A new report on Canada's digital economy says high capacity Internet and wireless networks can help small and medium sized businesses increase their access to foreign customers and improve the quality, speed, and cost-effectiveness of business transactions.
But despite the potential benefits, Canadian small and medium-sized enterprises (SMEs) are hesitant to sell online because they lack the knowledge of how to do so effectively, according to the Conference Board of Canada report, Best Practices for SMEs to Build International Sales in a Digitized Economy.
The report identifies key factors it says contribute to success in international digital markets: a favourable online reputation, strong online technological capabilities, and an engaged online brand community.
"Most Canadian small and medium-sized businesses use the Internet, but online selling is not yet widespread," said Rebecca Reuber, co-author and Professor of Strategic Management at the Rotman School of Management, University of Toronto.
"Although greater internationalization provides growth opportunities, doing business in foreign markets can be difficult and costly for resource-constrained SMEs, and most of them operate solely in the domestic market," added Eileen Fischer, co-author and Max and Anne Tanenbaum Chair of Entrepreneurship and Family Enterprise. "One particular hurdle for some firms is the investment that's required in technology to sell effectively online. "
A 2010 Statistics Canada study found that only seven per cent of small enterprises and 13 per cent of medium size enterprises were selling online in 2007, about the same percentage reported in 2001.
The report lists three main factors that affect company success are:
· A favourable online reputation - elements include visibility, trustworthiness, and signals of high product or service quality.
- Strong online technological capabilities - the CEO and other top managers must champion technological development, rather than delegating responsibility.
- Engaged online brand communities - buyers increasingly want to become involved with firms, so companies should invest resources in monitoring a range of social media and interacting with customers.
The report was produced by the International Trade and Investment Centre for the Conference Board's CanCompete program. CanCompete is a three-year program of research and dialogue is designed to help leading decision makers advance Canada on a path of national competitiveness.
The 26-page report is available online to active account holders, at www.e-library.ca.