174 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 1.12 EU SMEs and E-Business Innovation Anne Wiggins The London School of Economics and Political Science, UK INTRODUCTION Although motivating electronic business (e-busi- ness) adoption and implemention by small- and medium-sized enterprises (SMEs) is endorsed by policies and initiatives introduced by the European Union (EU), a number of challenges arise as the result of a limited conceptual understanding of the relationship between SMEs and information and communication technologies (ICTs). Relatively little is known about how SMEs respond to the opportunities provided by ICTs, and even less is known about why and how small businesses use ICTs (Dixon, Thompson, & McAllister, 2002). ,QWKH¿UVWVHFWLRQRIWKLVFULWLFDOUHYLHZRIWKH academic and government bodies of literature re- lated to EU SMEs, e-business and policy initiatives DQGGH¿QLWLRQVRI60(VDUHH[SODLQHGWKHXQLTXH characteristics of SMEs and entrepreneurial characteristics are outlined, and the case is made that there is a clear need for more comprehensive research on SMEs in the European Union. The second section concentrates on e-business. Many of the factors that compel organisations to adopt and implement innovation are pertinent to the adoption and implementation of e-business. These have hitherto largely been treated as sepa- rate bodies of literature, however. In this section, WKHEHQH¿WVRIHEXVLQHVVDUHH[SORUHGWKHIDF- tors that motivate or act as barriers to e-business adoption and implemention are outlined, and the organisational and management attributes that would seem to ensure the success of the innova- tion of adopting and implementing e-business are discussed. The third and penultimate section explores EU policy initiatives relevant to SMEs and to the promotion of e-business. The most wide-ranging and prominent initiatives directed at SMEs are H[DPLQHGKHUH7KH¿QDOVHFWLRQRIWKHSDSHUFRQ- cludes with suggestions for further research. BACKGROUND 7KHUH LV QR VLQJOH GH¿QLWLRQ RI DQ 60( EXW schemes that are targeted at SMEs usually adopt D YDULHW\ RI ZRUNLQJ GH¿QLWLRQV GHSHQGLQJ RQ 175 EU SMEs and E-Business Innovation their particular objectives. The importance of the SME sector as the cornerstone of a country’s economic prosperity is widely recognised: SMEs comprise approximately 95% of the enterprises in most nations, and are responsible for employing between 60-70% of a nation’s workforce (OECD, 2002). Consequently, the SME sector is crucial to the EU’s competitive development, collectively and for each individual member nation (Mul- hern, 1995). SMEs contribute to local economic growth by providing local services, employment opportunities, and by enabling participation in the economic development of their own communities. They also play a vital role in innovation, as the intermediaries between the public research infra- structure and large organisations, as developers of new ideas, and as adopters of new technolo- gies. SMEs have the potential to act as vehicles for the industrial and economic change of entire regions, as entrepreneurship attracts many who would otherwise withdraw from the labour market. Entrepreneurship can provide a positive way out of unemployment, particularly in disadvantaged FRPPXQLWLHVZKHUHWKHSRWHQWLDOZLGHUEHQH¿WV RIHQWHUSULVHFDQEHHYHQPRUHVLJQL¿FDQW6PDOO businesses often stimulate productivity growth amongst rival businesses (BarNir & Smith, 2002; Jeffcoate, Chappell, & Feindt, 2002, 2004; Small Business Service, 2004), and their dynamism can stimulate competition and innovation throughout the economy as a whole. The unique characteristics of SMEs that set them apart from larger organisations create par- ticular issues, because in day-to-day business operations the organisational, entrepreneurial, familial, and social structures in SMEs differ from those of larger organisations. An understanding of the constitution and circumstances of SMEs is essential in order to be able to identify the fundamental differences between large and small organisations and the effects of these differences on innovation—especially e-business innova- tion—adoption and implementation (Cheney, Mann, & Amoroso, 1986). SMEs face both eco- nomic and organisational constraints, a lack of DFFHVVWRFDSLWDOFDVKÀRZGLI¿FXOWLHVOLPLWHG ICT skills, a chaotic organisational structure, and heavy workloads—all factors that may impede in- novation (Small Enterprise Telecommunications Centre, 2002). SMEs also have their own unique qualities in terms of their environment, struc- ture, psycho-sociological climate, management, and technology usage and adoption (Castleman, Coulthard, & Hewett, 2000; Smallbone, North, Vickers, & McCarthy, 2000; Thong, 2001). SMEs tend not to have the resources available to large organisations, and this lack of resources creates WLPH¿QDQFLDODQGH[SHUWLVHFRQVWUDLQWV)DFLQJ these constraints, SMEs are likely to be more cautious than large organisations to adopt new technologies (Huang, Hart, & Wiley, 2004). Entrepreneurial attributes such as creativity, ÀH[LELOLW\ DQG G\QDPLVP DUH DVVRFLDWHG ZLWK the SME sector. The importance of creating an environment rich with opportunities through the support of entrepreneurial characteristics cannot be overstressed. Entrepreneurship relies not only on individuals or groups possessing the skills to recognise and harness potential, but also on conditions that permit, encourage and sustain them in their endeavours. Governments FDQ FUHDWH WKH HFRQRPLF ¿VFDO DQG UHJXODWRU\ framework, infrastructure and environment in which entrepreneurs and the organisations they found and run are able to recognise, realise and maximise potential competitive advantage. Al- WKRXJKIHZJRYHUQPHQWSROLFLHVDUHVSHFL¿FDOO\ directed at creating an entrepreneurial culture, cumulatively all government policies affect the long-term factors that create conditions that (can) foster entrepreneurs (HM Treasury, 2001). A stable DQGWUDQVSDUHQWHFRQRPLFDQG¿VFDOHQYLURQPHQW with steady economic growth can not only provide entrepreneurs with appropriate opportunities to foster entrepreneurial experiments, but also with a chance to convince the market of their potential contribution. 176 EU SMEs and E-Business Innovation Entrepreneurship is closely liked to the psy- chological and behavioural aspects of individuals, and it would seem that an entrepreneur’s personal initiative therefore dominates the potential for the success of many SMEs (Howarth, 2002; Kuem- merle, 2002; Quayle, 2002a, 2002b; Vrazalic, Bunker, MacGregor, Carlsson, & Magnusson, 2002). Entrepreneurs share a commitment to the consistent and methodological exploration of possibilities to improve a business’s potential (Drucker, 1998). Entrepreneurs also share the distinctive characteristics of feeling comfortable skirting the boundaries of propriety, assuming enormous personal risk, being willing to shift strategies quickly, being profoundly opportunis- tic, and doing whatever it takes to close a deal (Kuemmerle, 2002). Having examined not only a number of the characteristics of SMEs but also the issues pertaining to their operations, we turn now to examine e-business in more detail, as it is a form of technological innovation that can profoundly impact SMEs. EU SMEs AND E-BUSINESS INNOVATION (EXVLQHVV SUHVHQWV VLJQL¿FDQW FKDOOHQJHV WR academic research. These challenges arise from its recent emergence, the rapid change that char- acterises the domain, the variation in behaviour in (apparently) similar contexts, the enormous media attention it has generated (with its resultant distortion of terminology and data), the lack of familiarity with e-business technologies by many management scholars, and the lack of established research approaches (Drew, 2002). It has been GLI¿FXOWIRUUHVHDUFKHUVWRLVRODWHWUHQGVLQWKH separate innovation, ICT, and e-business canons from more general economic and organisational change drivers. Moreover, research has often failed to examine the roles of size, age, sector experience of ICTs and management support within single integrated studies, types of exporting activities, DZDUHQHVVRIEHQH¿WVW\SHVRIFXVWRPHUDQGLP- position by larger trading partners. These factors KDYHVHUYHGWRH[DFHUEDWHWKH³SDWFK\´QDWXUHRI much research (Dixon et al., 2002). 1RQHWKHOHVVHEXVLQHVVKDVSURIRXQGEHQH¿- cial consequences for business practice and re- search. Technology-driven change is revolutionis- LQJEXVLQHVVUHTXLULQJFRPSDQLHVWRUHGH¿QHWKHLU strategies, products and processes in a business- operating climate that has become increasingly competitive, turbulent, and uncertain (Goldman, Nagel, & Preiss, 1995). Organisations that have adopted e-business believe that it contributes to improved performance in four main ways: • The development of new products and ser - vices; • The generation of new customers and busi - ness channels; • A reduction in costs; and • Improved productivity (HM Treasury, 2001). E-business is a resource that is rapidly inno- vating not only traditional business processes but also the very nature of competition, as e-business enables market fragmentation, with its ability to treat mass clients as individuals, convergence be- tween products and services, generation of global production networks, and simultaneous coopera- tion and competition between organisations. As e-business facilitates this radical transformation of both technical and business operations, it is truly innovative. Innovation is an important engine of long-term competitiveness, growth and employ- ment. The OECD estimated that between 1970 and 1995, more than half of the total growth in output of the developed world resulted from innovation, and that this proportion is increasing as economies become more knowledge-intensive (Irwin, 2000). The cross-functional nature of innovation man- agement requires strong leadership in managing through turbulence (Tushman, 2002). 177 EU SMEs and E-Business Innovation The Innovation Scoreboard (which analyses statistical data in the areas of human resources, knowledge creation and the transmission and application of new knowledge, and innovation ¿QDQFHRXWSXWDQGPDUNHWVIRXQGWKDWVDOHVRI innovative products as a proportion of total turn- over increases with organisation size: 15% for small, 21% for medium-sized, and 38% for large organisations. The Innovation Scoreboard (Eu- ropean Commission, 2000a) also found that large organisations spend nearly twice the proportion of their turnover (4.2%) on innovation activities as do SMEs. Similarly, the Statistics on Innova- tion in Europe, 2000 (European Commission, 2000a) also found that the larger the organisation, the more likely it is to be an innovator (36% of VPDOORIPHGLXPDQGRIODUJH¿UPVDUH innovators) and that SMEs account for only 18% of Europe’s innovation productions. Building an Innovation Economy in Europe, 2001 (European &RPPLVVLRQEZDVWKH¿UVWLQDVHULHVRI Innovation Policy Studies undertaken for the European Commission’s Enterprise Director- ate-General to promote the message that not only is innovation important, as competitiveness increasingly depends on the ability of industry sectors to meet turbulent market needs quickly DQGHI¿FLHQWO\WKDWLQQRYDWLRQLVSHUYDVLYHDQG GLYHUVHWDNLQJSODFHLQ¿UPVRIDOOVL]HVDFURVV all regions and all sectors, and that innovation is unevenly distributed, but also that innovation is systemic rather than linear, with multidimensional processes. In order to develop these ideas, we must draw further upon the literature to explore and extend questions concerning the motivation(s) for, and genesis of, innovation. There is no single reason for an organisation to innovate: In some cases, innovation is triggered by new knowledge, in RWKHUVE\WKHRSSRUWXQLW\WRIXO¿ODPDUNHW need (Mahdjoubi, 1997). Multiple forces inhibit change and maintain the status quo. Some of these forces are group performance norms, fear of change, member complacency, and a lack of skills (Bergquist, 1993). For lasting change to occur, new behaviours must be learned so that attitudes and routines can be replaced (Senge, 1990). Although the implementation of innova- tive ideas is an organisational change process (Hoffer, George, & Valacich, 1996), lasting competitive change takes application, time, and involves individual and organisational learning and adjustment. An organisation must possess (and be willing to commit) the resources needed to implement a new technology for innovation adoption and implementation to be successful (Amidon & Mahdjoubi, 1999). An organisation’s VL]H¿QDQFLDOUHVRXUFHVDQGWHFKQLFDONQRZKRZ D O OL Q ÀX H Q FH W K HDGR S W LR Q RI W H FK QROR J LF D O L Q Q RY D- tion. Customer and competitive pressures, along with support from business partners, can also be VWURQJLQÀXHQFLQJIRUFHVLQWKHDGRSWLRQGHFLVLRQ (Iacovou, Benbasat, & Dexter, 1995; Premkumar & Roberts, 1997). The 1999 KITE project’s Analysis of E-Busi- ness Practice in SMEs reported that SMEs typi- FDOO\KDYHPRUHGLI¿FXOW\LQDFKLHYLQJHEXVLQHVV success because of these characteristic SME attributes (Chappell & Feindt, 1999). The KITE project also found that SME e-business adoption and implementation success is dependent on the following factors: • Having an original idea and/or targeting a unique market niche; • Developing a business case for e-business; )LQGLQJVXI¿FLHQWIXQGLQJWRFDUU\RXWH business properly, without being dependent on third parties, or having to update sites out of hours, etc; • Finding the right business, technology and promotional partners; (QVXULQJWKHULJKW³ILW´EHWZHHQWKH company’s product or service and internet demographics; %HLQJÀH[LEOHHQRXJKWREHDEOHWRUHVSRQG to competition and changing technological conditions; and 178 EU SMEs and E-Business Innovation • Being able to manage and scale the growth that may result (Chappell & Feindt, 1999). Having examined the concepts of e-business and innovation, we turn now to examine EU policy initiatives directed at promoting e-business innovation amongst SMEs. FUTURE TRENDS A series of EU SME policies have been intro- duced to create a favourable competitive busi- QHVVHQYLURQPHQWLQZKLFK60(VFDQÀRXULVK However, relevant technological innovation policy promoting e-business adoption and implementa- WLRQGHSHQGVRQDQXQGHUVWDQGLQJRIZKDW³UH- ally” drives adoption and implementation, of the external barriers that prevent or delay it, and of how it impacts on competitiveness and employ- ment. Incentive schemes and policies intended WR EHQH¿W WKH 60( VHFWRU QHHG WKHUHIRUH WR take into account the culture, performance, and abilities of SMEs. Although an evolution towards more interactive support is visible, there is a high degree of heterogeneity in policy instruments aiming to foster innovation in SMEs throughout the European Union (HM Treasury, 2001). Cur- rent EU government-funded projects designed to assist SMEs to adopt e-business include the promotion of online trading and the creation of virtual business networks to promote technol- ogy diffusion (Papazafeiropoulou, Pouloudi, & Doukidis, 2002). A number of EU policies have been formulated and introduced to facilitate the creation of a busi- ness environment in which SMEs can innovate DQGÀRXULVK0RVW(8PHPEHUVWDWHJRYHUQPHQWV UHFRJQLVHWKDW60(VRIWHQKDYHGLI¿FXOW\¿QG- ing appropriate independent sources of business advice and information, and face skills shortages. Accordingly, they have launched national and regional initiatives to assist SMEs to acquire or adapt e-business skills (Mulhern, 1995). Many of these policies, schemes and programmes are interlinked. For example, the European Union’s 1994 Regional Technology Plan (RTP), which was inspired by the 1993 White Paper on Growth, Competitiveness and Employment, was in turn instrumental to the development of the 1996 Green Paper on Innovation, which was created to develop an EU-wide strategy for the promotion of innovation. The 1996 Action Plan for Innovation in Europe paved the way for a common European analytical and political framework for innovation policy. Building on this framework, the Trend Chart on Innovation in Europe was introduced as a tool for policy makers. Formulated along the lines of the 2001 Community Innovation Survey (CIS), which is jointly implemented by Eurostat and DG Enterprise under the aegis of the Euro- pean Innovation Monetory System (EIMS), The Trend Chart updates and analyses information on innovation policies EU-wide and at national level, and provides a forum for benchmarking and for WKHH[FKDQJHRI³JRRGSUDFWLFHV´LQLQQRYDWLRQ and technological policy development. The 2001 Innovation and SME Programme promotes innovation and supports SME participa- tion in the Fifth Framework Programme (FP5) in order to optimise their potential advantages from such participation. FP5 aims to diffuse good practices and to encourage interregional cooperation in innovation by improving support infrastructures, in addition to introducing comple- mentary policies for innovation and technology transfer through a set of interrelated projects: the Regional Innovation Strategy (RIS), the Regional Innovation and Technology Transfer Infrastruc- tures and Strategies (RITTS) and the Regional Technology Transfer Projects (RTT). The RIS and RITTS projects share the same methodol- ogy and philosophy as well as many objectives in common. Both are based on building regional consensus and agreement, referenced to the same FRUHVSHFL¿FDWLRQVDQGDUHDEOHWRJLYHDFFHVVWR international experience. Twenty-eight European regions have been participating on RIS and RITTS 179 EU SMEs and E-Business Innovation projects since they were launched in 1994, and an additional forty regions have enlisted for similar initiatives. This calculates to approximately one region in four across the European Union par- ticipating in projects concentrating on enhancing local innovation capabilities, providing the most comprehensive structure for the development of regional systems of innovation in the world, by far (European Commission, 2000e). The DEEDS Forum generated from the G7 Policy Group project A Global Marketplace for SMEs (1996-1999), and seeks to provide an open forum of EU policy makers to stimulate, discuss, exchange, and monitor national policies. The project has a particular focus on the uptake of e- business practices by SMEs, as did The Bologna Charter on SME Policies. Held in 2000, it was WKH¿UVWFRQIHUHQFHRI(8PLQLVWHUVUHVSRQVLEOH VSHFL¿FDOO\IRU60(V7KHVXEVHTXHQW(XURSHDQ Council Summit in Lisbon, 2000, announced the (8¶VJRDORIEHFRPLQJWKH³PRVWFRPSHWLWLYHDQG dynamic knowledge-based economy in the world” by 2010. This objective necessitated the creation of innovation policy initiatives at EU national and regional levels (many of these initiatives were still being framed in mid-2005). The Summit called for a series of benchmarking exercises to monitor progress by member states towards the implemen- tation of effective policies in support of innova- tion. The European Union responded in 2000 to this request with The Integrated Programme for SMEs: A General Framework for all Community Actions in Favour of SMEs, which, combined with Innovation in a Knowledge-Driven Economy, 2001, has contributed to an improved coherence in technological innovation policy in Europe, and also to the development of a framework for dialogue on innovation policy making and policy coordination. eEurope 2005 - An information soci- ety for all: An Action Plan, endorsed by the Feira European Council in June 2000, also forms part of the overriding Lisbon strategy. Europe 2005 addresses issues relevant to internet and e-busi- ness adoption and use, consisting of national and multinational actions on e-government, e-health, e-learning, and e-business, generated with the aim to improve participation, to open up opportunities, and to enhance skills. The European Union has devised a number of EURDGXPEUHOODSROLFLHVWRSURPRWHWKHEHQH¿WVRI e-business and other technological innovations, not least for SMEs. Such framework policies often set clear and ambitious targets, and coordinate with other policies to ensure that the various compo- nents serve common goals. They cover a broad spectrum of initiatives, from awareness actions, to establishing SME support networks, to providing consultancy and customised services to SMEs. 7KHVHLQLWLDWLYHVDLPWRLQÀXHQFHSROLF\DFURVVWKH economies of countries or regions, and are often both horizontal and vertical in concept: horizontal in that they cover most business sectors and act as a bridge between education, business and the citizen; and vertical in that they can impact upon primary, secondary and higher education (in the form of training and up-skilling initiatives). In 2002, the Go Digital (European Commis- sion, 2002) initiative administered by the e-Busi- ness Policy Group (EBPG), was launched as a collaboration of representatives of the EU member states and the European Commission services. The Third Multiannual Programme for SMEs in the European Union (European Commission, 1996) was also adopted as the cornerstone of the European Union’s actions aimed at improving the conditions in which SMEs operate. Under the Fifth Framework Programme (FP5) (European Commission, 1998), it supported European SMEs to participate in FP5 actions and to optimise their advantages—especially in relation to technol- ogy—from such participation. The outcomes are still being formulated. FP5’s successor, the Sixth Framework Programme (FP6) (European Commission, 2003), was formally launched in November 2003 (Keown, 2002). The SMESPRIT project aims to develop a knowledge-based system that will provide support to SMEs introducing and managing e- 180 EU SMEs and E-Business Innovation business adoption and implementation. This is interlinked with the COMPETE and Brite-Euram programmes, both of which fall under the umbrella of the Esprit research programme (Chappell & Feindt, 1999). COMPETE aimed to strengthen Eu- ropean SME competitiveness through technology. Running from 1997 to 2002, COMPETE brought together more than 45 companies delegating 70 specialists and representing more than 50 EU- funded projects. Encouraging and facilitating col- laboration and joint ventures for SMEs were also key aims of Brite-Euram, which enabled groups RI60(VZLWKLQVXI¿FLHQWUHVRXUFHVWRFRPPLV- sion university laboratories and research centres to carry out research and development (R&D) activities for them, and encourage them to pool resources with other SMEs. Thematic networks brought together various individually run projects that shared similar technological or industrial objectives, with the intention of bringing greater coherence to research activities and encouraging the exchange of knowledge and technologies. The outcome of the projects has been shared by all participants, and has also served to inform the decision-making process on future EU-funded R&D (Chappell & Feindt, 1999). CONCLUSION Many organisations recognize the potential stra- tegic opportunities offered by e-business, and seek to realize them. However, other than the need to adhere to legalities (such as tax and VAT requirements) most SMEs seem to be unaware of projects, policies or initiatives intended spe- FL¿FDOO\WREHQH¿WWKHP7KLVVWURQJO\LQGLFDWHV that such projects, policies and initiatives could be better targeted to their intended audience. The overall take-up rate of e-business amongst SMEs also indicates a lack of success for these initiatives. It would seem that crucial changes could be made to policy formulation, in order to render the outcome more relevant, coherent and accessible to SMEs. Through presenting an outline of the various domains and approaches that are present within the literature relating to SMEs, e-business and policy initiatives, the implicit aim of this article is to indicate gaps in the literature. A transdis- ciplinary approach such as information systems (IS) offers considerable scope for moving between these theoretical and empirical parameters. The IS perspective also creates an opportunity to study relationships that have not as yet received adequate attention between SMEs, e-business, and policy initiatives. These include the relationship between SMEs and their government(s), the organisational implications of integrating e-business into a small organisation’s business, and the implications of governments adopting a more inclusive approach to creating a dialogue with SMEs. By adding tex- ture to the study of these subjects, the opportuni- ties that e-business affords SMEs can be opened up to scrutiny, with the potential to gain a more nuanced understanding of how governments can contribute to SMEs successfully adopting and implementing e-business. REFERENCES Amidon, D. M., & Mahdjoubi, D. (1999). Atlas of knowledge innovation: Beyond business planning. In Year 2000 handbook of business strategy: A comprehensive resource guide to strategic man- agement. New York: Faulkner & Gray. Abstract retrieved June 21, 2002, from http://www.entova- tion.com/whatsnew/atlas1.htm Antonelli, C. (1999). The microeconomics of technological systems. Oxford: Oxford Univer- sity Press. %DU1LU$6PLWK.$,QWHU¿UPDO- liances in the small business: The role of social networks. Journal of Small Business Manage- ment, 40(3), 219-232. 181 EU SMEs and E-Business Innovation Bergquist, W. (1993). The postmodern organisa- tion. San Francisco: Jossey-Bass. Castleman, T., Coulthard, D., & Hewett, B. (2000, December 6-8). Riding on the Internet’s back: Can rural communities use information technologies for economic development? Proceedings of ACIS 2000, Australasian Conference on Information Systems, Brisbane, Australia. Chappell, C., & Feindt, S. (1999). Analysis of e-commerce practice in SMEs (Esprit Knowl- edge and Information Transfer on Electronic Commerce [KITE] Project). Retrieved January 31, 2000, from http://158.169.51.200/ecommerce/ sme/reports.html Cheney, P. H., Mann, R. I., & Amoroso, D. L. (1986). Organisational factors affecting the suc- cess of end-user computing. Journal of Manage- ment Information Systems, 3(1), 65-80. Cooke, P., & Morgan, K. (1994). The creative milieau: A regional perspective on innovation. In M. Dogson & R. Rothwell (Eds.), The hand- book of industrial innovation. Edward Elgar, Aldershot. Dixon, T., Thompson, B., & McAllister, P. (2002, September). The value of ICT for SMEs in the UK: A critical literature review (Report for Small Business Service Research Programme). The College of Estate Management Retrieved March 26, 2003, from www.sbs.gov.uk/content/analyti- cal/research/value_of_ICT_ for_SMEs_UK.pdf Drew, S. (2002). E-business research practice: Towards an agenda. Electronic Journal of Busi- ness Research Methods, 2(1), 18-26. Retrieved November 3, 2003, from http://www.ejbrm.com Drucker, P. F. (1998, November-December). The discipline of innovation. Harvard Business Re- view, 76(6), 149-157. European Commission. (1996). Third multiannual programme community for research, techno- logical development and demonstration activities (1998-2002). Retrieved August 12, 2002, from http://europa.eu.int/comm/research/fp5.html European Commission. (2000a). Statistics on innovation in Europe, 2000 Edition. Retrieved September 15, 2001, from http://www.cordis. lu/innovation-policy/studies/gen_study5.htm European Commission. (2000b). SME survey results: Examining mobile behaviour, needs, and concerns. SMESPRIT Report 1.1. A review of current activities in the domain. SMESPRIT Consortium. (XURSHDQ&RPPLVVLRQF³&RPSHWH´7KH network for microelectronics assembly-packag- ing-interconnection. Retrieved May 2, 2002, from http://www.compete.tm.fr/ European Commission. (2000d). Brite-Euram program. Retrieved October 3, 2001, from http://europa.eu.int/comm/research/brite-eu/im- pact2001/index_en.html European Commission. (2000e). The Lisbon Spe- cial European Council (March 2000): Toward a Europe of innovation and knowledge. Retrieved October 3, 2003, from http://www.europa.eu.int/ scadplus/leg/en/cha/c10241.htm European Commission. (2001a, September 9). Commission staff working paper, 2001: Innova- tion scoreboard. SEC, 1414. Brussels. European Commission. (2001b). Building an innovation economy in Europe: A review of 12 studies of innovation policy and practice in today’s Europe. Retrieved October 13, 2003, from http://www.cordis.lu/innovation-policy/studies/ ca_study1.htm European Commission. (2002). eEurope 2002: Hel pi n g SM Es t o go digit a l. COM, 136. Retrieved October 15, 2003, from http://www.europa.eu.int/ comm/enterprise/ict/policy/benchmarking.htm European Commission. (2003). The sixth frame- work programme in brief. Retrieved October 15, 182 EU SMEs and E-Business Innovation 2003, from http://europa.eu.int/comm/research/ fp6/index_en.cfm?p=0 Goldman, S., Nagel, R., & Preiss, K. (1995). Agile competitors and virtual organisations: Strategies for enriching the customer. Oxford: John Wiley & Sons. HM Treasury, Inland Revenue. (2001). Designs for innovation: A consultative note. Retrieved from http://www.ht-treasury.gov.uk/mediastore/ RWKHU¿OHV$&)SGI Hoffer, J. A., George, J. F., & Valacich, J. S. (1996). Modern systems analysis and design. Menlo Park, CA: Benjamin/Cummings. Howarth, B. (2002, July 18-24). Get ‘e’ or get out: Smaller companies are reluctant to take up e-commerce, and it will be to their cost. Business Review Weekly, pp. 64-65. Huang, C. D., Hart, P., & Wiley, M. (2004, May 23-26). Factors characterising IT use in SMEs: An exploratory study. Proceedings of the 15 th Information Resources Management Association (IRMA) Conference, New Orleans, LA. Iacovou, C. L., Benbasat, I., & Dexter, A. S. (1995). Electronic data interchange and small organisa- tions: Adoption and impact of technology. MIS Quarterly, 19(4), 465-485. Irwin, D. (2000). Enhancing the competitiveness of small businesses in the global economy: En- hancing the competitiveness of small businesses through innovation. OECD. Retrieved from http:// www.sbs.gov.uk/content/pdf/oecd.pdf Jeffcoate, J., Chappell, C., & Feindt, S. (2002). Best practice in SME adoption of e-commerce. Benchmarking: An International Journal, Elec- tronic Commerce: A Best Practice Perspective, 9(2), 122-132. Jeffcoate, J., Chappell, C., & Feindt, S. (2004). Assessing the impact of electronic commerce on SMEs in value chains: A qualitative approach to electronic commerce. In N. Al-Qirim (Ed.), Small to medium-sized enterprises: Frameworks, issues and implications (pp. 180-198). Hershey, PA: Idea Group Publishing. Keown, B. (2002, January 22). Opportunities for SMEs in FP6. European Research Area FRAME- WORK Programme 2002-2006 Conference. Kuemmerle, W. (2002, May). A test for the faint- hearted. Harvard Business Review, 80(5), 122. Lofsten, H., & Lindelof, P. (2002). Science parks DQGWKHJURZWKRIQHZWHFKQRORJ\EDVHG¿UPV Academic-industry links, innovation and markets. In Research policy: Vol. 31 (pp. 859-876). Mahdjoubi, D. (1997). Regional innovation strate- gies in the European community. Retrieved July 3, 2001, from http://www.gslis.utexas.edu/~darius/ ris_ec/ris_ec.html Mulhern, A. (1995, July). The SME sector in Europe: A broad perspective. Journal of Small Business Management, 3, 83-87. OECD. (2002). Competition, innovation and pro- ductivity growth: A review of theory and evidence. (Working Paper No. G17). Paris: Author. Papazafeiropoulou, A., Pouloudi, A., & Doukidis, G. (2002). A framework for best practices in e- business awareness creation. Business Process Management Journal, 8(3), 233-244. Premkumar, G., & Roberts, M. (1999). Adoption of new information technologies in rural small businesses. Omega, The International Journal of Management Science, 27, 467-484. Quayle, M. (2002a). E-commerce: The challenge IRU8.60(VLQWKHWZHQW\¿UVWFHQWXU\Inter- national Journal of Operations and Production Management, 22(10), 1148-1161. 4XD\OH0E3XUFKDVLQJLQVPDOO¿UPV European Journal of Purchasing & Supply Man- agement, 8(3), 151-159. 183 EU SMEs and E-Business Innovation Rogers, E. M. (1995). Diffusion of innovations (4 th ed.). New York: The Free Press. Senge, P. M. (1990). The leader’s new work: Build- ing learning organisations. Sloan Management Review, 32(1), 7-23. Small Business Service. (2004). A government action plan for small business: Making the UK the best place in the world to start and grow a business. The evidence base. Retrieved October 4, 2004, from www.sbs.gov.uk Small Enterprise Telecommunications Centre. (2002). Accelerating the up-take of e-commerce by small & medium enterprises. A report and action plan by the SME E-Commerce Forum Taskforce. Retrieved November 8, 2003, from http://www. setel.com.au/smeforum2002 Smallbone, D., North, D., Vickers, I , & McCarthy, I. (2000). Policy support for R&D in SMEs: The UK government’s smart award scheme. In W. During, R. Oakey, & S. Mukhtar (Eds.), New technology- EDVHG¿UPVDWWKHWXUQRIWKHFHQWXU\(Vol. VII, pp. 143-159). London: Pergamon Press. Thong, J. Y. L. (2001). Resource constraints and information system implementation in Singapor- ean small businesses. Omega, The International Journal of Management Science, 29, 143-156. Tushman, M. L. (2002). Managing strategic in- novation and change. Oxford: Oxford University Press. Vrazalic, L., Bunker, D., MacGregor, R. C., Carlsson, S., & Magnusson, M. (2002). Electronic FR P PHUFH DQG PD UNH WIR FX V 6RPH¿ QG LQ JVI U RP a study of Swedish small to medium enterprises. Australian Journal of Information Systems, 10(1), 110-119. Wilkins, L., Swatman, P.M.C., & Castleman, T. (1999). What’s in a name? Conceptual issues in GH¿QLQJHOHFWURQLFFRPPHUFH,QProceedings of the European Conference on Information System, Vienna, Austria. :RUOG %DQN (JRYHUQPHQW $ GH¿QL- tion of e-government. The World Bank Group. Retrieved November 7, 2002, from http://www. ZRUOGEDQNRUJSXEOLFVHFWRUHJRYGH¿QLWLRQKWP KEY TERMS EBPG (E-Business Policy Group): A col- laboration of representatives of the EU member states and the European Commission services. E-Business (Electronic Business): Those business activities related to the business opera- tions of an organisation online. E-business encom- SDVVHVDOOFRPPHUFLDODFWLYLWLHV7KHGH¿QLWLRQRI e-business that was agreed by the Organisation for Economic Co-operation and Development (OECD) and the European Union is the method by which the order is placed, which determines whether a transaction is e-business, not the pay- ment or delivery channels. Shifting business activities from paper-based, local, face-to-face and manual processes to electronic, dispersed, mediated, and automatic processes is the essence of e-business, whether in dealing with customers or suppliers (Wilkins et al., 1999). E-business activities include, but are not limited to: •Web sites; (PDLORUGHUFRQ¿UPDWLRQ •Intranet; •E-mail; • E-procurement; • Web catalogues; • Staff remote online ERP via Web; • Trading exchanges; • Internet auctions; •B2C; • Online ordering on our ERP; and • View orders on ERP online. E-Government: The use by government agencies of ICTs that have the ability to transform . sectors and act as a bridge between education, business and the citizen; and vertical in that they can impact upon primary, secondary and higher education (in the form of training and up-skilling. understanding of the relationship between SMEs and information and communication technologies (ICTs). Relatively little is known about how SMEs respond to the opportunities provided by ICTs, and. e-business adoption and implemention are outlined, and the organisational and management attributes that would seem to ensure the success of the innova- tion of adopting and implementing e-business