The Impact of Institutional Pressures on the Use and Maintenance of E-Commerce in Brazilian Micro and Small Enterprises (MSEs).
| Autor | de Sousa, Henrique Adriano |
1 Introduction
The use of e-commerce is modifying the way business models are executed in companies, especially in those considered as traditional (Choshin & Ghaffari, 2017). The growth of this commerce model has redirected business strategies to meet customers' expectations (Jai et al., 2013) and improve relations with suppliers. According to the literature, some consequent benefits of using e-commerce are: an increase in market expansion potential, adaptation to the external environment, an increase in reliability, uncertainty minimization, cost reductions, a visibility boost, and reduced need for physical space (Cheng & Yu, 2008; Felipa, 2017; Nohara et al., 2008; Yu et al., 2018). However, companies face obstacles regarding technological adaptation to innovations, wide asset use in information systems, lack of qualified employees, absence of data security, process modifications, and limited financial assets (Yu et al., 2018).
According to data from Ebit Nielsen's (2019) survey, in Brazil, e-commerce grew by 12% in the first semester of 2019. In the second, this growth represented R$26.4 billion in revenue. The first half of 2019 saw 20% growth regarding the volume of orders in e-commerce, representing R$65.2 million. Sales through mobile-commerce (m-commerce) were more prominent in nondurable goods, with emphasis on products for immediate consumption, such as food and beverages (Nielsen, 2019). By expanding their reach and consequently their sales, e-commerce can be a strategic option for micro and small enterprises (MSEs) seeking survival in the market. According to the Brazilian Micro and Small Business Support Service (SEBRAE), there are 6.4 million business establishments in the country, of which 99% of them are micro and small enterprises that account for 52% of formal jobs in the private sector (Servico Brasileiro de Apoio as Micro e Pequenas Empresas, 2020). In addition, the participation of MSEs represents 27% of the gross domestic product (GDP).
However, the use of e-commerce is not always a strategy issue. Companies seek to address the pressures of diverse customer profiles and analyze the behavior of other organizational field agents. In order to address the pressures of the business environment and the demands of their customers, companies have shown increasing concerns when adopting pre-established practices that will make them more appreciated and recognized in the market where they operate. This leads companies from the same environment to become similar to each other, building a scenario known as institutional isomorphism (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Furthermore, external institutions become the rulers through mimetic, coercive, and normative pressures (DiMaggio & Powell, 1983; Scott, 2008).
Mimetic isomorphism occurs due to the perception of successful actions taken by other companies from the same institutional field. It can be achieved by the incorporation of technological elements, innovations, or reactions to crisis situations, such as the Covid-19 pandemic, which directly impacts small entrepreneurs' commerce strategies (Cheng & Yu, 2008, Lin, Luo & Luo, 2019). Coercive isomorphism occurs through the relationship of dependence of one company on others, while normative isomorphism occurs due to professionalization (Cheng & Yu, 2008; DiMaggio & Powell, 1983; Lin et al., 2019).
MSEs and large companies have different aspects when it comes to perceiving benefits and obstacles related to technological innovations and the distinctive pressure they suffer from the environment since there is a time gap between their adoption of technologies due to social, economic, technological, and political conditions. However, with the introduction of the internet and the rapid change in customer requirements, institutional pressures have intensified (Rahayu & Day, 2015). For MSEs, keeping track of new technologies, market demands, and changes in customer behavior is essential to their survival due to their limited financial and technological resources, as well as physical capacity (Baggio et al., 2019). The knowledge and use of e-commerce help these businesses to access different marketplaces by applying economies of scale and achieving network effects, which facilitates their development and makes them competitive and sustainable (Kabanda & Brown, 2017; Lestari, 2019).
Considering companies' perspectives and the growth of e-commerce, the purpose of this study is to verify the impact of institutional pressures on the perception of obstacles and benefits in the use and maintenance of e-commerce by Brazilian MSEs. After consulting managers of MSEs and collecting data through a survey, structural equation modeling was used to analyze and highlight the connection between institutional pressures and the perception of obstacles and benefits by MSEs that led to the adoption and maintenance of e-commerce.
The institutional approach in MSEs has been explored from different perspectives in Social Science research. Kurnia et al. (2015) examined the influence of organizational, industry and national readiness and environmental pressure on the adoption of distinct e-commerce technologies by MSEs in the retail sector in developing countries, based on the Malaysian supermarket sector. Williams and Spielmann (2019) analyzed how external institutional pressures influence the international market orientation in MSEs. Ramaswamy et al. (2017) examined Indian business groups and their diversification strategies at the time of pro-market institutional reforms, highlighting the diversification choices at the group level, and the consequences of these choices for their performance during a period of institutional change. In Brazil, institutional studies on MSEs have been conducted emphasizing internationalization and the adoption of accounting standards. Garcia et al. (2019) analyzed the mechanisms of institutionalization of the Brazilian Accounting Pronouncements Committee (CPC) for small and medium enterprises (SMEs). Silva et al. (2014) studied the institutional factors and the isomorphic mechanisms shown in the internationalization process, as well as the mimetic mechanisms in the approach of managers from different organizations. In this regard, studies that seek to verify how MSEs adapt to institutional dynamics and changes due to the implementation of e-commerce in their organizational field have become more relevant, aside from analyzing aspects that have not yet been addressed in Brazilian studies.
The effects of Covid-19 on e-commerce are remarkable and it is possible that the impact of coercive pressures has been intensified in terms of buyers, sellers, and regulations (Agus et al., 2021; Machova et al., 2021). Due to the expansion of the field, mimetic pressures related to new business have also been intensified (Wang, 2021).
2 Institutional pressures and the perception of obstacles and benefits in the adoption of e-commerce
Institutions are systems that can structure social interactions with long-standing rules and social conventions that are already established and embedded. Language, money, law, systems of weights and measures, table manners, and businesses, among others, are examples of institutions (Scott, 2008). Institutions are fundamental to social interactions as they can shape and change individuals' willingness and aspirations, as well as exert pressures on organizations' behavior. These pressures are an outcome of the environment, such as regulatory forces and social forces, which transact with the organizations, and direct control relationships (DiMaggio & Powell, 1983; Guarido & Costa, 2012; Scott, 1994, 2008).
From the institutional perspective, the interaction between organizations and external institutions guides and shapes the actions that must be taken regarding new organizational practices (DiMaggio & Powell, 1983; Guarido & Costa, 2012; Williams & Spielmann, 2019). Changes in organizational behavior and adherence to new technologies occur within the institutional field, mediated by formal and informal pressures (DiMaggio & Powell, 1983; Oliver, 1991).
According to Fonseca (2003), Institutional Theory is based on three pillars - cognitive, regulatory, and normative--that can form the background of the relationship between institutions and organizations. Mimetic pressures are related to the cognitive pillar, coercive pressures to the regulatory pillar, and normative pressures to the normative pillar. Isomorphism occurs through institutional pressures and, although it is related to the empirical context, it is presented in three different features: mimetic, coercive, and normative (DiMaggio & Powell, 1983; Lai et al., 2006), as it can be seen in Chart 1.
Mimetic pressures are reinforced in environments with a high level of uncertainties and when members do not have clear goals, besides arising from the disadvantages perceived compared to competitors (Alsaad & Taamneh, 2019; DiMaggio & Powell, 1983; Oyadomari et al., 2008). Thus, companies seek to replicate other organizations' valid and successful actions. According to DiMaggio and Powell (1983), it is not uncommon for organizations to face unknown demands and difficulties, making such practices easy for these companies.
According to Haveman (1993), in the technological field, mimicry becomes efficient when companies diversify into a new market segment and start using new technological tools. As these innovations are included as part of the company, other social actors recognize and copy them, minimizing uncertainty, decreasing costs, and increasing benefits (Haveman, 1993; Cheng & Yu, 2008). In this sense, MSEs may recognize benefits by copying other companies that have previously adopted such practices.
In e-commerce, reducing uncertainties by studying the way of working and the operationalization of similar companies can lead to obstacles being overcome. This allows a better technology collection and a greater...
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