E-Business

Article Review
E- Business, SMEs and Risks: Towards a
Research Agenda
Author:
Dr. Arun Sukumar
Department of Management
Glasgow Caledonain University, United Kingdom

Submitted To:
Georgy P Kurien
Associate Professor

Name: Sayon Das

Roll. No. : 1421328
MBA (LMN)

Institute of Management
Christ University

Introduction

The SMEs existing and entering the world of E-business are exposed to various forms of
risks and the research article reviews the risk from perception of five different stakeholders
which includes risks such as strategic risk, customer risk, branding risk, security threats and
dependency and technological risks. The rapid integration of e- business in SME that has
resulted in development of normative and formative proposals on how e-business should be
developed and exploited in order to increase effectiveness and efficiency in its operations.
The advent of e-business is entering into every industry and business especially the retail
sector.
The integration and education of E- Business has resulted due to increase in usage if internet
and related technologies and primarily due to large companies adopting e- business initiatives
using resources and developing new innovative business models. According to a research
study 76% of large companies uses intranet to link operations and 88% use advance
technologies to fulfil business objective.
The extent which e-business is being adopted by the SME is also growing rapidly as through
a study conducted from annual survey by Office pf Natinal Statistics it was observed that
SME in UK account for 103 billion Euro. It also recorded a growth of 113% and SME has
superseded large corporations in online purchases which was an increase of 15% of large
firms. The adoption of internet of both internet and non-internet based SME firms is also
significant as 65% of SME have their own websites in the U.K. 18.5% of small business have
access to WLAN set-up.
Thus, with the increase in integration of e-business the quantification of risk associated with
it to SME is also required and detailed research is required in order to counter it. Risk
associated with SMe are related to various areas of business as supply chain management,
customer relationship, marketing, strategy, online banking and managing internet
technologies.
SMEs are prone to primary risk which can be categorised as strategy, operational, legal and
financial domain. Primary risks are system failure, viruses and dependency on third party for
maintenance & system development. Non business risks are branding which involves
strategic valuation, intellectual property violation, privacy and decision of company in ebusiness operations.

The research methodologies adopted was literature reviews to identify the issue and in-depth
interview of SME stakeholders to develop and refine business risks.
Security issues as a risk can be fraudulent internet and network access, credit card theft,
identity thefts, email misuse and attacks of viruses, Trojans and worms.
Reputation and customer related risks can be online reviews, seal of approval which is
directly correlated to the online trust of employees. Resource constraints of SME also pose a
significant risk to market for their brand in the online space. Dependency on contractors, web
developers and consultants for SME to run e-business create intellectual property issues,
security threats largely dependent relationship with suppliers. Leadership and management
risk also pose a major problem in adoption of e-business and understanding technical and
non-technical issues. Also threat to system from employees is also present including
intentional or accidental damages.
Rapid shifts in technology and fast up gradation of new ERP systems from legacy systems
create resource hindrance for SME which can undermine success of e-business activity. SME
entrepreneurs also requires systemised valuation systems and models to evaluate cost/benefit
analysis in terms of investment.
Critique
The research article through its research methodology helps us to identify the primary risks
which are faced by SME in implementation and conducting of E-Business and what is the
implication to it from various risks. It is very complex to quantify all risks in terms of
numbers and prepare a risk assessment model in order to counter all the risk as probability of
occurrence of risks in E-Business are unknown and the variables are independent of each
other. A set of universal guidelines for SME in e-business can be developed so as to minimize
the exposure to the risk and help SME involved in E-business to succeed in countering the
risk and grow as the scope of utilisation of technology and its implication on expansion of
SME is very high irrespective of country or region. It is imperative in the modern world to
safeguard SME in order to stimulate the integration of technology and E-Business.