Cash-Flow Model for Efficiency Evaluation in Multinational Trade Enterprises Applying E-Commerce

Abstract

In this study, the authors have investigated e-commerce in the activity of multinational trade enterprises (MNTEs) and highlighted the main differences between online and offline trade. Many studies are focusing on the application of e-commerce technologies but not on providing efficiency evaluation tool helping to identify how e-commerce technologies change trade business and propose its application in MNTEs. This research aims to provide the cash-flow model for an economic evaluation of investment and operations of e-commerce and traditional trade and the practical application of the model in MNTEs. To achieve this objective, the authors have proposed a cash-flow model useful for efficiency evaluation and its practical application. According to the case study analysis, trade enterprises which apply e-commerce technologies have approximately 3.7 times fewer employees and 3.1 times fewer investments in long-term tangible assets than other trade enterprises. However, MNTEs performing online business have 5.1 times fewer employees than MNTEs operating in offline. Of course, these numbers depend significantly on business size and the economies of scale. The study consists of three parts. In the first one, the paper discloses trade business changes determined by the investments into e-commerce. These results are presented on multinational and national business and disclose how actively multinational enterprises (the Mother Companies and their branches) and national ones invest in e-commerce. In the second part, the new cash-flow model is used for efficiency evaluation when trade firms practice e-commerce technologies. In the third part of this paper, the practical application of the model was delivered. Herein several trade MNTEs with and without e-commerce technologies are compared.