Impacts of Globalization on E-Commerce Use and Firm Performance: A Cross-Country Investigation

Abstract

This article develops and tests a model examining the relationship between firm globalization, scope of e-commerce use, and firm performance, using data from a large-scale cross-country survey of firms from three industries. We find that globalization leads to both greater scope of e-commerce use and improved performance, measured as efficiency, coordination, and market impacts. Scope of e-commerce use also leads to greater firm performance of all three types. Globalization has differential effects on B2B and B2C e-commerce, however, such that highly global firms are more likely to do B2B but less likely to do B2C. Our findings provide support for CitationPorter's (1986) thesis that upstream business activities (namely, B2B) are more global while downstream business activities (B2C) are more local or multidomestic. Keywords: B2BB2Ccross-countrye-commerceglobalizationperformance This research is part of the Globalization and E-Commerce Project of the Center for Research on Information Technology and Organizations (CRITO) at the University of California, Irvine. The material is based upon work supported by the National Science Foundation under grant 0085852. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation. Notes a Score ranges from 0 "low globalization" to 5 "high globalization." b Score ranges from 0 "low EC use" to 7 "high EC use." c Scores range from 0 "no use" to 1 "sales or services use" to 2 "both sales and services use." d Scores are based on a 5-point Likert scale, where 1 is "no impact" and 5 is "great impact." e Score is number of total employees (log-transformed). † p < .10 *p < .05 **p < .01 ***p < .001. a Coefficients are standardized betas. † p < .10 *p < .05 **p < .01 ***p < .001. a Coefficients are standardized betas. † p < .10 *p < .05 **p < .01 ***p < .001. a Coefficients are standardized betas. † p < .10 *p < .05 **p < .01 ***p < .001. 1. We tested for response bias in our data set because our sample consists of both IS and non-IS managers and executives, since IS managers may be positively biased when rating the impacts of e-commerce on firm performance due to their higher level of investment in the technology. To test for bias, we conducted a comparison of responses by IS managers versus non-IS managers to determine whether a systematic difference exists. This comparison was done using a Mann–Whitney U-test to compare the means across the two groups, and the Kolmogorov–Smirnov test to examine the hypothesis that the sample distribution of the IS managers is equal to that of the non-IS managers. The test showed that there were no statistically significant differences between these two groups on any of the items except one, "international sales increased." Thus we conclude that the responses from the two groups do not differ significantly in terms of the sample mean and sample distribution. 2. Conceptually, we felt that including both internal and external measures of firm globalization strengthened the measure by making it more multidimensional. We also felt that combining the endogenous and exogenous items into a single measure was appropriate since the index is more reliable with all five items than excluding the exogenous international competitive pressure variable (the alpha score without this item is only .65). In addition, a factor analysis confirmed that the five items loaded as a single factor. 3. Earlier studies of EDI and e-commerce have mainly studied either adoption or "intent to adopt." This was primarily due to the fact that these studies were conducted early on in the adoption of the technology and researchers were trying to understand the factors that might lead to adoption. We focus on firms already using e-commerce, so it is appropriate for us to study scope and type of use rather than adoption or intent to adopt.