Abstract
Organisational integration is being heralded as a critical “dynamic capability” and is seen as an important strategic issue for firms in the future. This study seeks to explore this issue in the specific context of e‐commerce and information system integration, by considering the model proposed by Poon and Swatman, in the case of small‐ and medium‐sized enterprises (SMEs) in the UK. Poon and Swatman propose that the model of business transformation enabled by traditional IT turns “inside out” when applied to the e‐commerce domain. Their model suggests a hierarchy of levels of e‐commerce integration. At the lowest level firms develop inter‐organisational systems. At the next level they undertake limited integration with existing internal systems, and only at the highest level do they achieve full internal integration. The study, which was carried out by a mailed questionnaire, found that the proposed model is indeed valid. Three distinct groups of firms are identified that correspond to the hierarchical levels proposed in the model. The benefits realised by the firms were found to increase with increasing integration, but the level of process change required was found to be independent of the level of integration. Contextual variables, such as industry sector and organisational size, are explored for firms at the three different levels of integration. Developments of the Poon and Swatman model are suggested.