E-commerce and Export Performance By Munib Karavdic

The theory of internationalisation is a valuable theoretical base for explaining a firm’s export business in an e-commerce framework. First, the e-commerce environment is especially well suited for export firms since they are able to enter and evolve much more quickly and efficiently than firms involved in other types of cooperation (e.g. joint ventures or vertical integration arrangements). Second, an e-commerce environment potentially enhances the ability of a firm to transmit, exchange, and learn new knowledge and skills. Third, the emergence of e-commerce will only highlight this trend towards collaboration as it creates the ability to generate relationships more effectively and efficiently (Fontanella 2000).

Furthermore, firms are now moving toward the creation of an environment in which suppliers, manufacturers, intermediaries, and even customers collaborate for the ultimate goal of value creation (Normann and Ramirez 1993). As such, internationalisation theory could explain how e-commerce technologies enhance focus on relationships, resources, and coordination among participants in an export venture.

2.2.2 The industrial organisation theory (IO)

The IO theory focuses on external markets to identify drivers of a firm’s strategy and argues that the firm’s performance is determined by its strategy (Scherer and Ross 1990). The IO framework is best observed in the principle of co-alignment which contends that the fit (or congruency) between a firm’s strategy and its environment has significant and positive implications for performance (Venkatraman and Prescott 1990). The IO theory focuses on the external markets to identify drivers of a firm’s strategy and states that the firm’s performance is determined by its strategy. Strategy is conceived as a firm’s deliberate response to the external industry / market imperatives whereas competitive advantage can be sustained by business strategy (Porter 1980; Barney 1991). The premise is that the external market (or industry) imposes selective pressures to which a firm must respond (Conner 1991). Firms that respond successfully to these pressures through formulating and implementing a strategy will survive and prosper whereas those that fail to respond are doomed to failure (Collis 1991).