provided address material in order to filter out the environment (step 3). The internal analysis is followed
relevant software companies for the second main step of by the selection (step 4) and the implementation of
analysis. In order to be included in the main sample, strategies (step 5). The last step also involves the design
firms had to belong to the software industry, which was of the organisational structure and control systems
divided in three segments: Packaged software (SIC necessary to implement the chosen strategy [14, 15].
7372, respectively NAICS 51121, 334611), custom The focus of this article lies upon step 2 (external
software and software related services (SIC 7371, 7373 analysis) and 3 (internal analysis). The purpose of the
respectively NAICS 541511, 541512) . Although external analysis is to identify opportunities and threats
custom software, i.e. software that is produced only in the organisation's operating environment, while the
once, is viewed as service output  this segment was internal analysis seeks to pinpoint the organisation's
considered separately. For both, the pre-liminary and strengths and weaknesses. Many companies are
the main analysis, the design of a questionnaire which conducting a SWOT analysis as part of the strategic
was validated in several pre-tests was necessary. For the planning process to identify the strengths, weaknesses,
pre-liminary phase random sampling was employed and opportunities and threats before proceeding to the
the 600 chosen companies were contacted by telephone. formulation of a strategy [16, 17]. SWOT analysis,
The achieved response rate was 70.4%. Some respectively the analysis of "key" or "critical" success
companies could not be contacted, because they had factors, belongs to the highest ranked set of techniques
ceased to exist, the address was wrong or could not be of strategic analysis used by firms in empirical surveys
found, etc. These neutral dropouts were considered in .
the calculation of the response rate and therefore did not
decrease the return quota. On completion of the 3.1 Internal Analysis
preliminary analysis structured face-to-face interviews
followed in the main step of analysis, which based on a This work seeks to analyse if the endogenous situation
stratified and disproportional sample with subgroups faced by the firm is interrelated with the applied level of
according to company size. The rate of return for this e-business initiatives. For the development of the
second and main step of the study was 55.6%. After framework this research builds on the generic building
completing both, the pre-liminary and main step of blocks of competitive advantage together with a
analysis, non-response effects were examined. The resources and capability based view: Efficiency, quality,
analysis (regarding known distributions of variables of customer responsiveness and innovation are the generic
the Austrian computer software market such as the type building blocks of competitive advantage that every
of the organisation) revealed no significantly different software company can adopt. Achieving superiority
characteristics between non-respondents and requires an organisation to develop appropriate
respondents. competence, which in turn is a product of the kind of
resources and capabilities that a company possesses
The main questionnaire assessed general company . The variables that influence the long-term business
information, the endogenous situation, exogenous data, success were therefore categorised into six areas:
and questions on co-operations. This endogenous • Resources
section also covered the level of support of marketing • Capabilities
objectives through use of Internet technology. The • Efficiency
question was stated so that all organisations regardless • Quality
of their software sub sector or their different e-business • Customer responsiveness
tactics were able to respond on their Internet utilisation • Innovation
rate. This included mentioning examples for online and
offline e-business tools such as e-newsletters, web The distinctive competence of a software company
banners, web sites or portals. It is important to mention, arises from two complementary sources: its resources
that this article does not consider the area of e- and capabilities. The distinction between resources and
procurement or e-sourcing. The assessed variable only capabilities is important in understanding what
refers to primary activities in marketing products and generates specific competence. Without the appropriate
services. resources, the company may not be able to create a
distinctive competency . The inquired variables
3. SWOT ANALYSIS contributing to the resource-based view were
"acquisition of venture capital", "equity capital
Although there is an extensive amount of literature situation", "trademark/label" and "image". Variables
covering the strategic planning process, most used to asses the capabilities of the organisation were
approaches include a cyclic iteration of the following "internationalisation capabilities", "order/project
five elements. The strategic planning process begins procurement", "organisational structure", "adherence to
with a statement of the corporate mission and goals costs and schedules", "employee motivation" and
(step 1). This is followed by the analysis of the "employee qualification". While only efficiency was not
organisation's external competitive environment (step 2) divided into sub-areas, quality was analysed by the
and the analysis of the organisation's internal operating factors "product quality" and "business process quality",
customer responsiveness was represented by the small-to-medium sized enterprises (SME), and 12.1% to
variables "product diversity", "price levels", "customer large enterprises (LE). Classification was performed
satisfaction", "level of specialisation" and "customer using data on number of employees, turnover and
orientation", and to innovation the variables "know-how independency following the definition proposed by the
embedded in company" and "access to new Commission of the European Community (EC, 1996).
technologies" were attributed. Although the inquired The applied criteria and the approximated overall
variables were allocated into different groups, they are number of software enterprises in Austria are presented
highly interrelated. For example, factors contributing to in Table 1. In Austria the average firm size has declined
innovation such as "know-how embedded in the in line with smaller firms entering the industry.
company" or "access to new technologies" can also Especially at the end of the 1980's and the early 1990's
enhance quality, efficiency and customer annual growth rates of over 20% (measured by number
responsiveness. of enterprises in Austria) caused the decline of average
3.2 External Analysis
Table 1. Company size distribution
The independent variables of the external perspective Size Emplo Turn Indep No. of No. of
were subdivided into potential exogenous growth yees over end.1 comp. comp.
barriers (threats) and potential exogenous growth Mio.€ (rel.) (abs.)
drivers (opportunities). The selection of variables for ME 1-9 <7 < 25% 55,7% 1.082
both groups was influenced by the Porter's five forces SME 10-249 < 40 < 25% 32,2% 625
model  and a wider macro-environmental view. LE > 250 > 40 12,1% 235
Industries are embedded in a wider macro-environment, Total 100% 1.941
which comprises the technological, social and 1
Capital share in external ownership
demographic, ecological, political and legal, and
broader macro-economic environment [15, 20].
Changes in the macro-environment can have a direct In the following sections analysis was performed only
impact on the five forces in Porter's model. for the MEs and SMEs which constitute the research
The potential exogenous growth barriers deemed as focus of this article. Consequently, from the 174
relevant for the analysis in conjunction with e-business datasets 91 MEs (weighted N=97) and 50 SMEs
were: (weighted N = 56) were included in the analysis,
• Marketing/distribution in foreign countries whereas two SMEs did not respond on e-Business
• Culture, varieties in language
• Trade/commerce law issues
4.2 E-Business Adoption
• Governmental regulations
• Lack of ITC standards This study assessed the degree in which the Internet is
• Acquisition of capital used in supporting the firm’s primary activities in the
• Labour legislation issues marketing area on an interval-scale from 1 (never) to 5
• E-business maturity in Austria (very intensively). To test whether MEs and SMEs have
• Austrian market size identical distributions the Mann-Whitney U Test was
• TC costs and infrastructure in Austria applied, which is a nonparametric alternative to the
• Software piracy independent-sample Student t test. It revealed that
• Rivalry significant differences (p < 0.05) exist. The data showed
that in the mean SMEs are more intensively engaged in
As potential exogenous growth drivers the following e-business compared with MEs. The following
criteria were selected: exploratory analysis was undertaken for each group of
• EU Software patent protection initiative companies classified by their size separately.
• Break-up of the former eastern bloc The data set comprising only MEs exhibits a clear
• EU east expansion kurtosis and low skewness, i.e. indicating a very
• EU domestic market symmetric distribution. The variability of the data set is
• Liberalisation of telecommunications high. A great part of the organisations ignore e-business
while approximately the same proportion of respondents
already embraces e-business based transactions.
4. EMPIRICAL RESULTS
Traditional marketing and communication channels are
still predominant in the case of MEs. Many companies
4.1 Distribution of company size
do not even build on the simplest e-based methods.
The empirical data showed a strong overbalance of Among SMEs, the distribution changes significantly. In
smaller software enterprises in Austria: Micro- SMEs, the utilisation rate of e-business is concentrated
enterprises (ME) account for 55.7% of the Austrian around a high level of utilisation. Only a small minority
software organisations, 32.2% can be attributed to of SMEs have not implemented any e-business
supporting this relationship is limited to the sample
4.3 Internal Analysis comprising all companies. The significance was lost
when analysing both groups defined by company size
The endogenous success factors given in a previous separately. Efficiency was expected to be better in
section had to be rated by managers of Austrian organisations with more e-business supported
software companies on an interval scale based on our operations. A significant relationship was detected for
local school grading system from 1 (very positive) to 5 all companies analysed together, but no sensible pattern
(very negative) as perceived in their own organisation. underlying the relationship was identified. The same
The first step of analysis was to test if there is a situation applies to product quality. A surprising
relationship between e-business utilisation and indication is that MEs with lower customer orientation
endogenous success factors. As a non-parametric test of levels have more widely adopted e-business. The link
statistical significance for bivariate analysis, the Chi between firms and their customers is believed to be
square test was applied followed by an analysis of cross strengthened by enabling e-business. Finally, the ability
tabs with a special focus on standardised residuals to to acquire venture capital improves with the level of e-
identify influential observations . The strength of a business diffusion. In general, MEs and SMEs with
possible relationship between success factors and the venture capital background passed a sales and
size of the company was analysed by calculating the marketing due diligence, which gives an explanation for
Spearman rank correlation coefficient. Again, a non- their above average inclusion of state-of-the-art
parametric measure was used, which does not make any information and communication technology in their
assumptions about the underlying frequency marketing models.
The following analysis was applied in multiple steps. Table 2. Identified endogenous success factors showing
The first step comprised MEs and SMEs grouped dependencies by Chi2-Test and/or Spearman Rank
together, followed by separate steps of analysis for each Correlation Coefficients
group of companies. Viewing both MEs and SMEs No. Variable Classification
together, the study identified seven out of the twenty 1 Internationalisation Capabilities
success factors analysed that showed differences in how Customer
2 Product diversity
they were rated by managers dependent on the rate of e- responsiveness
business adoption. Among MEs, six variables remained. Customer
3 Price levels
Considering SMEs, four factors showed a significant responsiveness
relationship (see Table 2). It can be noted, that due to Customer
4 Customer orientation
the impact of sample size on statistical power, less
5 Efficiency Efficiency
statistical significance is achieved with SMEs, where
the number of observations is lower (50) compared to 6 Access to new technologies Innovation
MEs (91). The endogenous situation improves with e- 7 Product quality Quality
business utilisation for almost all identified 8 Trademark/label Resources
relationships. The analysis of residuals for non- 9 Acquisition of venture capital Resources
correlated factors has shown the same tendency.
The internationalisation capabilities improve, especially To identify how and if the significant endogenous
in SMEs, with higher e-business adoption levels. This criteria relate as sets to the e-business utilisation
reflects that the use of information and communication variable, two stepwise regression analyses were
technologies in general, decreases the costs of distance, performed for each group defined by company size. It
especially for more product rather than service oriented was therefore implicitly hypothesised that a multivariate
firms. The Internet is an enabling technology to reach model can be found, that significantly predicts e-
new customers and suppliers in an affordable, more business utilisation as the dependent criterion. The
efficient and effective way  without the necessity to results of the stepwise analyses are reported in Table 3.
set up and maintain local branches in foreign markets. For MEs, five steps were calculated, i.e. while five of
For MEs, the data shows that firms that see their relative six factors retain in the regression equation, the
strengths in the areas of trademarks/labels, product trademark/label factor was omitted. Due to the stepwise
diversity, and price levels are more intensively engaged approach, all remaining factors significantly contribute
in e-business. These factors seem to be key strengths to the model and therefore explain e-business utilisation.
that motivate software firms to market their products The extent of change in e-business utilisation for each
and services in the Internet, consequently not fearing the 1-unit change of predictors seems to be similar. The
associated global transparency. The ability to access direction of the change is different for product quality
new technologies is positively related with higher e- and customer orientation compared with the other
business adoption levels. Another study reported that factors significantly contributing to the final model.
the highest barrier for SMEs to doing business on the Product diversity was the first measure to be included in
internet is the lack of technical skills . This research the stepwise calculation. Specifically, 31% of the
adds empirical evidence to this statement applicable to variance in e-business utilisation is explained by the five
the software industry. The empirical evidence success factors in the final model (p < 0.01).
indication is that managers in SMEs who are more
Table 3. Results of stepwise regression analysis of e- intensively relying on e-business are experiencing less
business utilisation on significant endogenous factors in rivalry than their competitors. The marketing
MEs opportunity in the European Union is considered as a
corr. more important growth driver by software managers
Step Variable B R2 ? r2 employed in firms with higher e-business utilisation.
1 Product diversity** -0.50 0.11 0.10 -
Finally, firms with lower capital resources more
intensively exploit e-business. For the remaining
2 Product diversity** -0.58 0.18 0.16 0.06
factors, no clear direction of the dependencies was
Customer orientation** 0.56 identified.
3 Product diversity** -0.50 0.25 0.22 0.06
Customer orientation** 0.65 Table 5. Identified exogenous factors showing
Price levels** -0.56 dependencies by Chi2-Test and Spearman Rank
4 Product diversity** -0.46 0.31 0.28 0.06 Correlation Coefficients
Customer orientation** 0.73
1 EU domestic market
Price levels** -0.55
2 Labour legislation issues
Acquisition of venture
-0.30 3 Marketing/distribution in foreign countries
5 Product diversity** -0.50 0.35 0.31 0.03 4 Acquisition of capital
Customer orientation** 0.67 5 Austrian Telecommunication costs and infrastructure
Price levels** -0.57 6 Rivalry
Acquisition of venture 7 EU Software patent protection initiative
Product quality 0.46 In analogy to the previous section, stepwise regression
* p < 0.05, ** p < 0.01 analyses were performed to complement the analysis
The regression constant was excluded from the with a multivariate method considering all detected
table for every step. significant variables together. Since no multivariate
dependency profile was detected for MEs, the analysis
For SMEs, four factors were included in the calculation, was undertaken for SMEs only. The calculation process
whereas two retained in the regression equation and based on the identified exogenous factors as predictors
together significantly explain e-business utilisation (see was not able to conclude with a sensible and statistically
Table 4). With the final regression function, 16% of the significant model.
variance in e-business utilisation is explained by the two
variables (p < 0.01). 5. CONCLUSIONS
Table 4. Results of stepwise regression analysis of e- The paper provides empirically grounded insights into
business utilisation on significant endogenous factors in e-business utilisation in conjunction with related
SMEs endogenous as well exogenous factors for MEs and
corr. SMEs in the Austrian software industry. In MEs, the
Step Variable B R2 ? r2
R2 usage of e-business tools in marketing their products
1 Internationalisation* -0.24 0.10 0.09 -
and services is diverse with many organisations
ignoring e-potentials. Among SMEs, e-business is
2 Internationalisation** -0.28 0.19 0.16 0.07
variability is much less, i.e. most companies already
Trademark/label* 0.45 seek to complement and enhance their marketing skills
* p < 0.05, ** p < 0.01 with e-business tools. They exploit e-business as an
The regression constant was excluded from the additional marketing channel, allowing for a global
table for every step.
reach. They therefore follow Porter’s argument that
organisations should use the Internet in conjunction
4.4 External Analysis
with their traditional business models and activities .
During the interview, the companies assessed the given
The analysis of the internal situation faced by the firm
exogenous variables according to their perceived
showed that a number of success factors were perceived
influence on business growth on two different interval
as relative strengths in companies with better e-business
scales for each of the following groups: potential
support. E-business can be advantageous or
exogenous growth barriers and potential exogenous
disadvantageous to the business strategy of small firms
growth drivers. With these variables the same analysis
. Behind this background it does not seem
as presented above was conducted. The analysis showed
surprising, that branding and pricing together with an
that observed e-business utilisation had a significantly
attractive product portfolio were identified as key
different distribution depending on a number of external
strengths connected with the decision to engage the
factors more specifically in SMEs. An interesting
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