Organizational factors affecting Internet technology adoption Ana R. Del Aguila-Obra and Antonio Padilla-Melendez�� University of Malaga, Malaga, Spain Abstract Purpose ��� To explore the factors that affect the implementation of Internet technologies and to what extent the size of the company, as an organizational factor, influences that process. Design/methodology/approach ��� According to the innovation adoption theory, it was found that Internet adoption in firms is a process with different stages where a company is in one of a number of development stages depending on some variables related to organizational factors, such as the availability of technology resources, organizational structure, and managerial capabilities. The paper identified empirically different stages in the Internet adoption process and linked them with those factors. It analyzed questionnaire-based data from 280 companies, applying factor and clustering analysis. Findings ��� Four main groups of companies were found according to their stage in the adoption of Internet technologies. The paper established that, contrary to the literature suggestions, the size of the company does not have any effect on the availability of these Internet technologies but it does for managerial capabilities. The smaller the size of the firm, the greater the possibilities of using external advice in adopting Internet technologies, because small firms usually have fewer managerial capabilities. In the mean time, a more sophisticated technology development was identified in larger firms. Research limitations/implications ��� As in all empirical research, the characteristics of this study limit the applicability of the findings. First, the study concentrated in businesses that already were using Internet technologies, because they have registered their domain name. Consequently, the study firms that did not have a Spanish domain name were omitted however, firms could have a ���.com��� or ���.org��� domain name and still be Spanish firms. Also, other companies without any domain name on the Internet were not included in the study. Second, the study applied a classification analysis with exploratory purposes about the characteristics of the business according to the cluster of pertinence. Nevertheless, a longitudinal study could be more useful explaining whether or not these companies follow the process described. Third, a more detailed questionnaire with more specific questions could be more helpful to gain a better description of the phases of a more sophisticated technology adoption (i.e. the acceptance/routinization and infusion stages). Practical implications ��� This paper has some relatively important managerial implications. First, the fact of having a domain name does not mean that the companies are in the acceptance/routinization phase and even less in the infusion phase. From this, the paper identified how the majority of firms were in the so-called initial stages of the Internet technologies adoption process. Second, it is possible that managers who do not perceive the strategic value of these technologies are managing the majority of these firms. Third, as more businesses implement these technologies in their processes, presumably more competitive pressure will exist to adopt Internet technologies. Originality/value ��� This paper contributes to the research into the organizational factors that affect Internet adoption. Keywords Internet, Innovation, Companies, Communication technologies, Spain Paper type Research paper 1. Introduction Internet technology has a direct impact on companies, customers, suppliers, distributors and potential new entrants into an industry (Porter, 2001). In some The current issue and full text archive of this journal is available at www.emeraldinsight.com/1066-2243.htm INTR 16,1 94 Internet Research Vol. 16 No. 1, 2006 pp. 94-110 q Emerald Group Publishing Limited 1066-2243 DOI 10.1108/10662240610642569

cases, Internet technology adoption and use contribute to the creation of competitive advantages (Del Aguila-Obra et al., 2002). Far from having all the related issues resolved, some questions arise when thinking of particular uses of this Internet technology, for either internal or external purposes. In the meantime, the adoption of information technology (IT) by firms is a question that has been analyzed from different points of view and theoretical perspectives, such as transaction cost economics, population ecology, or resource dependence theory (Iskandar et al., 2001). However, there is a shortage of specific research analyzing the factors that influence Internet technology adoption by firms. Moreover, if we mainly consider one stage of the innovation process (the implementation stage), the scarcity of studies is more evident. Innovation adoption theory (Rogers, 1983) provides an appropriate theoretical framework to explain the innovation adoption process in organizations and to describe what factors influence it, as well as to identify the phases within this process. In this paper, we are interested in analyzing the effect of organizational factors in the implementation stage of the adoption process of Internet technology (Damanpour, 1991). Within this stage, we aim to explore and analyze the size-related characteristics of the different phases that, according to the theory and our empirical study, the organizations pass through: initiation, adoption, adaptation, acceptance, routinization and infusion. Consequently, the main purpose of this study is to explore what the factors are that affect the implementation of Internet technology and to what extent the size of the company, as an organizational factor, influences that process. The paper continues with a literature review of technology adoption theory and of the main findings of the research carried out on Internet technology adoption. An empirical study on Spanish firms is also presented. A discussion about the main findings follows, including the limitations of the study and some managerial implications. Some preliminary conclusions finish the paper. 2. Literature review Internet technology adoption can be considered as a package of innovations (Prescott and Conger, 1995 Daniel et al., 2002). Regarding this innovation, the process of adoption by businesses and the factors that influence the adoption, as an IT, have been studied in the literature. In general terms, the innovation adoption process in firms has the following phases (Rogers, 1983): . agenda-setting . matching . redefining/restructuring . clarifying and . routinizing. These stages can be summarized in two phases, according to Damanpour (1991): (1) initiation and (2) implementation. Internet technology adoption 95

In the first of these ��� initiation ��� the firm considers the need to introduce the innovation, it searches for information, training is carried out, resources are proposed, the process is evaluated, and finally the decision to adopt the innovation is made. In the second phase ��� implementation ��� first use of the innovation is made, and subsequently organizational routines are modified appropriately. Similarly, Premkumar and Roberts (1999) considered five phases in the adoption process: (1) awareness (2) persuasion (3) decision (4) implementation and (5) confirmation. Cooper and Zmud (1990) argued that the IT adoption process could be divided into six stages: (1) initiation (active or passive search for opportunities) (2) adoption (negotiations for backing IT implementation) (3) adaptation (applying the IT and revising organizational procedures) (4) acceptance (company members are encouraged to use the IT) (5) routinization (the use of the IT becomes standard) and (6) infusion (efficiency is increased as a consequence of the IT use). Concerning the factors influencing adoption, there are many studies classifying them (see Kim and Galliers, 2004). The factors are grouped into different categories: internal or organizational, external and technological factors (Tornatzky and Fleischer, 1990). A summary of the main factors mentioned in the literature that affect innovation adoption in firms is shown in Table I, which includes the main literature about factors affecting innovations and in particular Internet and other IT technology adoption in organizations. Among the external factors relating to IT adoption, and specifically the adoption of the Internet, researchers have found that the following are common: . pressure from competitors, customers or suppliers . the role of government (incentives) . partners��� alliances . technological infrastructure . technology consultants . image of Internet technology and . users��� expectations. These external factors, according to some research (Teo et al., 1997 Teo and Tan, 1998) are less important than internal and technological factors. The technological factors identified in the literature are related to barriers to technology adoption and its perceived benefits. The perceived benefits for managers could be direct, such as cost savings or income generation, or indirect, such as potential INTR 16,1 96