There is overwhelming evidence that the use of the Internetenabled applications and solutions provide unprecedented economic growth opportunities. However, the Internet diffusion rates remain low in many countries. According to the International Telecommunications Union (ITU), in 2004, less than 3% of the Africans used the Internet, whereas the average Internet subscription rate for G8 countries (Canada, France, Germany, Italy, Japan, Russia, the UK, and the US) is about 50%. Also, in nearly 30 countries the Internet penetration rates still remain below 1% (ITU, 2006). So, what are the key factors that explain this wide variation in Internet subscription rates in countries around the world? An understanding of these factors will be highly useful for policy makers, economic developmental agencies and political leaders in establishing and implementing suitable national developmental strategies and policies.
Global Internet Diffusion Factors
Several factors have been observed to determine the penetration rates of the internet in various countries. These factors include the availability of reasonably-priced telecommunications infrastructure, access to personal computers, educational and training opportunities for individuals, income levels, and innovative capability of the country (Beilock & Dimitrova, 2003; Chinn & Fairlie, 2007; Dewan, Ganley, & Kraemer, 2006; Dholakia, Dholakia, & Kshetri, 2003; Kiiski & Pohjola, 2002; Oyelaran-Oyeyinka & Lal, 2005; Meijers, 2006; Murthy, 2004; Nath & Murthy, 2003, 2004). Also, the rule of law (e.g., property rights, strong legal system) governing the country’s trading system, government regulations and market liberalization policies, and credible payment systems (e.g., credit cards, digital wallet, and cash) are necessary for migrating to digital commerce.
Key Terms in this Chapter
Power Distance (PD): A measure of the unequal distribution of power in a society. Cultures with high power distance are centralized whereas cultures with low power distance are more participative and individuals like more autonomy.
Hofstede’s Cultural Dimensions: Four factors proposed by Hofstede along which cultures might differ.
Economic Freedom Index: A measure of the absence of government constraints on the economic activities of a nation.
Uncertainty Avoidance (qUA): A measure of how well a culture accepts uncertainty. A culture with high uncertainty avoidance is mostly rule oriented and is less tolerant of divergent opinions and behaviors.
Internet Diffusion Rate: Percent of population of a nation having access to the Internet.