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Global Development Institute

Exploring the Reality of eCommerce Benefits Among Businesses in a Developing Country

Alemayehu Molla

Abstract

The use of e-commerce by businesses in developing countries is related to the potential benefits of participating in international value chains, increasing market access and reach, improving internal and market efficiency, and lowering transaction costs. Belief in such benefits has led to the adoption of e-commerce by some businesses in these countries. However, the questions of what and how much benefits businesses in developing countries are actually reaping from their e-commerce investments are not well covered. This paper attempts to explore the real benefits of e-commerce based on data from 92 businesses in South Africa. The findings indicate that e-commerce benefits are by and large limited to improving intra- and inter-organisational communications. Strategic benefits such as improving relationships across the value chain, increasing market reach, and reducing market, operation and supply chain management costs are not as widely found as the standard model of e-commerce would have us believe. These findings support the argument that cautions against an over-optimistic view of e-commerce for developing countries.

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Educator's guide

Synopsis questions

  1. What are the dominant beliefs about the role of e-commerce in developing countries? [Introduction]
  2. Identify and discuss the main theories that underlie e-commerce benefits in general and in developing countries in particular. Identify any assumptions embedded in the theories. [Part A]
  3. What are the strengths and weaknesses of perception-based measures in assessing e-commerce benefits? How valid are such measures? [Part B]
  4. Critically analyse and discuss the findings of this study. What lessons can you draw? [Part C]
  5. What must businesses in developing countries do to benefit more from e-commerce? [Part D]

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. Do you believe that lack of e-commerce use by businesses in developing countries affects the nature and structure of their relationship to global commodity chains?
  3. eCommerce can shift the power from sellers to buyers. Do you agree with this assumption? What are the implications of this assumption for encouraging more use of e-commerce by producing and exporting organisations in developing countries?
  4. Discuss the negative consequences of disintermediation to businesses in developing countries.
  5. Identify a real-world organisation that has implemented e-commerce. Analyse it to draw out the benefits that the organisation obtained from using e-commerce and compare your findings with the findings in the paper. Are they comparable?
  6. How specific to, or generalisable from, South Africa do you think the findings presented here are?