The Role of E-commerce in SME Growth: Challenges and Opportunities

Abstract

This study examines the role of e-commerce adoption in driving small and medium enterprise (SME) growth, analyzing both the opportunities and challenges faced by SMEs in the digital marketplace environment. Drawing on data from 1,850 SMEs across six countries (India, Vietnam, Thailand, Philippines, South Africa, and Mexico) collected between 2019 and 2024, the research employs a longitudinal panel data approach combined with qualitative case studies to understand the mechanisms through which e-commerce influences firm performance. The analytical framework integrates the Resource-Based View (RBV) with dynamic capabilities theory to explain heterogeneity in e-commerce success among SMEs. Our findings reveal that e-commerce adoption is associated with a 34% average increase in annual revenue and 28% expansion in customer base, with these effects being mediated by digital marketing capabilities and supply chain integration. However, the study identifies significant challenges including digital skills gaps affecting 62% of SMEs, logistics infrastructure constraints impacting 48%, and payment system integration difficulties faced by 41% of firms. The results demonstrate that firm-level digital capabilities, particularly in data analytics and customer relationship management, moderate the relationship between e-commerce adoption and performance outcomes. Furthermore, ecosystem factors including platform support services, access to digital financing, and government digital initiatives significantly influence SME success in e-commerce. These findings provide actionable insights for SME managers developing digital strategies, platform operators designing SME support programs, and policymakers crafting inclusive digital economy policies.