E-Commerce on the Global Platform: Strategic Insights on the Localization-Standardization Perspective

By Alhorr, Hadi S.; Singh, Nitish et al. | Journal of Electronic Commerce Research, February 1, 2010 | Go to article overview

E-Commerce on the Global Platform: Strategic Insights on the Localization-Standardization Perspective


Alhorr, Hadi S., Singh, Nitish, Kim, Seung H., Journal of Electronic Commerce Research


ABSTRACT

While extensive empirical and theoretical literature has been developed on organizational adaptation, especially in strategic management, the broad application of the environment-organization has not been applied adequately to the growing global e-commerce research realm. In this paper, we apply the concept of "adaptive strategies" [Kraatz 1998] to e-commerce practices in the global arena to address the localization-standardization paradigm, which continues to be a healthy debate. Bringing two areas of research together, the global e-commerce and institutional theory perspectives of organizational change and adaptation, adds a new dimension to the literature of global e-commerce, and conforms with institutional theorists that organizations are adaptive systems attempting to match the complexities of their environments [Meyer and Rowan 1977]. This paper offers strategic insights about the localization-standardization debate in international business and its strategic implications on global e-commerce strategies.

Key words: global, e-commerce, standardization, globalization, localization

1. Introduction

Since the mid-1990s, global e-commerce has been expanding rapidly; based on industry estimates several trillion dollars are being exchanged annually over the web. The global online population is also increasing substantially and by 2012, Jupiter Research [2008] estimates that there will be 1.8 billion internet users worldwide. The highest growth in internet usage is anticipated in countries like China, India, Russia and Brazil. According to Internet World Stats as of 2008, North America only accounts for 17.5 percent of global Internet users. Asia now has the largest number of internet users, accounting for almost 37 percent of the global online population, followed by Europe with 27 percent [Internet World Stats 2008]. By the end of 2010, U.S. retail e-commerce will be about $182.5 billion [Grau 2008a]. On the other hand, European B2C e-commerce is expected to reach almost $234 billion by 2010 [Grau 2006].According to e-marketer estimates, by 2010 the British market share will fall to 44.5% as France and Germany ramp up their online sales. Asia will also see significant growth in B2C e-commerce with a 23.3 percent annual growth rate reaching almost $168.7 billion in 2011 [Grau 2008b]. Japan and South Korea currently lead the B2C e-commerce sales in Asia but by 2011 they will be overtaken by China and India [Grau 2008b]. From these numbers, it is evident that e-commerce is now a truly global phenomenon that has initiated an enormous business revolution and that has affected the process of globalization tremendously [Cyr and Lew 2003]

One of the very crucial international business decisions surrounding the global e-commerce is whether to use a standardized approach to marketing and communications or a localized approach. On one hand, the debate on the appropriateness of standardization versus localization in international marketing continues to receive considerable attention among scholars and practitioners in the international marketing realm [Ohmae 1989]. Within the context of the World Wide Web, the debate takes another level of complexity. The Web constitutes a global communication medium, where technology makes mass customization or adaptation possible, while forces of global integration and the emergence of transnational web style [Sackmary and Scalia 1999] justify the use of a standardized web marketing and communication strategy.

The central purpose of this paper is to explain the changes that B2C e-commerce practices of multinational firms undergo when external variations in the environment exist. The main objective of this paper is to look at global e-commerce within the context of the localization-globalization debate and to offer strategic insights for best practices in this domain of marketing and international business as multinational firms tap into worldwide consumer markets.

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