ISSN 2039-2117 (online) ISSN 2039-9340 (print) Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy Vol 5 No 23 November 2014 246 The Influence of SMMEs Internal Factors on E-commerce Adoption: A South African Perspective Mr Patrick Ndayizigamiye University of KwaZulu-Natal, South Africa, School of Management, IT and Governance Ndayizip@ukzn.ac.za Doi:10.5901/mjss.2014.v5n23p246 Abstract In South Africa, there is evidence of continued growth of internet users. This signifies that there is an increase of potential internet users who may be interested in conducting online transactions. The South African government, recognizing the importance that e-commerce plays in SMMEs business, has introduced an initiative to stimulate SMMEs online presence. The Woza online 1 is platform that enables SMMEs to create their website using the .co.za domain. This move echoes authors that suggested that in order to thrive in the increasing digital economic environment, SMMEs must have an online presence. Following the same trend, this paper seeks to contribute to the knowledge of SMMEs internal factors that need to be taken into consideration in order to stimulate the growth of e-commerce adoption by SMMEs in the South African context. To this end, a survey was conducted amongst 400 SMMEs in Pietermaritzburg and Durban areas. Based on literature search, the following factors were identified as internal factors that influence e-commerce adoption: Firm’s characteristics, Owner/manager characteristics and Internal IT capabilities. The influence of these factors on the adoption of the following 4 e-commerce was then assessed: i) customers payment by credit card through the SMME’s website, ii) customers placing orders through the SMME’s website, iii) providing customer services through the SMME’s website and iv) placing orders with suppliers over the internet. Using convenience sampling, data was collected by means of questionnaires administered to 400 SMME owners/managers. Usable responses were collected from 360 SMME owners/managers. This represents a 90% response rate. Findings reveal that SMMEs size, compatibility of e-commerce with company’s’ preferred work practices, compatibility of e- commerce with company’s values are the firm’s characteristics that influence e-commerce adoption in the selected SMMEs. In addition, Owner/Manager enthusiasm about e-commerce adoption is the Owner/Manager characteristic that significantly influences the adoption of e-commerce in the surveyed SMMEs. This characteristic is moderated by age in both locations. However, there is no significant relationship between internal IT capabilities and e-commerce adoption. Keywords: e-commerce adoption, South Africa, SMME, internal factors 1. Introduction Poon and Swatman (1999:9) define e-commerce as “sharing of business information, maintaining business relationships, and conducting business transactions by means of internet based technology.” A recent South African Mobile Report indicates that 80.2% internet users in South Africa access internet using their smart phones compared to 19.8% who use the traditional desktop-based internet access (Iab, 2014). The increase in internet adoption via mobile devices is an opportunity for firms that seek to establish an online customer base. The same report highlights that 20% of smart phone owners perform banking and other finance related purchases via their devices and 50% of them have been exposed to mobile-based advertisement. In addition, South Africa has 68% of internet users who access the internet daily (PRC, 2014). A number of SMMEs have responded to the call to have an online presence in order to leverage the increasing number of internet users across the country. A 2012 survey (Goldstuck, 2012) revealed that e-commerce was growing at a 30% rate per year with predictions of increased growth in the following years. The survey revealed that 63% of SMMEs that are trading in the formal sector (410.000 SMMEs) had a website. The study also reveals a positive impact of online presence on SMMEs business. According to Goldstuck (2012), 150.000 SMMEs would have closed their businesses if they did not have an online presence. The closure of such businesses would have had a significant bad influence on the S.A. economy and job market. As SMMEs contribute to 7.8 million jobs (Goldstuck, 2012), such loss of SMMEs businesses would translate into 1.56 million of job losses (Goldstuck, 2012).The lack of 1 Woza online is a platform (created through a joint venture between South African Department of Trade and Industry, Vodacom, the Human Resources Development Council and Google) that enables SMMEs to create their own websites through easy-to-follow steps without any cost (Goldstuck, 2012).