A growth theory perspective on the international diffusion of e-commerce

Abstract

This research explores the reasons why electronic commerce practices have diffused around the world at the national level of analysis, due to forces that are both internal and external to the countries in which diffusion is observed to occur. We propose two related growth theories that contribute contrasting viewpoints about the origins of the drivers of diffusion: endogenous growth theory and exogenous growth theory. We use the former theory to argue that the primary drivers of diffusion stem from economic forces that are internal to a country, including its government policies (e.g., tax on online stores), wealth, infrastructure, readiness, education levels, and so on. The latter theory suggests that the primary drivers are external to the economy, and may reflect the forces present in the regional economy, international drivers of technological change, trade flows and so on. We explore the efficacy of these alternative perspectives in a set of propositions for the drivers of national-level diffusion of e-commerce that spans developed and developing nations.