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

  •  Hassan Almuwallad    
  •  Hamad Alhumoudi    


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 organization’s 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-commerce's 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.

This work is licensed under a Creative Commons Attribution 4.0 License.