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Global Development Institute

The Impact of eReadiness on eCommerce Success in Developing Countries: Firm-Level Evidence

Alemayehu Molla

Abstract

This paper explores the organisational and environmental "e-readiness" variables that might affect e-commerce success in developing countries. Data are extracted from a survey of business organisations conducted in South Africa. Cluster, discriminant function and canonical correlation analysis are used to analyse the data. The results indicate that - contrary to the conventionally-accepted perception that treats environmental factors as major barriers to e-commerce in developing countries - firm-specific variables appear to be the key drivers in differentiating relatively successful from less successful businesses.

In particular, the technological resources of businesses, the governance model they put in place, and their commitment appear to be playing significant roles in affecting successful development of e-commerce and its benefits in terms of communications improvement, cost saving and market performance. The implication is that businesses in developing countries that excel in these three areas are likely to achieve greater e-commerce success. However, because any sustained advantage is context-specific (that is, there are no universal sources of advantages), the importance of other organisational and environmental contextual variables should not be ignored.

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Educator's guide

Synopsis questions

  1. Describe the notion of e-readiness in general and in this study in particular (Introduction)
  2. Analyse the assumptions embedded in the research methodology and its strengths and weaknesses (Parts A & B)
  3. Explain the relationship between e-readiness and e-commerce success (Part C)
  4. What must businesses in developing countries do to achieve greater e-commerce success? (Parts D & E)
  5. What must governments and other institutions in developing countries do to facilitate e-commerce success? (Parts D& E)

Development questions

  1. Is the notion of e-commerce for development just technology-driven hype or does it have real value for developing countries?
  2. What impact does a country's level of e-readiness have on e-commerce success?
  3. In view of the dot.com crash, should businesses in developing countries continue investment in e-commerce projects?
  4. How does the diffusion of e-commerce in industrialised countries affect businesses in developing countries?
  5. How does the diffusion of e-commerce in developing countries affect businesses in industrialised countries?
  6. Identify a real-world organisation that has adopted e-commerce. Analyse it to draw out the factors that affect its e-commerce success and compare your findings with the findings in the paper. Are they comparable?
  7. How specific to, or generalisable from, South Africa do you think the findings presented here are?
  8. Discuss the research model and suggest ways to improve it. Are there variables that are included in the model that should not have been, or others that should have been included but are missing from the model?