Understanding Country Level Adoption of E-Commerce: A Theoretical Model Including Technological, Institutional, and Cultural Factors

Understanding Country Level Adoption of E-Commerce: A Theoretical Model Including Technological, Institutional, and Cultural Factors

Punit Ahluwalia (University of Texas Rio Grande Valley, Edinburg, USA) and Mohammad I. Merhi (Indiana University South Bend, South Bend, USA)
Copyright: © 2020 |Pages: 22
DOI: 10.4018/JGIM.2020010101

Abstract

This paper provides a theoretically grounded model of e-commerce adoption to explain differences in adoption rates among countries. The model extends the existing culture-policy-technology (CPT) framework to examine causal relationships between the technological, institutional, and cultural factors in order to examine country-level e-commerce adoption. Thus, interesting relationships among macro-level factors are hypothesized. The paper highlights the important of risk mitigating mechanisms or institutions to facilitate adoption of e-commerce in countries with high uncertainty avoidance. A call for empirical examination into country level adoption is answered by analyzing macro level data from 69 countries. The hypotheses are confirmed using PLS analytical procedures. The study is timely as e-commerce technology has now taken hold in several countries but its revenues in proportion to the overall total revenues remain low. The study is motivated by significant different in e-commerce adoption rates among countries. The paper makes significant contributions to literature and practice.
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1. Introduction

In an ICT (Internet and Communication Technologies) enabled interdependent world, most countries consider e-commerce as a significant instrument for economic growth (Merhi & Ahluwalia, 2018; Zhu & Thatcher, 2010). However, despite early promise, overall e-commerce revenues remain insignificant in comparison to the overall business volumes (D’Onfro, 2015; Edquid, 2017) and e-commerce adoption at the global level remains low (Commission, 2011; EUR, 2013; Postnord, 2014; Stambor, 2010). Research shows that e-commerce adoption rates among different countries and regions exhibit significant variations (Zhu & Thatcher, 2010; Statista, 2017). For example, in 2017 e-commerce sales accounted for only 2.2% of the total retail sales in India, 23.1% in China, and 16% in Korea (Statista, 2017). Disparities exist even within the same continent or the same group of nations (developed vs. emerging). For example, in Europe, online shoppers in the age group between 15 and 79 ranged from less than 40% in Italy to more than 80% in United Kingdom (Postnord, 2014). Statista (2017) reported that in 2017 the share of e-commerce sales in the total retail sales is 19.1% in UK, 12.6% in Denmark, and 7.9% in Germany. According to a study by Business.com in 2017, the e-commerce share of total retail sales in Japan 5.4%, France 5.1%, Canada 5.7%, Russia 2%, and Brazil 2.8% (Edquid, 2017). The question then arises, “what causes such variations?” Additionally, because of gradual and consistent accretion in e-commerce trade volumes in recent times, governments across the nation states are focused on improving their share in the overall global trade. Therefore, it is important to examine the important drivers of e-commerce adoption at a country level.

In the existing literature, studies focusing on macro-level determinants of e-commerce adoption are few; most of this research mainly emphasizes individual and organizational environments (Delone & Mclean, 2004; Grandon et al., 2011; Chiu et al., 2014). Although individual and firm level factors are important, they do not explain significant differences in e-commerce adoption among countries. Moreover, because of sampling constraints, the generalization of the results reported in the existing research that examine macro-level determinants of e-commerce adoption is rather limited. Most existing studies focus on adoption factors within one country (Stylianou et al., 2003; Yoon, 2009; Al-Hudhaif & Alkubeyyer, 2011; Jehangir et al., 2011). Also, a significant number of these studies are based on qualitative methodology (Aleid et al., 2009; Choudrie & Dwivedi, 2005). As a result, Tan et al. (2007) called for empirical research into cross-cultural and cross-country analysis of e-commerce adoption factors.

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