adopt e-commerce technology, and the findings support this hypothesis. However, the effect size is small (f² = 0.015), indicating that while usage barriers hinder adoption, their influence is relatively weak compared to performance expectancy, which has a more substantial effect on adoption decisions. SMEs often face challenges in understanding and utilizing e-commerce platforms, mainly due to limited IT skills within their workforce (Azubuike et al. 2023; Nazir and Roomi 2021). While this complexity may contribute to hesitation, it does not outweigh the perceived necessity of going digital. As e-commerce adoption becomes increasingly essential for SMEs to remain competitive, performance expectancy, specifically the potential for higher sales and market expansion, holds greater weight in their decision-making. This aligns with the broader trend that SMEs prioritize business outcomes over usability concerns, as seen in the insignificant effect of effort expectancy in the UTAUT discussion. Given the relatively weak influence of usage barriers, efforts to enhance SME adoption should focus on reinforcing the perceived benefits of e-commerce rather than solely addressing usability concerns. While improving platform accessibility remains important, SMEs appear more motivated by expected revenue growth and business sustainability, further reinforcing the dominance of performance expectancy in adoption decisions.

H9 examined the negative relationship between value barrier and SMEs’ intention to adopt e-commerce, with findings confirming that value perception is the strongest determinant of adoption (f² = 0.487). This suggests that SMEs’ adoption decisions are primarily driven by assessing the perceived value of e-commerce. When they see clear benefits, they are more likely to adopt; when they perceive limited value, they resist adoption. SMEs carefully weigh the expected returns against the effort and costs of adopting e-commerce. If they believe that the time required to learn online marketing systems outweighs potential revenue gains or that platform costs exceed expected profits, they are unlikely to invest in digital transformation (Karim and Gide 2018; Satar and Alarifi 2022). The strong influence of value barrier aligns with the significant role of performance expectancy in adoption decisions. SMEs are not simply deterred by usability or operational complexity; they adopt e-commerce when they perceive a strong business case, revenue potential, and strategic advantage. This underscores the need for policymakers and e-commerce platforms to enhance perceived value by demonstrating tangible benefits, ROI, and scalable growth opportunities.

H10 examined the negative relationship between risk barrier and SMEs’ intention to adopt e-commerce, with findings confirming a significant but weak effect (f² = 0.024). This suggests that while SMEs acknowledge risks related to security, financial loss, and product imitation, these concerns are not the primary determinants of adoption decisions. The small effect size of risk barrier compared to performance expectancy (f² = 0.068) and facilitating conditions (f² = 0.129) indicates that SMEs place greater emphasis on having the necessary resources, infrastructure, and external support (facilitating conditions) rather than concerns about risk. While SMEs may fear transaction insecurity, product copying, or financial losses (Harsasi et al. 2023), these concerns do not outweigh their ability to secure financial resources, access infrastructure, or receive external support for digital transformation. This aligns with the finding that facilitating conditions play a more decisive role in adoption, as SMEs rely on financial and knowledge resources to engage in e-commerce confidently. The findings highlight that SMEs adopt e-commerce not because they ignore risks but because they prioritize having the necessary means to manage those risks. Trust in e-commerce platforms remains relevant (Khsroo et al. 2024), but SMEs appear more influenced by their financial and operational readiness. Therefore, reducing perceived risks alone may not be sufficient to drive adoption. Efforts should also focus on enhancing SMEs’ access to financial resources, technical knowledge, and support networks to strengthen their ability to adopt and sustain e-commerce.

H11 hypothesized that tradition barriers exert a significant association with use intention. The study findings do not support the hypothesis. While traditional practices can shape decision-making, their impact appears to be overshadowed by more pressing factors, such as perceived business benefits, competitive pressures, and the availability of digital infrastructure (Harsasi et al. 2023). This aligns with Innovation Diffusion Theory (Rogers 2003), which suggests that resistance due to tradition decreases as a technology matures and adoption spreads. Several contextual factors may explain this insignificant relationship. First, Indonesia and Malaysia have experienced strong governmental support for digitalization, active e-commerce campaigns, and increased accessibility to affordable digital tools, which likely reduces the impact of traditional resistance. Second, the industries examined in this study, including fashion, cosmetics, and education services, are highly consumer-driven and rapidly evolving, making it essential for SMEs to adapt to technological shifts regardless of traditional norms. Third, by the time this study was conducted, e-commerce platforms had reached a high level of growth in both Indonesia and Malaysia. Tradition barriers may act as a significant obstacle when a technology is first introduced. Still, their influence tends to decline as adoption becomes widespread and digital transactions become standard business practices. These findings align with research suggesting that entrepreneurial SMEs prioritize innovation and digital transformation over traditional constraints (Himawan et al. 2024; Khsroo et al. 2024). Moreover, the increasing normalization of digital transactions in society may have weakened the role of tradition barriers. SMEs may now view digitalization as a necessary step rather than a cultural shift. While tradition barriers may not significantly impact adoption decisions in this study, future research could explore whether these barriers influence the speed of adoption rather than the decision itself. Additionally, tradition barriers may still influence rural SMEs or industries with deeply entrenched business models where cultural norms play a more prominent role in operational decision-making.

H12 examined the negative relationship between image barriers and SMEs’ intention to adopt e-commerce, with findings confirming a significant but weak effect (f² = 0.015). This suggests that while some SMEs perceive e-commerce as complicated, insecure, or potentially harmful, these concerns do not dominate adoption decisions. The small effect indicates that SMEs prioritize other factors, such as expected business outcomes and resource availability over image concerns when adopting e-commerce. While some SMEs may hesitate due to fears of increased competition, uncertainty about digital transactions, or a preference for traditional business models (Kinkani et al. 2024), these concerns do not significantly deter adoption. Instead, the decision to engage in e-commerce is more influenced by practical considerations such as financial resources, infrastructure support, and the potential for revenue growth. Although image barriers exist, their influence can be mitigated by enhancing SMEs’ confidence in digital platforms through financial incentives, security assurances, and industry-wide digital adoption initiatives. Rather than being a major obstacle, image barriers appear to be a secondary concern, likely to be overcome when SMEs recognize the tangible benefits of e-commerce.

TOE framework influences SMEs’ intention to adopt e-commerce technology

The result showed that the technological aspect of the TOE framework does not significantly influence SMEs’ intention to adopt e-commerce technology. This finding contrasts with traditional expectations that technological readiness is a key driver of digital adoption but aligns with studies suggesting that organizational and environmental factors often outweigh technological factors in SME decision-making (Tornatzky and Fleischer 1990). One possible explanation is that SMEs prioritize immediate business benefits, such as customer engagement and competitive positioning, over the technical integration of e-commerce platforms. Several contextual factors related to the specific indicators used to measure technology readiness in this study may explain the insignificant influence of technological factors. First, one measured indicator was whether the online marketing system would integrate seamlessly into SME operations. However, many SMEs operate with flexible, informal, or hybrid business models that do not necessarily require full system integration. Retail SMEs in sectors such as fashion, cosmetics, and F&B often rely on semi-automated or manual processes sufficient for their scale of operations, making seamless technological integration a lower priority (Setiyani and Yeny Rostiani 2021). Rather than focusing on integration, these SMEs may emphasize market accessibility, branding, and customer interaction, which are captured under organizational and environmental factors. Second, the expectation that online marketing requires low costs may be met with skepticism by SMEs. While e-commerce platforms often advertise low-cost entry points, SMEs may encounter hidden costs associated with customization, platform fees, logistics, and digital marketing expenses (Satar and Alarifi 2022). These financial considerations may lead SMEs to deprioritize technology as a key adoption driver, viewing it as a tool rather than a strategic advantage. Another key factor is the growth of e-commerce platforms in Indonesia and Malaysia. Over time, the ease of adopting e-commerce platforms may have reduced the importance of technological considerations in SME decision-making. Modern platforms offer pre-integrated solutions that require minimal IT expertise, making organizational readiness (including financial and managerial support) and external environmental factors (such as competition and consumer demand) stronger predictors of adoption. Additionally, many SMEs rely on third-party services for logistics, payment integration, and digital marketing, reducing their dependence on internal technological capabilities.

On the other hand, organizational factors play a significant role in SMEs’ adoption of e-commerce, with findings confirming a medium effect size (f² = 0.197), making it the second most influential factor after value barrier. This highlights that internal readiness, managerial support, and resource availability are key determinants of whether SMEs integrate e-commerce into their business operations. SMEs with a proactive approach to digital marketing, strong managerial support, and a capable workforce are better positioned for adoption. When SME owners actively support online marketing financially and non-financially, they create an environment that fosters digital adoption. This aligns with findings that organizational readiness, including financial stability and technical expertise, directly influences technology adoption (Alshamaila et al. 2013). Similarly, managerial commitment to innovation is essential for overcoming resistance to change and ensuring the successful implementation of e-commerce strategies (Ghobakhloo et al. 2011). The substantial effect size of organizational factors suggests that SMEs prioritize internal preparedness over external pressures when adopting e-commerce. Even in a rapidly digitalizing market, SMEs are more likely to adopt when they have the internal capacity to manage online marketing effectively. These findings underscore the importance of investing in digital skills development, leadership-driven digital initiatives, and financial support mechanisms to further promote e-commerce adoption among SMEs.

H7 examined the influence of environmental factors on SMEs’ intention to adopt e-commerce, with findings confirming a significant but weak effect (f² = 0.010). This suggests that competitive pressure, customer behavior, and government support contribute to adoption decisions but are not primary drivers. SMEs are aware of shifting consumer preferences and increasing competition in e-commerce, but these factors alone do not significantly influence their adoption decisions. Instead, SMEs are more likely to adopt e-commerce when they have internal readiness and perceive tangible business benefits. While government support through financial incentives, training, and infrastructure development helps create a favorable environment for adoption (Triandini et al. 2023), its influence is secondary to organizational preparedness and expected performance gains. The low effect size suggests that SMEs do not passively adopt e-commerce in response to external pressures. Instead, they evaluate their internal capabilities and potential returns before making adoption decisions. This aligns with findings that competitive pressure and customer demand alone do not automatically translate to adoption unless SMEs see clear advantages in terms of sales growth and operational efficiency (Ahmad and Siraj 2023; Shahadat et al. 2023). While environmental factors shape the broader market landscape, SMEs ultimately prioritize internal readiness and perceived business value in their adoption decisions. To further encourage SME adoption, government initiatives, and market incentives should focus on external support and strengthening SMEs’ internal capabilities and financial preparedness.

Industry variation

Since this study focuses on e-commerce adoption, the samples were deliberately selected from the retail industry, encompassing both goods and service retail subsectors. SMEs in the retail industry are particularly well-suited for this research, as their operations naturally align with the core functions of e-commerce. Retail SMEs can readily sell their products or services online, conduct online purchase transactions with consumers, and integrate digital platforms into their marketing and sales strategies. This contrasts with the construction, real estate, or entertainment industries, where direct online consumer transactions are more challenging or less relevant. This operational suitability makes retail SMEs an ideal setting for investigating e-commerce adoption and the factors influencing its success.

The study sample includes several retail subsectors. Based on our observation and interviews with SMEs in each subsector, each shows distinct e-commerce needs and priorities, and adoption drivers and challenges. These differences reflect variations in customer expectations, product characteristics, and operational challenges. For example, fashion retail SMEs primarily adopt e-commerce to expand their market reach and enhance consumer engagement through visually appealing digital marketing tools. Their e-commerce needs focus on platforms that support high-quality product imagery, social media integration, and user-friendly interfaces to attract customers. These businesses prioritize branding and personalized shopping experiences, often leveraging influencer marketing and digital advertising campaigns. However, key challenges include managing product returns and combating counterfeit or copied products. Despite these barriers, the availability of visually driven marketing tools and global access to customers make e-commerce a vital channel for fashion SMEs.

Like fashion, cosmetics, and skincare, SMEs emphasize visually appealing marketing and influencer-driven strategies. Their e-commerce needs include platforms that allow product tutorials, reviews, and detailed product descriptions to educate consumers about the benefits and usage of products. The primary challenges for this subsector include the inability of consumers to physically test products, concerns about product compatibility (e.g., suitability for different skin types), and managing allergic reactions or customer dissatisfaction. Overcoming these barriers requires robust return policies, digital tools such as virtual try-ons, and targeted consumer education campaigns.

Electronics retailer SMEs focus on providing detailed product information, user reviews, and comparison features to facilitate informed purchasing decisions. Their e-commerce needs revolve around reliable platforms that support advanced search filters and integration with after-sales support systems. Logistics challenges, such as handling fragile or high-value items, providing adequate technical support, and competing in a highly price-sensitive market, are significant barriers for this subsector. Competitive pricing strategies and partnerships with logistics providers are essential to overcoming these challenges.

Eco-friendly product SMEs cater to environmentally conscious consumers, emphasizing sustainability certifications, storytelling, and eco-branding in their e-commerce strategies. Their needs include platforms that highlight product certifications (e.g., organic) and educate consumers about the environmental benefits of their products. Challenges in this subsector include high production costs, sourcing sustainable packaging materials, and increasing consumer awareness. Leveraging niche marketplaces and collaborating with environmental organizations can help overcome these barriers and build consumer trust.

F&B SMEs rely on e-commerce to enable online ordering and delivery services. Their e-commerce priorities include seamless integration with delivery platforms and user-friendly mobile applications to enhance customer convenience. However, challenges such as maintaining food quality during delivery and coping with high platform fees from delivery apps can hinder adoption. F&B SMEs need reliable cold chain systems and innovative packaging solutions to ensure product quality and customer satisfaction.

Accommodation SMEs adopt e-commerce primarily for online booking and reservation systems, enabling real-time availability updates and leveraging customer reviews to build trust. They require platforms that facilitate seamless booking experiences, integrate with travel aggregators, and provide customer feedback systems. Key challenges include maintaining personalized services, managing cancellations, and navigating platform commission fees.

Handicraft SMEs use e-commerce to preserve cultural heritage and connect with niche global markets. Their needs center on platforms that support storytelling, artisanal branding, and showcase unique, handcrafted products. Challenges for this subsector include tradition-related resistance, limited digital skills, and the inability to scale production for larger markets. Training programs in digital skills, combined with government support for promoting artisanal products, can help address these barriers.

Education SMEs offering online courses prioritize e-commerce platforms that support e-learning tools such as live streaming, recorded sessions, and learning management systems (LMS). Their needs include functionality for enrollment management and content delivery. Challenges include replicating traditional classroom experiences online, protecting intellectual property, and maintaining student engagement. Providing interactive and adaptive learning tools, as well as securing course materials, can help mitigate these challenges.

SMEs in graphic design adopt e-commerce to showcase their portfolios, attract clients, and streamline project management. Challenges include difficulties conveying the value of creative services online and competing in saturated digital marketplaces. Offering unique value propositions and leveraging SEO strategies can help graphic design SMEs stand out.

Despite their diversity, retail SMEs share commonalities in their e-commerce adoption strategies. Customer trust and engagement are universal priorities, with online reviews, secure payment systems, and responsive customer support playing critical roles. Additionally, all subsectors require reliable digital infrastructure to facilitate operations, including user-friendly platforms, social media integration, and logistics solutions. Shared barriers include financial constraints, a lack of technical expertise, and resistance to change.

Comparison with past studies

This study builds upon previous research on SME e-commerce adoption, particularly Mensah et al. (2023) and Nguyen et al. (2024), by integrating Innovation Resistance Theory (IRT) alongside TOE and UTAUT. While prior studies primarily focused on drivers of adoption, this study offers a more comprehensive perspective by examining both enablers and barriers, shedding light on why some SMEs hesitate to adopt e-commerce.

From a methodological standpoint, this study covers Indonesia and Malaysia, providing a broader regional scope compared to Mensah et al. (2023) (China) and Nguyen et al. (2024) (Vietnam—CBEC). Additionally, while Mensah et al. (2023) employed simple random sampling, this study utilizes a stratified random sampling approach based on industry sectors, ensuring that SME-specific variations are captured.

A key distinction lies in the theoretical framework used. Mensah et al. (2023) integrated TOE and UTAUT, whereas Nguyen et al. (2024) combined TOE with TPB. This study extends these models by incorporating Innovation Resistance Theory (IRT) to systematically examine five resistance factors: Usage Barrier (UB), Value Barrier (VB), Risk Barrier (RB), Tradition Barrier (TB), and Image Barrier (IB). This framework allows for a more balanced analysis of adoption motivators and inhibitors, which were not fully explored in prior studies.

Findings reveal several key differences. Unlike Mensah et al. (2023), this study finds that technological factors do not significantly drive adoption, suggesting that SMEs in Indonesia and Malaysia rely more on internal readiness and expected business outcomes than on technology infrastructure alone. Additionally, while Mensah et al. found that environmental factors had no significant impact, this study identifies a weak but present effect (f² = 0.010), indicating that competitor success, customer behavior, and government support still influence SME decisions but are not primary determinants of adoption. Compared to Nguyen et al. (2024), who found strong external pressures in cross-border e-commerce adoption, this study suggests that domestic e-commerce adoption is more internally driven, emphasizing organizational readiness and financial capacity over regulatory and market pressures.

From a practical perspective, this study highlights that reducing perceived risk and clarifying value perception are crucial for encouraging SME adoption. In contrast, Mensah et al. (2023) emphasize organizational capabilities, while Nguyen et al. (2024) stress the importance of government support. Moreover, this study finds that facilitating conditions (f² = 0.129) and organizational factors (f² = 0.197) have a greater influence on adoption decisions than external pressures, reinforcing the idea that SMEs prioritize financial resources, managerial commitment, and internal preparedness over external influences.