Relationship‐based e‐commerce: theory and evidence from China

Abstract.  Electronic commerce models and prescriptions from rule‐based market economies like the United States have limited applicability in emerging markets. This paper adopts a strategic management perspective to examine the distinctive challenges facing e‐commerce in China. A theory is developed to explain how the lack of dependable rules encourages guanxi and relationship‐based commerce. It suggests that personal trust, contextual and informal information, and blurred boundaries between business and government have shaped e‐commerce in mainland China. Case studies of online retailers in Beijing and Shanghai and a business‐to‐business (B2B) marketspace reveal how dynamic business relationships with complementary service providers and state agents can overcome institutional deficiencies. Short message service (SMS)‐based mobile commerce (m‐commerce) and other leapfrogging information technology (IT) applications could transform Chinese consumer behaviour and improve economic efficiency. The evidence from China helps to explain the influence of culture and institutions on different types of IT applications. Implications for e‐commerce research and practice in China and other emerging markets are discussed.

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