“^Ihere are onCy two tfemes in ad the literature:

someone goes on journey, and the stranger comes to town"

-John W. Garden
*It is much easier to point out the problem that
it is easy to sayjust how it should he solved"
-John Kenneth Galbraith

LITERATURE

RESEARCH
 Section-I
Review of Related Literature
To probe the problem at hand in an efficient and effective manner, review of
existing and related literature is very important. In the word of Walter R., Borg, “the
literature in any field forms the foundation upon which all future work will be built”. If
researcher fails to build this foundation of knowledge provided by the review of
literature, work is likely to be shallow and waive and will often duplicate work that has
already been done better by someone else. Thus, the review of literature justifies the
study, checks the repetitive research work on the same subject matter, eliminates the
chances of academic piracy and gives the researchers an understanding of what still
remain to be done in the area of subject under the study. Therefore, keeping in view the
importance of the review of related literature, researcher attempt here to review the
available literature on the subject under study. Brief review of related literature on the
present study is given below:
Information Technology has affected the most parts of human society and its
dominance over other technology is clearly visible. One of the major application areas
where Information Technology has greatly changed the traditions of the society is the
way in which business is being conducted (Jain & Jain, 2000)1. Ever since the inception
of computers and Internet technology, ‘Electronic Commerce’ (popularly called
E-commerce) or ‘Internet Commerce’, has become a fashion of the day (Singh & Kaur,
2002) 2. E- Commerce is often used interchangeably with IBM’s coined term,
“E-Business”. However, E-Commerce is a subset of E-Business (Kalakota & Robinson,
2000)3. E-Commerce can be supported technologically in number of ways, but the expert
feels that Internet is potentially the most significant vehicle for E-Commerce (Verma et
al, 2000)4. 5Internet being a World Wide Web (www) based communication system
through computer networks (Kotler, 1999/ has given the birth to modem E-Commerce.
But, Electronic Commerce is not just a technology; it is a way of conducting business that
has the potential to impact every aspect of the firm’s value chain (Greenstein & Feinman,
2003) 6. It has produced a revolutionary new way for businesses to communicate and
interact with customers. It breaks down the geographical barriers and brings together
customer across globe (Goyal & Gupta, 2004)7.

Jain, Pardeep and Jain, Nikhil (2002), “ Information Technology and E-Commerce", in Ramendu Roy
and J. N. Mishra (ed), Commerce Education in the New Millennium, Kitab Mahal, New Delhi, pp 13-20
2 Singh, Gurjeet and Kaur, Harlovleen (2002), “ Emergence of Electronic Commerce in India:
Contemporary Issues, Trennds and Challenges”, Panjab University Law Review, Vol. 44, No.l, pp 118-
131
Kalakota, Ravi and Marica, Robinson (2000), E-Business: Roadmap for Success, California Addison
Wesley Longman Inc
4 Verma, D. P. S.; Kumar, Surendra and Gayatri Verma (2002), “ Incoroprating E-Commerce", in
Ramendu Roy and J. N. Mishra (ed), Commerce Education in the New Millennium, Kitab Mahal, New
Delhi, pp 61-71
5 Kotler, Philip (1999), Marketing Management, Prentice Hall of India, New Delhi
6 Greenstein, Marilynand, and Feinman, M Todd (2003), Electronic Commerce: Security, Risk
Management and Control, Tata McGraw Hill.
7 Goyal, A. K. and Gupta, Nitin (2004), “E-Commerce in a Globalised Economy", Third Concept: An
International Journal of Ideas, Vol. 18, No. 209, pp21 -25.

38
 Thus the growth of E-Commerce as a business technology has been phenomenal.
Majumdar (2000)8 in his study explained, the Internet and its enabled technologies are
just few years old and is already being viewed as the worlds most revolutionary
development. It has created a universal platform for buying and selling goods and
services and driving important business process inside the organization. Small and large
companies are using the Internet to make their product information, ordering, and
customer support immediately available to help buyers and sellers to make contact
(Landon & London, 1999)9. Organizations are finding some of the greatest of this
computer technology come from the E-Commerce application that significantly lower
purchase transaction costs by eliminating middlemen in the distribution channels. In
some categories such as information services and digital products, providers can decrease
the financial cost of distribution to zero (Jones, 199510; Hoffman; Novak and Chaterjee,
1995)". Low cost and ease of use (Timmers, 1999)12 has resulted in widespread adoption,
high degree of interconnectivity between many parties (Shapiro & Varian, 1995)f3 and
the richness of information that can be exchange between parties (Evan &Wurster,
1999)n. E-commerce provide effective and efficient ways in which corporate buyers can
gather information rapidly about available P/S (products and services), evaluate and
negotiate with suppliers, implement order fulfillment over communication links, and
access post-sale services (Archer & Yuan, 2000)IS. There are many factors that influence
the adoption of E-Commerce application between large, medium and small-scale
industries. Study of Poona & Swalman, (1999)16 found that perceived benefits are a key
reason why organizations adopt and continue to use Internet for commerce. Study of
Khatibi et al (2003)17 in 222 Malaysian manufacturers, traders and services providers,
suggest that E-Commerce does provide benefits in terms of providing information,
enhancing image, improving the business processes, improving customer’s services and
so on. A majority of firms (about three-fourth) perceive that E-Commerce has
tremendous benefits and these benefits are the main drivers of E-Commerce application
among the organizations. However, these perceived benefits varies from company to

8 Majumdar, Ankit (2000), "Regulation of Internet Broadcasting Content: The Raging Debate", Chartered
Secretary, Vol. XXX, No. 8., pp 968-972.
9 Landon,. K. C. and Landon, J. P. (1999), Essentials of Management System, Boston, M.A.: Addison
Wesley.
10 Jones, R. (1995), Digital World Wide Web Server: A Case Study of Computer Network and ISDN
System
11 Haffman, D. L; Novak, T. P. and Chaterjee, P. (1995), "Commercial scenario for Web: Opportunity and
Challenges", Special Issue on Electronic Commerce.
12 Timmers, P. “(1999), Electronic Commerce: Strategy> and Model for Business to Business Trading,
Chichester: John Wiley
13 Shapiro, C. and Varian, H. (1999), Information Route: A Strategic Guide to the Networked Economy,
Boston, M. A.: Harvard Business School Press.
14 Evans, P. and Wurster, T. (1999), Blown to Bits: How the New Economy Transforms Strategy, Boston,
M.A.: Harvard Business School Press
15 Archer, Norm and Yuan,Yufei, (2000), "Managing Business to Business Relationship throughout the E-
Commerce Procurement Life Cycle", Internet Research, Vol. 10, No.5, pp 385-395.
16 See, Poona and Swatman (1999), "An Exploratory Result, at
http://www.handles.go.se/ifsam/steens/etmp20isy/1759/20final.
17 Thyagarajan, V.; Khatibi, Ali and Seetharaman (2002), "E-Commerce in Malaysia: Perceived Benefits
and Barriers", Vikalpa, Vol. 28, No. 3, pp 77-81

39
company, according to their size and product and services they offered (Khatibi et al,
2003) . Many promote e-commerce as a vehicle for the cost reduction and therefore
believe that goods sold online should be cheaper than goods sold in an offline shop
(example are cited in Scott Morton et al, 2001 9; Riquelme, 200120; Reibstein, 200221).
Study of Yelkur, 2001 ; and Chesney, 2002) revealed that e-commerce allows easy,
direct communication with small groups of customers or individual customers. The web
itself can be customized for these small groups or individuals (Harding et al, 2001)24.
This allows the businesses to target the very specific markets. The Internet’s major
advantage as a medium through which to conduct business is that it allows very
personalized interaction with customers and potential customers at every stage of buying
process (Chesney & Darby 2003)25. Small businesses should exploit this to build up
relationships with customers. However there is literature that does not back this up. Many
online companies following the low price model quickly failed (Kung et al, 2002) . Such
strategies are known to be costly and short lived (Daripa & Kapur, 2001)27. It appears the
logic behind the low price strategy is flawed; evidence suggests that low price is not the
most important factor in securing repeat online business (Saloner & Spence, 2002)28 and
that the retailers with the lowest prices are not getting the most sales (Brnjolfsson &
Smith, 2002)29.
Further, the Research Commissioned by Ernest and Young: UK30, found that
large companies, especially manufactured are using E-Commerce to reduce cost in their
supply chain and with product distribution, with the cost saving directly related to the
company size. The significant of Internet based e-commerce is clearly highlighted in the
literature of (Angeles, 2000)31. B2B e-commerce may replace some of the traditional
activity in the manufacturing supply chain. The power of B2B e-commerce is that it

ibid
19 Scott Morton, F., Zettelmeyer, F., Silva-Risso, J. (2001), “Internet Car Retailing”, Journal of Industrial
Economics, Vol. 4, pp 501-519.
20 Requelme, H. (2001), “An Empirical Review of Price Behaviours on the Internet", Electronic Market,
Vol. 11, No. 4., pp 263-272.
21 Reibstein, D.J. (2002), “ What Attracts Customers to Online Stores and What Keeps them Coming Back”,
Journal of Academy of Marketing Science, Vol. 30, No. 4, pp 465-473.
22 Yelkur, R.; DaCosta, M. (2001), “Differential Pricing and Segmentation on the Internet: The Case Study
of Hotels", Management Decisions, Vol. 39. No. 4, p 252-261.
2’ Chesney, T. (2002), 'Differentiating Commodities Sold Online', UK Academy of Information Systems
Conference, Leeds, 10th-12C1 April.
24 Harding, W.T.; Reeds, A. J. and Gray, R.L. (2001), “Cookies and Web Bugs: What They Are and How
They Work Together”, Information System Management, Vol. 18, No. 3, pp 17-24.
25 Chesney, T. and Darby, P. (2003), ‘Spot the Difference', Southern Association of Information System,
Georgia, Atlanta.
26 Kung, M.; Monroe, K. B. and Cox, J. L. (2002), “Pricing on the Internet” Journal of Product & Brand
Management, Vol. 11, No. 5, pp 274-287.
27 Daripa, A. and Kapur, S. (2001), "Pricing on the Internet”, Oxford Review of Economic Policy, Vol. 1,
No. 2, pp 202-216.
28 Saloner, G. and Spence, A. M. (2002), ‘Creating the Capturing Value’, John Wiley & Sons, New York.
29 Brnjolfsson, E. and Smith, M. D. (2000), “A Comparison of Internet and Conventional Retailers”,
Management Science, Vol. 46, No. 4, pp 563-585.
’° Business Week (2003), Various.
Angeles, R. (2000), “ Revisiting the Role of Internet-EDI in Current E-Commerce Scene", Logistics
Information Management, Vol. 13, No. 1. pp 25-57.

40
allows a manufacturer to reduce costs, and more importantly, manipulates information
from all sectors along the chain to exploit growth opportunities (Keeffe, 2001)32. John
Gramption33, Vice President of Cap Gemini Ernest and Young, said, “e-commerce in
manufacturing clearly shows that large manufacturers are capable of tackling the
advantages of economics of scale”. In addition to the manufacturing sector, the use of
various types of e-services (such as financial, travel, music, auctions and gambling) is
increasing at a considerable rate. Shapiro and Varian, 199934; Evans and Wurster,
199935; and Lynch and Ariely (1999)36 argued that e-services (as compared to the offline
services) have the ability to serve customers more effectively and efficiently, and at a
lower marginal cost, while offering real time information. Chesbrough and Teece
(20 02)37. However, study of Poon (20 00)38, on companies of internet buying behaviour
between potential Internet buyers and non Internet buyers, found that, generally products
and services that have a low outlay, are frequently purchased, have intangible value
proposition, and relatively high on differentiation are more likely to be purchased via
Internet.
Furthermore, by using monitoring software and customer relationship
management techniques, e-services firms can track, analyze, and cater to a specific
customer needs (Peppers et al 1999)39. Customer loyalty is even more important in
e-commerce than traditional retailers (Reicheld & Schefter, 2000)40. Loyalty brings with
it repeat sales and customer referrals. Customer loyalty has been found to increase with
perceived service quality and increased trust (Gefen, 2002)41. Perceived service quality
comes from the firm’s image: a seller’s reputation is used as an indication of their quality
when the goods itself cannot be examined before the purchase (Melnik & Aim, 2002)4 .

’2 Keeffe, M. O. (2001), “Myths and Realities of E-Commerce in the Perishable Foods Industries:
Unleashing the Power Deputation and Relationship Assets”, Supply Chain Management, Vol. 6, No. 12,
pp 12-15.
3’ Wall Street (2003), Various Issues.
34 Shapiro, C. and Varian, H. (1999), Information Route: A Strategic Guide to the Networked Economy,
Boston, M. A.: Harvard Business Scholl Press.
’5 Evans, P. and Wurster, T.S. (1999), “Getting Real about Virtual Commerce”, Harvard Business Review,
Vol. 77, No. 6, pp 84-94.
’6 Lynch, J. G. and Ariely, D. (1999), “Electronic Shopping for Wine: How much Search Cost Affect
Consumer Price Sensitivity, Satisfaction with Merchandise and Retention", Marketing Science Institute,
Working Paper, Report No 99-104.
jl Chesrough, H.W. and David J. Teece (2002), "Organizing for Innovation: When is Virtual Virtuous",
Harvard Business Review, August issue, pp 127-134.
j8 Poon, S. (2000), “Business Environment and Internet Commerce Benefits- A Small Business
Perspectives”, Journal of Information System, Vol. 9, pp 72-81.
j9 Pepper, D.; Rogers, M. and Darf, B. (1999), "Is Your Company Ready for One-to- One Marketing?",
Harvard Business Review, Vol. 77, No 1., pp 151-160.
40 Reicheld, F.F and Schefter, P. (2000), “E-Loyalty Your Secret Weapon on the Web ”, Harvard Business
Review, July-August, pp 105-113.
41 Gefen, D. (2002), “Customer Loyalty in E-Commerce”. Journal of Association of Information System,
Vol 3,. Pp 27-51.
42 Melnik , K. and Aim, J. (2002), “Does a Seller’s Economic Reputation Matters? Evidence from Ebay
Auction ”, The Journal of Industrial Economics, Vol. 3, pp 337-349.

41
Increasing public trust appears to be the main barrier to increase e-commerce growth
(Belanger et al, 2002)43.
Review of indicates that small business operators tend to be more rigid, traditional
and outdated in their business practices and this evident in their approach to business
planning. Study of Jocusmsen (2002)44, concluded that small business tend to follow a
much less complex decision making process in compared with that suggested by
theoretical framework. Study also shows that small business proprietors tend to make
extensive use of learned competencies mostly in the form of perceived rationality and the
use of rudimentary analytical tools as well as the extensive use of inherent competencies
mostly in the form of intuition and gut feel, arising from innate sources as well as
learning experience of the proprietor. According to Atlantic Software’s E-Commerce
Report (2002)45, small to medium sized enterorises (SMEs) in UK are by and large using
e-commerce to increase the sales. The report^6 suggested some of the key reasons behind
the adoption of e-commerce in SMEs are: (1) t0 increase sale (2) to increase
coverage/new geographies (3) competitors are e-enabled (4) customers are demanding it
and (5) to lower the cost of sales and others. Study conducted by Communications of
Association for Information System47 on ‘E-Commerce Adoption: Perception of
Managers/owners in Chile’, suggest that Chilean managers/owners most receptive to
adopt e-commerce posses the financial and technological resources to implement it.
E-Commerce as increasing managerial productivity and supporting strategic decisions,
feel external pressure to put e-commerce as compatible with preferred work practices and
existing technology infrastructure and perceive e-commerce as useful for all types of the
firms.
Thus, e-commerce offers huge opportunities to all types of the organizations, but
adoption of e-commerce is not an easy task. The biggest problem that electronic
commerce pioneers encounter is the limited set of mental models that constrain our
thinking. We tend to think of the web in our “industrial age” paradigm- where everything
must be described and related to the physical world (Enix Consulting Limited, 1998)4 .
Forrester Research Corp. based on the Study of 40% of US and European Companies
revealed that the most pain in doing the global e-commerce business are: (1) internal
obstacles and policies (2) balance of global vs. local e-commerce (3) regional
co-ordination, cultural differences, inadequate service providers, transition of global to
web based strategy, global logistics and complicated product to deliver. Greenstein and
Feinman (2003)49 suggest that if e-commerce applications are not placed proper business

4’ Belanger, F.; Hiller, J.S. and Smith. W.J. (2002), “Trustworthiness in Electronic Commerce: The Role of
Privacy’, Security, and Site Attributes", Journal of Strategic Information System, Vol. 11, pp 245-270.
44 Jocusmsen, G. (2002), "A Model for Process and Strategic Marketing Decision Making in Small
Business", European Journal of Marketing, Vol. 24, No 3, pp. 86-97.
45 See, “Small and Medium Sized Enterprises (SMEs) are using Electronic Commerce Solution to Increase
Sales", at http://www.gcis.io/cdne-180-may-21-2002-html.
46 Ibid.
47 See, “E-Commerce Adoption: Perception of Managers/Owners in Chile", at
http://www.cais.isworld.org/articles/default/asp? Vo!= 13&art=8.
48 Enix Consulting Limited (1998), adopted from Greenstein, Marilyn and Feinman, M. Todd,
E-Commerce: Security, Risk, Management and Control, Tata McGraw Hill, 2003, pp 9.
49 Greenstein, Marilyn and Feinman, M. Todd (2003), E-Commerce: Security, Risk, Management and
Control, Tata McGraw Hill, pp 9.

42
context and strategy aligned with the business’ overall business strategy, then the
electronic commerce applications is likely to fail. Thus new models are necessary that
integrate electronic commerce initiatives with the overall business goals. Further,
Frances (2002)50 suggested that companies need more than good technology to make
most of the Internet. Companies also required flexible and self-confident managers and
employees to handle the electronic commerce technology.
The explosive growth in usage of the Internet provides a great number of potential
customers to the e-marketers. Whether or not marketers can convert their potential into
real ones and retain them depends, to a very large extent, on the service they offer and on
the perceived customers’ satisfaction of consumers (Churchill and Surprenant, 198251;
Oliver, 1980s"; Luarn and Lin, 2003)53. In fact, the level of satisfactions significantly
affected consumer’s attitudes and their intention to purchase (Bearden and Teel, 1983)54.
Several researchers proposed that consumners shopping behaviour in online shopping
may be fundamentally different from that in the traditional environment (Alba et al,
199755 and Winer et al, 1997)56. Study of Wolfmbarger and Gilly (2002)57 found that the
website design quality was an important issue in customer satisfaction. Study of Bakos
(2001)58 found that the lower search costs in digital markets will make it easier for the
buyers to find low cost sellers. Study of Shergill and Chen (2005) revealed that
reliability; customer services and security are another important factors affecting the
online shopping.
The adoption of e-commerce is widely studied in the industrialized world, only a
small number of these studies focus on the developing countries. To study e-commerce in
the Indian context we will have to move beyond these global concepts and review the
harsh realities of a developing nation. E-commerce is still in its infancy in India. For the
reasons just started, growth has been slow, confined to few major cities and some
industries, usually multinational companies (Niles, 1999)59. Malhotra, (2000)60, revealed

50 Frances, Cairncross (2002), The Company of the Future, Boston, M. A: Harvard Business School Press,
31 Churchill, G.A. and Surprenant, C. (1982), "An Investigation into the Determinant of Customer
Satisfication ”, Journal of Marketing Research, Vol. 19, No. 4, pp491-504.
32 Oliver, R.L. (1980), “A Cognitive Model of the Antecedents and Consequences of Satisfaction
Decisions", Journal of Marketing Research, Vol. 17, No. 4, pp 460-469.
33 Luran, P. and Lin, H. (2003), "A Customer Loyalty Model for E-Service Context", Journal of Electronic
Commerce Research, Vol. 4, No. 4, pp 156-167.
54 Bearden, W.O and Teel, J.E. (1983), "Selected Determinants of Consumers Satisfaction and Complaints
Reports", Journal of Marketing Research, Vol. 20, No. 1, pp 21-28.
53 Alba, J.; Lynch, J.; Weitz, B.; Janiszewski, C.; Lutz, R.; Saywer, A. and Wood, S. (1997). "Interactive
Home Shopping: Consumers, Retailers and Manufacturers Incentive to Participate in Electronic
Marketplaces", Journal of Marketing, Vol. 61, No. 3, pp 38-53.
56 Winer, R.S.; Deighton, J.; Gupta, S.; Jonhson, E.; Meller.B.; Morwitz,V.; O’ Guinn, T.; Rangaswamy, A.
and Sawyer, A. (1997), “Choice in Computer Mediated Environment", Marketing Letters, Vol. 8, No. 3,
pp.287-296.
37 Wolfmbarger, M. and Gilly, M.C. (2002), ".comQ: Dimensionalizing, Measuring and Predicating
Quality of the E-ail Experience", CRITO, University of California.
58 Bakos, Y. (2001), “The Emerging Landscape of Retail E-Commerce", Journal of Economic Perspective,
Vol. 15, pp 69-80.
59 Jack, M. Niles (1999), “E-Commerce and New Ways of Working in India”, at
http://www.ecat.com/country/india/inhauIt-inhtm.
60 Malhotra, S. K. (2000), "The Flow of Digital Information", Chartered Secretary, Vol. XXX, No. 8, pp
971-982

43
that in India, very few companies are using digital technology for new processes that
radically improve how they function, that give them the full benefit of all their
employee’s capabilities, and that give them the speed of response they will need to
compete in the emerging high speed business world. The study of Rao (1999) , on ‘IT in
Financial Services’ explained that the Indian financial service industry providers are not
akin to adopt the change. The probable reasons for not adopting or delaying the
implementation of e-commerce technology could be the fear of new technology,
reluctance to change, from the addition methods, improper infrastructure, stringent
policies, natural resistance of change, pessimistic attitude of the regulators apart from the
lack of financial support. Even companies that have made significant investments in
Information Technology are not getting the results they could be. The gap between what
companies are spending and what they are getting stems from the combination of not
understanding what is possible and seeing the potential when they use technology to
everyone in the company (Malhotra, 2000)6~. According to the Study of Computer
Society of India, Madras Consultancy Group, Scope Marketing and Information
Solutions with Computer Today Team (2002)63, most CEO said e-commerce was nascent
stage in India. Critical issues implying the growth of e-commerce, raised by 92 CEOs are:
(1) lack of adequate infrastructure (2) security (3) poor transaction facility like payment
mechanism is still in the initially planning stage in India (4) no clear cyber law in India
(5) high cost (6) customers and vendors readiness. Study also suggest to CEOs to make
e-commerce a part of company, make organization and stakeholders e-ready. Sumanjeet
and Mahlawat (2004)64 studied ‘E-Commerce in Indian Legal Regime’, and revealed that
India’s legal system is still very archaic for the development of e-commerce. There are
many important issues like e-taxation, privacy, intellectual property rights (IPRs) and
many more, which are not covered by the Information Technology Act, 2000.Unless all
these issues are dealt with e-commerce can not really take off in India. Further, Arora
(2000)65 concluded that apart from the legal and regulatory issues, problem of payment
mechanism is the biggest in the front of Indian companies. Trivedi, (2004)66, suggest that
when it comes to apply e-commerce in India, the major problem has been that of mind­
set, because for Indian, shopping is like a social outing which has to be celebrated.
There are, however many other stumbling blocks in the way of promoting
e-commerce in India, but still e-commerce has huge potential in India. Sumanjeet b.
(2005)67 concluded that Indian companies are fast jumping into the boom of electronic
commerce and adopting e-commerce as a business technology in much the same manner
as in other parts of the world. It has registered a rapid growth within few years in India.

61 Rao, Kullu. P. (1999), “ Information Technology in Financial Services Industry”, Chartered Secretary
62 Malhotra, S. K. (2000), “The Flow of Digital Information”, Chartered Secretary, Vol. XXIX, No 8, pp.
981-982.
See, “Computer Today" at http://www.india-today.com/today/2002030/master.html.
64 Sumanjeet and Mahlawat, Sameer (2004). “E-Commerce in the Indian Legal Regime ”, Indian Journal of
Applied Economics. Vol. I. No. 1, pp 176-181.
65 Arora, K.. Karunesh (2000), “E-Commerce: Business Trough Internet”, Science Reporter, October Issue,
pplO-16.
66 Trivedi, I. V. (2004), "E-Commerce: Concepts and Applications", Presidential Address Appeared in
Indian Journal of Commerce, Vol. 57, No. 3, pp 1-5.
67 Sumanjeet (2005), “Emergence of E-Commerce in India”, Science Tech Entrepreneur, Vol. 12, No. 8, pp
40-46.

44
According to Survey of Nasscom, the total volume of e-commerce transactions in India
rose from 4.5 billion in 1999-2000 to an estimated 23-25 billion in the year 2000-01, and
further expected to rise 1,95,000 crore by the end of year 2005. The share of B2B will be
of Rs. 1,93,000 crore and share of B2C will be of Rs 3,000 crore. The Study of
Confederation of Indian Industries (CIIs)68 predicts that e-commerce activity in India will
rose from 4.5 billion in 2000 to Rs 252 billion in 2005, of which B2B segment will
account Rs 232.8 billion. Both studies expect that B2B transactions will dominate and
will be the primary growth engine over the next 3 to 5 years. Further, Study of Nasscom
and Me Kinsey (1999)69, indicates that Indian services sector has huge opportunities,
which are covered under the broad sector of IT services (E-Commerce as “extended
enterprise” application) and E-Business. As per this Study e-commerce is one IT tool that
could do wonders to the Indian companies in many fields. India has potential to create
e-business worth $ 1.5 billion by 2004 and around $ 10 billion by 2008 with the
opportunities in both B2B and B2C areas.
Study of Ministry of Information Technology and IT&T Group (2000)w revealed
that e-commerce would give opportunity to Indian Small and Medium Enterprises to
project their capability globally and thus participate more proactively in such ventures.
Many traditional sectors such as handicrafts, textiles, art, natural medicines, which could
not tap the global market due to lack of marketing resources, should find an ideal medium
in Internet. Indian cultural heritage, monuments, temples, classical music etc., could be
widely known to the world and could be further leveraged in enhancing the tourism.
Conference of CIIs (2002)71 focused on the advantages that small and medium enterprises
(SMEs) could gain. The gains of e-commerce are not limited to the Multinational and
Large Scale industries. SMEs in India are exploiting the potential of e-commerce. The
Internet makes it for the artisans and SMEs to access B2C world markets, facilitates
activity as the global market for agriculture and tropical products, allows firms in India to
tap into B2B supply chains and allows services providing enterprises in developing
countries to operate more effectively and to provide certain services to the customers
anywhere in the world. Study of North (2001)72 indicates that the explosive growth of
e-commerce in India, demonstrates the Internet's ability to offer both large and small
scale companies major improvements in sales, order processing, supply chain
efficiencies, better customer services and the ability to reach a new larger customer base.
Singla (2000)73, in his Study, conducted a survey of 96 respondents from various sectors
and highlighted that the organizations viewed Internet as a technology that cannot be
ignored; that will serve as a strategic tool; and that will add to some competitive
advantage vis-a-vis their competitors. Respondents from retail and wholesale, financial

68 Energise Export Through Electronic Commerce: The 21s' Century Imperative for Global Trade,
Conference Organized by Confederation of Indian Industries (CIIs), New Delhi.
69 See, “Study of Nasscom and McKinsey on Electronic Commerce", at www.nasscom.org.
70 See, “Promotion of E-Commerce: National Initiatives”, A Discussion Paper, Ministry of Information
Technology and IT&T Group (2000), at http:/Vwww.mit.gov.in/itconf/ecommerce.asp.
71 Energise Export Through Electronic Commerce: The 21s' Century Imperative for Global Trade,
Conference Organized by Confederation of Indian Industries (CIIs), New Delhi
11 North, M. (2001), “B2B E-Marketplace: Will They Take Off?" Management and Labour Studies, Vol.2,
No.2,pp 60-63.
7j Singla, M. (2000), “Using IT for Competitive Advantages: A Supply Chain Perspective", Productivity,
Vol.41, No. 2, pp223-230.

45
services, and computer and communication reported to be leading in Internet based
implementation. Further the study also concluded that as we move from simple e-mail to
complex e-commerce, the present organizations in respective sector using any advanced
technology starts climbing down.
E-commerce has the potential to stimulate the economic growth and has strong
implication in the developing countries like India. According to UNCTAD-E-Commerce
and Development Report (2002). e-commerce is one of the most viable examples of the
way in which information and communication technologies can contribute to the
economic growth. It helps countries improved trade efficiency and facilitate the
integration of developing countries. Mukhopadhyay (2002)74, e-commerce gears the
wheels of economic growth. The advantage of e-commerce (vis-a-vis traditional
commerce) is that it can improve productivity and therefore, enhance economic growth
(albeit temporarily) by lowering transactions cost, saving time, improving consumer
choice, improving supply chain management, and reducing the barriers to entry. The
study also revealed that e-commerce allows economic agents (both buyers and sellers) to
interact more efficiently by reading new market opportunities. Coppel (2000)75 studying
the impact of E-Commerce on Economic Policy pointed out that on the average prices of
goods sold through the net were on the higher side than similar goods sold through the
retailers. However, in the case of digital goods like CDs and Books prices were on the
lower side. Brynjolfsson and Smith (1999) 6 found the prices over the net are on the lower
side. Friedman (1999)77 has argued that new technologies can greatly increase the speed
of financial operations and can reduce the cost of transactions. Studying the Contribution
of IT Sector in Indian Economy, Sumanjeet c. (2004)78 concluded that in developing
countries like India, where market size is very large and where information intensive
industries and international market still needs to open to exploit market opportunities. IT
sector is helpful not only for the economic growth but also for the human development. It
boost economic as well as social infrastructure, generate revenue, provides employment
and many more. Study of Singh and Singh (2004)79 revealed that the industry currently
employs 0.5 million people, and will employ over 2 million people directly and create
indirect employment opportunities for at least an additional 2 million people by 2008.
Further, by opening the door of Foreign Direct Investment, IT sector and e-commerce
(there are 100% FDI allowed in the case of B2B business) are playing most important
role in the regional developments. But, the advancement of IT sector would remain

74 Mukhopadhyay, Subrata (2002), "E-Commerce: Prospects, Problems and Policy Issues", Vaanijya,
July-September, pp 9-12.
75 Coppel (2000), E-Commerce: Impacts and Policy Challenges (web search)
76 Brynjolfsson and Smith (1999), Frictional Commerce? - A Comparison of Internet and Conventional
Commerce
77 Friedman, B. (1999), The Future of Monetary Policy, the Central bank as a Army With Only a Single
Cops,
78 Sumanjeet (2004), "Contribution of IT Sector in the Indian Economy", An International Journal of Ideas:
Third Concept, Vol. 18, No. 214, pp 43-44.
79 Singh, Ranjit and Singh, Kawaljeet (2004), “Information Technology’ (IT) and IT- Enabled Services
(ITEs) as a Catalyst in Economic Development of India", Indian Journal of Applied Economics, Vol. 1, No
1, pp 119-126.

46
incomplete, unless, the info-tech benefit reaches the Indian common mass. Saith (2001)80
studied the impact of ICT of Poverty Alleviation and raised a question, “Does
e-commerce provides a new avenue for the poverty alleviation?” and to what extend does
such e-commerce open new opportunities for poverty alleviation. The study concluded
that there could clearly be advantages for the small-scale businesses and for the
geographically isolated (buyers and) sellers; these do not translate automatically in to the
benefits for the poor. It is always possible for an international development agency or an
NGO to facilitate the sale of the product of poor via the net. But the issue that whether
this merely provides an advantage to some of the poor (so assisted) over the rest; whether
such efforts are economically viable; and further, whether these can be replicated to scale
without individual mediation in every case. The answers to these questions are not
immediately encouraging, and lead the debate back into the questions of inequalities in
effective access of ICT. Chaudhary (2000)81, the dotcom environment provides the best
opportunity to create and distribute wealth to move it from the hands of few (which has
been the historical business scenario in India) to a much wider base, to have
entrepreneurs created everyday, who in turn can create, generate and distribute wealth.
Singla (2000) \ in public administration, IT and its enabled technologies can play a vital
role facilitating better levels of services. In a country like India where file movement in
public administration became very important for determining efficiency, process and step
benchmarking assumes a critical significance. And this cannot be successfully
implemented without having IT based solutions.
Thus e-commerce has huge opportunities in India. But, e-commerce cannot be
operated in an institutional vacuum. It can succeed only in an enabling institutional
environment and a set of influencing factors. Sumanjeet and Mahlawat (2004)83, keeping
in view the expanding culture of electronic commerce in India, government of Indian has
already taken number of initiatives to boost and strengthen the entire infrastructure of e-
commerce in India, which inter alia, includes the development and adequate legal and
managerial framework. Despite all these initiatives the growth of e-commerce is slow in
India; and as compared to global volume the share of e-commerce in the world pie is
negligible. Bhatia (1999) revealed that e-commerce in India is facing some problems
like low penetration of Computers and Internet, cultural and legal issues. Another reason
is the language prevailing on the Internet is English and a very small percentage of Indian
population is comfortable with English. Further the study suggested that another major
factor hampering the growth of e-commerce is the high entry cost, as it requires a huge
investment in terms of hardware and software setting costs. Sumanjeet d (2005)85

80 Saith, Ashwani (2001), ‘‘Information-Communication Technologies and Poverty Alleviation: Hope or

Hype?" Paper Presented in International Conference on Labour and Capital Transformation in Asia,
December, 13-15, at the Center for Development Studies, Trivandrum, Kerala, India
81 Chaudary, Somnath (2000), “Round Table on Dot Corns: Evolution and Revolution”, Management
Review, September Issue, pp 63-64.
82 Singla, M. L. (2000), ''Using IT for Competitive Advantage: A Supply Chain Perspective, Productivity,
Vol. 412, No. 2, pp 223-230.
8> Sumanjeet and Mahlawat, Sameer (2004). “E-Commerce in the Indian Legal Regime", Indian Journal of
Applied Economics, Vol. 1, No. 1, pp 176-181.
84 Bhatia, Varun (1999), “E-Commerce: Changing Face of Business”, at
http://www.indiainfoline.co./basic/internet/html
85 Sumanjeet (2005), “Online Stock Trading in India". Science and Society, Vol. 3, No. I, pp 85-93.

47
concluded that the psychological fear of IT among the customers and as well as in the
companies is the major challenge in the growth of e-commerce in India. The Study also
revealed that many Indian organizations are not able to keep the pace with changing
technology. An issue of security is also a major area of concern. IDC, India (2002),
studying the problems faced by the Indian e-commerce customers (a survey of 180 Indian
customers) found that 44% are more comfortable with the traditional way of shopping.
33% do not believe that goods will reach on time.42 % of them are not sure of the quality
of goods delivered. 37% of think not enough goods ands services are available on the net
and 35% think ordering though the net is very slow.
E-commerce requires a sound strategy, which may not be same as the traditional
commerce (Sumanjeet, 2005)86. Singh (1999)87, concluded that apart from the hardware,
software and physical infrastructure, developing country like India require the right
'infrastructure”, which includes: (1) an appropriate legal and financial framework, (2) a
conducive political and business environment and (3) the human resources for
e-commerce. Further the study suggested that it is essential to create a policy and
regulatory environment that favours the e-commerce development. Arora and Banwet
(2003)88, concluded on the basis of results obtained by the statistical analysis and
response received from 103 respondents identify various capacity building determinants
for an organization so as to make it e-commerce capable. The findings identify building
organizational capability as a more important facilitator for e-commerce development
than environmental facilitation through the various value chain partners. Thus the
organizational issues such viz. core competence and structural capabilities are more
relevant and important for organization. In fact, the study indicates that factors which are
intrinsic to the organization viz. involvement of CEOs are more facilitating than extrinsic
factors like insistence by foreign buyers or by other value chain partners. In process
facilitation, security and legal issues have been considered as more vital than tariff issues.
The study also indicates that organizations followed various management strategies viz,
BPR (Business Process Re-engineering) and investment driven, CEO driven, fall in live
approach and strategy driven by middle management and foreign buyers. Mishra et al,
(2004) explained that technology has enabled the organizations to grow faster and that
too with enhanced productivity leading to significant economic growth and advancement.
In such an atmosphere, optimum utilization of resources through superior management
skills can be secured by the modern business entity. Thus the development of a new order
management applications and techniques in this era of e-commerce could only be the best
alternative that will make the organization more effective, efficient and growth oriented.
The study by Kanungo (1998/ indicates that the use of IT may produce the desired

86 Sumnajeet (2005), "E-Business: Is India Ready for it?’’, Journal of Commerce and Information
Technology, Vol. 14, No.2 pp 89-95.
87 Singh, D. (2002), “Electronic Commerce: Issues of Policy and Strategies in India”, at
http://www.eldis.org/static/Docl4597.html.
88 Arora , Ravi and Banwat, D. K. (2003), “E-Commerce Implementation in India: A Study of Selected
Organizations”, Asia Pacific Development Journal at http://www.uuescap.org/pdd/publications/apdj-10-
1 /arorabanwat.pdf.
8) Mishra, R. C.; Bisht, N. S. and Belwal. Rakesh (2004), "E-Commerce: Some Relevant Concern”, The
Economic Challenger, Vol. 16, No. 14, pp 44-46.
,n Kanungo (1998), “An Empirical Study of Organizational Culture and Network Based Computer Use”,
Computer in Human Behaviour, Vol. 14. No. 1, pp.83-91.

48
organizational results depending on the geographical, economic, cultural and
psychological context. Study of Gupta and Sanjay (2004)9’ revealed that Indian business
scenario still has not implemented applications in business intelligence domain and
decision support systems are rare. The overall satisfaction levels of the executives are low
and the applications available have not matured enough. On the basis of the study, few
impermeable suggestions are: (1) there is a need to create adequate awareness of the
larger benefits of these initiatives to provide the picture to all the users and supporters, (2)
the availability of skilled resources in this domain is always a challenge and required
additional efforts for the success of these initiatives and (3) the availability of sponsors
for the strategic application should be made mandatory to the required results. Sumanjeet
(2002)91 in his research work on “E-Commerce” suggested that, without doubt
e-commerce will have pervasive effects on both the business and society. The movers and
shakers of the Indian industry must first take a look what is to be gained and how it can
be achieved. If organizations want to exploit the Internet for the e-commerce to its fullest
extent, companies have to move in a phased manner linking their suppliers’ computers to
their computer system allowing for design improvement and product innovations to flow
freely to the relevant entities and information like production schedule, staff availability
and inventory of raw material to flow back. Subsequently these businesses also need to
connect their major customers to the company’s network. Free flow of information
among all parties (customers, suppliers and Company) requires that every process on the
way is clearly defined and completely transparent. Further the study suggested the
organizations to educate their employees, customers and management about the various
aspect of e-commerce; start slowly and proceed cautionly; protection of information
assets and allocate sufficient resources. Mulla (2000)93, the study reveals that there is
concern associated with the system of financial information that the design action should
make it a vital tool for operating and planning. Information system should take an
approach similar to that of the other areas of company, whose information needs is
designed around the managerial functions of planning, operating and controlling. There
should be complete understanding among practicing executives as to how decisions are
made in companies. Faisal (2000f4. concluded, IT has traversed a long path, from being
looked upon just as a faster means of providing and processing information. It has
transformed into a complete new role that deliver strategic value to an organization. But
to derive maximum benefits from an IT function in an organization, deeper integration of
IT in business units is required. CIO’s role is to be strengthened with the more
involvement in strategic planning in addition to realizing and identifying the benefits of
IT. Rehman fZOOO)9'2 suggested that for the Indian corporates which has been flirting with
the globalization, Internet commerce is perhaps the best thing to have happened. It has
the power to change the rule of game rapidly. If deployed effectively and on the time

91 Gupta, M. P. and Sanjay (2004), “Information Technology Usage: An Indian Experience", Vikalpa, Vol.
29, No. 1, pp. 83-91
92 Sumanjeet (2003), “E-Commerce", Dissertation Submitted for the Degree of M. Phil, Department of
Commerce, M. D. University, Rohtak
’’ Mulla, A. Mansur (2000), “ Effective Use of Information Technology for Managerial Decisions- A Case
Study “, Abhigyan, Vol. XVIII, No. 4, pp. 23-28.
94 Faisal, Nishant, Mohd. (2000), “Designing IT Functions: The Strategic Dimension", Abhigyan, Vol.
XVIII, No. 1, pp. 27-32.

49
Indian companies could write some of the rules themselves. Since we are in the early
stage of deployment of information technology, it is not very difficult for the Indian
companies to kick start the Internet commerce age with a corporate Intranet and Extranet.
Sampat (2000)96, study suggested six ‘C’ model of Goldman Sachs. This model
classifies the functionality of portals in six ways: (1) Connectivity (2) Context (3)
Communication (4) Community (5) Commerce and (6) Content. Successful Indian
companies need to have some/all of these for their success in the age of electronic
commerce. Teltshcher (2000)97 concluded that, from the developing country point of
view, issues that ensure that effective liberalization of e-commerce should have priority.
These include resolving the classification issues (i.e., the definition of electronic
transmission as goods or services), identifying e-services in which developing countries
have export potential (such as software development, audio-visual products, tourism, data
protection and other IT enabled services) and reviewing national commitments under
GATS that concern e-services. Study of Satapathy (1999/8 on Cyber Fraud indicates that
e-commerce should be allowed to grow without any regulation thereby ensuring privacy
of individuals; and business or government should step in creating more checks and
balances by instituting systems of accountability. Anonymity of privacy of individuals
and business enterprises are no doubt desirable, but criminal equally benefits from such
anonymity and privacy. Government has to re-think whether and how accountability
should be build into e-commerce activities. This could possible be done in two ways,
instituting suitable legal changes and creating enforcement mechanisms. Duggal (2002)"
India’s Cyber Law Expert and Advocate of Supreme Court talking about the e-commerce
and cyber law in India said, "There are complex legal issues arising in the field of
electronic commerce and Internet leading to the development of cyber laws which there
have been different approaches". One major problem of global business and global reach
is that there is just no global law. Although, the Information Technology Act, 2000 (IT
Act, 2000) was implemented in the October 2000, besides registration of couples of cyber
cases there has not been much progress. The digital signature regime in the country is yet
to effectively taken off and once it comes in there will be great enabling factors. The IT
Act, 2000 is the first step forward and others need to follow, the time to act is now. There
is also strong need to amend the existing IT Act, 2000, as it does not cover many
important aspects of electronic commerce. Sudhakar & Kishore (2002) l0°, revealed that
the absence of strong e-commerce laws undoubtedly affects the transactional aspects of
conducting business over the internet. Faisal (2000)WI concluded that to realize the full
benefits of new technologies, concept like IT outsourcing are to be experimental. In
today’s corporate milieu IT has to relate value in the business terms to business people.

96 Sampat, D. (2000), “Dotcom: Classifying the New Animals”, Management Review, Vol. 12, September
Issue, pp.79-84.
97 Telcher, Susnanne (2002), "Electronic Commerce and development: Fiscal Implications of Digital
Goods Trading”, World Development. Vol. 30, No. 7, pp 1137-1158.
98 Sataphthy. C. (1999), “E-Commerce and Cyber Frauds”, Chartered Secretary, Vol. XXIV, No. 3, pp.
738-739.
99 Duggal, Pavan (2002), “Cyber law Indian ", at http://www.cyberlawindia.com/cyberindia/press27.html.
100 Sudhakar, A. and Kishore, Krishna (2002), “Security is a Business Issue and not a Technology Issue”,
The Management Accountant, Vol. 37, No. 10, pp 784-787.
101 Faisal, N. Mohd. (2000), “Designing IT Function: The Strategic Dimension”, Abhigyan, Vol. XVIII,
No.3, pp. 27-32.

50
New tools of IT like ERP, SCM, CRM, E-Commerce and M-Commerce etc. are to be
integrated with a proper design of IT functions suited to a particular organization
considering that it should facilitate effective interaction between business people and IT
people. Sudhakar (2000)lo‘' suggested that in building a dotcom, the biggest investment
should be in the marketing, brand building and customer acquisition. Entire focus should
be on how to invest the lowest amount to create the biggest impact. So, Indian corporate
has to do multiple things, some of them conventional and unconventional.
Mann (2000) in this study revealed that electronic commerce in India offers
particular promise to the developing countries where co-ordination and transactions cost
are highest. In this respect, businesses and workers of many developed and developing
countries like USA and India, especially in the high-tech and service sectors stand to
benefit from the liberalization of e-commerce and its infrastructure. Rai (2004)W4
concluded that electronic commerce and Internet integrate both the services and goods
sectors, across the domestic and international boundaries. Key synergies exist between
telecommunications, financial infrastructure, distribution and delivery and governance.
The Internet and electronic commerce both depends on the facilitative liberalization in
these areas. Mann, (2000), suggested that the WTO process can help domestic
liberalization and open markets abroad. The World Trade Organization seeks to liberalize
the trade in services in a gradual manner. The General Agreement on Trade in Services
(GATS) identifies four models of supply of trade in services of which the first two are
relevant for e-commerce. Further the study of Rai (2003), indicates that we can expect
rapid growth also in the cross border services trade as telecommunications cost continue
to decline and internet based trade becomes more prominent. However, the influence of
electronic commerce in service sector is expected to be very important, but, it is difficult
to define precisely services which fall in the category of electronically delivered services
which is expanding constantly with new technological development. Dash and Sumanjeet
(2005)iOS, studying the impact of stock market reforms on the liquidity concluded that
technological advancement is one of the most important aspects of financial reforms
process and found that it has very positive impact on the liquidity. Anand et al (2000)106,
in their study suggested that Internet industry or digitalized firms must realize that their
greatest assets are in the form of intellectual property. Therefore, it is very necessary for
all Internet or e-commerce based companies to familiarize themselves with the scope and
ambit of intellectual property rights that could be said to reside in their website and itsd
content thereon. Last but not the least the study of Shah and Dawson (2002)107, suggested
that many of the advantages of e-commerce will be lost if it is implemented in isolation.

102 Sudhakar, U. S. (2000), “Dotcom Evolution and Revolution: Round Table’’, Management Review, Vol.
12, September Issue, pp. 73-75.
IOj Mann, Catherine (2000), Electronic Commerce in Developing Countries: Issues for Domestic Policy
and WTO, Institute of Economics, March 15.
104 Rai, Sheela (2004), “Electronic Commerce and Genera! Agreement on Trade in Sendees (GATS) ”, The
Foreign Trade Review, pp. 79-104.
105 Dash, Ranjan and Sumanjeet (2005), “Impact ofStock Market Reforms on the Liquidity: Evidence From
B.S.E.", Journal of Indian School of Political Economy, Vol. XVII, No. 1 &2, pp 45-57.
106 Anand, Pravin; Shamnad, Bashkar and Keshav, S. Dhakad (2000), “Prevention is Better than the Cure:
An Oft Repeated Aphorism that is Oft Forgotten", Chartered Secretary, Vol. XXX, No. 8, pp 959-963.
107 Shah, Nipula and Dawson, Ray (2002), “E-Commerce: Tactics and Strategies for Success”,
E-Commerce, Vol. 2, No. 5, pp. 12-15.

51
It is important to involve suppliers and distributors. This involves spreading the
e-commerce culture beyond the company boundary. The relationship with the partner
companies will need to be continually reviewed as other companies make and follow
their own initiatives. The technical issues of e-commerce implementation will also need
to be continually reviewed throughout the system life cycle. With the changes taking
place at regular interval, one needs to keep pace with the developments on all fronts in
order to successfully exploit the advantages of e-commerce.

Concluding Remarks
E-commerce is less than a decade old in India, perhaps therefore; a small research
work is available on this particular topic. Most of the literature is available in the form of
research papers, articles and projects conducted by various agencies like Nasscom, BCG
(Boston Consulting Group), McKinsey etc. After studying the existing literature on this
particular topic, it is observed that however, India is not untouched by the wave of
e-commerce, but it still has to cover a lot of ground to come up to the level of e-
commerce operations as, say, a developed countries like the US, UK and even developing
countries like Japan, Singapore etc. Most of the studies indicate that certain technical,
infrastructural, as well as psychological constraints are impeding the growth of
e-commerce in India. The legal system is still very archaic for the growth of this new
form of electronic trading. Studies also revealed that, despite all these challenges,
e-commerce has huge potential in a developing country like India, where market size is
very large, transactional cost is high, customer services are poor, paper work is more,
business require huge investment, Internet users are growing rapidly and where
information and knowledge intensive industries and international market still needs to
open. Review of literature suggested that to exploit these opportunities it requires sound
business strategy, which, may not be same as the traditional commerce. Most of the
suggested strategies are geared towards development of legal and financial framework,
boosting infrastructure for e-commerce and integration of various business strategies with
information technology.
But in the absence of sound research work in this particular field, the results of
these studies cannot be generalized. However, the studies reviewed so far are able to
present different aspects of electronic commerce in India. In fact, above studies not only
provide the general guidelines for the future work in this field; but also helping researcher
in understanding the basics and various concepts of this new subject in a correct manner.
Therefore, the contribution of all the researchers of this field cannot be ignored; it is
immense and researcher is very thankful for their efforts and inputs, which makes him
possible to go for an almost impossible research work.

52
 Section-II
Research Methodology
A systematic process and methodology is needed to conduct the research in a
successful manner. This section of the study highlights the methodology and process used
to conduct the present research. This section justifies the present study and highlights the
main objectives and hypotheses of the study. Further, this section discusses the research
methodology adopted for attaining the objectives and to test the hypotheses of the study.
In the end ofsection, scope and limitations of the study are discussed.

Justification of the Present Study

Change is the law of nature; the way business is being conducted can not be the
exception. The emergence of electronic commerce as a business technology in the last
decade has brought several changes in the business activity and it is needless to mention
that those who have not reaped are lagging behind (Sur et al, 2001)'. Companies all over
the world are finding e-commerce as a new platform for the business of the future
(Werbach, 2000)1 2. 3No other industry in the word history has achieved a rapid growth in
as short time as e-commerce (Khatibi et al., 2003)’. Though only a few years old in India,
e-commerce has taken off at an unprecedented speed despite much skepticism and some
initial hesitation. Irrespective of their sizes and nature, Indian companies are using
e-commerce to communicate with their partners, customers to connect with their back­
end systems and to transact commerce without the hindrance of time and geographical
constraints. As a result of this, e-commerce has registered a rapid growth in India within
a few years. Further, studies indicate that e-commerce has a very bright future in India.
Therefore, the present topic (E-Commerce: Business Applications, Strategies, Challenges
and Opportunities in India) is quite interesting to study because of its relative newness
and exploding growth rate in India.
The reviewed studies and researches are of view that e-commerce has not yet
fully developed in Indian companies. Order taking and placement systems are the basic
models of e-commerce implementation as per these studies. Major benefits from
e-commerce to Indian companies are: improved customer services, wider market
coverage, cost reduction and improved efficiency/functioning of organization. Among the
barriers: poor IT infrastructure, privacy issues and security problems, lack of manpower
to handle e-commerce, poor PC/Internet penetration, high investment and poor legal
regime are the major factors, as per these studies. The scope of these studies/researches
has mainly been limited to: manufacturing sector; large scale industries; top management;
either primary or secondary data; behavioral or managerial aspect of e-commerce and the
most importantly looking at the general impact of e-commerce in a particular industry.
Another limitation of existing studies is that, these studies have neglected the macro

1 Sur, Debasish; Dutta, Uttam and Niranjan, Mandal (2001), “E-Commerce: A New Gateway", The Indian
Journal of Commerce, Vol. 54, No 4, pp 215.
3 Werbach, Kevin (2000), "Syndication: The Emerging Model for the Business in the Internet Era", The
Harvard Business Review, May-June, pp 85-93.
’ Khatibi, Ali; Thyagarajan, V. and A. Seetharaman (2003), "Electronic Commerce in Malaysia: Perceived
Benefits and Barriers ", Vikalpa, Vol. 28, No. 3, pp 79-82.

53
aspect (like electronic payment system, economic implications of e-commerce and
e-commerce infrastructure) of electronic commerce. As these studies are conducted at the
micro level, the result of these studies can not be generalized in Indian context (macro
level).
Thus, the review of literature highlights that this particular field need
comprehensive study regarding many aspects of e-commerce pertaining business
applications, challenges, opportunities and strategies in India. Therefore, the researcher
has decided to work under the title “E-Commerce: Business Applications: Strategies,
Challenges and Opportunities in India”. The present study has made an attempt to
overcome almost all the limitations of the existing studies by taking into the
consideration: all types of industries; all level of management; both primary and
secondary data; and combination of behavioral, technical and managerial aspect of
e-commerce. Above all, the study has followed a macro approach by studying economic
implications of electronic commerce, electronic payment and security system and IT
infrastructure, so that the results of these studies can be generalized in Indian context.
The broad objectives and hypothesis of the present study are as under:
Objectives of the Study
• To discuss the conceptual framework of e-commerce.
• To find out the various business applications of e-commerce in India
• To study the present status of e-commerce infrastructure in India.
• To discuss the framework of electronic payment systems and study the security
schemes to secure electronic payment.
• To find out the opportunities and challenges of e-commerce in Indian business
scenario.
• To study the economic and social implications of e-commerce.
• To find out as how e-commerce improves the quality of work
• To study the important aspects of e-commerce while entering in the world of
e-commerce.
• To study the satisfaction level of Indian online customers towards the services of
Indian dot com companies.
Hypotheses of the Study
• There is no problem in the introducing/adoption of e-commerce in Indian firms.
• Adequate number of trained staff is not available to take care of e-commerce
technology and transactions in Indian firms.
• There is relationship between e-commerce and economic development.
• The small-scale industry is going to be benefited more as the technology size is
neutral.
• E-commerce will prove to be beneficial for the businesses, customers, employees,
society and economy as a whole.
• Customers are not satisfied with the services provided by the Indian dot com
companies.

Research Methodology
In modern times, management research has reached a stage of development where
the traditional methods and techniques require synthesis and extension. Now, research

54
 has become more complex, cost incurring and time consuming activity. Therefore, a
systematic process and methodology is needed to conduct the research in a
successful manner. Research methodology is the systematic method/process dealing
with enunciating of identifying problem, formulating hypothesis, collecting of facts or
data, analyzing these data and reaching at certain conclusion either in the form of
solutions towards the problem concerned or certain generalization for some
theoretical formulation (Hasouneh. 2003)4.
It also comprised of a number of alternative approaches and interrelated and
frequently overlapping procedures and practices. Since there are many aspect of
research methodology, the line of action has to be chosen from a variety of
alternatives. The choice of suitable method can be arrived at through the assessment
of objectives and hypotheses; and comparison of various alternatives. Research
methodology used in the present study is as under:

Research Types: Type of research is based on the nature of data. In the light of the
nature of data5, the present research is mainly of quantitative nature, as most of the
findings of the present study are based on quantified measures. However, the
researcher also manipulates the causality and consequences, which also represents a
sign of qualitative research. In the light of purpose of research6, 7the
8 present study is
mainly of applied nature as the researcher has tried to test the assumptions and
applications of the problem in a given set of conditions. Further, the survey method7 8
has been adopted by selecting and studying sample chosen from the population (firms
using e-commerce and online customers) to test the hypotheses and discover the
relevant incidence, distribution and interrelation of variables.

Research Design: Reliability and validity of the research require the planning of
inquiry, i.e., the detailed strategy of how the research will be conducted. A good
research design depends on two aspects of its designing: first, specifying what one
wants to find out, i.e., properly posing the problem or properly phrasing the issues to
be studied or the logical structure of inquiry ; and second, determining how to do it,
i.e., collecting data through scientific and appropriate methods, using effective

4 Hasouneh, Abdel Baset, I.M. (2003), Research Methodology, Jaipur: Sublime Publications.
■' On the basis of nature of data, research can be of two types: (I) Qualitative Research and Quantitative
Research. In the quantitative research, findings are based on some quantified measures; on the other hand,
if the findings are based on some statements, description and other value loaded stories and anecdotes, we
may call it qualitative research or exposition research, (see Basotia, G. R. and Sharma, K..K, (2002),
Research Methodology: Made Simple, Jaipur: Mangal Deep Publications.
6 On the basis of purpose, the research can be of three type's: (1) Pure Research or Fundamental Research,
which aims at finding out new knowledge which has more or less theoretical orientation; (2) Applied
Research and (3) Action Research, which aims at solving such type of problem which have already become
a part of action plan. In fact, action research and applied research are interwoven. In terms of degree an
action research aims at solving such business problems which would show immediate utility (see, Sharma,
C.K. and Jain, M.K. (2004), Research Methodology, New Delhi: Shree Publishers and Distributors).
7 On the basis of research method, there can be five types of research methods: Survey Method; Case Study
Method; Statistical Method; Historical Method and Evolutionary Method.
8 Black and Champion (1976) have defined survey research as “procedures for gathering information
about a large number ofpeople by collecting information from few of them ”. (Black, Jones A. and Dean J.
Champion (1976), Methods and Issues in Social Research, New York: John Wiley)

55
 techniques of data analysis and rational and meaningful deductions (Ahuja, 2001)9.
Therefore, the researcher has to take great care in the preparation of the research
design (Thanulingom, 2003 )10. There are many types of research design and there is
no standard or ideal research design to guide the researcher; many different research
designs may accomplish the same objectives. Broadly, research design can be of three
types: (1) Exploratory (2) Descriptive and (3) Casual/Experimental.
In the present study, mainly exploratory research design has been adopted, as the
main purpose of this study is to gain familiarity with the various aspects of
e-commerce in Indian companies and to achieve new insights into it. Further, the
study formulates more precise research problem by developing hypothesis". Since
the scope of the study is very vast, the present study also represents some
characteristics of descriptive research design.

Sample Design
In the most cases of research studies, it becomes almost impossible to examine the
entire universe; the only alternative thus is to resort to sampling. The present study is also
of the same nature. According to Manheim (1977)12, “a sample is a part of the
population which is studied in order to make inferences about the whole population”.
Thus, a good sample is a miniature version of the population and a good sample design
involve the following:
• Sample Unit (Unit of Analysis)
• Sample Techniques and
• Sample Size
Sample Unit: Before selecting a sample, a decision has to be taken concerning a sample
unit. The sample unit is the individual, group, or other entity that is selected for the
survey. This is also known as the unit of analysis when the survey data are examined
statistically (Fink, 1995)14. Since the major objectives of present study is to study
business applications of e-commerce, challenges, strategies and opportunities in Indian
companies; therefore, the large scale, medium scale and small scale industries form
different segment ( trading, manufacturing and services) has been considered as sample
unit. Another purpose of the present study is also to find out the customers satisfactions
towards the dot com companies; therefore, customers have also been considered as
sample unit.
Sampling Techniques: The procedure that a researcher adopts in selecting the unit for
the sample is known as sampling technique. There are mainly two types of sampling, the

9 Ahuja, Ram (2001), Research Methods, Jaipur: Rawat Publications.

10 Thanulingom, N. (2003), Research Methodology, New Delhi: Himalaya Publishing House.
11 See, Wilkinson, T. S and Bhandarkar, P.L. (2000), Methodology and Techniques of Social Research,
New Delhi: Himalaya Publishing House.
12 Manheim, Henry, L. (1977), Sociological Research: Philosophy and Methods, Illinois: Dorsey Press.
Most of the times, sample unit and analysis unit are same, but not always. In simple one-stage sampling,
they are same; in more complex multistage sampling they are not. In the present study, at one place both
were same at the another they were not. They were same when the data was collected from individual
customers; and they were not when the data was collected from the companies, because multistage
sampling was used there.
14 Fink, Arlene (1995), How to Sample in Surveys, London: Sage Publications.

56
first type of sampling is known as Probability Sampling15. And the second type of
sampling is known as Non Probability Sampling. Such samples are chosen based on
judgment regarding the characteristics of the target population and the needs of the
survey. With non-probability sampling, some members of the eligible target population
have a chance of being chosen, whereas others do not.
In the present study, both types of sampling techniques have been used. The
selection of the units has been made on the basis of non-probability sampling technique,
viz, ‘convenience’ sampling16. To obtain the information from the various respondents
within the organizations (Top Management, Middle Management and Lower
Management), stratified sampling, which is the form of probability sampling, has been
used. Information from the customers has been collected by using non-probability
convenience sampling, though mainly the use of mall intercept survey. In the preset study
the researcher approached the prospective respondents in shopping malls with previous
online shopping experience in shopping areas of selected cities. This method is really
proved very beneficial, as it was really difficult and in fact impractical to compile an
exhaustive list of the online customers from the entire population.
Sample Size: Sample size means the number of sampling units selected from the
population for the purpose of investigation. No doubt, sample size must be sufficiently
large so that we can have a representative sample. But, money and time constraints tend
to limit the size of sample. The population addressed under the present study consists of
all large scale, medium scale and small-scale industries using e-commerce in their
operations. 50 units, (manufacturing, trading, and services industries) with the
representatives from large scale, medium scale and small scale industries using
e-commerce technology located in Haryana, Delhi and Noida were chosen. Some of these
industries were highly advanced in the use of IT, while many others were not. The
sample industries involved in the survey, are given in the Table 2.1.

Table 2.1: Sample from the Industries

Delhi Haryana Noida Total
Large Scale
Industries
Multinational 5 >■>
2 10
Indian 5 2 10
Medium Scale
Industries
5 5 5 15
Small Scale
Industries
5 5 5 15
Total 20 16 14 50

’ Probability sampling provides a statistical basis for saying that a sample is representative of the study or
target population. In probability sampling every members of the target population has a known, nonzero
probability of being included in the sample. Probability sampling implies the use of random selection.
16 A convenience sample consists of group of individual that is ready and available for the purpose of the
survey.

57
 The main respondents targeted were from the top management (President, Vice
President, Chief-Executive Officer, Managing Director or other top most authority of
concerned organization), middle management (Chief Information Officer, Chief
Operation Officer, Head of Information Technology or other top authority which comes
in the hierarchy) and lower management (employees involved in the process of electronic
transactions, payment and handling e-commerce technology etc.)- Total 150 concerned
people were surveyed form the different type of organidsations. Table 2.2 indicates the
sample of respondents from the organizations.

Table 2.2; Sample of Respondents form Organizations

Industries Top Middle Lower Total
Management Management Management
Large Scale
Multinational 10 10 10 30
Indian 10 10 10 A 30
Total (A) 20 20 20 60
Medium Scale
Total (B) 15 15 15 45
Small Scale
Total (C) 15 15 15 45
A+B+C 50 50 50 150

The survey targets a sample population drawn from consumers who have
experienced online purchasing in India. To ^ojlect-th^ information from the customers,
200 respondents were selected from Delhi, Haryana and Noida. A detail of the
customers' sample size is given in table 2.3.

Table 2.3: Sample from Customers

Delhi Haryana Noida Total
100 50 50 200

Data Collection
In research process, the result will be good if the data put in is good. If poor and
unrelated data are collected, naturally poor and misleading conclusion will be drawn.
Therefore, due consideration should be given to the type and method of data collection
(Wilkinson and Bhandarkar, 2000)'1. There are two types of data: primary data and
secondary data. Since the scope of the study is really very vast, both types of data have
been collected18.
Primary data has been collected through the well-structured comprehensive
questionnaire. Sets of two questionnaires were prepared which have been given in
Appendix I and II.

17 Wilkinsion, T.S. and Bhandarkar, P.L. (2000), Methodology and Techniques ofSocial Research, New
Delhi: Himalaya Publishing House.
18 For details please see Frey, H. James and Oishi, Mertens. Sabine (1995), How to Conduct Interviews by
Telephones and in Person, London: Sage Publications.

58
 • Appendix 1: Questionnaire for Top Level, Middle Level and Lower Level
of Management
• Appendix-II: Questionnaire for the Customers
Well-structured questionnaires were prepared for the purpose to collect the necessary
information. The questionnaires were prepared in the two phases. In the first phase,
unstructured in-depth interviews were conducted to create initial questionnaires (the
instrument). Further, expert opinions on the questionnaire were collected and
improvements were made to the questionnaires. This necessitated some changes in the
final version of the questionnaire. In the second phase, a pilot survey was also conducted
with 3 organizations and 10 customers to evaluate how well the questionnaire was
understood, and also to test alternative wordings of questions, alternative response
options and determining whether some other response should be provided. During the
interview process, some weaknesses in the design were also found. Some of the
respondents had reservations about some questions in the initial questionnaire, due to the
sensitive nature of topic addressed. In question number 2.2 (Appendix-I), respondents
found some periods of time overlapped, such as ‘less than lyear’ and ‘less than 6
months’. In finalized questionnaire, one year was divided into ‘between 6-12 months and
less than 6 months. In question number 6, respondents were asked to allow them to rate
the various reasons behind the adoption of e-commerce, rather than asking only one
reason. The survey also helped the researcher in rewording and restructuring the
questionnaire. The validation of the questionnaires was done by the feedback from the
academicians, practitioners and by the issues identified by relevant literature. Finally, the
structured questionnaires were prepared and the survey was conducted by explaining the
purpose of the research to the respondents. The content offirst questionnaire included the
company profile, extent of IT usage particularly E-Commerce adoption, business
applications, impact on working efficiency, perceived benefits and barriers, attitudes
towards the opportunities etc. some strategical questions were also asked in the
questionnaire. The content of second questionnaire included the personal information of
online buyers, their buying preferences, methods of payment and their attitudes towards
the services of dot com companies/
The questionnaires mentioned above, contain several type of questions keeping in
view the objectives and hypotheses of the present study. Easily understandable and
answerable questions were prepared and were carried to the respondents to be filled up by
them. In most of the cases, personal interviews were conducted by the researcher to
secure correct and collect necessary information. Some questionnaires were mailed to the
respondents by the ordinary post. However, the response of such types of respondents,
were not encouraging. Most of them either did not return the questionnaires or they did
not fill the complete questionnaire. Some questionnaires were also mailed to the
respondents through the Internet. Here, it was quite interesting to know that, responses of
such respondents were encouraging compare to those whom the questionnaires were
mailed by the post. However few respondents insisted to collect the questionnaire after a
few days.
In the present study analysis is also based on the secondary data, which have been
collected from various journals, books, magazines, reports, working paper series. For this
purpose researcher visited many libraries. Internet was highly used for the purpose of

59
data collection. Some important information was compiled from the different
newspapers.

Data Processing and Analysis

The task of data collection is completed when all entries (or almost all) are filled
with the appropriate responses or values (Galtung, 1967)19. After the data has been
collected the researcher turns to the task of data processing and further analysis these
data. ‘Data Processing and Analysis20’, the task is to take the completed data matrix,
which is amenable to processing, and do two things with, in this order: (1) Processing: to
recast the matrix, concentrate and otherwise deal with it so that the data are as amenable
to analysis as possible and (2) Analysis: to see the data in the light of the hypotheses and
theories, and draw conclusions that are amenable to the theory formation as possible
(Gallon, 1967)2'.
In the present study, responses from respondents were coded and tabulated with
the help of computer. This process was used for the each type of the questionnaires. The
responses of individuals have been given in all the tables in the term of both the numbers
and percentages. Figures shown in tables with parentheses represent percentages while
those without parentheses are simple frequencies.
For analyzing the data, both simple and advanced statistical tools have been used.
In some cases simple statistics like average, percentage, weightage average and mean
score have been applied. Exploratory research, require some advanced tools; therefore to
test the various hypothesis of the study, non-parametric statistical tests based on
Chi-square have been used . The test was conducted at 95 per cent confidence level (or 5
per cent level of significance). The calculated chi-square values were compared with the
table values of chi-square at a given degree of freedom. A five point Likert scale was also
used to measure the intensity of the firms and customers attitudes towards the selected
attributes. The respondents were asked to rate the variables, using five point Likert scale,
which ranged from strongly agree to strongly disagree. The weighted average score were
also calculated at the appropriate places where the respondents were asked to rank/rate
different statements, either according to degree of their importance or according to the
extent they agree with the statement as the case may be. Likert scale is qualitative in
nature. A scoring system was adopted to quantify them. Score of 5,4,3,2, and 1 were
allotted to (1) to (5) respectively.

19 Galtung, Johan (1967), Theory and Methods of Social Research. London: George Allen and Urwin Ltd.
20 In this process collected data are classified, coded, tabulated, interpreted and analyzed with view to bring
out meaning from it.
21 Galtung, Johan (1967), Theory and Methods ofSocial Research, London: George Allen and Urwin Ltd.
" The Chi-Square test is carried out in the following steps. For each observed number (0) in the table find
an ‘expected number’ (E); this procedure is discussed below:
• Subtract the each expected number from each observed number: (O-E)
• Square the difference : (O-E)2
• Divide the squares so obtained for each cell of the table by the expected number for that cell:
(O-E)2 / E
• %2 is the sum of (O-E)2

60
 Scope and Limitations of the Study
The rapid growth of e-commerce and the anonymous nature of e-commerce
transactions have created new opportunities for the researchers to gather and analyze data
in order to learn about individuals, companies and societies. Thus, the topic
‘E-Commerce' offers a vast scope for the study. However, it is not possible to cover all
the aspects of e-commerce. Hence, the researcher has restricted to study the ‘Business
Applications: Strategies, Challenges and Opportunities in India’. The approaches to the
study have been from the point of view of large scale, medium scale and small-scale
industries, using e-commerce technology located in Haryana, Delhi and Noida. An
attempt has also been made to study the satisfaction level of online customers. Besides all
these, the present study covers electronic payment and security systems, socio-economic
implications of e-commerce and analyze e-commerce in the Indian legal regime. Despite
the scope of the present study is very vast; still the researcher has no claim to say that the
present research work is complete in every sense and results are accurate and original.
The reason, the every researcher (especially in Social Science) has to conduct the study
under certain limitations and collect the data based on certain assumptions. The present
study is not an exception. The present study has also been conducted under certain
limitations and is based on some assumptions. Some of the most important are given as
under:
• As the main objective of the present research is to study the business application
aspect of e-commerce in the Indian context, technical aspect of e-commerce has
not been covered properly.
• Since the scope of the study in this particular field is really very vast and collected
data provides huge information; therefore the researcher may reveal some other
interesting results. But, the researcher has limited the result of present study
according to objectives and hypothesis of the study. However, the researcher tried
to include all the necessary information for justifying the result of the study..
• Small size of present study is relatively small to generalize the results in the
Indian context. But time and financial factors did not allow the researcher to
selected very large sample size. However the researcher has made the justification
by taking into consideration of all types of firms, and the region selected for study
is really high tech. Therefore, it is logical to conclude that the result may be
generalized in the Indian context. But, for future research this factor should be
taken into consideration.
• The result of the present study is based on the opinions and experiences of the
respondents. In opinions survey there is always possibilities of individual biasness
in opinions, and results looks unreliable. This biasness could not be eliminated.

61