25
EJISDC (2004) 17, 2, 1-25 The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org ADOPTION OF ELECTRONIC COMMERCE BY ORGANIZATIONS IN INDIA: STRATEGIC AND ENVIRONMENTAL I MPERATIVES Monideepa Tarafdar University of Toledo College of Business Administration 2801 W. Bancroft Street Mail Stop # 103 Toledo, OH 43606, USA. [email protected] T: +1-419-530-2442 F: +1-419-530-2290 Sanjiv D. Vaidya Management Information Systems Group Indian Institute of Management Calcutta, Diamond Harbour Road, Joka, P. O. Box. 16757, Alipore Post Office, Kolkata 700027, INDIA [email protected] T: +91-33-4678300/01/02/03/04, Ext - 414 F: +91-33-4678307 Abstract In recent years many developing nations have been exposed to significant externa l changes such as economic deregulation and globalization. Evidence suggests that this has resulted in the adoption of EC by organizations in these countries. It is important to understand the strategic and environmental imperatives for EC adoption. Such understanding is required for anticipating necessary changes in EC adoption, to keep in tune with the impending and emerging changes in the environment. It is also needed for formulating business strategies in alignment with the organization’s IS strategies and IT capabilities, and for addressing managerial challenges in EC adoption. This paper is based on a study of EC adoption in eighteen companies from eleven industries in India. It is aimed at examining the different factors, related to strategic and environmental imperatives, which lead to the adoption of EC by organizations in developing countries. The results, based on interviews with close to a hundred people in these organizations indicate that there are broadly three conditions under which an organization adopts EC. These are related to the external environment, organizational performance and specific internal management compulsions. Each of these conditions describes a specific aspect of EC adoption and leads to imperatives for changes in processes and products. These imperatives in turn, result in the adoption of EC in different critical organizational processes. This study is one of the first detailed empirical studies on EC adoption in Indian organizations. Keywords: Ecommerce Adoption, Developing Countries, India, Strategic and Environmental Imperatives 1. INTRODUCTION AND MOTIVATION FOR THE STUDY Strategic and environmental imperatives have been cited as important reasons that lead to E- Commerce (EC) adoption (Iacavou et al., 1995; Premkumar and Ramamurthy, 1995; Chwelos et al., 2001). In recent years, many developing nations in Asia and South America have undergone significant economic changes such as deregulation and globalization. This has resulted in changes in the structure of different industries and in increased competitive pressures. At the same time, firms in many of these countries have experienced increased IT investment and heightened use of IT in the past decade, often involving the adoption of EC in many sectors of the economy (Wolcott and Goodman, 2003; Tarafdar and Vaidya, 2002). The

Adoption of Electronic Commerce by Organizations in India Strategic

  • Upload
    lamdung

  • View
    216

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

ADOPTION OF ELECTRONIC COMMERCE BY ORGANIZATIONS IN INDIA: STRATEGIC AND ENVIRONMENTAL IMPERATIVES

Monideepa Tarafdar University of Toledo

College of Business Administration 2801 W. Bancroft Street

Mail Stop # 103 Toledo, OH 43606, USA.

[email protected] T: +1-419-530-2442 F: +1-419-530-2290

Sanjiv D. Vaidya Management Information Systems Group Indian Institute of Management Calcutta,

Diamond Harbour Road, Joka, P. O. Box. 16757, Alipore Post Office,

Kolkata 700027, INDIA [email protected]

T: +91-33-4678300/01/02/03/04, Ext - 414 F: +91-33-4678307

Abstract

In recent years many developing nations have been exposed to significant externa l changes such as economic deregulation and globalization. Evidence suggests that this has resulted in the adoption of EC by organizations in these countries. It is important to understand the strategic and environmental imperatives for EC adoption. Such understanding is required for anticipating necessary changes in EC adoption, to keep in tune with the impending and emerging changes in the environment. It is also needed for formulating business strategies in alignment with the organization’s IS strategies and IT capabilities, and for addressing managerial challenges in EC adoption. This paper is based on a study of EC adoption in eighteen companies from eleven industries in India. It is aimed at examining the different factors, related to strategic and environmental imperatives, which lead to the adoption of EC by organizations in developing countries. The results, based on interviews with close to a hundred people in these organizations indicate that there are broadly three conditions under which an organization adopts EC. These are related to the external environment, organizational performance and specific internal management compulsions. Each of these conditions describes a specific aspect of EC adoption and leads to imperatives for changes in processes and products. These imperatives in turn, result in the adoption of EC in different critical organizational processes. This study is one of the first detailed empirical studies on EC adoption in Indian organizations.

Keywords: Ecommerce Adoption, Developing Countries, India, Strategic and Environmental Imperatives

1. INTRODUCTION AND MOTIVATION FOR THE STUDY Strategic and environmental imperatives have been cited as important reasons that lead to E-Commerce (EC) adoption (Iacavou et al., 1995; Premkumar and Ramamurthy, 1995; Chwelos et al., 2001). In recent years, many developing nations in Asia and South America have undergone significant economic changes such as deregulation and globalization. This has resulted in changes in the structure of different industries and in increased competitive pressures. At the same time, firms in many of these countries have experienced increased IT investment and heightened use of IT in the past decade, often involving the adoption of EC in many sectors of the economy (Wolcott and Goodman, 2003; Tarafdar and Vaidya, 2002). The

Page 2: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

2

objective of this research has been to understand and explore the context in which organizations in India have adopted IT in general and EC technologies in particular, as a result of environmental and strategic imperatives. In this paper we analyze the effect of factors such as economic de-regulation, increased competition and globalization, on the decision to adopt EC by Indian companies.

In India, economic liberalization, initiated in the early 1990’s, resulted in increased competition in many industry sectors, as foreign companies were allowed to set up manufacturing and assembly plants. This led to intensified efforts at overall modernization and IT adoption across industries, as domestic companies felt the need to respond to the requirements of a de-regulated economic environment. In many cases, the increased emphasis on IT investments has involved adoption of EC. It is important to understand how organizations have responded to these environmental changes by adopting IT in general and EC in particular.

This understanding is very important for three reasons. First, it is necessary for anticipating and planning necessary changes in the level and nature of EC adoption, in tune with the impending and emerging changes in the environment. Second, it is required for understanding the potential impact that the organization’s IS/IT and EC related capabilities can have on the business strategies of the organization. In a turbulent and information intensive environment, such understanding forms a critical input to the shaping of business strategies. Third, it is important for addressing managerial challenges in EC adoption in a judicious manner (Deans and Ricks, 1993). However, there have hardly been any studies on Indian organizations, in this direction. Empirical studies based on India have so far addressed software-related areas of GDSS implementation and software project management (Walsham and Sahay, 1999; Walsham, 2002).

For various reasons, India makes a particularly interesting case for studying these issues. India is the world’s largest democracy and the second most populous nation. These aspects present some distinct challenges, particularly related to the formulation and impact of relevant government policies. On the one hand, India has a large reservoir of hardware and software expertise. The Indian software industry is widely regarded as one of the most competitive in the world with acknowledged competencies in software development, maintenance and software services (Wolcott and Goodman, 2003; Carmel, 2003; Coward, 2003). At the same time, because of infrastructure deficiencies and a low GDP, India is still largely a developing nation (Watson et al., 1997; Walshan and Sahay, 1999). It remains a predominantly rural country with about 70% of the population residing outside major metropolitan areas and 67% of the workforce employed in the agricultural sector (Wolcott and Goodman, 2003). Although the combined volume of Business to Business and Business to Consumer E-Commerce activity increased from US$30M (1998-1999) to US$275M (2001-2002), most of the Internet related activity is confined to urban areas. Moreover, among organizations, there is a relative lack of familiarity with, and confidence in, IT. Organizations also often face problems of reliability with their IT infrastructure.

Thus, India, given its significant capabilities in software development, combined with seemingly disparate conditions of uneven distribution of telecommunications and Internet infrastructures and relatively low IT expenditures for most industries, formed an interesting domain for our study. We conducted empirical studies on a number of organizations from different industry sectors in India, with the intent of analyzing the following questions. 1. How have environmental, competitive and strategic factors affected the adoption of EC

for companies in India? 2. What are the implications of EC adoption for changes in products and processes?

Page 3: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

3

3. How can companies, specifically in India and in developing countries in general, anticipate changes in strategic and environmental factors and accordingly plan for corresponding required changes in EC adoption?

The rest of the paper is structured as follows. Section 2 consists of a descrip tion of the

conceptual foundations in the field. Section 3 outlines the research design. Section 4 describes the results and findings of the research. Section 5 explains the contributions and significance of the study. 2. CONCEPTUAL FOUNDATIONS We drew the background material for this study from two broad conceptual streams. The first stream describes some factors that have influenced EC adoption in developed nations. Some of these factors are expected to influence EC adoption in India as well. However, developing nations are faced with contextual conditions that are different from those in developed nations. A study of these conditions forms the second conceptual stream. The two streams have been described below. 2.1 Environmental Drivers for EC adoption External pressures in the form of actions of competitors and the expectations of customers, for instance, have been major driving forces in EC adoption by organizations in developed nations (Iacovou et al., 1995; Watson et al., 1997). These drivers include changes in government policies and legislation (Ives and Jarvenpaa, 1991), social conditions (Palvia, 1998), economic circumstances (Gallupe and Tan, 1999) and competitive rivalry (Iacovou et al., 1995; Premkumar et al., 1995). In the case of B2B technologies, adoption by partners results in positive externalities. For example, encouragement, support and coercion from customers and suppliers, lead to the adoption of B2B E-Commerce (Reich and Benbasat, 1990; Crook and Kumar, 1998; Hart and Saunders, 1998; Chwelos et al., 2001). Relevant characteristics of products and services, and the activities involved in the acquisition and use of the product by customers also affect the adoption of EC. Information based products can be effectively distributed through electronic means. Thus B2C E-Commerce can be used to differentiate such products (Straub and Watson, 1995; Choudhury et al., 1998). The content and the amount of information that is required to be supplied to customers along with the product, also have implications for the use of B2C systems (Malone et al., 1987; Rayport and Sviokla, 1994). The above factors have been summarized in Table 1 below. Environmental Drivers for EC Adoption Literature References

Actions of competitors and Expectations from Competitors

Iacovou et al., 1995; Watson et al., 1997; Premkumar et al., 1995

Changes in government policies and legislation Ives et al., 1991

Economic circumstances Gallupe et al., 1999

Adoption by suppliers and customers Reich et al., 1990; Crook et al., 1998; Hart et al., 1998; Chwelos et al., 2001

Nature of products Straub et al., 1995; Choudhury et al., 1998

Extent of information that accompanies the product

Malone et al., 1987; Rayport et al., 1994

Table 1: Environmental Drivers for EC Adoption

Page 4: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

4

2.2. Context for EC Adoption in Developing Nations There are two significant factors which affect the adoption of EC in developing nations. The first factor is related to infrastructure. Lack of adequate telecommunications infrastructure for example, can inhibit the growth of EC adoption. The phrase “Structural Characteristics” has been used to broadly describe this factor. Structural characteristics are concerned with physical, social, technical and economic arrangements that shape e- commerce business models and influence individual and organizational use of the Internet. They determine the extent to which it is feasible for an organization to conduct E-Commerce activities given the macro- level infrastructural capabilities and constraints. The second factor is related to the cultural context. The phrase “Cultural Characteristics” has been used to broadly describe this factor. Characteristics of national and organization culture influence the adoption of IT in general and EC in particular. 2.2.1 Structural Characteristics There are three aspects to the structural characteristics. The first consists of the infrastructural elements that provide necessary support systems for EC activities to be carried out. These elements include general technical infrastructure such as networking and telecommunications capabilities (Markus and Soh, 2002; Tractinsky and Jarvenpaa, 1995), availability of hardware and software (Walsham and Sahay, 1999) and elements of the National Information Infrastructure1 (Meso and Duncan, 2000). Infrastructural elements also include capabilities specifically required for EC activities such as logistics and distribution facilities (Ives and Jarvenpaa, 1991; Bin et al., 2003; Wresh, 2003), financial systems and electronic payment systems (Ein dor et al., 1993; Wresh, 2003) and security (Wresh, 2003). For instance, Bin et al. (2003) have pointed out that the lack of large scale and advanced shipping and delivery services in many developing countries has hindered the rapid growth of EC. Walsham et al. (1990) have suggested that the lack of suitable infrastructure is an important constraint to IT adoption in developing nations.

Next, there are regulatory and legislative policies that provide the competitive and external context in which firms take decisions related to EC. These policies are to a large extent, determined by the government. They include the legal and regulatory framework (Markus and Soh, 2002; Tractinsky and Jarvenpaa, 1995; Gallupe and Tan, 1999), laws governing and regulating internet usage (Markus and Soh, 2002), industry specific economic incentives such as reduced taxes (Mennecke and West, 2001) and national development priorities with respect to the allocation of human and economic resources for IT development (Palvia, 1997; Ein Dor et al., 1993). These policies influence to a large extent the nature of markets and industry competition, which in turn significantly influences the adoption of EC (Mennecke and West, 2001; Deans and Ricks, 1993; Markus and Soh, 2002). For instance, in India, telecommunication tariffs are such that payment systems for Internet access are pay per minute (Wolcott and Goodman, 2003). This has resulted in greater usage of the Internet only by the economically developed areas, and has limited its widespread usage across the country.

Finally, demographic structural factors determine characteristics of the general population, which may encourage or constrain the adoption of E-Commerce. For instance, non-uniform education across age groups is a factor that influences the sectoral adoption of

1 National Information Infrastructure (see Meso et al., 2000 for a detailed discussion), consists of the overall mass of internet, radio, newspapers, telecommunications and other general communication and connectivity technologies present in a country. It significantly influences a nation’s capacity for information processing and efficient delivery of information and related services. National Information Infrastructure includes internet, radio, newspapers, and general communication and connectivity technologies.

Page 5: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

5

EC in many developing nations (Markus and Soh, 2002; Wresh 2003). Given the financial implications of conducting business over the Internet, local business practices regarding purchasing and financing also influence the extent of EC adoption (Markus and Soh, 2002). 2.2.2 Cultural Characteristics The influence of cultural characteristics operates at two levels. First, elements of the overall national culture determine the extent to which social factors are conducive to the adoption of EC activities by organizations in general. For instance Walsham and Sahay (1999) and Harris and Davison (1999) suggest that the level of computer related technology usage in day to day work is relatively low in developing nations. This influences the extent of large scale societal usage of the Internet for B2C EC related activities. This holds true in the Indian context, where cultural preferences for physical facility- based purchasing dominate over electronic means of shopping.

Second, elements of the organization culture determine the extent to which specific conditions in the organization related to communication processes, control systems, work norms and management styles encourage the adoption of IT. For instance, in many organizations, data is regarded as a source of power (Myers and Tan, 2002). This influences the extent to which inter- functional and inter-organizational electronic information networks are implemented. Similarly, differences in management styles, work norms and the nature of control systems (Walsham, 1995; Palvia, 1997, Tractinsky and Jarvenpaa, 1995) influence the extent of electronic information transfer within and between organizations. The structural and cultural characteristics are summarized in Table 2 below. Drawing from the two conceptual streams, we anticipated that some of the factors described in studies on EC adoption in developed nations (refer to Table 1) would also influence the adoption of EC in developing nations, in general. However, given the specific cultural and infrastructure characteristics of developing nations (refer to Table 2), we also expected that this study would yield additional insights into the process of EC adoption, specifically from the point of view of developing nations, in this case, India. 3. Research Design 3.1 Choice of Sample Organizations IS research on India has focused on areas related to software development and project management (Walsham and Sahay, 1999; Walsham, 2000; Coward, 2003). There are however, virtually no studies that describe the adoption of IT and EC by Indian organizations. Considering that EC adoption in India is a relatively new phenomenon, and that there is a lack of explanatory literature in the domain, we adopted a qualitative, exploratory research methodology (Lee, 1989; Guba and Lincoln, 1994).

We used a multiple case study design (Yin, 2003) to study EC adoption by eighteen companies from eleven industries in India. The companies belonged to various manufacturing and service sectors such as banks, financial services, distribution, education, consulting and courier services, metal manufacturers, hydraulic and telecommunications equipment manufacturers and the hospitality industry. We selected organizations from different industries in order to study the adoption of IT and EC in the context of different competitive and strategic scenarios. For instance, firms in the financial services and banking industries were more affected by economic liberalization and exposed to more changes in the competitive environment, than those in the education, hospitality and distribution services industries. Therefore the broad range of industries helped us to study IT and EC adoption in the context of different organizational and competitive scenarios. In particular, it enabled us to take into account variations in the impact of economic liberalization and the subsequent changes in industry structure, for different industry sectors. The organizations had revenues

Page 6: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

6

ranging from 20 billion INR to 150 million INR. The variations in size and industry ensured that we had a fairly good representative sample of Indian companies. Details about the organizations have been mentioned in Table 3 below.

Elements of Structural and Cultural Differences Literature References

Implications for the strategic and environmental imperatives for the adoption of EC

Structural Characteristics

Infrastructure - Networking /Telecommunication - Security - Financial infrastructure and Electronic payment systems - Technology Barriers to technology dissemination and internalization - Availability of hardware and software - Logistics and Distribution - National Information Infrastructure

Markus et al., 2002; Tractinsky and Jarvenpaa, 1995; Wresh, 2003 Ein Dor et al., 1993; Wresh 2003 Walsham et al., 1999; Markus, 1979; Bin et al., 2003 Walsham et al., 1999 Ives et al., 1991; Bin et al., 2003, Wresh, 2003 Meso et al., 2000

Infrastructural elements provide the support systems for E-Commerce activities to be carried out. They determine the extent to which it is feasible for a nation to carry out electronic commerce activities, within the given infrastructural capabilities and constraints

Legal and Regulatory framework -National policies about governing and regulating Internet Usage -Industry specific policies -Nature of markets and industry structure -National Development priorities for the allocation of human and economic resources for IT development

Markus et al., 2002; Tractinsky and Jarvenpaa, 1995; Gallupe et al., 1999 Markus et al., 2002 Mennecke et al., 2001; Deans et al., 1993 Palvia, 1997; Ein Dor et al., 1993

Economic and legislative regulatory policies and frameworks provide the external context in which firms take decisions related to E- Commerce. Industry conditions specify the competitive drivers which influence the adoption of E-Commerce

Demographic -Non Uniform education across age groups -Local Business Practices - purchasing and financing

Markus et al., 2002; Wresh, 2003 Markus et al., 2002

Demographic factors determine characteristics of the general population which may encourage or constrain the adoption of E-Commerce

Cultural Characteristics

National Culture Level of computer related technology usage in day to day work

Walsham et al., 1999; Harris et al., 1999

Elements of the national culture determine the extent to which general social factors are conducive to the adoption of specific E-Commerce activities

Organizational Culture - Data ownership and power - Nature of control systems, Work norms, and Management styles

Myers et al., 2002 Walsham, 1995; Tractinsky and Jarvenpaa, 1995; Palvia, 1997

Elements of the organization culture determine the extent to which specific conditions in the organization related to communication processes, control systems, work norms and management styles encourage the adoption of E-Commerce

Table 2: Structural and Cultural Differences between developing countries and developed countries

Page 7: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

7

Industry

Standard Industry

Classification (SIC Code)

Company Reference Code (for the purpose

of the study)

Descriptions of people interviewed

6231-02

F1

Regional head of operations, Regional head of IS, Head of IS, one functional middle manager, 2 IS middle managers

6231-02 F2 1 Past president, one senior stock broker, CIO, CEO, 2 IS middle managers, 1 functional middle manager

Non Banking Financial Corporations

6141-02 F3 Regional head of operations, Regional head of IS, 1 IS middle manager, 1 functional middle manager, Regional head of accounting

Banks (Public Sector) 6021-01 B1

Regional head of operations, Regional head of IS, Manager of one of the largest branches, 1 middle IS manager, I junior IS executive, 2 middle functional managers

Banks (Private Sector) 6021-01 B2

Regional head of operations, 1 middle IS manager, CIO, 1 middle functional manager

Courier Services 4215-01 C1 Regional head of operations, Manager of one of the largest branches, 1 senior functional manager, 1 senior IS manager, I junior IS manager, I junior functional executive

Distribution Services 7319-08 D1 Regional head of operations, CIO, Regional head of IS, 2 senior functional managers

2844-05, 3841-01

FM 1

Regional head of IS, 2 senior functional managers, 2 middle functional managers Fast Moving

Consumer Goods 2111-98 FM2 Regional head of operations, Regional head of IS, 2

senior functional managers, 2 middle functional managers

Educational Institution 8299-72 ED 1 President, Head of IS, 2 faculty who were part of the IS planning process, 2 students

3353-01, 3354-98, 3355-01 M1 Regional head of IS, 2 senior functional managers, 2

middle IS managers, 1 middle functional managers

3369-03, 3494-03 M2 Head of IS, CEO, 2 senior functional managers, 1 middle IS manager, 1 junior IS executive

Industrial Products: Metal (Foundry and Process Bas ed)

3325-02 M3 Head of operations, CEO, 2 middle functional managers

Industrial Products Manufacturing: Hydraulic Equipment

3511-03 H1 CEO, CIO, 2 senior functional managers, 2 middle IS managers

Industrial Products Manufacturing: Communications Equipment

5065-51 CM1 CEO, CIO, 2 senior functional managers, 1 middle functional managers, I middle IS manager, I junior functional executive

Hospitality Industry 7011-12 HO1 Head of regional operations, Head of regional IS, 2 middle functional managers, 2 middle IS managers

8748-99

CO1

Head of regional operations, Head of regional IS, 2 middle IS managers, I senior functional manager, I middle functional manager Consulting Services

8711-11 CO2 3 senior functional managers, 2 middle functional managers, I senior IS manager

Table 3: Description of Organizations and Interviewees

Page 8: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

8

3.2. Data Collection For each organization, we identified one initial contact person at the senior management level, in either a functional department or in the IS department, through one of the co-authors. We explained the nature and objectives of our study to our initial contacts. We subsequently used a “snowball” approach (Markus, 1979), in which the initial contacts identified appropriate people for further interviewing.

A structured, open-ended questionnaire was used and data were collected through face-to-face interviews. The questionnaire was divided into three sections. The first section had questions about the background of the organization in terms of main products, employees, number of factories or branches, and revenues. The second section consisted of questions that addressed the IT and EC history of the organization in terms of landmarks with respect to major EC and IT adoption programs, the reasons for and areas of adoption, the benefits and business impacts. The third section had questions that addressed the external and competitive environment of the organization, such as the evolution of the industry, political and economic changes and critical factors for the business. It also had questions about the history of the organization, turning points, performance, and initiatives for new products, processes and technologies, and the reasons thereof.

One of the co-authors interviewed a total of 104 middle and senior managers from the IS department and various other functional areas from the different organizations. The specific people interviewed have been described in Table 3. Each person was interviewed for 30 minutes to an hour. Although the questions were guided by the literature find ings, we were open to emergent concepts, given that the context in which organizations in developing nations exist is different from that of developed nations. Besides these interviews, a number of other secondary sources of information such as industry databases and internal company documents were also used. Details of the data collected have been described in Table 4. 3.3. Data Analysis The interview and secondary data was “coded”. “Coding” (Miles and Huberman, 1994) is the process of attaching labels or “codes” to different segments of textual or qualitative data. Each “code” consists of particular segments of the interview transcripts that together signify a distinct concept emerging from the data. We categorized all the interview transcripts into different codes. These codes and their inter-relationships, together explained the different dimensions of the IT/EC adoption process. The process of matching different segments of the text and transcripts from subsequent interviews to existing codes from earlier interviews is known as pattern matching (Miles and Huberman, 1994). The process of identifying relationships between the different codes is known as explanation building (Yin, 2003). The processes of coding, pattern matching and explanation building were carried out on all the interview transcripts and the secondary data. This helped us to identify the different distinct dimensions of the EC adoption process and the relationships between them. The qualitative analysis software, Atlas Ti was used for coding and analyzing the data.

Page 9: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

9

Parameters Tracked Over Time Source of Data

Nature and Evolution of EC Deployment • Details of different types of IS

developed: reasons and drivers for adoption and expected benefits vis -à-vis the strategic and competitive contexts of the company

• The strategic importance of, and role,

played by different IS adopted over time

• Interviews with senior managers in the IS department for

information on EC applications • Interviews with line managers in the functional

departments • Company documents of configurations of existing and

past and present IS/IT

Drivers of EC adoption • Changes in the general and specific

environment (government policies, globalization, economic de-regulation), and their effect on IT and EC adoption.

• Changes in industry structure (power of

buyers, suppliers, entry of new competitors, change in the basis of competition) and their effect on the adoption of IT and EC.

• The effect of competitive pressures on

the adoption of EC technologies • The effect of company performance on

EC adoption. • Exploratory study of additional factors

which formed imperatives for the adoption of EC technologies

• Relevant secondary industry data from CMIE (Center for Monitoring Indian Economy) databases, business and technology press reports and web-sites for information on how the company was externally perceived, in the context of its use of EC technologies.

• Secondary data tracking developments in industry

structure, entry of new competitors, changes in customer preferences and the power of suppliers and business partners.

• Secondary data tracking changes in the external

economic context, government regulations and legislation.

• Internal administrative records and data from industry

databases showing past performance and its effect on EC adoption

Table 4: Details of Data Collected

Page 10: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

10

4. THE ADOPTION OF EC BY ORGANIZATIONS IN INDIA- RESULTS AND FINDINGS . We identified three broad higher- level dimensions (or codes) of the EC adoption process by companies in India (as described in Figure 1). In this section we describe each of the dimensions and the relationships between them. We do this by providing quotes from the interviews to illustrate the codes associated with these dimensions. Figure 1: Dimensions of E - Commerce Adoption in India

The first dimension (or code) consists of drivers that lead to the adoption of EC. The

second dimension (or code) describes imperatives for changes in the organization, created by the drivers associated with the first dimension. Typically, the changes are related to new product introduction, process re-engineering or changes in business strategy. Finally, organizations are required to adopt EC in different functions and processes, in order to implement these changes. Identification of implications for the adoption of IT and EC therefore form the third dimension (or code). The overall framework including the individual dimensions and their specific indicators has been described in Figure 1.

DIMENSION 1 Drivers for the adoption of E-Commerce: 1. Drivers related to the external environment:

Changes (economic, political, technological, customer preferences) in the external environment which undermine the competitive position or value proposition

2. Drivers related to organizational performance Continuing and serious decline in performance parameters such as profits, revenues and market share 3. Drivers related to Internal Factors Proactive organizational actions for pursuing business excellence

DIMENSION 2 Imperatives for changes in the organization 1. Strengthening of

individual activities in the value chain through internal restructuring or process re-engineering.

2. New product

development 3. Change in the

competitive position or value proposition

4. Setting pioneering

trends in process and product innovation

5. Following innovative

technology based business strategies

DIMENSION 3 Implications for the adoption of IT and EC 1. Adoption of EC for

product distribution, for instance in banks and financial services.

2. Adoption of B2C EC

for redesign of product distribution processes and customer relationship management processes

3. Adoption of B2B EC

for the redesign of processes linking the organization with suppliers.

4. Supporting product,

process and business innovation through the use of EC

5. Adoption of IT for

rationalizing and re-engineering internal process.

Dimensions and their Linkages demonstrated through illustrations from the data

Page 11: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

11

4.1 Dimension 1- Drivers for the Adoption of EC Dimension 1 describes the drivers for the adoption of EC. Analysis of the code associated with Dimension 1 revealed that there are three driving forces for the adoption of EC in India. They are related to conditions in the external environment, the performance of the organization and certain internal factors within the organization. They have been described below, with accompanying quotes from interviews and segments from the secondary data. We would like to mention here that some of these quotes reveal the combined substance of more than one interview conducted at the specific organization. 4.1.1 Drivers Related to the External Environment Changes in the external environment such as economic, political and technological transformations, including discontinuous developments in product or process technology, have affected the structure of the industry and the competitive position of organisations in the industry, across many sectors of the economy. These conditions have induced changes in the power of buyers and suppliers, entry barriers and the threat of substitutes. These, in turn, have caused changes in the nature of competition in the industry and in some cases, have altered the basis of competition.

For instance, in the financial services company F3, interviews had the following to reveal.

“As of 1999, more than 85% of the business of the company came from customers in the infrastructure sector, mainly construction contractors. The economic downturn which started in 1996 adversely affected our business because it led to a slowdown in the building activities. Our margins decreased. Profits declined from Rs. 110 million in 1995 to Rs. 56 million in 1998 and Rs. 83 million in 1999. Moreover, rapid changes in information technologies were being used by companies in our industry worldwide, to change processes and create new distribution channels” Secondary data2 additionally revealed that starting from the mid-1990’s, the lending

rates had decreased from 30% to 17%. At the same time the borrowing rates had decreased only slightly, from 19-20% to 17%.

At the consulting firm CO1, we observed the following:

“As of 1999, 85% of the business of our company came from clients in the steel industry. The steel industry had been facing a recession since 1995, and demand had decreased considerably. Starting 1997, we were under pressure to explore new segments.”

Data from the metal manufacturer M1 revealed that:

“Starting 1995, there was pressure to keep the costs low because of the import of cheap substitutes from some South East Asian countries. Cheap substitutes could be imported because of the changes in import duties that accompanied liberalization. The new laws stipulated that the import duty on downstream finished products be reduced significantly and be the same as that on upstream raw materials.”

2 For sources of all secondary data, please refer to Table 4.

Page 12: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

12

According to data from the hydraulic equipment manufacturer H1:

“The demand for our products is linked to the demand for new construction, which depends on the state of the economy. Initially (during the 1980’s), we operated as a monopoly in a protected market, with stable demand. Entry barriers were high due to import regulations. In 1995, a competitor entered the market (in a region where we had a weak presence). This competitor was able to take advantage of the reduced import duties and offer finished products imported at a much cheaper rate. Gradually the competitor was able to build market share and take away some of the existing customers.”

Secondary data revealed that there was an economic recession from the mid 1990’s.

Since the demand for the company’s product was linked to the state of the economy, there was a further decrease in demand.

At the courier services company, C1, we observed the following:

“Following changes in entry laws as a result of liberalization, a number of new competitors entered the market. There was pressure on us to improve efficiency and decrease the turnaround time for delivery of articles.”

At the public sector bank we observed the following:

“Initially, we were supported by the government to a large extent. Priority was given to social sector lending and deposit mobilization in the rural areas, rather than to generation of profits. New financial regulations were passed in 1993, with which the bank had to comply. These included changed and stiff performance measures and increased efficiency requirements. Government support was also partially withdrawn. In 1995, new competitors (private Indian banks), emerged. These organizations were more efficient and provided far better service. Additionally, 1993-1994 onwards, non-banking institutions started offering products similar to those by traditional banks. Therefore there was a serious threat from substitute products. Our customers presented with increased choice, expected better service and more innovative financial products.”

There have also been changes in customer preferences regarding product acquisition

and consumption. We observed at the consulting firm CO1 the following. “Our customers started showing a preference for electronic transactions. Various international clients demanded that the service be delivered according to certain norms and standards. One such specification was: All drawings should be given to us on a CD ROM, on AutoCAD release 14. (which required the latest version of Windows NT). We have lost a couple of big orders because we could not comply with some such specifications.”

Interviewees at the financial services firm S3 had the following to say. “There was an increasing preference on part of our customers for carrying out electronic transactions with us.”

As we have described above, external drivers have undermined competitive positions

and value propositions for organizations and in some cases have rendered their vital processes and systems inefficient and obsolete.

Page 13: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

13

4.1.2 Drivers Related to Organizational Performance Some of the organizations had failed to track changes in customer preferences, environmental conditions and competitive imperatives over prolonged periods of time. Consequently, they had not been able to respond to these important changes by taking appropriate strategic and operational decisions at the right time. This had resulted in inefficient processes, obsolete systems and declining performance in terms of drastically reduced revenues, negative profits and decline in market share. Hence these organizations had come under pressure to initiate immediate corrective action. This typically had implications for the use of EC.

At the consumer durables manufacturing firm FM2, we observed the following:

“We had extremely inefficient and high cost processes, which had been ignored by senior management for a long time. This combined with some financial irregularities, resulted in consecutive losses in the years 1993 to 1996. In 1997, the company showed a negative cash balance. At that time the owners sold out and the company was acquired by another company.”

At the distribution services firm, D1, interviews revealed the following:

“We are a public sector enterprise and are financially supported by the government. Many of our processes were inefficient. Also, given the large scale of our operations, our co-ordination costs were consequently high. However, in 1995-1996, as a result of policy changes in the government sector, we were instructed by the government to find ways to modernize our processes and reduce our costs”.

At the metal manufacturing firm, M2, we observed the following:

“The power of our buyers is high because they purchase in bulk and can demand lower prices. Our foreign customers require products of international standards. We compete with cheaper imported products from China. However, over the last four to five years, we have not been able to predict demand accurately and as a result we have high inventory levels. This has increased our costs”

Data from the financial services firm F2 revealed the following:

“The technology for carrying out the basic processes in our industry has changed drastically since the late 1980’s. We had failed to develop new processes and had continued to operate with inefficient and obsolete technology. Our competitors (1995 onwards), started using new and advanced technology for carrying out their important processes, and offered better products. Since we did not implement process changes, we lost many customers and our turnover decreased drastically. Performance deteriorated. The average number of transactions per day, which is one of the parameters that we use for measuring performance, decreased from 25134 in 1989-90 to 11900 in 1995-96”

In the communications equipment manufacturer CM1 we observed that:

Page 14: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

14

“Our existing processes were inefficient and costly. We were the largest manufacturer and the waiting time for our customers was high. The entry of new competitors, forced us to upgrade our technology and improve our processes. Our balance sheet showed continuous losses from 1993 to 1999 and our market share declined from 80% to 25% during this period. We were forced to work on all three fronts of technology upgradation, cost reduction and delivery time reduction simultaneously. ”

As the above illustrations demonstrate, many firms in our data-set faced these

performance related pressures when they failed to quickly and adequately respond to increased competition after economic liberalization. They were therefore compelled to use EC, in the process of creating new products and services, as described in Sections 4.2 and 4.3. Some adopted Business- to-Business EC in their critical processes. Others adopted Business - to - Consumer EC for improved customer service. 4.1.3 Drivers Related to Internal Factors Finally, we found that a few organizations have a passion for, and culture of, striving for excellence. This has driven them to adopt a proactive stance towards environmental trends and pursue business excellence irrespective of the presence of any external pressures.

At a private sector bank, B2, we observed from secondary data that the bank was among the first private banks to be set up, after deregulation of the Indian economy in 1991. It was among the first banks to provide depository services and internet banking facilities. It was ranked as one of the best banks in India by various Industry Surveys in 1997 and 1998. These surveys also named it among the banks with the highest productivity per employee, among all banks in India, in 1998-1999. Many of the bank’s senior managers were highly regarded members of various trade organizations. Interviews revealed that:

“Our performance targets are very stiff and are revised every year. Our position as one of the best among the first new generation private sector banks puts pressure on us to deliver innovative products and superior customer service. It is a big responsibility.”

At the consulting firm, CO2, secondary data revealed that the company was a premier

consulting firm, closely associated with, and a subsidiary of an international firm. Its stated objective was to remain as one of the leading consulting firms, internationally. Interviews revealed the following:

“We are constantly trying to find out ways to provide innovative solutions to our clients. This involves working with the latest technologies for developing business solutions”.

At the consumer goods manufacturing company, FM1, we observed the following:

“We are the largest and the best -known company in our industry, and our objective is to continue to remain so”.

At a financial services company, F1, secondary data revealed that the organization was

a pioneer in its field. It was the first company to design its system delivery system around its IT infrastructure, and operate in national instead of regional markets. In doing that it changed the basis for competition in the industry. Interviews revealed the following:

Page 15: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

15

“Our objective is to be a leader in our industry in India, and develop the industry in line with international standards. We are always under pressure to innovate.”

Finally, our data from the hospitality company HO1 revealed the following:

“Our objective is to provide world class services to our national and international clients. We are one of the largest and the best-known companies in our particular market segment and we have achieved numerous international industry awards for excellence in operations. Internal pressures to excel are very high.”

As the above data shows, such organizations are often industry leaders. In many

instances, their proactive strategies create fundamental changes in industry structure and characteristics. Their constant efforts at business innovation often entail adoption of EC, as described in Sections 4.2 and 4.3. 4.2. Dimension 2- Imperatives for Change Within Organizations The three drivers had created imperatives for change in different parts of the organization. Dimension 2 describes these changes. The code associated with this dimension describes different changes that the organizations adopted or planned for, as a result of the effect of the drivers described in Dimension 1. These changes were related to either product re-design or process upgradation, depending on the nature of the drivers that the organization faced. 4.2.1 Imperatives for Change due to Drivers Related to External Enviroment Drivers related to the external environment typically created imperatives for strengthening of individual activities in the value chain through process re-engineering or internal re-structuring. They also led to new product development and consequent changes in the value proposition or competitive positioning of companies. This is illustrated by the following data segments: We observed the following in the financial services company F3.

“We basically needed to decrease costs and create process efficiencies that could improve our margins. Our essential processes such as proposal generation, credit check, loan approval and marketing were largely manual, performed with the help of very basic IT. We needed to upgrade these processes”.

Interviews at the consulting company CO1 revealed the following:

Aside from exploring new segments, we also needed to find ways to reduce costs in our existing processes. We therefore developed a plan for automating information flows between the different departments and between us and our customers”.

Data at the metal manufacturer M1 showed the following:

Page 16: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

16

“Our primary pressures were to keep costs low. Therefore we decided to improve our inventory management and scheduling processes. Also we were a vertically integrated organization, with different facilities catering to different parts of the manufacturing value chain, in different parts of the country. We developed plans to improve communication between our facilities and hence improve co-ordination between different stages of the value chain.”

We observed the following from the interviews at the courier company, C1:

“We developed a strategic plan for reducing the cycle time between dispatch and delivery, and to improve information transfer between our different offices across the country”

The pressures for change at the hydraulic equipment manufacturer H1 are described in

the following way:

“We undertook a program to identify areas where costs could be reduced and product quality improved. We identified problems in the inventory planning and demand forecasting functions. These problems resulted in high inventory levels. We also identified the customer service function as one which needed to be changed, so that we could have better access to customer data. We decided to re-engineer these functions.”

Interviews at the public sector bank B1 revealed the following:

“We planned to change our processes associated with inter- functional communication, inter office co-ordination, and retail banking”

4.2.2 Imperatives for Change due to Drivers Related to Organizational Performance Performance related drivers have created imperatives towards cost reduction and efficiency increases. This has led to imperatives for process up gradation and reengineering. We describe these imperatives as follows.

At the consumer durables manufacturing firm FM2, we observed the following:

“There was an immediate requirement for improving basic transaction processing systems such as payroll and accounting. This was because even these basic processes were not automated and resulted in very high costs of co-ordination and manual information processing.”

Data from a financial services firm F2 revealed the following:

“There was a need for completely re-engineering our fundamental stock trading process. This process was manual, inefficient and was the primary cause of the decrease in the trading volumes. Rapid developments in the field of IT pointed us towards new distribution channels.”

At the distribution services firm, D1, interviews revealed the following:

“Given the scale of our operations, the sheer information processing requirements between our different facilities across the country are

Page 17: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

17

tremendous. The number of suppliers and customers is also very large. Our most important requirement is to decrease process and co-ordination costs. There is a need for streamlining internal information processing and flow, and also for introducing real time communication capabilities with customers and vendors.”

Observations at the communications equipment manufacturer CM1 yielded the

following.

“Our priorities were to decrease the waiting time for customers and decrease costs There was hence a need for reengineering the processes related to demand forecasting, materials management, production planning and customer services. There was no co-ordination between different functions in the organization because of lack of flow of information”.

At the metal manufacturing firm, M2, we observed the following:

“We planned to make changes to our demand forecasting process. We also planned to use the Internet to interface with our international customers”.

4.2.3 Imperatives for Change due to Drivers Related to Internal Factors Internal drivers have created pressures within organizations to initiate EC enabled changes with respect to product and process innovation and to formulate and implement EC based business strategies.

Interviews at the private sector bank B2 revealed the following situation:

“We are in an information based industry. Our efforts at business innovation involve the use of IT and the Internet in particular, to create more innovative products and services”

Interviews at F1, the financial services company, revealed the following:

“All critical functions are carried out online on computers. Our efforts are directed towards using and further developing our IT capabilities to design better products, services and processes”.

At the consulting firm, CO2, interviews revealed the following:

“We are in a knowledge based industry and hence one of the areas in which we concentrate our efforts is the use of the internet for disseminating the considerable knowledge that we have, with our consultants and clients throughout the world. We think this is one way in which we can differentiate ourselves from our competitors. We also think we should use the Internet to improve our customer interface processes”.

At a consumer goods manufacturing company, FM1, we observed the following:

“Our production processes are very complex and we have many inputs. Also our organization is vertically integrated and has facilities in different parts of the country. Moreover marketing and advertising are two of our most

Page 18: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

18

important functions. We think that our efforts towards business innovation should be concentrated on demand forecasting and materials planning, co-ordination between our various offices and in marketing our products”.

Finally, our data from the hospitality company HO1 revealed the following:

“We are in a service industry. Our most important functions are customer service and better demand management. We already have a good IT infrastructure base which we use in different functions. Our goal is to effectively use this infrastructure and develop more advanced IT capabilities, for improving out service”.

4.3. Dimension 3- Adoption of EC in different processes. Dimension 3 describes instances of IT and EC adoption in specific processes and functional areas, as a result of the drivers (Dimension 1) and the consequent imperatives for change (Dimension 2). The code associated with this dimension describes situations where organizations have responded to the imperatives described in the previous section, by adopting specific applications. 4.3.1 Adoption of EC due to Drivers Related to Internal Factors In general, when the external drivers dominate, adoption of EC has been in response to the actions of competitors and industry leaders. The response has taken the form of using IT for improving efficiencies in the value chain, modernizing infrastructure and creating new products and services. This was evident in the actions of the following organizations as described below.

We observed at the financial services company F3 that: “From the mid 1990’s, we began computerizing some of the essential functions like proposal generation, credit check, loan approval and marketing. By the late 1990’s we were in the process of implementing internet based processes for interacting with our customers, and for some of our financial research. This considerably reduced the time from initial customer contact to final closing.”

At the consulting firm CO1, we observed the following: “We developed a central database where we stored our designs-in-progress. Consultants from various departments could simultaneously work on these designs. This reduced the overall time taken for design development. We also increased our use of CAD software”. At the courier services company, C1, we observed the following: “We have developed plans for using the internet to enable online tracking of items by customers, initially on a limited basis. We have also connected different facilities electronically to facilitate speedy information flow and enable better co-ordination. This has helped to track articles faster and we expect that it will reduce our delivery times” According to data from the hydraulic equipment manufacturer H1:

Page 19: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

19

“During the early 1990’s we had computerized the payroll function. In the mid 1990’s we developed an integrated software package that was used to perform functions related to material procurement, material requisition for production, inventory control, dispatches and invoicing. We are now in the process of developing an internet based system that would link to our major dealers and enable us to have quicker feedback regarding service problems and sales figures”. At the public sector bank B1 we observed the following: “We started by implementing integrated systems within our offices. We then networked our important offices to enable electronic data transfer. We have also developed plans for delivering our retail banking services electronically, initially through kiosks and finally through the internet”. At M1, the metal manufacturer, we observed the following: “After liberalization, we computerized in three stages. In the first stage we automated inventory tracking, invoicing, dispatches and sales order processing. In the second stage we implemented an ERP system and computerized the production planning, inventory control, market analysis processes in individual facilities. We also implemented JIT systems in individual factories. Finally we developed extensive computer networks between different factories and offices. Now we have online databases that help us to carry out integrated scheduling and inventory management across facilities. This has decreased the overall costs in the value chain significantly. We also now plan to extent these links with our major suppliers and one or two of our largest customers.”

As is evident from the above descriptions, these organizations responded by increasing the efficiency of critical processes by facilitating faster and more accurate flow of information. This involved adoption of IT in the relevant processes.

4.3.2 Adoption of EC due to Drivers Related to Organizational Performance The dominance of Performance related drivers has led to the implementation of Business - to - Consumer EC in product acquisition and distribution processes. For example, the financial services firm F2 implemented Business – to - Consumer systems in redesigning critical customer interface processes which were information intensive.

Data from F2 revealed the following: “We introduced new IT based distribution channels and began delivering all our products and services through terminals or kiosks. We also had electronic links with our business partners.” At the distribution services firm, D1, interviews revealed the following:

Page 20: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

20

“We computerized transaction processing functions in the individual offices and built networks between the different facilities. These were used to track the movement and storage of goods and improved the timeliness of the delivery process”.

Some of the firms used IT in those processes that were related to the decline in performance. For instance at a consumer durables manufacturing firm FM2, we observed the following:

“We started out by computerizing the accounting and payroll functions. We now have plans to implement an ERP system which we anticipate shall help in better tracking and controlling inventory”. In the communications equipment manufacturer CM1 we observed that: “We implemented an integrated enterprise system that enabled better inter-function co-ordination and information flow. The system was planned to be used as the basis of an internet based CRM system, used for streamlining the customer service function.” At the metal manufacturing firm, M2, we observed the following: “We have implemented materials management systems internally and have started using the Internet for identifying and interacting with our international customers”.

4.3.3 Adoption of EC due to Drivers Related to Internal Factors When drivers related to internal factors dominate, EC has usually been adopted in order to change the basis of competition in the industry. It has been used to support product, process and business innovation and to build electronic networks with partners and customers for strategic advantage. This was observed in our study as described below.

Firms in the financial services industries developed strategic IT and EC applications in their product distribution processes. This changed the basis of competition in their industry. For instance, at the financial services company, F1, interviews revealed that once the organization started offering country wide services, customers expected all other similar organizations to do the same. Therefore the capability to offer services nationwide emerged as the new basis of competition:

“The delivery of the service is through the IT infrastructure and all the critical functions are carried out online on computers. When the computers fail, everything stops- it is a nightmare for us. We are the first in the country to introduce an internet based trading system and offer services countryside. We are also developing a data warehouse for analyzing stock data and for tracking trends, so that we can advise customers. We want to differentiate ourselves from our competitors, through our technology and infrastructure.” At the private sector bank, B2, we observed that: “All critical functions in all our branches are computerized. There is also a wide area network connecting all the branches. Computers are used as the

Page 21: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

21

means of service delivery, and we cannot afford to have a downtime of more than 2 hours. We are the first bank in the country to have Internet based links with our retail and corporate customers” At the consumer goods manufacturing company, FM1, we observed the following: “All our functions such as production planning, materials planning, dispatching, sales planning, materials costing are computerized. In addition we have sophisticated modeling software that enables us to forecast demand, and develop integrated production plans across all of our facilities. We cannot perform any functions without IT here. When there is some IT maintenance scheduled, the work in the factories and offices has to be temporarily stalled. It looks like a holiday. With the computers down, no one can even dispatch the goods” At the consulting firm, CO2, the data revealed that: “Our objective is to differentiate our consultants by equipping them with tools which enable access to relevant information, any time, anywhere. We have developed data and knowledge repositories, which our consultants can access through the internet from anywhere. These repositories help to disseminate information and solutions about our cases which can be used throughout our organization. They help us to store, develop and use our collective knowledge. We have also used the Internet to develop training modules for our consultants to use, in order to accelerate the learning process.” Finally, our data from the hospitality company, HO1 revealed the following: “Functions like housekeeping, guest registration, accounting, and front office management are computerized. We are the first in the country to have implemented a yield management system that enables us to study consumption patterns and predict demand. It helps us to adjust room rates according to the demand. We are in the process of combining this system with an Internet based online reservation system, which would help in integrating demand scenarios for different facilities and help in better demand forecasting and yield management. Customers would be able to log in, reserve rooms and provide preferences. This information will help us in studying patterns of individual customers and customize our services accordingly. It would be nice to reach a situation where we can remember individual customers and provide them their favorite rooms, their favorite drinks and so on.”

5. CONTRIBUTIONS AND DISCUSSIONS Rapid globalization of business, economic deregulation and the increased role of IT in shaping corporate strategy in developing nations have given rise to a need for understanding the strategic and environmental drivers for EC. This paper reports the results of one of the first detailed studies of the phenomenon of EC adoption by Indian organizations in response to different environmental factors, and reveals the impact of strategic and external drivers of EC adoption. The study contributes in three ways. First, it identifies three distinct drivers of EC adoption in India. Each of these drivers describes a specific aspect of EC adoption. The qualitative data described in this paper gives a detailed description of the indicators and

Page 22: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

22

factors associated with each dimension. Second, the study explains the conceptual links between the three drivers and the imperatives for change in organizations. Finally it identifies the implications for EC adoption, as a result of these imperatives. The framework developed in this study has been described in Figure 1.

The results show that when External Drivers dominate, the adoption of EC is often a phenomenon that is determined by the forces of economic and technical change. This view finds support in existing literature on EC adoption in developed nations, as described in Section 2. Additionally our study shows that EC adoption can also be as a result of drivers related to a continued deterioration in performance, which causes pressures on the organization for action. This aspect is especially true for organizations in developing nations, which have been exposed to intense competition rather suddenly, subsequent to economic liberalization. The study also points to a third driver, the internal drive for continued innovation, in the quest for business excellence that may exist in an organization. Implications for organizational change and EC adoption as a result of the three drivers have been explained.

Finally, although the empirical basis of this study is in Indian organizations, other comparable societies in South America, Africa, Eastern Europe and the erstwhile Soviet Union, and other parts of Asia have also undertaken similar changes in economic policy, in the past decade. Hence the findings of this study can be used as a preliminary basis for identifying opportunities and imperatives, and understanding the contexts, for EC adoption in these nations as well, and in developing nations in general. There also exist possibilities for further refinement of the model through a statistical study and through similar studies in other developing countries. 6. REFERENCES Bin, Q., Chen, S. and Sun, S.Q. (2003) Cultural Differences in E-Commerce: A Comparison Between the US and China, Journal of Global Information Management, 11, 2, 48-55. Carmel, E. (2003) Taxonomy of New Software Exporting Nations, Electronic Journal of Information Systems in Developing Countries, 13, 2, 1-6. Choudhury, V., Hartzel, K. and Konsynski, B. R. (1998) Uses and Consequences of Electronic Markets, MIS Quarterly, 13, 2, 471-507. Chwelos, P., Benbasat, I. and Dexter, A. (2001) Research Report: Empirical Test of an EDI Adoption Model, Information Systems Research, 12, 3, 304-321. Coward, C.T. (2003) Looking Beyond India: Factors that Shape the Global Outsourcing Decisions of Medium and Small Sized Companies in America, Electronic Journal of Information Systems in Developing Countries, 13, 11, 1-12. Crook, C.W. and Kumar, R.L. (1998) Electronic Data Interchange: A Multidisciplinary Investigation Using Grounded Theory, Information and Management, 34, 2, 75-89. Deans, P.C. and Ricks, D.A. (1993) The Agenda for Research Linking Information Systems and International Business: Theory, Methodology and Application, Journal of Global Information Management, 1, 1, 6- 20.

Page 23: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

23

Ein-Dor, P., Segev, P. and Ograd, M. (1993) The Effect of National Culture on IS: Implications for International Information Systems, Journal of Global Information Management, 1, 1, 33- 44. Gallupe, R.B. and Tan, F.B. (1999) A Research Manifesto for Global Information Management, Journal of Global Information Management, 7, 3, 5-18. Guba, E.G. and Lincoln, Y.S. (1994) Competing Paradigms in Qualitative Research, In: Denzin, N.K. and Lincoln, Y.S. (Eds.), Handbook of Qualitative Research, Sage Publications, CA, USA, 105-117. Hart, P. and Saunders, C. (1998) Emerging Electronic Partnerships: Antecedents and Dimensions of EDI Use from the Supplier’s Perspective, Journal of Management Information Systems, 14, 4, 87-111. Iacovou, C.L, Benbasat, I. and Dexter, A.S. (1995) Electronic Data Interchange and Small Organizations: Adoption and Impact of Technology, MIS Quarterly, 19, 1, 465-485. Ives, B. and Jarvenpaa., S.L. (1991) Applications of Global Information Technology: Key Issues for Management, MIS Quarterly, 15, 1, 33-49. Katz, J.P. and Townsend, J.B. (2000) The Role of Information technology in the “Fit” between Culture, Business, Strategy and Organizational Structure of Global Firms, Journal of Global Information Management,8, 2, 24-41. Lee, A.S. (1989) A Scientific Methodology for MIS Case Studies, MIS Quarterly, 13, 1, 33-49. Markus M.L. (1979) Understanding Information Systems use in Organizations: A Theoretical Explanation, Unpublished Doctoral Dissertation, Case Western Reserve University, August. Markus, M.L. and Soh, C. (2002) Structural Influences on Global E-Commerce Activity, Journal of Global Information Management,10, 1 5-12. Malone, T.W., Yates, J. and Benjamin, R.I. (1987) Electronic Markets and Electronic Hierarchies, Communications of the ACM, 30, 6, 484-497. Mennecke, B. and West, L.A. (2001) Geographic Information Systems in Developing Countries: Issues in Data Collection, Implementation and Management, Journal of Global Information Management, 9, 4, 44-54. Meso, P. and Duncan, N. (2000) Can National Information Infrastructures Enhance Social development in the Least developed Countries? An Empirical Investigation, Journal of Global Information Management, 8, 4, 30-52. Miles, M.B. and Huberman, A.M. (1994) Qualitative Data Analysis, Sage Publications, CA, USA, 110-122, 187-206 Myers, M. and Tan, F. (2002) Beyond Models of National Culture in Information Systems Research, Journal of Global Information Management, 10, 1, 24-32.

Page 24: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

24

Palvia, P.C. (1997) Developing a Model of Global and Strategic Impact of Information Technology, Information and Management, 32, 5, 229-244. Palvia, P.C. (1998) Research Issues in Global Information Technology Management, Information Resources Management Journal, 11, 2, 27-36. Premkumar, G. and Ramamurthy, K. (1995) The Role of Inter-organizational and Organizational Factors on the Decision Mode for Adoption of Inter-organizational Systems, Decision Sciences, 26, 3, 303-337. Rayport, J.F. and Sviokla, J.J. (1994) Managing the Marketspace, Harvard Business Review, 72, 6, 141-150. Reich, B.H. and Benbasat, I. (1990) An Empirical Investigation of Factors Influencing the Success of Customer Oriented Strategic Systems, Information Systems Research, 1, 3, 325-347. Straub, D.W. and Watson, R.T. (2001) Research Commentary: Transformational Issues in Researching IS and Net-Enabled Organizations, Information Systems Research, 12, 4, 337-345. Tarafdar, M. and Vaidya, S.D. (2002) Evolution of the Use of IT for E-Business at Century Financial Services: An Analysis of Internal and External Facilitators and Inhibitors, Journal of IT Cases and Applications, 4, 4, 49-76. Tractinsky, N. and Jarvenpaa, S.L. (1995) Information Systems Design Decisions in a Global vs. Domestic Context, MIS Quarterly, 19, 4, 507-535. Walsham, G., Symons, V. and Waema, T. (1990) Info rmation Systems as Social Systems: Implications for Developing Countries, in: Bhatnagar, S.C. and Bjorn-Andersen, N. (Eds.) Information Technology in Developing Countries, Elsevier. Walsham, G. and Sahay, S. (1999) GIS for District Level Administration in India- Problems and Opportunities, MIS Quarterly, 23, 1, 39-66. Walsham, G. (2002) Cross-Cultural Software Production and Use: A Structural Analysis, MIS Quarterly, 26, 4, 359-380. Watson, R.T., Kelly, G.G., Galliers, R.D. and Brancheau, J.C. (1997) Key Issues in Information Systems Management: An International Perspective, Journal of Management Information Systems, 13, 4, 91-115. Wolcott, P. and Goodman, S. (2003) Global Diffusion of the Internet in India: Is the Elephant Learning to Dance?, Communications of the Association for Information Systems, 11, 32, 560-646. Wresh, W. (2003) Initial E-Commerce Efforts in Nine Least Developed Countries: A Review of National Infrastructure, Business Approaches and Product Selection, Journal of Global Information Management, 11, 2, 67-78.

Page 25: Adoption of Electronic Commerce by Organizations in India Strategic

EJISDC (2004) 17, 2, 1-25

The Electronic Journal on Information Systems in Developing Countries, http://www.ejisdc.org

25

Yin, R.K. (2003) Case Study Research: Design and Methods, 3rd Edition, Sage Publications, CA, USA.

AUTHORS’ BIOGRAPHIES

Monideepa Tarafdar Monideepa Tarafdar, is Assistant Professor, College of Business Administration, at the University of Toledo, Toledo, Ohio. She has an undergraduate degree in Physics, and a graduate degree in Telecommunications and Electronics engineering from the University of Calcutta, India. Her doctoral degree is from the Indian Institute of Management Calcutta. Her current research and teaching interests are in the areas of Strategic Information Systems Management, Management of IT, Enterprise Systems and Organizational Aspects of IS. Her teaching has been in the areas of Management Information Systems , Data Management, Data Communications and E-Commerce. Her research has appeared in Journal of Information Technology Cases and Applications, Journal of Global Information Technology Management, Annals of Cases in Information Technology and System Dynamics: An International Journal of Policy Modeling. Sanjiv D. Vaidya Sanjiv D. Vaidya is currently Associate Professor with the Management Information Systems Group at the Indian Institute of Management Calcutta, India. He holds a B.Tech. degree in Electrical Engineering from the Indian Institute of Technology Bombay, and an M.B.A. and a Doctorate from the Indian Institute of Management Calcutta. He has spent several years in the Indian Industry and has held positions in the operations and IT functions. He has also worked in the capacity of a principal advisor on strategy matters for a leading IT organization in India. His research interests are – approaches & processes for information systems strategy formulation, impact of IT on organizations, end user comp uting, DSS & knowledge management and electronic business. His research work has been primarily of the theory building type. He has publications in Indian and international conferences and a book on Strategic Use of Information technology. He teaching interests are IS/IT strategy & management and e-business strategies. He also participates extensively in training corporate executives.