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The Diffusion of E-commerce at the Firm Level: Theoretical Implications and Empirical Evidence

  • E. Santarelli

As a specific institution of distributive trades, e-commerce displays similarities with retail stores and mail order companies. As well as providing theoretical support for the assumption that e-commerce is a way to sell certain goods and services at prices potentially lower than those of traditional distributive channels, this paper analyses its inter-firm diffusion among a sample of firms (mostly SMEs) in Italy. The paper has three main purposes. Firstly, it challenges the view of e-commerce as a “technological revolution”, by pointing out its nature as a cost minimizing marketing channel. In particular, it shows how, under certain circumstances, e-commerce is a source of transaction cost advantages analogous to those yielded by mail order business. Secondly, the paper identifies the circumstances under which e-commerce sales might achieve a significant level of penetration among those SMEs that would otherwise incur high costs in organizing a proprietary distributive channel. Thirdly, the paper employs a unique data set of Italian manufacturing, service, and hospitality firms (nearly 90% of them with fewer than 100 employees) to estimate a diffusion model based on the logistic curve. According to the estimates, by the fourth quarter of 2003 nearly 50% of the population of firms in the geographical area surveyed will have introduced e-commerce among their marketing channels.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 428.

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Date of creation: 2001
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Handle: RePEc:bol:bodewp:428
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  1. Michael, Steven C., 1994. "Competition in organizational form : Mail order versus retail stores, 1910-1940," Journal of Economic Behavior & Organization, Elsevier, vol. 23(3), pages 269-286, May.
  2. Garicano, Luis & Kaplan, Steven N, 2001. "The Effects of Business-to-Business E-Commerce on Transaction Costs," Journal of Industrial Economics, Wiley Blackwell, vol. 49(4), pages 463-85, December.
  3. Audretsch, David B & Thurik, A Roy, 2001. "What's New about the New Economy?," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 267-315, March.
  4. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
  5. Klein, Lisa R., 1998. "Evaluating the Potential of Interactive Media through a New Lens: Search versus Experience Goods," Journal of Business Research, Elsevier, vol. 41(3), pages 195-203, March.
  6. Jonathan Coppel, 2000. "E-Commerce: Impacts and Policy Challenges," OECD Economics Department Working Papers 252, OECD Publishing.
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