Exploring the Determinants of Web-Based E-Business Evolution in Canada

E-business is viewed as a transformative technology that may affect supply chain coordination, reduce transaction costs, facilitate international sales, and enable new organizational structures. While Canadian figures indicate online sales account for less than 1% of total operating revenue, growth rates are high, with a 40% increase in online sales in 2003. (Statistics Canada, 2004). Given this growth rate and the anticipated effects of e-business, there has been considerable interest in what factors influence (either positively or negatively) the extent of its adoption. While there have been a number of crosssectional studies of the determinants of the extent of e-business for various countries (e.g. Rao et al 2003; Zhu et al 2003; Chwelos et al 2001), there have been very few longitudinal analyses. In this paper, we examine the determinants of the evolution of e-business over time, using a panel data set of approximately 4,700 firms over the period 2001-2003 weighted to be representative of Canadian companies. Our theoretical framework for the determinants is based on the Technology, Organizations, and Environment (TOE) model of technological innovation proposed by Tornatzky and Fleisher (1990). We use the term e-business to refer to various ways in which business can be facilitated using the Internet, including marketing, sales, and after-sales support. E-business thus encompasses e-commerce, which is used by the OECD to refer only to online sales.