Globalization and E-Commerce: Growth and Impacts in France

Abstract

The early development of B-to-C e-commerce over the Minitel -a user-friendly, cheap, and low speed digital network designed for text-based information exchanges implemented on the telephone network -and the strong development of EDI in specific industries, contrast with the late take-off of e-commerce over the Internet in France.• This late take-off corresponds with the late take-off of the Internet in France.French companies did not immediately identify the Internet as the technological platform of ebusiness and the Information Society, because Minitel remained efficient for a long time, the telecommunications infrastructure was efficient, and the French IT industry was focused on traditional network architectures.• In addition, the French macroeconomic climate did not favor a rush into Internet technology until 1997.France had to modernize its economic structure to adapt to more global competition, and especially to the European integrated market.French firms accommodated their organization and business methods to a highly competitive environment, while they were used to regulated markets.Decision-makers were, therefore, not focused on the issue of digital technology and the rise of a "New Economy."• By late 1997, the French government began a strong initiative to stimulate the adoption of the Internet and the development of e-commerce.Several structural policies were implemented in 1999 to favor the diffusion of the Internet.• France was behind, but a catch up effort occurred because French firms were already open to the use of IT; the experience of the Minitel had resulted in a dense network of online specialists and information service providers; and governmental policy was quite efficient.• In comparison to the U.S., France is behind and is still trying to catch up, due to the delay of their efforts.In addition, the French "New Economy took" off only a few months before the explosion of the "Internet Bubble" that occurred in the French financial market, as well as in the U.S.• E-commerce is developing in France, but it is managed by traditional companies that acquired the start-ups.The French are strongly investing in e-commerce, but do not believe it will rapidly change economic structures and performance.Return on investment is expected to be long in coming, and overall investments are expected to be high because the organizational change that must accompany e-commerce is costly.• Internet-based B-to-C e-commerce is still in its infancy, even though many B-to-C ecommerce services migrated from Minitel.The dominant model is expected to be "brickand-mortar," operated by the traditional supermarkets or specialized chains that will use the Internet to provide their customers with additional and customized services.On-line ordering combined with home delivery -i.e., fully digitized sales -is not expected to be the dominant form of B-to-C e-commerce.• B-to-B e-commerce does not currently rely on the Internet.It mainly deals with the management of ex-post operations in transactions and leads to a greater integration of business partners.In the future, the development of global marketplaces could lead to more competition in procurement.However, it will mainly involve standard products and services.• B-to-B e-commerce readiness varies widely among industries and between large and small firms.• French information service providers are expected to be successful in the on-line Frenchbased information service market, because they will benefit from their experience on the Minitel market.• In summary, France's early adoption of Minitel and EDI was both a stimulus and an inhibitor to Internet-based e-commerce; it hindered the adoption of the Internet, but it also enabled a rapid catch up.Moreover, in some respects, being a latecomer enabled France to avoid some of the mistakes made by other countries.

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