10 E COMMERCE AND E GOVERNMENT
Overcoming barriers to e-commerce
E-commerce has tremendous potential to speed up, simplify and reduce the cost of all kinds of commercial and non-commercial transactions, and to provide easy access to global markets. However, the evidence indicates that there are significant barriers to e-commerce, resulting in huge variations between regions and countries. It is obvious, therefore, that by identifying these barriers and devising ways to overcome them, significant benefits can be delivered.
Bajaj and Leonard [1] have suggested that factors affecting e-commerce penetration can be grouped under three headings: culture, technology and policy. These factors can be further grouped in terms of whether they are global or local. A recent survey has found that the most important global cultural factor for international companies is ensuring that their e-commerce web interfaces appeal to different nationalities. Most writers agree that key local cultural factors include the level of trust between individuals, and also between individuals and their institutions. Technical factors can also be global and local. The availability of browser encryption and secure web servers are usually thought of as global factors, while national factors include the level of Internet penetration and its speed, which are both very low in many developing countries.
Many writers seem to agree that government legislation, such as setting targets for Internet connectivity and bandwidth, can have a significant effect on e-commerce penetration. In addition, government has a role to play at all levels. As Haag, Cummings and McCubbrey [2] point out, “Local, regional, and national governments can play a key role in promoting the adoption of e-commerce”. Local and regional government can identify savings which e-commerce can provide in the delivery of public services, and highlight the benefits it can bring to businesses. Developments in technical infrastructure can often be carried out quickly, whereas other infrastructure developments, which require political intervention, take place over much longer timescales.
The evidence suggests that, in addition to the technical infrastructure, the legal, financial and physical aspects of a country’s infrastructure also need to be considered. Roubiah, Hassanien and Khalil [3] assert that “well-developed legal and regulatory frameworks” are an important factor in the rapid adoption of e-commerce. Consumer protection legislation ensures that goods sold are good quality. The state of the physical infrastructure determines how far and at what cost goods can be delivered. Similarly, the state of the financial infrastructure will determine whether payments can be made quickly and securely. As Ou, Sia and Banerjee [4] point out, if trust in the quality of goods and services is low, there is likely to be less demand for online payment methods, as buyers may want to check their purchases before paying. The evidence from a BBC report [5] on China’s e-commerce supports this position.
Let’s look at an example of government intervention to improve infrastructure. In 2004, Teo and Ranganathan [6] examined e-commerce uptake among companies in Singapore, which already had a huge level of Internet penetration. Their survey found an astonishing level of e-commerce uptake among traditional ‘bricks and mortar’ companies. Much of this was due to the tremendous work by Singapore’s government in promoting the benefits of e-commerce to these companies. During the 1990s, the government funded a gigantic e-commerce system for non-commercial transactions, allowing companies to submit import and export data. The system slashed transaction times dramatically from four days to around two minutes, demonstrating to business managers that e-commerce could be what Teo and Ranganathan [6] term a “strategic business decision and not just a technology decision.” This data shows how, by implementing a technical infrastructure to bring e-commerce to Singapore’s regulatory frameworks, the government could directly influence the take-up of e-commerce by businesses.
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