E-Commerce in Developing Countries: Impediments and Opportunities

Introduction

As the number of Internet users around the world has steadily grown various studies have been conducted and models have been developed to identify diffusion of e-commerce in different environments. (Zwass, 1999; Wolcott, et. al. 2001; Travica, 2002; Hasan and Ditsa, 1999) These models have looked at “infrastructure” (e.g. connectivity hardware and software, telecommunications, product delivery and transportation systems) and “services” (e.g. e-payment systems, secure messaging, electronic markets, etc.) as the primary diffusion factors. Furthermore, Travica (2002) study has focused on Costa Rico and its culture, and Hasan and Ditsa (1999) have tried to identify and present possible cultural factors that may impact broad based adoption of Information Technology.

Industry based organizations have also been interested in diffusion of e-commerce in different countries and have also identified similar factors, and have rated these countries on their readiness for e-commerce. Most widely cited of these ratings are presented by IBM and the intelligence unit of The Economist (Economist Intelligence Unit, 2004), which define e-readiness by measurement in six distinct categories (1) Connectivity and technology infrastructure, (2) Business environment, (3) Consumer and business adoption, (4) Social and cultural environment, (5) Legal and policy environment, and (6) Supporting e-services.

In addition to infrastructural and business system issues, trust (I call this “transactional trust”) has been identified as one of the critical issues that confront businesses that are new businesses or utilize new business models like e-commerce. One of the most widely studied cultural classifications was originally proposed by Hofstede (1980). His cultural framework consists of four dimensions identified as: individualism-collectivism, uncertainty avoidance, power distance, and masculinity-femininity. Even though Hofstede’s framework was originally developed for national-level analyses, Oyserman et al. (2002) has shown that it can also be applied at individual levels. Further research by Doney et al. (1998) and Jarvenpaa et al. (1999) have suggested that individualism-collectivism effects the ways people form trust and may affect the users’ willingness to trust online vendors. Other studies have also tried to find correlations between trust and experience with a new system, concept, or relationships, including a correlation to frequency of e-commerce activity, and other researchers have noted that trust may be significantly influenced by culture of a given society. (McKnight et. al., 1998; McKnight and Chervany, 2001; Lee and Turban, 2001) Grabner-Kraeuter (2002) observes and states that trust is “the most significant long-term barrier for realizing the potential of e-commerce to consumers”, and others state that trust will be a “key differentiator that will determine the success of failure of many Web companies.” (Urban et. al., 2000) Studies by Park (1993) and Keil et al. (2000) have focused on the impact of uncertainty avoidance on people’s willingness to accept uncertainty, which is an unavoidable foundation of e-commerce.

To see the impact of these factors, especially the “influence of culture on acceptance and use of e-commerce in a developing country”, we conducted a study in China. (Efendioglu and Yip, 2004) We selected China because it has unique social and cultural characteristics (Bond, 1986; Chen, 1993; Moore, 1967) and is a country with accelerated changes and growth in its economic systems, fueled and supported by both governmental and business entities.