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Global e-business: firm size, credibility and desirable modes of payment

Author

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  • Xia Pan
  • Angappa Gunasekaran
  • Ronald E. McGaughey

Abstract

This paper explores the impact of company size on an important financial consideration affecting the decision to adopt e-business in international trade. We assert that firm size will influence the choice of payment method in global e-commerce. When a Letter of Credit (L/C) is used among global supply chain partners in the e-business setting, payment flows will move faster than the physical flow of products. This asymmetric speed is not preferable for importers, particularly small importers. In this case, the diffusion of e-business adoption will likely be upstream rather than down. We predict that the usance Letter of Credit and usance L/C payable at sight will become more popular as payment modes in global e-business, particularly for Small- to Medium-size Enterprises (SMEs). New ICC regulations for e-business, if actually implemented, will likely popularise a payment mode similar to the current usance Letter of Credit.

Suggested Citation

  • Xia Pan & Angappa Gunasekaran & Ronald E. McGaughey, 2006. "Global e-business: firm size, credibility and desirable modes of payment," International Journal of Business Information Systems, Inderscience Enterprises Ltd, vol. 1(4), pages 426-438.
    • Handle: RePEc:ids:ijbisy:v:1:y:2006:i:4:p:426-438
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    Cited by:

    1. Zheng, J., 2012. "Essays on pensions, health expectancy and credit insurance," Other publications TiSEM 922b794a-7d11-4463-9843-8, Tilburg University, School of Economics and Management.

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