Normative and Cognitive Institutions Affecting a Firm's E-Commerce Adoption1

Article excerpt

ABSTRACT

Notwithstanding the proliferation of studies linking e-commerce with the macro-environment, theoretical frameworks on the institution-e-commerce linkage are not well developed. Our primary purpose in this paper is to extend theory on the institution-e-commerce linkage by explicating the influences of normative and cognitive institutions on individuals' and firms' e-commerce adoption behaviors. Broadly speaking, the approach employed in this paper can be described as a positivistic epistemology. The paper takes a conceptual or a theory-building approach. We first develop a conceptual framework that represents how a technology's interaction with normative and cognitive institutions affects a firm's relationships with the profession, other businesses and customers. We then apply the framework to develop a set of propositions on normative and cognitive influences on a firm's e-commerce adoption behaviour. Our analysis indicates that normative and cognitive institutions, in spite of being less visible than regulatory institutions, are no less important in shaping the diffusion pattern of e-commerce.

Keywords: Normative institutions, cognitive institutions, social network, e-commerce, cultural affinity

1. Introduction

In a rich body of theory and empirical research, scholars have examined how factors external to a firm affect firms' technology adoption behaviors [Brown et al. 1976]. From the standpoint of e-commerce adoption, some of the factors most often cited in the literature include the lack of economies of scale in small nations, unavailability of credit cards and weak formal institutions and rule of laws hindering transactional and institutional trust [Hawk 2004, Pigato 2000, Wresch and Fraser 2006].

Notably lacking from this literature, however, is explicit attention to how informal institutions such as societal norms and culture affect the diffusion and adoption of e-commerce. Prior researchers have indicated that socio-culture environment as an important component of "national information ecology. that affects e-commerce pattern [Zhu and Thatcher 2010, p., 53]. From a manageres perspective, a better understanding of how value systems and culture influence consumer preferences and hence e-commerce pattern and potential could help devise better strategies across multiple markets [Gibbs et al. 2003, Hornby, Goulding and Poon 2002, Samiee 1998]. In particular, a careful consideration of how potentially culture-specific content is portrayed on a website is important to achieve the potential of e-commerce [BCG 2001, p. 1, Chau et al. 2002, Luna et al. 2002, Lynch and Beck 2001, McGrane 2000]. Especially for managers in developing countries, a more accurate knowledge of mechanisms associated with social and cultural contexts that drive the diffusion of e-commerce and other modern information technologies is likely to reduce the failure rate in assimilating these technologies [Munir 2002, Shareef, Kumar and Kumar 2008]. A deeper and richer understanding of social and cultural contexts is more important for business-to-consumer (B2C) e-commerce compared to business-to-business (B2B) e-commerce. This is because B2C e-commerce is more of a local phenomenon whereas B2B e-commerce is driven by global forces [Gibbs et al. 2003].

A deeper understanding of social and cultural contexts that drive consumer preference could also help policy makers devise strategies to accelerate e-commerce diffusion. Such an insight would also help national governments work with one another as well as with business communities engaged in online activities to define appropriate policies for e-business and drive down transaction costs [Cutter et al. 2000].

Preliminary evidence indicates that online shopping behaviors are shaped by norms and values that characterize social institutions [Lim et al. 2004, Pavlou and Chai 2002]. Little is known, however, about how social and cultural contexts [Luna et al. …