Impacts That the Internet and E-Commerce Have Had on International Business
E-commerce is used to describe the execution of business transactions within and across countries using the internet. In simpler terms e-commerce is the process of buying and selling via the internet (Graham, 2008). These transactions may either be B2B or B2C or C2C. Generally internet usage level and infrastructure for e-commerce are very low in poorer countries (Shenkar & Luo 2008. The trend is fast changing and according to the Internet World Stats, as at September 2010, 1.97bn people, representing 28.8% of the world’s population were users of the internet
Growth and Impact
Bill Gates (2000) predicted that the internet will have ‘’profound effect on the way we work, live and learn’’ and that it …show more content…
• make time and distance insignificant, minimizing the liability of foreignness and expanding consumer bases of MNEs
• enables MNEs to rapidly place their merchandise on the market
• Lead to the creation of virtual organisations which promotes efficient business coordination across borders without physical structures or personnel movement. This delayers hierarchies and simplifies management
Challenges to MNEs
• Koenig et al (2004) observe that governments and public authorities lag behind in internet applications. This does not allow MNEs full electronic migration.
• Whilst providing easy placement of merchandise on the global market it also provides quicker opportunity for imitation by competitors, leading to concerns about protecting intellectual property
• As with all new technological opportunities, e-commerce comes with new risks as the law strives to keep pace with technology. (Frieden & Roche, 2006).This requires review of corporate legal strategy
• Other challenges include keeping the internet secure from hackers and credit card fraudsters as well as customising to meet cultural and legal demands.
We agree with Bill Gates that the internet (and we add, e-commerce) bring challenges, but they are not entirely new and are surmountable.
1. Shenkar, O. & Luo, Y. (2007)