Internet Use in Brazil: An empirical Investigation

Transcription

1 1 Internet Use in Brazil: An empirical Investigation Prof. Dr. José Dutra de Oliveira Neto, FEA-RP/USP Prof. Dr. Edson L. Riccio, FEA/USP Prof. Dra. Rosana C.M.G. Gonçalves, FEA-RP/USP Prof. João Marino Junior, FEA-RP/USP Faculdade de Economia, Administração e Contabilidade FEA USP - Brasil Av. Bandeirantes Ribeirão Preto - SP dutra@usp.br Abstract Although the use of the Internet has been increasingly growing around the world, research indicates there are many firms still considering its use in Brazil. Only a small percentage of the 180 million population in Brazil have access to the Internet. This paper presents the results of an empirical study on Internet corporate users and non-users in Brazil. Several topics were studied to find the reasons for use on non-use of the Internet and Intranet: organizational characteristics, benefits and reasons for non-use, ISP selection criteria, Internet applications, Website objectives, and Internet and Intranet top users. Using survey results obtained from a sample of 73 firms, findings on the current status of users and non-users are provided for the understanding of the reasons for use or non-use of the Internet in Brazil, as well as guidelines to improve the scenario. Finally, implications and suggestions for further research are discussed. Key Words: Internet, e-commerce, e-business, company/client relationship, Brazil

2 2 1. Introduction The objective of the present paper was to identify and to measure the degree to which the Internet and all its resources are used as management and company/client relationship tool by companies in Ribeirão Preto, Brazil, as well as to assess the reasons for use/non-use based on ACI members (Ribeirão Preto Industrial and Commercial Association). Internet Evolution in Brazil and around the World The internet started being used in Brazil experimentally in 1990 under the coordination of the National Research Network (RNP). The commercial stage started as of Globally, Brazil is ranked 9th in number of hosts (Network Wizards, 2003). Although numbers are still low if compared to the United States, the leading position in Latin America is to be pointed out both in number of users and hosts. As far as hosts ( ) Brazil has exceeded the total number of all Latin American countries (Network Wizards, 2003). In 1997 we were ranked as down as 22nd for number of hosts (68.685). A total of 29.6 million internet users are estimated for 2003 in Latin America (in 2000 that number was 13.3 million), and Brazil will report 41% of that total. The expectation is for Brazil to reach 44% of e-commerce in Latin America, with expected invoicing at US$ 12.1 for 2003, US$ 17.5 billion in (IDC Brasil). As for South America (Mexico and Central America excluded), Brazilian e-commerce stands for approximately 90%. In 1998 Brazil reported US$90 Million worth e-commerce. In 2003 the expectation is for approximately US$ 2.7 billion, being US$ 1.9 billion for B2B and US$ 760 million for B2C (IDC Brasil). Most Internet users in Brazil are males (57%), with the following shares for corresponding social class level: 21% - A class, 42% - B class, 17% - C class, and 20% - D class or lower (Comitê Gestor da Internet). As for Internet banking, Brazil is ranked as one of the most advanced in the world. Brazilian top private bank reports 780,000 Internet banking users, which stands for 9.5% of their clients. Another success example is internal revenue federal system: in 2002, approximately 97% of income tax declarations were sent over the Internet. Internet users for purchase transactions in the US amount to 53%; in Europe, that figure is 32% [ESP, 15/03/2002]. When looking at those numbers, we could estimate Brazil s huge potential to be captured, for a share of the US$ 609 billion e-commerce estimated by IDC [ESP, 15/03/1999]. Brazil s population amounts to 180 million, with GDP at US$ 450 billion (2002). The State of São Paulo alone holds 33% of the GDP, with a population of 35 million. Ribeirão Preto, in São Paulo State, has a population of 500,000 (2000), with GDP at US$ 10 billion. MPE Micro and Small-Size Companies

3 3 According to the Brazilian Institute of Geography and Statistics (IBGE) there are approximately 3.5 million companies in Brazil, out of which 98% are ranked as micro and smallsize. Micro companies are those with yearly invoicing up to US$ 70,000; small size, up to US$ 345,000. MPE are responsible for approximately 59% of total employment in the country, with 28% of total GDP. From all exporting companies in Brazil, PME stand for 29% (SEBRAE - IBGE, FUNCEX, PNAD and RAIS/ and 1996). Below, the share taken by MPE in the 4 different sectors: Sector/Activity % Industry 12% Commerce 43% Table 1 MPE share in Services 31% the different sectors (Brazil) Sources: SEBRAE Agric. and Cattle 14% CEE/TEM (Dec, 99) and Agropecuário (95/96) In the State of São Paulo the MPE stand for a significant share of companies in each of the sectors / activities as specified below: Sector/Activity % MPE Industry 97.8% Commerce 99.6% Services 98.4% Table 2 - CEE/TEM (Dec.99) and Censo Agropecuário IBGE (1995/96) - SEBRAE 2. Methodology The purpose of this paper was to identify how Ribeirão Preto companies used the Internet for their businesses. To check whether the Internet has been used as a direct communication tool with clients, with the possibility of online purchase, or whether it has been used only as a new way of brand exposure. Through reference research, a questionnaire was developed for data collection. The questionnaire was based on a work by TEO and TAN (1998) developed in Singapore, and pretested to eliminate possible misunderstandings as to topics. The result of that research was a questionnaire with 34 questions divided into 5 major blocks (Attachment 1). Procedures for Data Collection

4 4 The investigation counted on member companies of ACI-RP (Ribeirão Preto Industry and Commercial Association State of São Paulo - Brazil), that provided names and addresses of companies. One thousand companies were chosen randomly (16.6%) from approximately 6,000 members. They were all sent the questionnaire, with a cover letter, the questionnaire itself, and a stamped envelope. A second remittance to 100 new companies also chosen randomly was carried out one month after the first one aiming at reaching a higher number of respondents. A total of 73 valid responses were counted (6.6% of the total companies to which the questionnaire was sent). 3. Respondents Profile Block I in the questionnaire is made up of 6 questions where responding companies profiles are identified (respondent s position, company s activities, number of employees, estimated revenue, information team and Internet use). As for top positions in sample, Table 3 shows that most respondents are company directors, which may indicate a personal view of executives about their business Respondents Position % Director 62% General Manager 5.5% Sales Manager 4.1% Finance Manager 4.1% Marketing Manager 2. 7% Accounting Manager 2.7% Operations Manager 2.7% Others 16.2% Table 3 Respondents Major Positions

5 5 Major Activities of Respondents % Industrial 16.4% Engineering 9.6% Education 4.1% Clothes and Accessories 4.1% Others 65.8% Table 4 Companies Activities The sample under research comprises quite a wide variety of activities: industrial, agriculture and cattle raising, pharmaceuticals, transportation, tourism, among others (Table 4). Two major activities can be detected: Industrial and Engineering. As for the number of employees, most companies answered they had up to 30 employees, and only 8.4% were mid and large size companies, with over 300 employees. Company Size % < % % % % % > % Table 5 Size (Number of Employees)

6 6 As for company size, it could be noticed that the sample concentrated small size, low invoicing companies below U$$ 200, yearly a group to stand for 74.3% of respondents. Company invoicing US dollars <30, % 30,001 85, % 85, , % 145, , % 200, , % 260, , % >300, % Table 6 - Invoicing US$ Thousand (2000) The sample is consistent with Brazilian corporate structure, since most firms can be classified as MPE. As for information technology, it was found that only 23.5% of the companies actually have a Information Technology Department, and approximately 27.9% have only one person in charge of systems. Information Technology With IT Department 23.5% IT Activities Out-Sourcing 32.4% Only a few IT professionals 16.2% Only 1 IT Professional 27.9% Table7 Information Technology

7 7 As for the use of the Internet, 72 valid responses showed that 64 use it and 8 do not (1 company did not answer); 47.2% reported they have only , and 41.7 % + Web which portrays the potential for growth in the region. Only 4.2% of respondents stated that they will not use the Internet. From the sample, 34 respondents use only, which is seen as an elementary use of the Internet. For analysis purposes, let us consider that companies using the Internet are those that have available at least tools or /www, which totals 64 ( ) respondents, which is to say, 88.8% of the sample. Current Internet Status 47.2% + Web 41.7% Will not use it 4.2% Will start using it in the next 6 months 2.7% Will start using it in the next 12 months 4.2% 4. Results 4.1 Internet Applications Table 8 Information Technology Block II of questionnaire (Attachment 1) covers the use of Internet in the company. Respondents were asked whether they had used the Internet before, and if so, to rank on a 1 to 7 scale some Internet applications( , WWW - site, FTP, Usenet, Telnet inter-computers communication, Chat and Download). On the scale, 1 would stand for a tool that has never been used, and 7 for the most used tool. (Table 8). Table 9 shows that use is restricted to www, and download. All other applications are little known by respondents as a result of their little acquaintance with information technology or their very specific use of the tools. Application 1(least used) (most used) 1.5% 1.5% 1.5% 1.5% 0% 7.8% 86.2% WWW 13.8% 3% 1.5% 4.5% 13.6% 43.9% 19.7% Download 12.9% 9.7% 6.5% 8.1% 37% 12.9% 12.9% FTP 48.3% 5% 11.7% 23.3% 8.3% 1.7% 1.7% Usenet 50% 13.3% 20% 11.7% 3.3% 1.7% 0% Chat 66.7% 8.3% 6.6% 11.7% 1.7% 1.7% 3.3% Telnet 55% 23.3% 13.3% 5% 1.7% 0% 1.7%

8 8 Table 9 Ranking for Internet Applications 4.2 Leaders One aspect that may be seen as crucial for the use of new technologies is the presence of leaders in the implementation stage [BEATH apud TEO & TAN [1998]. Block III in the questionnaire (Attachment 1) checks how important a leader or the person in charge as well as their characteristics for implementing the Internet (position, area, degree of knowledge). Out of the 64 companies that had implemented the Internet following the criteria selected in the present paper, 41 adopted the figure of the Leader, 21 did not adopt the figure of the Leader and 2 did not answer. Most leaders come from high management and administration, and only 2.4% from lower management echelons (Table 10 and Table11). Such results differ from the work of TEO & TAN [1998], since their results show that 46.1% of leaders come from information technology area. As for leader s knowledge on technology and businesses the following could be detected (Table 10 and Table 11): a concentration of leaders who are more knowledgeable on the business area and less knowledge on technology. That may explain the fewer number of leaders from Information Technology or the lower use of technology by PME. Leaders from % High Management 84% Middle Management 12% Low Management 4% Table 10 Leaders Major Positions Leaders from % Administration 68% Technology 11% Table 11 Leaders Major Areas Leaders Expertise in Information Technology % Low 12% Medium 42% Above Average 19% High 19% Exceptional 8% Table 12 Leaders Expertise in Information Technology in Respondents View (Low, Medium, Above Average, High and Exceptional)

9 9 One of the explanations found in the research was that the leaders in most cases are executives or company owners (from the business area), and are not knowledgeable enough to implement IT resources effectively in the business area. Leaders Expertise in the Business Area % Low 0% Medium 24% Above Average 24% High 28% Exceptional 20% Table 13 Leaders Expertise in Information Technology in Respondents View (Low, Medium, Above Average, High and Exceptional) 4.3 Internet Sites: Objectives Major objectives for a company to have a site on the Internet can be found in Table 14: To provide clients with information To advertise products and services To have corporate presence on the Internet Considering there is strong business competition entrepreneurs feel the need to position their companies in that means of communication as well, to provide clients with information through products and services advertising, without direct sales, though. Only 25% of those who have sites try to sell products or services on the Internet. Approximately 30% of the companies using the Internet still do not have a company site. All objectives listed by respondents can be found in Table 14. It puts together the answers of the 64 companies in the sample that have implemented the Internet following the criteria selected by the present paper.

10 10 Site Objectives % To provide clients with information 63% To advertise products and services 55% Do not have a company site yet 30% Corporate presence on the Internet 28% Products / Sales Direct Sales 25% To acquire Internet experience for the future 17% 24-hour communication with clients 16% Collect information on visitors 16% Table 14 Site Objectives (Each respondent could choose one or more options) 4.4 Internet Use Benefits Block D1 of questionnaire (Attachment 1) was answered by 59 companies that have implemented the Internet (from a total of 64) following the criteria as set up by the present paper. Through a Likert-type scale respondents indicated the reason for Internet implementation. The scale varied from: [1] I fully disagree, [2] I somewhat disagree, [3] I agree, [4] I somewhat agree and [5] I fully agree. Major benefits identified by respondents are: access to global information, to have corporate presence on the Internet, to expand global market and to monitor competitors (similar to the results as obtained by TEO & TAN [1998] ). To our surprise, the worst benefit is sales on the Internet (Table 15), which differs from TEO & TAN [1998], whose worst benefit was to lower operating costs.

11 11 Reasons for Internet Implementation (média) Access to global information 3.6 Corporate presence on the Internet 3.6 Global market expansion 3.6 Monitor competition 3.6 Create new business opportunities 3.4 Lower operating costs 3.2 Improve clients assistance 3 Intention of selling through the Internet 2.4 Table 15 The Implementation of the Internet (Each respondent could choose one or more options) 4.4 Reasons for Non-Implementation of the Internet Block D2 of questionnaire (Attachment 1) was answered by 7 out of the 8 companies that have not implemented the Internet. Respondents indicated the reasons for deciding not to implement the Internet through the same scale used for previous question. Respondents main concern is the fact that the company is small and that employees cannot use the Internet. Second and third concerns were practically a tie, and have to do with personnel qualification. Costs, the threat of hackers and virus are the next ones. The concern that employees could waste time browsing on the Internet was the least relevant among respondents (Table 16). Such results differ from TEO & TAN [1998], who report Waste time surfing on the web as the major reason for no implementation, and Employees cannot use the Internet as the bottom one for no implementation.

12 12 Reasons for No Internet Implementation (Mean) The company is small 3.7 Employees cannot use the Internet 3.7 Not enough qualified personnel 3.6 High cost 3.6 Hackers threat 2.9 Virus threat 2.7 It does not aggregate value to my business 2.6 Time waste surfing on the web 2.4 Table 16 Reasons for Non-Implementation (Each respondent could choose one or more options) 4.5 Criteria for Internet Provider Selection Block E in the questionnaire (Attachment 1) asked about choice selection criteria for Internet access providers. The scale used varied from (1) Not important at all to (5) Extremely Important. The block was answered by 64 companies that use the Internet. As expected, access speed was the top criterion for choice selection, followed by cost and the reputation of provider/available applications for my needs. Friends recommendation, ranked first in TEO and TAN [1998], was ranked lowest in our investigation. (Table 17).

13 13 Choice Criteria for Providers Selection Mean Speed 4.6 Cost 4.2 Provider s Reputation 4,0 Applications available for my needs 4,0 On-site support 3.9 Telephone and Internet support 3.9 Promotions 3.3 Friends recommendations 3.1 Table 17 Choice Criteria for Provider Selection (Each respondent could choose one or more options) 5 Analysis Results Some tests were initially carried out to check the possible connection between demographics (Questions 1 to 5 Block 1 - Attachment 1) and the implementation or nonimplementation of the Internet. Results are described below: As for respondent s position (Question 1, Block 1 in Questionnaire Attachment 1), the only analysis possible was to compare the position of a Director with other positions following distribution. The test was chi-square. Test result was 2.23 and p=0.14. Therefore, no significant difference was found between a respondent that held the position of a Director and other positions for Internet implementation. As for major company business (Question 2, Block 1 in Questionnaires - Attachment 1) two analyses are possible: Industrial and industrial-related sector, and Services and servicesrelated sectors. The test used was Fisher exact test. As for company size (Question 3 Number of Employees - and Question 4 Estimated Revenue for 2000) no significant difference was found for company size in Internet implementation. Results were obtained through Fisher exact test. Lastly, Question 5 showed no significant difference between companies with an IT department or outsourcing IT as for Internet implementation. Results were obtained through Fisher exact test. Therefore, considering the sample used for the present study the authors cannot say that demographics interfere in Internet use or non-use.

14 14 6. Conclusions For companies to use the Internet in the future the present research will provide information so that implementation may be more successful. Initially, demographics were not found to be impacting in Internet implementation to our sample. Most used applications by companies using the Internet are , www and downloading. The figure of the leader to conduct the process of Internet implementation in the companies was adopted by most companies under research (41 out of the 64 companies using the Internet). Such significant figure reflects how important a role a leader plays for Internet successful implementation. The leader, as identified in the study, comes from high management, from the administration area with good knowledge on business, and only 50% of them show to have information technology knowledge above average. Therefore, the predominance of business expertise over information technology expertise was reported. The objectives for the implementation of the Internet exhibit static characteristics, with little interaction with clients, and with no current concern about Internet sales. Only 25% of those who have implemented the Internet have the objectives of selling products or services, which may be seen as quite shy strategy. Benefits identified in Internet implementation are consistent with objectives, which is to say: to be present on the Internet, to have access to global information, and not to have concern about internet sales at this point in time. The reasons for non-implementation may be narrowed down to qualified human resources a common characteristic for PME in Brazil. Providers selection follows speed as expected in its turn followed by cost. Most connections are low-speed in Brazil (dialed connections) as a result of fast speed cost. Friends recommendation is not a relevant component, which may reflect a more professional use of IT resources. Major differences when compared to TEO & TAN [1998] were associated to leaders profile and the reasons for not implementing the Internet. 7. References COMITE GESTOR DA INTERNET - COOPER; Brian Como Usar a Internet, Publifolha DENEGA M.A., Como Promover seu Site, Editora Berkeley DORIA; F.A., Comunicação dos Fundamentos da Internet, editora: Revan ESP, Jornal O Estado de São Paulo, 15/03/1999 GARTNER GROUP: GRIMES A. D., Internet, 2a Edição, Editora Berkeley IBOPE: IDC BRASIL, Brasil s 1999 Internet and e-commerce strategies, LYMCH; D.C., Dinheiro Digital O Comércio na Internet, editora: Campus NETWORK WIZARDS NETWORK WIZARDS - em 7/3/2003) NUA: The World s leading resource for internet trends & Statistics

15 POVOA; M.P., Anatomia da Internet, editora: Casa da Palavra RIES; A.L., As 11 Consagradas Leis de Marcas na Internet, editora: Makron Books TEO, T.S.H.; TAN, M. An empirical study of adopters and non-adopters of Internet in Singapore, Information & Management, 34, p , 1998 TORRES; G.T., Alavancando Negócios na Internet, editora: Axcel Books VENETIANER; T.V., Como Vender Seu Peixe na Internet, editora: Campus 15