Academic journal article Journal of Electronic Commerce Research

National Institutions, Entrepreneurship and Global Ict Adoption: A Cross-Country Test of Competing Theories

Academic journal article Journal of Electronic Commerce Research

National Institutions, Entrepreneurship and Global Ict Adoption: A Cross-Country Test of Competing Theories

Article excerpt

ABSTRACT

To better understand the development of e-commerce across countries we utilize competing theories to examine information and communication technology (ICT) adoption, a critical foundation of global e-commerce. On the one hand, economic institutional theory predicts that strong national institutions will engender trust and thus foster arms length business transactions in a society, such as those conducted using ICT. On the other hand, entrepreneurship theory suggests that new business creation is a main driver of ICT adoption. Drawing on a sample of 80 countries, we find strong support for the institutional argument and weak support for the entrepreneurship view. Our findings further indicate that institutional quality is especially critical in developing countries where it is an important driver for both the basic and more advanced technologies that underpin e-commerce. Implications for theory and public policy are discussed.

Key words: information, communication, and technology (ICT), e-commerce, entrepreneurship, institutions, institutional quality

1. Introduction

Confidence in the economic system is a very important element in today.s modern business context. This is especially true for e-business where value is created through impersonal, arms-length transactions [Amit and Zott, 2001]. The Internet supports virtual markets through various mechanisms, including high connectivity, a focus on transactions, importance of information goods and services, and high reach and richness of information [Amit and Zott, 2001]. Others have pointed to physical infrastructure as a key determinant of Internet use [Oxley and Yeung, 2001]. Physical infrastructure studies highlight differences in the ways in which core technologies such as telephone networks are accepted and used by consumers and organizations in various countries [e.g., Meso Musa, and Mbarika, 2005; Chan and Ngai, 2007]. Without the trust and acceptance (and consequent use) of an underlying infrastructure and Internet application layer, e-commerce is not possible.

In the current study, we examine the antecedents of e-commerce in terms of Information and Communication Technology (ICT) adoption. Global e-commerce and ICT adoption have been put under empirical scrutiny by previous scholars who have examined their determinants with regard to cultural differences across countries [Erumban and de Jong, 2006; Zhao, Kim, Suh, and Du, 2008] and institutional differences [Oxley and Yeung, 2001]. Other scholarly inquiry has focused on the issue of the global digital divide, that is, the gap between rich and poor countries regarding the access to technologies available to their inhabitants [Baliamoune-Lutz, 2003; Goldstein and O.Connor, 2002; van Dijk and Hacker, 2000; Wilson, 2004].

The first theoretical lens we use to frame our examination of ICT as an underlying foundation of e-commerce is institutional theory. Recent research has highlighted the role of reliable institutions as a key factor within the national institutional framework [e.g., Henisz, 2000; Oxley, 1999]. The core argument of this view is that good quality institutions inspire confidence in the ability of a government to monitor and enforce codes of conduct and laws, thus allowing individuals to trust that the system will protect commercial transactions wherever they occur in physical space or cyberspace [Shareef, Kumar, and Kumar, 2008]. We extend this perspective to include an entrepreneurship theoretic lens and contend that both theories shed light on the underpinnings of e-commerce. On the one hand, institutional theory [North, 1990, 2005; Scott, 1998] provides strong arguments that explain the acceptance and use of technologies that enable e-commerce. Constructing legally binding contracts, minimizing opportunistic behavior, and providing open and fair access for dispute settlement are some examples of how this theory can apply to e-commerce. On the other hand, entrepreneurship theory [Schumpeter, 1934; Baron, 1998; Shane and Venkataraman, 2000; Low, 2001] provides alternative reasons regarding a society. …

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