The Institutionalization of an Electronic Marketplace in China, 1998–2010

Abstract

The paper traces the evolution of the electronic marketplace in China from 1998 to 2010. According to an application of actor network theory and institutional theory, the e‐marketplace was co‐constructed and institutionalized by various participating actors in interwoven diffusion and legitimation processes. A content analysis of news articles reveals key actors who helped develop and shape the e‐marketplace: consumers, online vendors, online criminals, technology companies, transaction platforms, entrepreneurs, professional associations, banks, and the government. The analysis of their interrelationships and major events reveals four distinct stages in the institutionalization of the e‐marketplace in China: novelty, incubating, empowering, and growth. Unique problems emerge at each stage, and different types of actors enter the actor network at different phases, playing unique roles in the co‐creation process to establish cultural, normative, and regulatory legitimacy. Many varied agents participated in a transformational process specific to the macro‐socioeconomic and technological environment of China, which featured particular institutional forms. eBay's failure to maintain a first‐mover advantage in China helps illustrate that global companies must understand political, economic, cultural, and institutional environments before considering expansion.