Does This Site Deliver? B2B E-commerce Services for Developing Countries

Many prognoses of B2B e-commerce and its potential for developing countries presume that it is a panacea enabling producer firms in these countries to sell their products and services more easily in external markets by reducing the transaction costs they must incur to participate in international trade. Drawing on data from a detailed analysis of 117 B2B e-hubs in the garments/apparel and agriculture/horticulture sectors, it is argued that the kinds of transaction-related support services available at these online trading platforms are more limited in their scope and functionality that is often assumed in the literature on B2B e-commerce development. The findings suggest that the mere application of, and access to, technologies such as the public Internet and the World Wide Web is not likely to enable a reduction in overall transaction costs that is sufficient to facilitate entry into new global markets by developing country producer firms. 1 Internet-based market structures, and more broadly, the extension of global telecommunication networks, appear to offer producer firms in developing countries new exchange mechanisms that will enable them to compete on a more equal basis in world markets (Goldstein and O'Connor 2000; United Nations 2000). The new technologies, it is argued, enable cost reductions in infrastructure and service development, and potentially, substantial savings for firms that engage in business-to-business (B2B) e-commerce (Xie 2000). The received wisdom about B2B e-commerce is that its implementation has the capacity to enable producer firms in developing countries to sell their products and services more easily in external markets by potentially reducing the transaction costs they must incur to participate in international trade. It is expected that developing country producer firms will be able to achieve a previously unattainable international profile and that market barriers inhibiting the growth of developing country exports will be eliminated. B2B e-commerce also is seen as a means of reducing other trade-related transaction costs by providing opportunities to develop direct one-to-one trading relationships between buyers and sellers (Malone et al. World Wide Web, some analysts have even pointed towards the potential for 'leap-frogging' generations of information and communication technologies (Panagariya 2000). In this optimistic view, B2B e-commerce promises a radical shift in the way in which enterprises trade with one another. Rooted in the neo-classical model where information asymmetries are seen to be the primary barrier to trade, this rose tinted view of B2B e-commerce rests on a technologically deterministic assumption; the application …