Effect of Country Distance on E-commerce Export: Focusing on the Moderating Effect of Entrepreneurship

Abstract

Purpose - This study examines the role of e-commerce resulting from technological innovation as a new approach toward internationalization. We study the relationship between e-commerce export and country distance, measured in CAGE distance, which has hindered traditional internationalization. As a control variable, entrepreneurship was introduced to check the moderating effect on the relationship between country distance and e-commerce export. Design/methodology - Based on empirical analysis, e-commerce exports from the Republic of Korea to 96 countries were used as dependent variables. First, hierarchical regression analysis was conducted to test the hypothesis about each country s distance, measured by CAGE distance, and each dimension of CAGE, on e-commerce exports. Next, the hypothesis was tested through the interaction term to examine the moderating effect of entrepreneurship. Findings - The analysis showed that the hypothesis, which postulated e-commerce exports as affected negatively by the country s distance, was supported but not that all CAGE dimensions affected it. Specifically, geographical distance and economic distance have negative effects, but cultural distance and administrative distance did not affect e-commerce exports. Thus, in contrast to the expectation that distance restrictions in e-commerce would not exist, this study confirmed that distance still matters to internationalization and that entrepreneurship can mitigate the adverse effects. Originality/value - Through these results, when export firms try to enter new markets and start internationalization through e-commerce, the entrepreneurship of the importing country should be considered.