Legal determinants of the global spread of e-commerce

Abstract

This paper examines the effects of quality of legal rules and enforcement, creditor rights, shareholder rights and the level of technology integration in the market on the global spread of e-commerce. We report three primary results. First, consistent with our hypotheses, quality legal rules and enforcement and creditor rights in each country are significantly and positively related to 1998 global e-commerce revenues. The relationships between shareholder rights, technology integration and e-commerce revenues are weak. Second, consistent with 1998 results, quality legal rules and enforcement and creditor rights are significantly and positively associated with 1999 global e-commerce revenues. Finally, when 1998 and 1999 data are pooled together, the results are stronger and consistent with the individual year findings. All our results are robust to alternative model specifications, time periods and scaling or non-scaling of the dependent variable. Taken together, the results underscore the importance of quality legal rules and creditor protection in global spread of e-commerce. © 2002 Elsevier Science Ltd. All rights reserved.