Regulatory and Policy Barriers to SMEs’ E-Commerce Adoption in Developing Countries: Opportunities and Threats for Sustainable Growth

Inconsistent regulations and limited policy support affect the uptake of e-commerce by small and medium-sized enterprises in developing economies. This study aims to understand the extent to which regulatory barriers and policy support influence the willingness of SMEs to adopt e-commerce and the level of digital trust that mediates this influence. We employed a T-O-E perspective and surveyed 320 SME owners/managers in Nigeria, Ghana, Sierra Leone, and Liberia. We analysed the data with PLS-SEM and qualitative mapping of the regulatory and policy instruments. By focusing on SMEs in these four countries, the study explores how institutional constraints and support mechanisms jointly influence e-commerce adoption behaviour. The measurement quality was found to have a satisfying threshold (loadings ≥ .75; CR .88–.92; AVE .65–.75; HTMT < .85; SRMR = .056). Regulatory barriers negatively impact digital trust and e-commerce adoption, while policy support positively impacts both. Furthermore, digital trust positively affects e-commerce adoption to a strong extent. Results also show indirect effects of digital trust, which partially mediates the relationship of RB EA and PS EA. Predictive checks (PLSpredict) show meaningful contribution in explanatory power (DT = .49; EA = .62) with lower RMSE than a linear benchmark and RMSE regression. Multi-group analyses demonstrate the countries’ heterogeneity in the impact of PS on EA. This shows the need to customise policy support interventions based on the administrative and resource capabilities and maturity of the respective market. While the findings broaden the understanding of SMEs’ digitalisation in environments with policy and regulatory uncertainties, policy implications consist of streamlining licensing and tax policies, clarifying data and consumer-protection laws, and coupling these with trust-building measures. The findings contribute to SME digitalisation research by identifying the distinct regulatory and policy pathways related to digital trust.