Organizational Characteristics and Electronic Commerce Utilization in Korea

Abstract

ABSTRACT This study sought to explore how firms are utilizing EC in Korea. Drawing on existing research on IT and EC related field, this study presented the framework of EC utilization level and analyzed its affecting factors in the point of six organizational characteristics (industry type, firm size, IT resources, CIO, annual investment in IT/EC, and strategic IT stance). The impact of EC utilization on firm performance was also examined by employing BSC. The results showed that the rate of EC utilization is growing quite rapidly and all organizational characteristics except industry type have a significant relationship with the EC utilization level. As far as the impact of EC utilization on firm performance, the level of EC utilization was found to be significantly related to all perspectives performance indicators of BSC. INTRODUCTION The spread of the Internet and Internet-based Electronic commerce (EC) are rapidly changing the paradigm of the economic activities of nations and enterprises. More and more companies are establishing their presence on the Web and expanding their on-line activities in order to leverage the potential of the Internet. The total volume of EC in the world has continuously increased from $936 billion in 2002 to $1,600 billion in 2003 despite economic slump and it is expected to increase up to $7 trillion in 2007 (Korea Institute for Electronic Commerce (KIEC), 2005). In case of Korea, the total volume of EC was 413 trillion won in 2006, among them the proportions of B2B, B2G, and B2C were 88.5%, 8.3%, and 2.2% respectively (KIEC, 2007). It is obvious that Internet technology and EC may be used in different ways by different firms, and firms may differ in terms of their level of EC (Teo, 2007). Even though organizations are actively engaged in adoption and integration of EC tools and practices for different goals in different ways and levels across industries, most research has focused on identifying affecting factors of Information Technology (IT)/EC adoption (Cragg and King, 1993; Vadapalli and Ramamurthy, 1998; Chung, 2001; Mehrtens et al., 2001; Han et al., 2002; Molla and Licker, 2005; Hong and Zhu, 2006; Lee et al., 2008 etc.) rather than on assessing the level and impact of EC utilization. This study, therefore, attempts to answer the following questions through a survey of EC utilization level among firms in Korea: 1. Do organizational characteristics differ for firms that higher versus lower level of EC Utilization? 2. Do firms at a higher level of EC utilization get greater performance than firms at a lower level of EC utilization? Korea is one of good countries to examine the IT/EC utilization since the country has, arguably, the world's best IT infrastructure. Korea ranks at the top in the Digital Opportunity Index of International Telecommunications Union (ITU) 2007. Further, Korean government has been making efforts to boost the IT industry as the key engine for economic growth by setting up such EC activation strategies as 'Comprehensive Polices for EC development' and 'e-Business initiative'. Recently Korea established the 'u-KOREA Master Plan' which promotes technical and industrial competitiveness thereby making it increasingly necessary for firms in Korea to utilize IT/EC (KIEC, 2007). It would be interesting to investigate the level of EC utilization and its impact on firm performance in Korea due to the importance of conductive cultural and socio-economic environment in facilitating EC diffusion (Teo, 2007). An understanding of EC utilization level is important for researchers, practitioners, and policy makers who intend to encourage greater EC utilization, as well as assess the impact of EC utilization. BACKGROUND Several extant studies of stages and level of IT/EC were reviewed to explore how organizations utilize EC in their daily business applications rather than to simply predict whether an organization adopts EC at all. …

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