This first study conducted in Brunei investigates the 84 small and medium enterprises by using a survey approach to find out the key factors that are determinants to EDI adoption. Based upon the existing model, the study uses seven factors grouped into three categories, namely organizational, external and economic factors. The findings indicate that hypotheses related to perceived direct benefits and perceived cost are supported. However, the study could not find support for perceived indirect benefits. All other factors such as: IT knowledge, government support, top management support and trading partner influence remain insignificant. Based upon these findings, recommendations are provided.