Global E-Commerce: Impacts of National Environment and Policy
The new millennium coincided with an explosion in the use of the Internet for commercial purposes. Dot com companies in the U.S. such as Amazon and eBay led the way, creating new online services where none had existed before. Recognizing the value of ecommerce, traditional companies also jumped online, including Wal-Mart in retail, Cisco in networking, Dell in the PC industry, and Charles Schwab in banking. In just a few short years, a company without a web site was considered passé and the Internet was becoming mythologized: “a few years from now business economists may include the Internet in the Schumpeterian Hall of Fame, as an economic innovation of the same magnitude as the steam engine and the assembly lines of yore” (DePrince Jr. & Ford, 1999). Radical changes toward online business models were widely believed to be ushering in a “new economy” requiring new competitive strategies, business models, and even a new economics. Given the major role played by the U.S. in developing the Internet and fostering its commercialization, other nations voiced concern that it would dominate e-commerce, spreading American culture and economic influence via electronic networks. The Internet compresses time and space, making it easier for companies to expand beyond regional boundaries. Commerce emerges as a powerful force beyond the control of individual countries, with a corollary being that the relevance of differences between countries diminishes. Taking this argument to the extreme, some predicted the emergence of a borderless global economy. In his treatise on strategies for the new economy, Kenichi Ohmae (2001, pp. 5) argues that “the idea of Japan or America as economic aggressor is simply a ‘cartographic illusion’ – a misperception derived from the false idea that national borders represent lines of true political autonomy.” Powerful global production networks and the rise of offshore outsourcing would appear to be consistent with this view of a borderless global economy. The Internet may indeed be driving a shift toward a global marketplace, with significant ramifications for supply chains, business processes, customer service, and the basis of competition. In times of rapid change, historical perspective is lacking. What is reality and what is hype? And how can we systematically distinguish between the two? Anecdotes and case studies have been the primary means of examining the impact of the Internet on societies, markets, and economies, painting detailed portraits of particular organizations and events. Exposing rich phenomena in context helps understand the “how” and “why” of e-commerce. However, their application to other contexts is limited. What happens in one country or region may not happen in another. The impact of back-office e-commerce operations may be different than customerfacing websites. Processes particular to one industry such as finance differ from those in others such as manufacturing. This leads to differences in how the Internet and e-commerce are applied, resulting in varying performance impacts. A systematic analysis of the impact of the Internet and e-commerce across firms, industries, and economies is necessary to separate hype from reality. We focus on understanding the topographical patterns of e-commerce across diverse economies and industries in order to assess the evolution of e-commerce (transformational versus incremental change), the extent of U.S. hegemony, and the extent to which globalization diminishes the power of nations, shapes local economies, and re-aligns national cultures. This book addresses these and other issues by reporting the results of a major research program using country case studies, secondary data, and survey data collected across ten economies, three industries, and small and large firms. The research program, which is called the Global E-Commerce (GEC) Project, was supported by grants from the Information Technology Research (ITR) Program of the U.S. National Science Foundation. Our research was focused on understanding how differences in national environments and policy influenced the diffusion and impacts of e-commerce in a global context. Consequently, we examined diffusion in ten economies, including both developed and developing ones. Within each economy we further studied the three industry sectors most shaped by the early diffusion of e-commerce--manufacturing, distribution and finance—and both small and large firms within these sectors. Among the various studies that comprised the GEC Project, we gathered secondary data on 40 economies, historical case study data on 10 economies, and original survey data on 2139 firms across the 10 case study economies. We refer to this later survey data as the “GEC Survey” or “global sample” throughout the book. The value propositions of the research program described herein are fourfold. Given varying approaches to managing and controlling national economies, varying levels of technological infrastructure, and diverse national, business, and consumer cultures, we might expect significant variation in how e-commerce is adopted, how it diffuses, and how it impacts firms, industries and countries. The first value proposition is thus an enhanced and systematic understanding of the relationship between national environments and policy and the use and impacts of e-commerce. Findings also improve understanding of variation in e-commerce use and impacts across manufacturing, finance, and retail industries, as well as across large versus small and medium-sized organizations. Such results inform the decisions of policymakers who seek to develop and shape e-commerce applications to fit their specific contexts with maximal benefit. Results also assist researchers in their quest to unearth structural patterns in how technology is diffused and used, and its effects. The second value proposition of the book is to provide insights for firms, industries and global e-commerce markets. Analysis of the GEC survey data reveals substantial opportunities for the application of e-commerce to fit local contexts. Results described herein underscore, however, that a one-size-fits-all approach is not advisable. Only by carefully understanding the historical antecedents of information technology application as well as the prevailing business and cultural conditions, can e-commerce application be successful. The third value proposition is to serve as a benchmark for future studies. One motivation for the current research program was a lack of cross-country analyses of e-commerce application using systematic survey data. Having undertaken this colossal task, it is our hope that this research program, as documented herein, will serve as a rigorous scientific benchmark for future studies of national and global Internet and e-commerce trends. To this end, the editors have attempted to be completely transparent in describing and interpreting not only the findings of the various studies, but also the methodology used to derive them. The final value proposition is providing a snapshot in time to preserve the early facts of the e-commerce and Internet revolution. So much has been written about the Internet and ecommerce by pundits, essayists, economists, business researchers, and others. Unfortunately, however, intermingled with excellent studies and useful insights is a monumental collection of hyperbole. This book, therefore, is a counterbalance of sorts, enabling future generations to assess studies of the Internet, e-commerce, and globalization and draw their own conclusions about what really happened—or didn’t happen.