E-Commerce

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E-Commerce Adoption in Developing Countries: an Indonesian Study

Sherah Kurnia

Department of Information Systems

The University of Melbourne
111 Barry St, Carlton, VIC 3010, Australia
Ph: 61-3-8344 1534
Email: sherahk@unimelb.edu.au

Abstract

ELECTRONIC COMMERCE (EC) HAS THE POTENTIAL TO IMPROVE EFFICIENCY AND PRODUCTIVITY IN MANY AREAS AND, THEREFORE, HAS RECEIVED SIGNIFICANT ATTENTION IN MANY COUNTRIES. HOWEVER, THERE HAS BEEN SOME DOUBT ABOUT THE RELEVANCE OF E-COMMERCE FOR DEVELOPING COUNTRIES. CURRENTLY, THERE ARE STILL A LIMITED NUMBER OF STUDIES ON E-COMMERCE ADOPTION BY DEVELOPING COUNTRIES. TO ADDRESS THE GAP IN THE LITERATURE, THIS STUDY AIMS TO ASSESS THE ADOPTION OF E-COMMERCE IN INDONESIA, AS AN EXAMPLE OF A DEVELOPING COUNTRY, AND ITS RELEVANCE BY ASSESSING THE ADOPTION LEVEL, BENEFITS EXPERIENCED, NEGATIVE CONSEQUENCES AND PROBLEMS ENCOUNTERED DUE TO E-COMMERCE ADOPTION. THIS IS A RESEARCH-IN-PROGRESS PAPER. SOME FACTORS AFFECTING THE ADOPTION OF EC AND THE CONDITION OF INDONESIA IN RELATION TO EC ADOPTION ARE DISCUSSED IN THIS PAPER. THE FINDINGS OF THE RESEARCH CONDUCTED SO FAR INDICATE A POSITIVE GROWTH OF E-COMMERCE ADOPTION IN INDONESIA.

Keywords

Technology adoption, e-commerce, developing country, Indonesia

Introduction

ELECTRONIC COMMERCE OR SIMPLY E-COMMERCE, WHICH RELIES ON VARIOUS INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT), HAS THE POTENTIAL TO IMPROVE TRADE EFFICIENCY AROUND THE GLOBE AND TO INTEGRATE DEVELOPING COUNTRIES INTO THE GLOBAL ECONOMY (UNCTAD 1999). AS A RESULT, THERE HAS BEEN A SIGNIFICANT GROWTH OF E-COMMERCE IN DEVELOPED COUNTRIES IN THE LAST TWO DECADES AND MORE RECENTLY IN DEVELOPING COUNTRIES (CHOWDHURY 2003). Most technologies, including e-commerce were developed in Western countries that have very different backgrounds to those of developing countries. The success of technology adoption is heavily dependant on how it is used by the adopters and this in turn is affected by the fit between the technology and the adopters (Unhelkar 2003). Not surprisingly, technology adoption has not always been successful in developing countries. Moreover, while many of the e-commerce benefits have been realized by organizations in developed countries, there is still skepticism in the relevance of e-commerce and its benefits for developing countries (Odedra-Straub 2003; Raman and Yap1996). In the globalization era, understanding the adoption of ICT, including e-commerce by developing countries is becoming important to improve its adoption success. This, in turn, enables developed countries to trade with developing countries more efficiently. At this stage, there are still a limited number of studies on the adoption of e-commerce technologies by developing countries (Chowdhury 2003). This study is designed to address the gap in the technology adoption literature by looking at the adoption of e-commerce by developing countries, using Indonesia as a case. In particular, the aim of the study is to explore the status of e-commerce adoption in Indonesia, the reasons for adopting, the benefits experienced, negative consequences and the problems encountered. For the purpose of this study, a combination of a multiple case study and a survey of various organisations in Indonesia will be conducted. Like other developing countries in South East Asia, Indonesia has only devoted a small percentage of its GDP to ICT implementation and has a low score for Network Readiness Index (NRI) and E-Readiness Index (ERI) (Indjikian and Siegel 2005). Indonesia has been chosen in this study because it presents a unique and interesting case as a developing nation. It has been undergoing a wide array of economic and political changes in the last few years (Raman and Yap 1996; PWH 2003/2004). Because of globalisation, in particular, the Indonesian government removed the ban on foreign investment in wholesale and retail trading in March 1998 (PWH...
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