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Nowadays, e-commerce and its applicability are in controversy throughout the world. Firms in all sizes are facing with various barriers in adopting e-commerce. For case of small and medium sized enterprises (SMEs), there are much more obstacles than large companies have face with, therefore, the model that is fit and effective for SMEs may quite different from large enterprises’ ones. This paper takes up case of Japanese distribution channels to illustrate the major impact of information technology on SMEs, finds out the role of e-commerce within SMEs distribution systems in Japanese economy, and then, points out some major barriers that prevent SMEs from entering into e-commerce. Finally, we propose an analytical framework for e-commerce penetration into SMEs as a guideline of future research in this area.