Electronic commerce: conceptual pitfalls and practical realities

This paper offers a critical assessment of the development of business‐to‐business electronic commerce. Focusing particularly on the use of Internet‐based ‘many‐to‐many’ electronic marketplaces, the practical reality of the experience of B2B electronic commerce for a sample of garment and horticulture sector firms in Bangladesh, Kenya and South Africa is examined. The limitations of conventional transaction cost perspectives on the development of electronic commerce are considered. A conceptual framework is applied that gives greater emphasis to institutional structures and practices and to the specific characteristics of the markets and supply chains in which firms operate. The empirical results suggest that in contrast to speculation about the benefits of Internet‐based many‐to‐many electronic markets especially for firms in developing countries, for firms that are already engaged in international trade, the emergence of restricted access Internet‐based trading and new ways of integrating supply chain information are the most significant developments. The paper considers some of the factors that are likely to influence future developments in B2B electronic commerce and the lessons for policy makers and practitioners.