The Impact of E-commerce on Organizational and Financial Performance in SMEs: Evidence from Saudi Arabia

Purpose: Small and medium enterprises (SMEs) play a critical role in the growth and development of economies especially when it comes to E-commerce. Previous studies highlighted that the global business environment with SMEs occupies the largest number of companies and contributes up to 70% of the global GDP. However, in developing countries such as Saudi Arabia, E-commerce has not yet been embraced completely and management is still reluctant to adopt E-commerce, hindering organizations ability to achieve full benefits from the technology. The purpose of this study is to examine the impact of E-commerce on organizational and financial performance in SMEs in Saudi Arabia. Methodology: The primary data were collected through a structured questionnaire distributed to 230 participants (SMEs owners and managers). The use of convenience sampling was imposed. The data collected were analyzed using SPSS. A descriptive analysis, correlation analysis and regression analysis were performed including testing the null hypothesis. Findings: The study found that the application of E-commerce systems in organizations is very critical, regardless of their size, either small or medium organizations. E-commerce systems improved the operations of the companies, the financial performance, and market-based performance, which led to the development of economic growth. Hence, it has been recommended that SMEs should adopt E-commerce to facilitate performance and ensure that it aligns with the firm strategies and structure. Originality: The paper is valuable in examining E-commerces effects on SMEs organizational performance in a developing country context. It provides a unique opportunity for SMEs to relate organizational performance factors and in turn, to the degree of organizational volatility faced, thus enabling respondents to identify the most appropriate technology.