Constraints on E-commerce in Less Developed Countries: The Case of China

Abstract

We suggest a revised framework based on Michael Porter's Diamond of National Competitive Advantage that can be applied in examining development of e-commerce in less-developed countries. This incorporates cross-industry institutions and networks as key determinants of national competitive advantage. Using this framework we show that China has made significant progress in building the technical infrastructure and regulatory framework for e-commerce. However, it suffers still from poorly developed institutions and social networks. These are crucial in moving into the second phase of development of electronic commerce where the technologies are integrated into existing industries.