A growth theory perspective on B2C e-commerce growth in Europe: An exploratory study

Information and communication technologies (ICTs) continue to have a profound effect on the economies and societies where they are used. In this article, we propose three related theories to describe the underlying mechanism for growth in e-commerce revenues at the national level. Endogenous growth theory posits that the primary drivers of e-commerce growth are internal to a country. Exogenous growth theory suggests that the primary drivers of e-commerce growth are external to an economic system, and reflect the forces of the regional economy. A blend of these, a mixed endogenous–exogenous growth theory, incorporates drivers from both the economy and the region of a country. We test a number of hypotheses about e-commerce growth in the context of these theories. The key variables include Internet penetration, telecommunication investment intensity, venture capital and credit card availability, and education level. The data are drawn from 17 European countries over a five-year period from 2000 to 2004, and are analyzed using panel data regression with robust error terms, a variant of weighted least squares. The results show the differential efficacy of internal and external drivers as endogenous and exogenous precursors of e-commerce growth across the countries for a number of different modeling specifications. We conclude with a discussion of alternative approaches to model e-commerce growth in a country. The results also suggest the appropriateness of exploring models of regional contagion for e-commerce growth. 2006 Elsevier B.V. All rights reserved.