Opportunities and pitfalls related to e-commerce strategies in small-medium firms: a system dynamics approach

E-commerce is often perceived as a powerful lever to foster growth of SMEs. However, both the literature and empirical evidence have shown the perils hidden in superficial decision making by SME entrepreneurs. A system dynamics (SD) approach is used in this article to demonstrate how managing processes of accumulation and depletion of strategic assets, detecting inertial effects of decisions made in the past, and selectively acting on policy levers are likely to help entrepreneurs in understanding opportunities and pitfalls related to e-commerce strategies. A feedback analysis of three case studies selected from the literature and the main findings from a survey conducted by the authors on SMEs pursuing e-commerce strategies are discussed. Based on the insights developed through this analysis, the last section of the article shows a generic SD model aimed to help entrepreneurs to better understand processes of accumulation and depletion e-ventures. Copyright (C) 2002 John Wiley Sons, Ltd.