Community Level Socio-Economic Impacts of Electronic Commerce

Abstract

As electronic commerce grows, an important socio-economic side effect will be increased competition with the traditional businesses in any given local community. Our research suggests that local merchants typically go online in order to better access distant markets, but are often unprepared to cater to remote customers and hence do not fare well. In this paper, we suggest that it is important to consider now how electronic commerce may influence the health of local economies. Despite the rhetoric that electronic commerce is free from the constraints of geography, we argue that there are good reasons to reconsider the role of physical location in making e-commerce policies. We show that using transaction cost and competitive advantage approaches, supplemented by perspectives from research on social networks and trust, it is possible to develop locally sensitive Web strategies for businesses in a given community. We highlight generic strategies that local businesses can use to leverage their physical presence in a market with electronic commerce in order to better compete with distant Web-based companies.