Home-based e-business - an option for the self-employed?

Appendix 2

Definition of Terms

•  Definition of SMEs

The definition of what constitutes an SME varies widely among different countries. According to the PricewaterhouseCoopers' Final Report on SME Electronic Commerce Study (1999), their definition of SME is based on the number of persons employed by the firm with up to 500 employees. However, based on the compact situation of Hong Kong, the SME Information Centre in Hong Kong defined that manufacturing enterprises with fewer than 100 employees and non-manufacturing enterprises with fewer than 50 employees are regarded as small and medium enterprises (SMEs). Most of the SMEs was in the import and export trades followed by the wholesale and retail trades, restaurants and hotels. They accounted for more than 60% of the SMEs in Hong Kong and represented over half of SME employment.

•  Definition of home-based e-business

There is lack of literature on objective research on the home-based e-businesses. A home-based business can be described as performing one's occupation, profession or trade in the same place where that person lives for a permanent residence. (Mary Jolynn R. 2001) Therefore, home-based e-business is referring to business that is performed at home and is conducted through Internet. The status activities are varied from employed, self-employed or partnership. However, to be more specific, it is confined to self-employed in this study. Therefore a home-based e-business is a home-based business where the trading of goods and services occurs in which the final order is placed over the Internet.

•  Definition of e-business

All businesses conduct commerce. Commerce is the exchange of money for goods or services between businesses and consumers. E-commerce is the sharing of business information, maintaining business relationships and conducting business transactions by using electronic media such as Internet, intranets, and the extranets. Forrester Research, Inc., an independent research firm, narrowly defines e-business as the trading of goods and services in which the final order is placed over the Internet. (1998)

•  Types of e-business

•  Business to Business (B2B)

B2B is the use of web-based technologies to conduct business between two or more companies. Business can mean buying or selling, or it can mean exchanging information. B2B transactions can take place directly between companies or through a third party who helps match buyers and sellers. B2B applications use electronic trade between you and your customers, suppliers, and business partners. There are many reasons to use B2B applications:

•  To increase your supply chain efficiency at lower costs

•  To help you improve customer service

•  To give you total supply chain management (SCM), from the initial ordering process to the distribution of the final product

•  Business to Customer (B2C)

B2C includes all e-business between businesses and individuals, from retailing over the Internet to Web-enabled services such as banking. B2C transactions provide consumers with online shopping through Internet, allowing consumers to shop and pay their bills online. This type of offering saves time for both retailers and consumers. Several characteristics are shared by most B2C transactions:

•  A secure firewall is used to safely make purchases.

•  A catalog is used to browse products before making a selection and purchase.

•  Non-repetitive items are purchased each time you shop online.

•  Items are purchased with a credit card or debit card.

•  Electronic Network within the company or organization

Through Intranet, people can exchange and handle business information internally.

•  Customer to Customer

Consumers can post their own products online through some agent Web site for other consumers to buy. Such sites include well-known auction sites such as eBay.  

•  Government to Citizen

Among various kinds of services provided by governments, many of them can be done through electronic media. The Government of the Hong Kong Special Administrative Region has launched the Electronic Service Delivery (ESD) Scheme on Internet in December 2000, providing more than 60 kinds of services round the clock.

•  Government to Business

The Government of the Hong Kong Special Administrative Region has launched the Electronic Tendering System (ETS) in April 2000. This system is an infrastructure to provide online services such as registration of suppliers, tender notification, download facility for tender documents, inquiries handling, submission of tender proposals and announcement of tender results.

Although e-business are generally divided into six categories as mentioned above, over 90% of e-business are concentrated on B2B and B2C activities. Therefore, home-based e-businesses in this study are mainly focus on B2B and B2C except that there are some C2C activities through auction site like eBay.