The Impact of E-commerce on the Financial Performance of Small Enterprises: Evidence from Official Trade Data

Abstract

This research conducts a quantitative evaluation of how the adoption of e-commerce influences the financial performance of Small and Medium-sized Enterprises (SMEs), We utilize a comprehensive panel dataset sourced from U.S. official trade statistics spanning from 2018 to 2024, One crucial challenge we confront is selection bias, that is, more prosperous firms might be more likely to embrace e-commerce. To handle this issue, we integrate Propensity Score Matching (PSM) with a Differencein- Differences (DID) framework, This methodological approach aims to identify the causal impact of e-commerce adoption, The research findings are notable. Compared to a meticulously selected control group, the adoption of e-commerce is associated with approximately a 15.2% rise in revenue growth and simultaneously a 5.8% decrease in operational costs, This twofold effect leads to a substantial enhancement in overall profitability, Our results offer solid, data-based evidence for the transformative significance of digital platforms. They also highlight the importance of formulating policies that can expedite the digitalization process of SMEs.