Management Decision

Impact of organizational learning and knowledge management factors on e‐business

adoption
Hsiu#Fen Lin Gwo#Guang Lee
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Impact of
Impact of organizational learning organizational
and knowledge management learning
factors on e-business adoption
171
Hsiu-Fen Lin
Department of Information Management, St John’s and St Mary’s Institute of
Technology, Taipei, Taiwan, Republic of China, and
Gwo-Guang Lee
Department of Information Management, National Taiwan University of
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Science and Technology, Taipei, Taiwan, Republic of China

Abstract
Purpose – To examine the impact of organizational learning factors (training available, technical
expertise, and knowledge level) and knowledge management processes (knowledge acquisition,
knowledge application, and knowledge sharing) on e-business systems adoption level.
Design/methodology/approach – The data from a survey of 202 IS executives in Taiwan were
used empirically to test the proposed research model. Moreover, confirmatory factor analysis was
conducted to examine the reliability and validity of the measurement model, and the structural
equation modelling technique was used to evaluate the research model.
Findings – The analytical results showed that organizational learning factors and knowledge
management processes are closely related to the level of e-business systems adoption. However,
knowledge sharing did not significantly affect e-business systems adoption level.
Research limitations/implications – Future studies could seek an enhanced understanding of the
impacts on the level of e-business adoption of the organizational learning and knowledge management
factors investigated in this paper through structured interviews and case studies of IS executives
dealing with ongoing or recently completed e-business systems projects.
Practical implications – Owner/managers considering e-business systems adoption would be best
to focus on both social and technical factors, and their interaction within and beyond the organization,
rather than focusing exclusively on technological considerations.
Originality/value – This paper has implications for e-business managers or policy-makers in
formulating policies and targeting appropriate organizational capabilities to ensure effective adoption
of e-business systems.
Keywords Knowledge management, Innovation, Learning organizations, Technology led strategy,
Information systems
Paper type Research paper

Introduction
Modern firms face an increasingly complex and competitive environment. Within this
context, organizational capabilities and technological innovation are major
challenges and crucial to firms success (Tornatzky and Fleischer, 1990; Veliyath and
Management Decision
The authors would like to thank the National Science Council of the Republic of China, Taiwan Vol. 43 No. 2, 2005
for financially supporting this research under contract no. NSC92-2416-H-011-004. The authors pp. 171-188
q Emerald Group Publishing Limited
are also thanking all of those IS executives who participate in this project, especially who 0025-1747
pre-tested the questionnaire. DOI 10.1108/00251740510581902
 MD Fitzgerald, 2000). A successful e-business systems adoption is recognized as a key
43,2 concept for technological innovation and investment (Damaskopoulos and Evgeniou,
2003; Jackson and Harris, 2003). E-business systems are defined as any form of
commercial or administrative transaction or information exchange that an
organization makes available over the internet (Moodley, 2003). Some of the major
benefits of e-business are providing more timely and accurate information for
172 decision-making, enabling improved coordination and communication with business
partners, facilitating improved customer service, and helping reduce administrative
costs (Zhuang and Lederer, 2003).
Although e-business systems have technical components, management issues must
be addressed regarding changes in organizational processes and interaction both
within a firm and among firms (Ash and Burn, 2003). Firm’s ability to conceptualize
and manage process innovation, and to increase the learning capacity of its knowledge
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workers, thus has become a source of competitive advantage (Nonaka and Takeuchi,
1995). Moreover, developing organizational learning and knowledge management
strategies has been considered an effective and efficient means of successful
technological innovation (Martin and Matlay, 2003). This perspective has been
strengthened by several recent studies (Gilbert and Cordey-Hayes, 1996; Raymond and
Blili, 2000). However, empirical studies have seldom addressed the organizational
learning and knowledge management factors influencing the level of e-business
systems adoption.
This study aimed to examine the impact of organizational learning factors (training
available, technical expertise, and knowledge level) and knowledge management
processes (knowledge acquisition, knowledge application, and knowledge sharing) on
e-business systems adoption level. The research model and hypothesized relationships
are empirically tested using the structural equation modelling (SEM) approach
(Anderson and Gerbing, 1998), supported by LISREL software. The analytical of this
study may help in predicting the determinants of firm decision to adopt e-business
systems. This study also contributed to the literature on technological innovation
theories, organizational capabilities and organizational adoption of e-business systems.
This study has implications for e-business managers or policy-makers in formulating
policies and targeting appropriate organizational capabilities to ensure effective
adoption of e-business systems.

Literature review
Technological innovation
Technological innovation has become increasingly complex, costly, and risky owing to
changing business processes, strong competitive pressure, and rapid and radical
technological changes (Griffin, 1997). Previous studies discussed features of
organizational capabilities corresponding to different mechanisms that facilitate
information technology (IT) diffusion and innovation performance (Caloghirou et al.,
2004). Part of these organizational capabilities result from interaction culture and
knowledge accumulation within firms, and form what has been described as the firms’
“absorptive capacity” (Cohen and Levinthal, 1990; Carneiro, 2000).
The adoption of technological innovation is a function of willingness to try new
methods, processes, or production systems (Rogers, 1995; Thong, 1999). Information
systems (IS) researchers have proposed that e-business systems adoption can be
 considered a technological innovation (Kendall et al., 2001; Jackson and Harris, 2003; Impact of
Patterson et al., 2003), which offers firm’s opportunities to establish interactive organizational
relationships with business partners (such as suppliers, logistics providers,
wholesalers, distributors, service providers, and end customers), improve operating learning
efficiency and extend their reach, all at a very low cost (Ash and Burn, 2003).
E-business systems enable firms to execute electronic transactions with any business
partners along the value chain. E-business systems thus significantly impact business 173
process change, diffusion innovation, and even business transformation.

E-business systems adoption

Recently, numerous researchers have studied e-business systems adoption. For
example, Eastin (2002) examined influences on the four e-commerce activities (e.g.
online shopping, online banking, online investing, and electronic payment) adoption,
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and found that all diffusion attributions (perceived convenience and financial benefits,
risk, previous use of the telephone for a similar purpose, self-efficacy, and internet use)
significantly influence the adoption processes. Kendall et al. (2001) partially adapted
the innovation diffusion theory of Rogers (1995) to investigate relative advantage,
compatibility and trialability factors affecting the adoption of e-commerce by small
and medium-sized enterprises (SMEs). Horner-Long and Schoenberg (2002)
investigated whether the leadership characteristics required for e-business differed
from those needed by traditional bricks and mortar organizations. A more recent
survey by Patterson et al. (2003) examined the impact of organizational size,
organizational performance, inter-organizational factors and environmental
uncertainty on the success of supply chain technology adoption. Although these
studies have provided significant insights into the relationship between various factors
and the adoption of e-business systems, exactly how factors related to organizational
learning and knowledge management affect the level of e-business systems adoption
has received little empirically attention.

Research model and hypotheses

This study considers e-business systems in terms of technological innovation (Jackson
and Harris, 2003), and examines the organizational learning and knowledge management
factors facilitating their adoption. Figure 1 shows the research model, which hypothesized
that organizational learning factors (training available, technical expertise, and
knowledge level) and knowledge management processes (knowledge acquisition,
knowledge application, and knowledge sharing) affect e-business systems adoption
level. Each construct involved in the research model and hypotheses are discussed below.

E-business systems adoption level

E-business systems adoption level is a valuable construct that can be used to
understand various issues related to e-business systems, including expected functional
level and the degree of importance an organization needs to attach to certain adoption
factors. Based on firm e-business strategy and functional characteristics (Chan and
Chung, 2002; Lewis and Cockrill, 2002; Chen, 2003; Teo and Pian, 2004), this study
proposes five levels of e-business systems adoption. These levels are discussed below.
Level 1 – Initiation. The first level is an initiation level in which firms begin to
recognize the importance of e-business systems and prepare for web site
 MD
43,2

174
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Figure 1.
Research model

implementation efforts. This level simply involves using internet technology to access
information and brochures.
Level 2 – Propagation. The propagation level involves firms starting to invest in
building their e-business infrastructure to enable internal activities such as intranet.
Intranet allows internal operating processes to run smoothly and coherently through
real time management and provision of information to enhance internal resource
control (Chan and Chung, 2002). This level merely involves the internal use of intranet
functions.
Level 3 – Networking. This level is an external integration level where online
interaction is networked not only within a firm but also among firms and other
organizations. Most firms at this level establish business-to-business (B2B)
e-commerce and business-to-customer (B2C) e-commerce. This level supports
business partnerships in an electronic online environment for business transactions.
Level 4 – Business integration. Web site adoption is incorporated into the business
model and integration of business processes (Teo and Pian, 2004). Links exist between
suppliers and customers regarding the consideration of data from various business
processes and integration of firm’s business strategy, for example the enterprise
resource planning (ERP), supply chain management (SCM), and customer relationship
management (CRM) systems.
Level 5 – Business transformation. This is the highest level of e-business systems
adoption. This level of systems adoption transforms the overall organizational
business model (Teo and Pian, 2004). The key e-business management issue for this
level of systems adoption is how to integrate the diverse and distributed organizational
knowledge and seek new business opportunities.
 Organizational learning factors Impact of
E-business systems shape the technological innovation processes. Successful adoption organizational
of a complex technology requires adjustments in business processes, also requires that
the firm modifies and masters the technical aspects of the technology (Attewell, 1992). learning
Despite the pervasiveness of IT in modern workplaces, there is growing evidence of
failure to fully realize organizational effectiveness due to poor employee acceptance
of new technologies (Johnson, 1997). Training availability and high level of technical 175
expertise have been identified as a necessary and essential component of the firm’s new
technical adoption (Venkatesh and Speier, 2000; Robey et al., 2002).
Training availability refers to quantity of education available technology adopters
or users. Attewell (1992) argues that learning the technical knowledge required to use a
complex innovation is challenging for innovation adopters. Accordingly, the level of
training that firms’ employees undergo in ERP systems is positively related to
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implementation success (Bradford and Florin, 2003). Venkatesh and Speier (2000)
found that training availability was positively correlated with technology use
intention. Training e-business systems thus may be necessary for realizing successful
e-business systems adoption. Thus, the following hypothesis is formulated:
H1. Training availability will positively affect e-business systems adoption level.
Technical expertise refers firm level of specialized technical expertise. Firms are more
likely to adopt an innovation when technical expertise is available, and technical
expertise thus can increase levels of firms’ technology adoption (McGowan and Madey,
1998; Thong, 1999). Cragg and Zinatelli (1995) identified lack of technical expertise as a
key factor inhibiting IS evolution and sophistication. Moreover, Tiessen et al. (2001)
found that technical capability facilitated firms’ e-commerce adoption. Firms with high
levels of technical expertise can be expected to master the technical aspects of
e-business and adopt e-business systems more completely than firms with lower levels
of technical expertise. Hence, the following hypothesis is formulated:
H2. Technical expertise will positively affect e-business systems adoption level.
Knowledge level refers to the familiarity of firms’ employee with a technology. If firms’
employees are knowledgeable regarding a new technology, they are likely to be better
capable of dealing with technology adoption. McGowan and Madey (1998) found that
level of electronic data interchange (EDI) knowledge positively influences the extent of
EDI implementation. Consequently, if firms’ employees are knowledgeable about
e-business systems, the firm may be more willing to adopt e-business systems. The
following hypothesis is formulated:
H3. The knowledge level will positively affect e-business systems adoption level.

Knowledge management processes

Knowledge management is emerging as an important concept and is frequently cited
as an antecedent of innovation (Nonaka and Takeuchi, 1995; Darroch and
McNaughton, 2002). More and more companies are launching and maintaining
knowledge management initiatives to benefit from the dynamic effects of interactive
processes. Additionally, recent studies stressed that in a context of rapid technological
innovation, firms consider organizational capabilities through the knowledge
 MD accumulation, combination and dissemination (Grant, 1996). Efficient knowledge
43,2 management processes, such as knowledge acquisition, application, and sharing, are
important for new technology adoption.
Knowledge acquisition is defined as the business processes that use existing
knowledge and capture new knowledge. Administrator and technical innovations
require concerted effort and experience in recognizing and capturing new knowledge
176 (Drucker, 1993). Moreover, Darroch and McNaughton (2002) examined the link between
knowledge management practices and innovation types, and found that the likelihood of
effective firm innovation increases with the extent of knowledge acquisition. The
e-business systems infrastructure involves not only e-commerce initiatives but also is
driven by acquisition knowledge and skills (Moodley, 2003). Relationships between
knowledge acquisitions capabilities thus are expected to be positively related to
e-business systems adoption. The following hypothesis is formulated:
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H4. Knowledge acquisition will positively affect e-business systems adoption level.
Knowledge application is defined as the business processes through which effective
storage and retrieval mechanisms enable a firm to access knowledge easily. From the
technological innovation perspectives, knowledge transfer, knowledge integration and
practical application of knowledge are the main elements for developing technological
capabilities (Gilbert and Cordey-Hayes, 1996; Sveiby, 1997; Johannessen et al., 1999).
Firms that stimulate and improve organizational application of knowledge are more
likely to adopt new IS. Therefore, the following hypothesis is formulated:
H5. Knowledge application will positively affect e-business systems adoption level.
Knowledge sharing is defined as the business processes that distribute knowledge
among all individuals participating in process activities. The literature on the
organizational effectiveness of IS emphasizes that a knowledge sharing culture is
the main organizational condition for successful knowledge management and
exploitation (Damodaran and Olpher, 2000). According to the survey of Caloghirou et al.
(2004), openness towards knowledge sharing is important for improving innovative
performance. Additionally, knowledge sharing is important in innovation processes in
the e-business context (Liebowitz, 2002; Nah et al., 2002). Thus, knowledge-sharing
processes are expected to be positively associated with level of e-business systems
adoption. The following hypothesis is formulated:
H6. Knowledge sharing will positively affect e-business systems adoption level.

Research methodology
Sample and data collection
The study population comprised of IS executives in Taiwanese firms. Heijden (2001)
used IS executives as informants because of their ability to answer questions related to
e-business systems adoption. A draft questionnaire was pilot tested by three MIS
professors to ensure that the content and wording were free of problems. Five IS
executives then examined the revised questionnaire. These IS executives were given
the questionnaire and asked to examine it for meaningfulness, relevance, and clarity.
The sample frame was selected based on the 2003 Common Wealth directory of the
1,000 largest firms in Taiwan. However, this list did not contain information on IS
 department. Consequently, to ensure that IS executives received the questionnaire and Impact of
maximize response rate, two research assistants spent two weeks telephoning these organizational
1,000 firms. The research assistants asked the target firms whether they had formal
IS departments. Additionally, the research assistants sought the name of the IS learning
executives to whom a questionnaire should be mailed. Firms with no formal
IS departments were removed from the sample. This process produced a sample of 820
firms from various industries. Moreover, the final questionnaires were mailed to the 177
820 IS executives in the summer of 2003. A cover letter explaining the study objectives
and a stamped return envelope was enclosed. Follow-up letters were sent
approximately three weeks after the initial mailing.

Measures
Table I lists the constructs definition of instruments and the related references. In this
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study mainly adapted from previous studies and modified for use in e-business
context. Five-point Likert type scales were used except in the item for e-business
systems adoption level. Respondents gave the extent to which they agree or disagree
with each statement the constructs. All operationalized items are shown in Appendix.
The organizational learning factors were using three constructs: training available,
technical expertise, and knowledge level. Training available was measured using two
items based on the work of Bradford and Florin (2003). Technical expertise was
measured using a two-item scale adapted from McGowan and Madey (1998).
A three-item measure taken from Thong (1999) was modified to measure extent to
which employees in firm are familiar with e-business knowledge. The knowledge
management processes were measured using three constructs with a total of 13 items:
knowledge acquisition, knowledge application, and knowledge sharing, derived from
those proposed by Gold et al. (2001).
The construct of e-business systems adoption level was measured using descriptions of
the five e-business systems adoption levels. Respondents were to select the level of

Constructs Definition References

Training available The quantity of education available Bradford and Florin (2003)
technology adopters or users
Technical expertise The firm level of specialized technical McGowan and Madey (1998)
expertise
Knowledge level The familiarity of firm’s employee with a Thong (1999)
technology
Knowledge The business processes that use existing Gold et al. (2001)
acquisition knowledge and capture new knowledge
Knowledge The business processes through which Gold et al. (2001)
application effective storage and retrieval mechanisms
enable a firm to access knowledge easily
Knowledge sharing The business processes that distribute Gold et al. (2001)
knowledge among all individuals
participating in process activities
E-business systems Descriptions of the five e-business system Lewis and Cockrill (2002) and
adoption level adoption levels, including initiative, Teo and Pian (2004)
propagation, networking, business Table I.
integration, and business transformation level Constructs definition
 MD e-business systems that most fit their firm. This measure method is similar to those of
43,2 Angeles et al. (1998) and Teo and Pian (2004). These levels are discussed below.
(1) Initiation level – My organization has established its own web site, but this
web site only provide basic firm’s information.
(2) Propagation level – My organization has established a web site with an
intranet, and the web site features include information on executing internal
178 business tasks.
(3) Networking level – My organization has established B2B e-commerce and B2C
e-commerce systems that link company employees, suppliers, and customers
and allow them to make online transactions.
(4) Business integration level – My organization has integrated ERP, SCM, and
ERP systems that include advanced features such as business strategy support.
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(5) Business transformation level – The business strategy of my organization has

been transformed by e-business adoption. The strategy is characterized by
cross-enterprise involvement, with a focus on establishing partnerships and
developing new business opportunities.

Statistical analysis
The research model shown in Figure 1 was analysed primarily using SEM, supported
by LISREL 8.3 software. Numerous researchers have proposed a two-stage
model-building process for applying SEM (Joreskog and Sorbom, 1996; Hair et al.,
1998; Maruyama, 1998), in which the measurement models (or confirmatory factor
models) were tested before testing the structural model. The measurement models
specify how hypothetical constructs are measured in terms of the observed variables
(such as training available, technical expertise, knowledge level, knowledge
acquisition, knowledge application, knowledge sharing, and e-business systems
adoption level). Furthermore, the structural models specify causal relationships among
the latent variables. This study is employed to describe the causal effects and amount
of unexplained variance (Anderson and Gerbing, 1988).

Data analysis and results

Sample characteristics
Of the 820 questionnaires distributed, 202 completed and usable questionnaires were
returned, representing a response rate of 24.6 percent. All respondents were IS
executives, and had worked in the IS field for an average 13.1 years. Table II lists the
respondent company characteristics, including industry type, number of IS employees,
e-business experience and e-business systems adoption level.

Measure reliability and validity

The research instrument used confirmatory factor analysis (CFA) to examine the
reliability and validity. The measurement model includes 21 items describing seven
constructs: training available (TA), technical expertise (TE), knowledge level (KL),
knowledge acquisition (KA), knowledge application (KAP), knowledge sharing (KS),
 Demographic characteristics Frequency Percentage
Impact of
organizational
Industry type
Manufacturing 46 22.8
learning
Banking/insurance 45 22.8
Computers/communication 55 27.2
Transportation 10 4.9 179
Retail/wholesale 8 3.9
Real estate/construction 11 5.4
Health/foods 13 6.4
Utility 4 1.9
Others 10 4.7
Number of IS employees
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Less than 10 66 32.7

11-30 46 22.8
31-50 18 8.9
51-100 19 9.4
Above 100 53 26.2
E-business experience
Less than 1 year 37 18.3
1-3 years 122 60.4
3-5 years 29 14.3
Above 5 years 14 7.0
E-business systems adoption level
Level 1 – Initiation 15 7.4
Level 2 – Propagation 51 25.2
Level 3 – Networking 70 34.6 Table II.
Level 4 – Business integration 48 23.8 Sample characteristics
Level 5 – Business transformation 18 9.0 (n ¼ 202)

and e-business systems adoption level (AL). Table III lists the results of measurement
model CFA.
Table III summarized the results of internal reliability and convergent validity for
constructs. Internal consistency reliability to test unidimensionality was assessed by
Cronbach’s a. The resulting a values ranged from 0.76 to 0.90, which were above the
acceptable threshold 0.70 suggested by Nunnally and Bernstein (1994).
Convergent validity, the degree to which multiple attempts to measure the same
concept are in agreement, was evaluated by examining the factor loading within each
construct and composite reliability (Anderson and Gerbing, 1988). The items of factor
loadings significantly (i.e. t . 1:96) on their corresponding construct, with the lowest
t-value being 7.59 (Bagozzi et al., 1991). All composite reliabilities measures of
constructs exceed the recommended level of 0.70 (Bagozzi and Yi, 1988). Moreover, the
correlations of potentially overlapping constructs were used to assess discriminant
validity. No pair of measures had correlations exceeding the criterion (0.9 and above),
suggested by Hair et al. (1998), as shown in Table IV, implying that no
multicollinearity exists among the various constructs. The results of the tests for
unidimensionality, reliability, and convergent validity and discriminant validity
provide evidence of the internal and external validity of the scales used in this study.
 MD Internal reliability Convergent validity
43,2 Factor Composite
Construct Item Cronbach a loading t-value reliability

Training availability TA1 0.82 0.55

8.10* 0.80
TA2 0.66
10.09*
180 Technical expertise TE1 0.81 0.81
13.50* 0.76
TE2 0.83
14.03*
Knowledge level KL1 0.90 0.52
7.59* 0.82
KL2 0.60
8.94*
KL3 0.82
13.69*
Knowledge acquisition KA1 0.86 0.67
10.03* 0.84
KA2 0.79
12.78*
KA3 0.82
13.47*
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KA4 0.64
9.48*
Knowledge application KAP1 0.79 0.69
10.58* 0.81
KAP2 0.62
9.34*
KAP3 0.88
15.52*
KAP4 0.77
12.03*
KAP5 0.82
13.84*
Knowledge sharing KS1 0.76 0.56
8.41* 0.79
KS2 0.71
10.79*
KS3 0.69
10.35*
KS4 0.53
7.61*
Table III. E-business systems adoption level AL – 0.82
13.69* –
Instrument reliability and Notes: Overall fits of measurement model x 2 =df ¼ 420:78=164 ¼ 2:56; GFI ¼ 0:90; AGFI ¼ 0:82;
validity CFI ¼ 0:92; RMSEA ¼ 0:061; * p , 0:001

(1) (2) (3) (4) (5) (6) (7)

(1) Training availability 1.00

(2) Technical expertise 0.68 1.00
(3) Knowledge level 0.72 0.51 1.00
(4) Knowledge acquisition 0.43 0.36 0.46 1.00
(5) Knowledge application 0.27 0.44 0.59 0.36 1.00
Table IV. (6) Knowledge sharing 0.36 0.29 0.40 0.56 0.48 1.00
Constructs correlations (7) E-business systems adoption level 0.57 0.62 0.50 0.27 0.54 0.63 1.00

The following measured indices was assessed the overall model fit. From Table III, the
observed normed x 2 for this model was 2.56 ðx 2 ¼ 420:78; df ¼ 164Þ which is smaller
than 3 recommended by Bagozzi and Yi (1988). Other fit indexes include the
goodness-of-fit index (GFI) and comparative fit index (CFI) exceed the recommended
cut-off level of 0.9 (Bagozzi and Yi, 1988). The adjusted goodness-of-fit index (AGFI)
also exceeds the recommended cut-off level of 0.8 (Chau and Hu, 2001). The root mean
square error of approximation (RMSEA) is below the cut-off level of 0.08 recommended
by Brown and Cudeck (1993). The combination of these results suggests that the
demonstrated measurement model fits the data well.
 Testing the structural model Impact of
The results of structural model analysis are shown in Figure 2. The structural model organizational
analysis has a good fit as judged from the goodness-of-fit indices (GFI¼ 0.91;
AGFI ¼ 0.87; CFI ¼ 0.93; RMSEA ¼ 0.070), and the Chi-square index being learning
significant ðx 2 ¼ 420:78; df ¼ 164; x 2 =df ¼ 2:64Þ:
The analytical results showed that organizational training available (path
coefficient¼ 0.28, p , 0:01), technical available (path coefficient ¼ 0.20, p , 0:05), 181
and knowledge level (path coefficient ¼ 0.43, p , 0:01) positively affects e-business
systems adoption level, providing support for H1, H2, and H3. Since H1, H2, and H3
are statistically significant, each hypothesis was then tested to identify the
organizational learning factors were important for the e-business systems adoption.
The analytical results also support H4 and H5, as knowledge acquisition (path
coefficient ¼ 0.33, p , 0:01) and knowledge application (path coefficient ¼ 0.24,
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p , 0:05) positively influence e-business systems adoption level. However, there is

insufficient evidence to support H6, as knowledge sharing (path coefficient ¼ 0.09,
p . 0:05) is not significantly related to e-business systems adoption level. Table V
summarizes the hypotheses testing results.

Figure 2.
Results of structural
model

Hypothesis Effects Path coefficient t-value Remarks

H1 Training availabilitya 0.28** 3.19 Supported

H2 Technical expertisea 0.20* 2.14 Supported
H3 Knowledge levela 0.43** 5.52 Supported
H4 Knowledge acquisitiona 0.33** 3.82 Supported
H5 Knowledge applicationa 0.24* 2.58 Supported Table V.
H6 Knowledge sharinga 0.09 0.93 Not supported Hypotheses testing
Notes: *p , 0:05; ** p , 0:01; a effect on e-business systems adoption level results
 MD Discussion
43,2 This study examined influences on the extent of e-business systems adoption. The
analytical results show that organizational learning factors significantly affect the
level of e-business systems adoption. The analytical results also show that knowledge
management processes partially influence e-business systems adoption. The analytical
results are discussed below.
182
Organizational learning and e-business systems adoption
The analytical results reveal significant associations between three organizational
learning factors (training available, technical expertise, and knowledge level) and the
level of e-business systems adoption. Firms that provide training related to e-business
systems achieve greater levels of e-business systems adoption. Because of the inherent
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complexity of e-business systems, training methods must potentially enable employees

to scale initial hurdles to acceptance and usage, leading to greater firm adoption of
e-business systems.
Firms with greater levels of technical expertise and e-business knowledge attain
higher levels of e-business systems adoption. These analytical results are consistent
with the notion that e-business is a complex technological innovation whose successful
adoption requires technical know-how (McGowan and Madey, 1998). Firms that can
afford to hire e-business system specialists and maintain significant technical expertise
are better positioned than other firms to adopt complex technological innovation.
Moreover, firms that increase their knowledge of e-business can be expected to be more
willing than other firms to adopt e-business systems. Consequently, adequate technical
and e-business knowledge is a necessary first step towards e-business systems adoption.

Knowledge management and e-business systems adoption

The analytical results of this study support the hypotheses that knowledge acquisition
and application positively impact e-business systems adoption. This finding is consistent
with Gilbert and Cordey-Hays’ (1996) conceptualization of knowledge acquisition and
application as the facilitator of successful technological innovation. Specifically,
e-business systems differ from many previously studied areas of IT innovation because
they integrate intra- and inter-organizational business processes. Knowledge
accumulation enables employees to both use existing knowledge and create new
knowledge, both of which are crucial for e-business systems adoption. Consequently, in
the context of e-business systems adoption, it is important to note that managers should
encourage employees to create and use knowledge rapidly and effectively. That is, if
organizational knowledge management processes are focused on making knowledge
useful, firms are more likely to achieve increased levels of e-business adoption.
Contrasting with the literature on knowledge sharing practices, this study found
that knowledge sharing did not significantly impact e-business systems adoption level.
This phenomenon might result from the fact that employee relationships in Taiwanese
organizations frequently are egocentric (Tang and Tang, 1996), because employees are
afraid of giving away their expertise to colleagues who would use this knowledge to
get promoted at their expense. Consequently, although knowledge-sharing processes
may indeed provide increased substantive benefits leading to e-business systems
adoption, the main challenge for respondents was that current organizational culture
does not encourage knowledge sharing.
 Conclusions Impact of
This study developed a research model that drew upon organizational capabilities and organizational
the IS adoption literature to examine the influences of organizational learning factors
and knowledge management processes on e-business systems adoption level. The learning
analytical results confirm that successful e-business systems adoption is expected to
understand the training support and technical knowledge available, while also
understanding the knowledge-intensive practices required to create, apply, and deploy 183
knowledge. The implications for practitioners and researchers and the limitations of
this study are discussed below.

Implications for practitioners

The results of this study have implications for firm adoption of e-business systems.
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First, this study stresses the important considerations for practitioners who are
initiating or currently conducting e-business systems adoption. Owner/managers
considering e-business systems adoption would be best to focus on both social and
technical factors, and their interaction within and beyond the organization, rather than
focusing exclusively on technological considerations. The development of
organizational learning and knowledge management strategies would be useful for
e-business systems adoption, implementation and support processes. Second, the firms
that provide e-business training for their employees and increase their knowledge of
e-business can expect to achieve higher levels of e-business systems adoption. Third,
establishing knowledge management mechanisms and leverage knowledge assets is
essential for successful technological and organizational innovation (Hall and
Andriani, 2003; Bong et al., 2004). Johannessen et al. (1999) argued that knowledge
integration and related applications have been developed as strategic competitive
factors in modern organizations, such as managing of intellectual and social capital,
promoting organizational innovation and supporting new forms of collaboration.
Furthermore, knowledge management applications provide a novel architecture for
enterprises that contributes significantly to understanding and facilitating the
e-business transformation of operational processes (Fahey et al., 2001). Hence, a firm
with an enhance and accurate leveraging of the strategic relevance of knowledge and
knowledge management practices is more likely to adopt e-business systems or
increase the level of e-business systems adoption.

Implications for researchers

A number of interesting issues have surfaced from this study that could be considered
for future research. First, future studies could seek an enhanced understanding of the
impacts on the level of e-business adoption of the organizational learning and
knowledge management factors investigated in this study through structured
interviews and case studies of IS executives dealing with ongoing or recently
completed e-business systems projects. Second, some e-business literature has also
indicated differences between large organizations and SMEs in e-business systems
adoption (Riquelme, 2002). Similar studies of SMEs therefore should be conducted to
examine these differences. Third, this study examined knowledge management
processes as important antecedents of technological innovation. Notably, a knowledge
asset must be rare and inimitable to become a source of competitive advantage.
Without secure processes, knowledge loses the key qualities of being rare and
 MD inimitable (Gold et al., 2001). Therefore, future research could assess the influence of
43,2 knowledge protection processes on level of e-business systems adoption. Finally,
although the scales used for measuring organizational learning and knowledge
management factors similarities with existing scales, further research might consider
developing more elaborate measures to allow for a richer coverage of these antecedents
of e-business systems adoption.
184
Limitations
This study has three main limitations. First, since the respondents were IS executives
in Taiwan the findings may be influenced by cultural differences between Taiwan and
other countries. Second, besides the factors proposed here, organizational factors
related to technological innovation are many and varied, and can change over time.
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This study did not test all organizational factors, and focused particularly on learning
capacity and knowledge capability factors. Finally, the sample population only
included large enterprises in Taiwan. Large organizations have greater e-business
systems maturity than SMEs, so that the analytical results presented may have limited
generalizability for SMEs.

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Appendix. Questionnaire items

Training availability
TA1: My organization views employee training as an investment, not an expense.
TA2: My organization provided extensive training in e-business systems.

Technical expertise
TE1: IS employees are generally very knowledgeable regarding technical matters.
TE2: My organization contains considerable technical expertise.

Knowledge level
KL1: The organization contains a high level of e-business knowledge.
KL2: My organization hires highly specialized or knowledgeable personnel for e-business
systems.
KL3: My organization is dedicated to ensuring that employees are very familiar with
e-business systems.

Knowledge acquisition
My organization. . .
KA1: Has processes for acquiring supplier knowledge.
KA2: Has processes for generating new knowledge based on existing knowledge.
 MD KA3: Has processes for acquiring customer knowledge.
43,2 KA4: Has processes for acquiring knowledge on developing new products/services.

Knowledge application
My organization. . .
188 KAP1: Has processes for integrating different sources and types of knowledge.
KAP2: Has processes for transferring organizational knowledge to employees.
KAP3: Has processes for filtering knowledge.
KAP4: Has processes for applying experiential knowledge.
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KAP5: Has processes for applying knowledge to solve new problems.

Knowledge sharing
My organization. . .
KS1: Has processes for distributing knowledge throughout the organization.
KS2: Has processes for distributing knowledge among our business partners.
KS3: Has a standardized reward system for sharing knowledge.
KS4: Designs processes to facilitate knowledge sharing across functional boundaries.

E-business systems adoption level

What is the level that most closely fit your organization for adopting the e-business systems?
.
Initiation level – My organization has established its own web site, but this web site only
provide basic firm information.
.
Propagation level – My organization has established a web site with an intranet, and the
web site features include information on executing internal business tasks.
.
Networking level – My organization has established B2B e-commerce and B2C
e-commerce systems that link company employees, suppliers, and customers and allow
them to make online transactions.
.
Business integration level – My organization has integrated ERP, SCM, and ERP systems
that include advanced features such as business strategy support.
.
Business transformation level – The business strategy of my organization has been
transformed by e-business adoption. The strategy is characterized by cross-enterprise
involvement, with a focus on establishing partnerships and developing new business
opportunities.
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