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This paper introduces a model for Internet adoption, namely: level 0 – e-mail adoption; level 1 – Web presence; level 2 – prospecting; level 3 – business integration; and level 4 – business transformation. Two broad Web site categories can be identified: informational Web site and transactional Web site. The competitive advantages in terms of differentiation, cost reduction, innovation, growth, and alliance that are affected by Internet adoption are examined.

A questionnaire survey of 553 firms was conducted, of which 159 usable responses were received, resulting in an effective response rate of 28.8%. The results show that proactive business strategy, firm size and competitive advantage are found to be positively related to Web adoption level. Implications of the results for researchers and practitioners are discussed, and directions for future research are proposed.