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Journal of Global Information Management, 14(3), 17-38, July-September 2006 17

A Composite-Model forE-Commerce Diffusion:

Integrating Cultural and Socio-EconomicDimensions to the Dynamics of Diffusion

Alexander Yap, Elon University, USA

Jayoti Das, Elon University, USA

John Burbridge, Elon University, USA

Kathryn Cort, North Carolina A&T State University, USA

ABSTRACT

Why are some countries successful with e-commerce while others flounder? The purpose of thisarticle is to study the impact of technology, cultural, and socio-economic factors on the globaldiffusion of e-commerce. While past studies have focused on technology reasons alone, thisresearch includes cultural and socio-economic factors as well. Having access to the Internetdoes not necessarily translate to e-commerce usage. Fundamentally, culture and socio-economicfactors are pivotal in bridging the gap between Internet usage and e-commerce diffusion. Theobjective is to provide a model that quantifies the aggregated influences of all factors on globale-commerce diffusion. A cross-country regression model analyzes the determinants of e-commercediffusion and the results used in a cluster analysis to provide further evidence that the propensityfor e-commerce depends on the interplay among the different factors. The results can providefirms with an improved understanding of strategies to employ while implementing e-commerce.

Keywords: cultural influences; e-commerce diffusion; Internet; socio-economic

INTRODUCTIONDuring the past decade, global e-com-

merce has experienced explosive but somewhatuneven growth throughout the world. TheInternet has facilitated rapid growth by simpli-fying traditional business-to-business (B2B)and business-to-government (B2G) transac-tions while allowing firms to deal directly withconsumers using online or Web based selling.Business to consumer selling (B2C) has nowbecome a major component in the marketing

strategy of retail firms. The Internet has alsobeen a major factor in globalization since it al-lows firms, large and small, to extend their reachin selling products and/or services. Digital net-works have connected individuals, businesses,and governments and have removed traditionalbarriers to trade such as transportation and dis-tance.

Given this backdrop, firms throughout theworld should expect to see significant successusing the Internet as a marketing and selling

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tool. However, high expectations regarding theglobal diffusion of B2C e-commerce have notalways materialized on a universal basis. Whilethe potential of e-commerce in the developedworld is high given the existence of a technol-ogy infrastructure, such potential has not al-ways been realized. Thus, it appears that hav-ing a desirable technology infrastructure is notthe sole reason for successful e-commerce dif-fusion. This research will attempt to explain glo-bal e-commerce diffusion as critically depend-ing on socio-economic and cultural variablesalong with the necessary technology infrastruc-ture. By understanding these factors, it is ex-pected that firms will be able to make informeddecisions in penetrating global markets via e-commerce. Firms should also be able to cus-tomize their implementation and strategy needs.

BACKGROUND ANDRESEARCH INTEREST

The Internet provides a platform for e-commerce diffusion in a global setting. In orderto understand global diffusion of e-commerce,the study focuses on determining what dictatesthis process across countries. E-commerce hashelped countries, and commercial sectors withindeveloped and developing countries to reducetransaction costs and improve access to globalmarkets (Humphrey, Mansell, Pare, & Schmitz,2003; Kraemer, Gibbs, & Jackson, 2002;UNCTAD, 2002).

Much of the research in e-commerce dif-fusion concludes that the main barriers to glo-bal e-commerce adoption are the lack of tech-nological infrastructure and the citizen’s accessto the Internet at reasonable prices (Dutta &Jain, 2003-2004; Kirkman, Osorio, & Sach, 2001-2002; Oxley & Yeung 2001; UNCTAD, 2002;Wolcott, Press, Henry, Goodman, & Foster,2001). Petrazenni and Kibati (1999) have focusedon the government’s role in the acceptance anddeployment of new technology such as theInternet. However, some studies have con-cluded that it is more than just technology andinfrastructure but also cultural factors that addto the problem of digital divide (Gurstein, 2003;

Jusswalla & Taylor, 2003; Kling, 2000; Lim,Leung, Sia, & Lee, 2004; Tibben, 2003; Zhao,Suh, Kim, & Du, 2004). According to these pa-pers, “technological” as well as “social” infra-structures must be considered. Empirical stud-ies incorporating these factors have been lim-ited. Gibbs, Kraemer, and Dedrick (2003) exam-ine global, environmental, and policy factorsthat act as determinants for e-commerce diffu-sion, but their study is limited to a comparisonof only 10 countries. A study by Ferle, Edwards,and Mizuno (2002) concerning Internet diffu-sion explores the cultural reasons influencingthe penetration rates of the Internet in Japanand the U.S., while excluding socio-economicand technological forces. Furthermore, empiri-cal studies have included case based ap-proaches focusing on e-commerce diffusionacross individual countries such as Germany(Koenig, Wigand, & Beck, 2003), Brazil (Tigre,2003) and Costa Rica (Travica, 2002).

Therefore, even though there are a num-ber of studies addressing Internet or e-com-merce diffusion, they have been limited in theirscope. There has been no attempt to representthe determinants of global diffusion of e-com-merce in a cross-country composite-model in-corporating cultural as well as socio-economicfactors along with technological consider-ations. Furthermore, some distinctions shouldbe made regarding global internet diffusion vs.global e-commerce diffusion. Accessibility tothe Internet does not automatically mean thatconsumers and businesses are willing to trans-act or buy online. Many people and businessestablishments surf the Internet to initiate atransaction without buying online. There aresome reasons for this behavior. In some coun-tries outside the United States, consumers andbusiness establishments do not wantonly usecredit, since debt is often viewed as an unfa-vorable socio-cultural stigma. In addition, citi-zens in many countries do not trust e-commercetransactions over the Internet. In the case ofUnited States, the explosion in e-commercegrowth is based on the ability to use credit andthe willingness to trust online transactions.

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