E-commerce and Export Performance By Munib Karavdic

The instant global reach of e-commerce raises the potential need for international competencies to employ the technology. Technical infrastructure and capabilities are typically a source of economic value creation and strategic competitive advantage (Clemons et al. 1993). As a result, it is expected that firms with greater investments in IT and e-commerce technologies will tend to develop e-commerce functions that could serve as a source of competitive advantage in the export business.

If well developed, a firm’s e-commerce infrastructure facilitates e-commerce flexibility in firms to accommodate export markets, create services to support e-commerce export sales activities, and facilitates online technical support to foreign distributors or subsidiaries. Because organisational skills are a source of distinct competence, firms will continue efforts to accumulate institutional knowledge through human assets, even as boundary-spanning functions such as sales or procurement increase through intermediaries. It is very important to allocate some resources to the person or people, team or department dedicated to e-commerce development and support. Following RBV theory, integration of e-commerce into internal organisation resources is crucial because it influences changes in a firm’s exporting capabilities, increases efficiency in transaction and delivery processes, improves and enhances information efficiency, and facilitates knowledge development throughout the organisation.

2.2.4 The transaction cost economics theory (TCE)

The original proposition of transaction cost economics theory (TCE) was that firms and markets are alternative governance structures that differ in their transactions costs (Coase 1937). This theory identifies transaction efficiency as a major source of value as enhanced efficiency reduces costs (Williamson 1975, 1986, 1991). Under particular conditions, costs of organising an exchange in a market go beyond the costs of coordinating the exchange in a firm. Transaction costs, in this context, are classified as costs before (ex-ante) and after (ex-post) transactions. The costs before transaction include the expense of searching for a trading partner or clients, specifying the product(s) to be traded and – most importantly – negotiating the price and contract. The costs after transaction are obtained after the contract has been signed but before the entire transaction has been completed. These include aspects such as late delivery, non-delivery, non-payment or problems of quality control (Casson 1996).