Critical Success Factors in Caribbean E-Commerce Efforts:

National Competitive Advantage in E-Commerce Efforts:

A Report from Five Caribbean Nations

Simon Fraser

The University of West Indies

William Wresch

University of Wisconsin Oshkosh

Contact:

wresch@uwosh.edu

920.424.4151

College of Business Administration

800 Algoma Blvd.

University of Wisconsin Oshkosh

Oshkosh, WI 54901

National Competitive Advantage in E-Commerce Efforts:

A Report from Five Caribbean Nations

Abstract

During July and August 2004 the principle investigators visited business executives in five Caribbean nations. 36 businesses and government agencies were interviewed. General results showed significant e-commerce efforts underway in these countries. Leading companies interviewed were experiencing modest to significant successes in this business approach, but all were experiencing impacts from national characteristics. Characteristics examined in detail were factor conditions, demand conditions, support industries, firm strategy, and government policy. Results showed generally supportive business conditions but problems exist in government agencies, niche markets, the banking sector, and industry isolation. The authors hope the results of this study will suggest improved strategies for SMEs in developing countries and for national governments seeking to use e-commerce to expand business activities.

Introduction

In his book, The Competitive Advantage of Nations, Michael Porter presents four significant determinants of national advantage:

Factor conditions. The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry.
Demand conditions. The nature of home demand for the industry’s product or service.
Related and supporting industries. The presence or absence in the nation of supplier industries and related industries that are internationally competitive.
Firm strategy, structure, and rivalry. The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry. (Porter, 1990, 71)

To these four, he adds two additional variables which may influence the success of nations: luck and government policy. Examples of luck include inventions, wars, external political developments, and major shifts in foreign market demand. Government policy might include regulations, investments in education, government purchases, and monetary policies. Governments have the ability to aid competitiveness or retard it, or to have conflicting policies that do both.

Porter’s competitive factors have been used to help understand development efforts in less developed nations (Chen, 2002) since they have the advantage of being grounded in substantial research and of being remarkably comprehensive.

To apply Porter’s factors to the competitive situation of companies in the Caribbean, the investigators interviewed executives at 21 firms in five English-speaking Caribbean countries who were publicly acknowledged to be ecommerce “success stories.” Our research focused on how well these successful firms had adapted their ecommerce initiatives to each of Porter’s competitive factors.

Background

The English speaking Caribbean is made up of former and remaining colonies of the United Kingdom. Geographically the region stretches from the Bahamas in the northwest to Guyana, located on the South American mainland. While many Caribbean nations are categorized as developing states, per capita incomes, access to healthcare, education and technology are significantly greater than some regions of Africa, Asia and Latin America.

Another critical characteristic of the English speaking Caribbean is the close proximity to the United States – the leading adopter of electronic commerce technologies and processes. Miami is a major international trade hub for the region. The flying time from Miami to any of the islands ranges between 30 minutes to the Bahamas and 4.5 hours to Guyana. Each country is served by daily flights to the United States. Several shipping lines offer scheduled service between the United States’ eastern seaboard and each country.

Further analysis of Caribbean nations can be achieved using Porter’s competitive advantage model.

Factor Conditions

Traditionally, countries have been differentiated competitively by such factors as wage rates, worker educational levels, and natural resources. High quality workers willing to work for lower wages provide a distinct advantage as we are currently seeing, for instance, with the growth of the Indian ICT industry. Porter expands these traditional factors to include human resources (skills and costs), physical resources (abundance, quality, access, and cost, plus geographic location of the nation and its climate), knowledge resources (scientific, technical, and market knowledge bearing on goods and services), capital resources (amount and cost of capital), and infrastructure (transportation systems, communication systems, funds transfer, mail and parcel delivery).

But Porter points out that these traditional advantages carry less weight than they may have in centuries past. “…Most advanced and even newly industrialized nations today have comparable factor endowments in terms of infrastructure; many also have similar pools of high school – and even university educated workers.” (1990,76) He also notes “human resources, knowledge, and capital factors can be mobile among nations. Skilled people move among nations, as does scientific and technical knowledge. This mobility has been enhanced by greater international communication and easier movement.” (1990, 76)

Table 1 provides a summary of factor conditions for Caribbean nations and a sampling of their competitors. As can be seen, Caribbean nations are moderately advantaged over Latin American and Asian peers in motor vehicles, telephones, and internet access, and substantially better off than African nations.

Table 1 – Selected Development Indicators.[1]

Caribbean	Population 2002 (Millions)[2]	GDP Per Capita PPP US$ (2002)[3]	Infant Mortality (per 1000 live births (2002)[4]	Net Enrolment Ratio (Secondary Level) 2001/02[5]	Motor Vehicles (per 1000 inhabitants)[6]	Telephone mainlines (per 1000 people (2002)[7]	Internet Users per 1000 people (2002)[8]
Barbados	0.3	15,290	12	87	268	494	111.5
Guyana	0.8	4,260	54	75	100.8	92	142.2
Jamaica	2.6	3,980	17	75	74	169	228.4
Trinidad and Tobago	1.3	9,430	17	68	219	250	106.0

Africa
Nigeria	120.9	860	110	..	.6	5	3.5
Ghana	20.5	2,130	57	32	10.5	13	7.8
Kenya	31.5	1,020	78	24	16.7	10	12.5

Latin America
Brazil	176.3	7,770	30	72	111.9	223	82.2
Argentina	38.0	10,880	16	81	197.7	219	112.0
Chile	15.6	9,820	10	75	135	230	237.5
Venezuela	25.2	5,380	19	57	100.2	113	50.6

Asian Counties
Philippines	78.6	4,170	29	56	34.3	42	44.0
Indonesia	217.1	3,230	33	47	27.6	37	37.7
Malaysia	24.0	9,120	8	69	18.8	190	319.7
Thailand	62.2	7,010	24	..	126.1	105	77.6
Vietnam	80.3	2,300	30	65	.7	48	18.5

Demand Conditions

Local customers not only provide firms with a source of income, but they educate firms about customer needs and perceptions. Understanding customers is never easy, and is even more difficult when the customer may be many time zones distant. So the local customer has much more influence over how products are designed, supported, and sold.

If the local customer is atypical – vastly different education levels, income levels, or values than potential global customers – then the local firm may actually be misled about which goods or services have international potential.

Table 2 presents comparative income and educational levels for Caribbean nations and potential customer nations. The Caribbean nations visited have substantially lower per capita income than their potential customers, but have high school enrolment rates just below those of their major export markets. Internet usage, while strong by developing country standards, lags significantly when compared with the US, Canada and UK. Given the small size of Caribbean territories, absolute numbers of science, math and engineering graduates are miniscule by developed country standards. These last two factors may hamper Caribbean companies as their primary export markets continue the transition to information and knowledge based economies.

Table 2 - Comparative Income and Education Statistics[9]

Country	Population 2002 (millions)[10] [11]	GDP Per Capita 2002 (PPP US$)[12]	Net Secondary Enrolment Ratio (2001-2002)[13] [14]	Tertiary Students in Science, Math and Engineering 1994-1997 (% of all tertiary students)[15]	Internet Users per 1000 people (2002)[16]
Caribbean
Barbados	0.3	15,290	87	21	111.5
Guyana	0.8	4,260	75	25	142.2
Jamaica	2.8	3,980	75	20	228.4
Trinidad and Tobago	1.3	9,430	68	41	105.0

Export Markets
Canada	31.3	29,480	98	..	512.8
United Kingdom	59.1	26,150	95	29	423.1
United States	291.0	35,750	85	..	551.4

Related and Supporting Industries

We recognize that successful companies and industries do not work in isolation. Companies whose suppliers and distributors meet international standards have distinct advantages over companies forced to work with inadequate supply or distribution chains. And while much supply and distribution is now global, home-based suppliers and distributors are crucial for innovations – for competitive advantage. It is through direct and personal connections with supporting companies that firms learn about the latest innovations and adopt them before competing firms. Porter uses Italian shoe makers as an example here, with their close ties to leather manufacturers giving them advanced insights into new textures and colors, insights that allow the shoe manufacturers to stay well ahead of competitors in other nations.

While one presumes that supporting relationships do not necessary require very large populations, the miniscule size of many Caribbean nations would appear to inhibit significant development of industry clusters. Table 2 highlights population sizes for Caribbean nations. While there have been efforts in the past to create a larger political union, those efforts were all unsuccessful. Limited inter-island institutions such as The University of West Indies still survive from the era of British colonial administration, but there is little support for new efforts in that direction, and in fact UWI now faces increasing competition from newly founded national universities.

Firm Strategy, Structure and Rivalry

We all recognize that firms have a variety of structures and strategies to use, and that some will be more effective than others. Porter asserts that national culture plays a significant role in which structures and strategies are selected by management, noting that technically trained German managers tend to adopt hierarchical business models, while Italian managers are more comfortable with smaller-family dominated business models. He notes that the relative success of these business models varies with each industry. The German model works well with larger industries, especially manufacturing, while the Italian model seems perfect for more rapidly changing industries like fashion.

National attributes that impact the global thinking of management include such things as language training and general attitudes towards travel. In nations where travel is commonplace, managers have often lived abroad in their youth, and so are far more comfortable opening business divisions or export units in those countries.

Porter also emphasizes local rivalries and the benefits they have for managers. With a significant number of competitors, managers see a variety of strategies attempted in similar businesses, and learn quickly what is working and what is not. And having survived significant local competition, firms are more ready to compete globally. They have not only improved their internal processes enough to be internationally competitive, but they may be driven to international competition in order to achieve economies of scale that may be unavailable in a fractured local market.

The Caribbean situation seems mixed in the area of national strategy and rivalry. Since the islands are small and relatively close to each other, transportation off the islands is common, especially amongst managerial classes. It has also become increasingly common for people to emigrate to the U.S. or other destinations, so many residents have family members living abroad whom they visit with some regularity. Many managers have also received training at highly regarded universities in the United, States, Canada and United Kingdom. In short, managers have extensive international exposure.

Business rivalries, however, tend to be less common. Give the size of island populations, and the size of village populations, many businesses operate in isolation. The one industry that has multiple firms in direct competition is tourism.

The Role of Chance

Porter should be congratulated for recognizing that not all business success is based on careful planning and brilliant strategies. Some events are just chance. Inventions arrive and whole new industries are launched. Wars come and substantial markets disappear or competitors disappear. Some chance events, like inventions, create opportunities for all, while other chance events like war or natural disasters, create problems for some nations and opportunities for others. The differentiator for nations is the ability to respond more quickly when the opportunities arrive.

For Caribbean nations the most common chance event is weather – hurricanes that periodically destroy property and claim lives. A more singular chance event was the September 11^th terrorist attack on the U.S. This not only impacted international travel as many Americans became afraid to venture outside the U.S., but it also impacted trade as the U.S. began significantly different (and more burdensome) customs procedures. Trade with the U.S. became more difficult and more expensive.

On a more positive note, having seen one business center destroyed in a single morning, U.S. businesses began looking for multiple suppliers and service providers so that if one center’s work were disrupted, work could be shifted to other centers. This created new opportunities for service providers, especially in the Caribbean which shares the same language and time zone as the business centers in the Eastern U.S.

The Role of Government

Porter asserts that the government can have a role in all determinants of national competitiveness, but that the role can be negative as well as positive and that its role will always be partial – not sufficient in itself to make a national industry competitive. The government can help by raising educational levels, or by purchasing local goods and by creating a regulatory environment that supports business development. But it can also hurt by raising tariff barriers to protect businesses, a process that also makes local products uncompetitive internationally. In general we should recognize that there is a limit to what we can expect from government, and we should be aware that governments can hurt business even when they try to help.

The governments in the Caribbean have limited budgets and limited public support, and so are very restricted in the role they can play in promoting national competitiveness. The governments of Jamaica and Guyana may be the least able. With few funds for street repairs or garbage removal, public services are in bad shape and crime is so bad the U.S. State Department warns of travel there. Trinidad has sufficient funds for basic public services, but crime is getting worse with robberies, killings, and kidnappings seeming to be beyond the control of local law enforcement. Nevertheless Trinidad and Tobago have embarked on an ambitious programme to become a developed country by 2020. Barbados is frequently acknowledged to be the best governed territory in the English speaking Caribbean. However, it too faces challenges when confronted by variable tourist arrivals, falling international sugar prices and rising unemployment.

All the nations visited had government agencies or NGOs that were tasked to support business development, but the support they provided was minimal, and insufficient to offset other shortcomings in government services such as crime prevention.

Methods

In the summer of 2004 Interviews were conducted at the 21 businesses listed in Table 3.

Antigua	Antigua Beachcomber Hotel Island Provision – wholesale foods Jolly Beach Resort King’s Glass – stained glass Susie’s Hot Sauce – food export
Barbados	Sandy Beach Island Resort Ann’s Craft Center Shop at Barbados.com
Guyana	CaraLodge Farfan and Mendes – small engine sales and service Raddison Hotel Wilderness Explorers – ecotourism
Jamaica	Ann’s Craft Centre – tourist goods Dolphin Cove – dolphin show GoldenEye – hotel Starfish Oils – candles SuperPlus Foods - groceries Walkerswood – food exports
Trinidad	Ajoupa Pottery Caribbuy – general on-line retailing DirectOne – Call center Poison Mas Camp – Carnival dancers Sacha Cosmetics

All businesses selected met three criteria.

They had to be identified as successful by third parties, usually government or non-government agencies supporting business development.
They had to declare themselves successful, describing sales growth or other business opportunities created via ecommerce.
Their web sites had to meet expected standards of navigation, content, and currency. Several businesses were found to have web sites that were years out of date. Those businesses were excluded from the study.

In addition to interviewing the 21 businesses listed in Table 3, the interviewers spoke with 15 business development and government agencies charged with supporting e-commerce development in the Caribbean. The agencies were able to supply additional information about government actions and about general business infrastructure. It should be noted that far more than 21 firms are engaged in e-commerce efforts in these countries. The 21 companies interviewed were selected because they were acknowledged as leaders in their industry, and because they represented a range of industries.

Interviews averaged approximately one hour in length and were held with the chief executive officer of the company, or with the senior manager most actively involved in e-commerce efforts. The main questions are listed in Appendix A.

Results

A summary of findings is presented in Table 4 and described below.

	Strengths	Problems
Factor Conditions	Dropping telecomm costs, educated work force, adequate courier and postal services, regular air services	Postal thefts (Trinidad)
Demand Conditions	Millions of expatriates, interest in local goods with a cultural component.	Possible over-dependence on expatriate consumers.
Support Industries	Retail IT industry is well represented and skilled.	Slow web services leading to remote hosting in US, inability/unwillingness of local banks to process on-line credit card transactions.
Firm Strategy, Structure, and Rivalry	Generally good executive IT skills, and extensive executive foreign travel	Only tourism businesses face much local competition. Small local populations mean that many other businesses are often the only ones in their industry.
Chance	9/11 attacks led many US firms to look for additional suppliers.	Increased customs requirements added to costs and delays when shipping to the U.S.
Government	All governments were ending local telecomm monopolies and were placing significant emphasis on improving education.	Governments were unable to respond to rising crime, especially in Jamaica, Trinidad, and Guyana, hurting both the tourism industry and discouraging local entrepreneurs.

Factor conditions:

Interviewees noted a number of advantageous factor conditions in the region. A relatively low wage gave them some advantages, as did the supply of well-educated English speaking employees. All interviewees asserted that sufficient local IT knowledge was available to get computers fixed or web sites designed or networks installed. Improving infrastructure was described by several companies. For one remote business (Ajoupa pottery), the government had recently helped the business considerably by completing a road to the village. A business in Guyana (Farfan and Mendes) noted that mail service in the country was so good that they were able to ship products to the U.S. quickly, cheaply, and reliably. BWIA International, Trinidad’s national air carrier recently expanded service to Cuba, Costa Rica and the Dominican Republic to support increasing trade with its Spanish speaking neighbors. The government has given a commitment that it will subsidize these routes until passenger loads allow the airline to break even.

While the infrastructure of these countries was generally adequate for business, there were several shortcomings cited during interviews. Crime is a general problem in the region, but poses particular problems in the Trinidad post office where mail thefts are common, and so obviate that as a means of shipping goods. The amount of institutional theft varied from country to country, but often had the effect of forcing companies to use more expensive courier services.

Another common complaint focused on local telecommunications services. Every business described recent improvements in service and reductions in cost. However, many felt that even with these improvements, service was still not up to “first world” standards and that costs were still too high. On balance, companies interviewed described the local conditions as being adequate for e-commerce especially after the company had made accommodations such as hosting their web server in the U.S. or using courier services for delivery.

Demand Conditions:

While some local use of web sites provides a modest number of customers to these on-line businesses, the most unique demand condition companies faced was demand from expatriates. By some estimates, two million emigrants of Caribbean origin live and work in the U.S.,Canada and UK. These emigrants want to purchase items from home for themselves, and they want to buy items for their relatives who still live at home. As a consequence, “local” demand actually has two meanings for the Caribbean – the nationals who still live on the islands, and the nationals who have emigrated. The presence of this double-target market provided special opportunities for companies in the Caribbean, since they could sell products with special cultural or dietary characteristics – a large niche market. Ajoupa Pottery, for instance, sells ceramic houses that are replicas of classic Caribbean homes. Susie’s Hot Sauce sells a spicy seasoning popular on the islands, but impossible to obtain in regular U.S. supermarkets. Poison Mas Camp sells costumes for Carnival both to locals and to émigrés who return to Trinidad for the Carnival celebration. In these cases and in many others, special cultural features of the Caribbean provided a marketplace for unique goods not available from sources outside the Caribbean.

While the unique culture of the region created an opportunity to sell goods not available from outside the region, this protected environment also seemed a temptation that restricted business strategies. We found no effort by these ecommerce leaders to export goods that might be attractive to a more general population. For example, none of these successful businesses was exporting generic goods – clothing, household items, sporting goods – where they would have to compete with businesses from outside the region. Porter suggests that local customers help a business understand sales techniques and product design. In the case of the Caribbean, it appears that “safe” customers are helping these businesses learn how to sell to culturally connected customers, but are teaching even these successful companies nothing about selling to general or distant customers. As a consequence, while e-commerce allows these businesses to reach the world, their product selection immediately reduces the real number of customers they reach.

Related and Supporting Industries:

Porter makes a strong case for the role of suppliers and distributors in enhancing the competitive abilities of companies. Companies interviewed all listed local technology firms as reliable and knowledgeable suppliers. A significant number of web design firms are present in the area, as are computer resellers, and networking consultants. Professional organizations for these sellers such as the Trinidad and Tobago and Jamaican Computer Societies give these providers an opportunity to compare strategies and enhance their own skills. No company we met with listed accessing or supporting technology as a barrier to their e-commerce efforts.

However, there were two support industries uniformly identified as weak areas. First, nearly every company we interviewed used a web hosting service in the U.S. Several mentioned that they had initially used a local hosting company, but for reasons of price or service, moved their web sites overseas. Using these hosting services in the U.S. posed no real problems for these companies, but they also derived no competitive advantages. Essentially, they were able to get hosting services at the same price and of the same quality as any company in the world.

The second problem, however, was not as easily solved. No company we interviewed was able to handle a “shopping basket” online and accept credit cards. Interviewees described the local financial institutions as disinterested and possibly inept. In the few cases where companies were continuing to push for credit card acceptance they found only one local bank and one bank in Bermuda that would develop these services, with one bank handling the validation of charges and the other handling the transfer of funds, and both banks charging significant amounts to set up and maintain such accounts. As a consequence, firms had resorted to work-arounds such as setting up accounts in the U.S. and doing their banking there, or taking fax orders and cajoling a local bank into accepting a faxed account number and signature as legally binding. One company (Caribbuy) was also negotiating to become a seller under the Amazon.com banner, so that Amazon could handle the banking processes for a fee.

Many executives also mentioned that purchasing goods was becoming a problem for them. U.S. companies that had shipped goods to them in the past, now refused to accept foreign credit cards based on the number of fraudulent purchases coming from developing countries. This reduced the number of suppliers that these companies could use and increased their transaction costs as they struggled with other methods of funds transfer. So whether buying or selling, companies interviewed identified banking/funds transfer as a competitive disadvantage to them.

Firm Strategy, Structure and Rivalry: Porter observes that the personal experience of executives can determine the amount of international trade that will interest them and the markets where they will be comfortable. While he makes no reference to technology expertise, it was clear in our discussions that all the executives we met had deep and personal experience in business technologies. Several had personally designed their corporate web sites. One (Wilderness Explorers) maintained a copy of his web site on a laptop computer so that he could update it quickly and transfer regular updates to his hosting service in the U.S. Many understood the fundamentals of web design, and a few had worked hard to learn the strategies used by search engines. They needed to have their sites listed early for the appropriate search terms, and several (Sacha Cosmetics, Raddison Hotel (no relation to the large chain), and Caribbuy) explained in detail the strategies they had learned and the processes they used to ensure that their companies made the listings of the first screen. It appeared that the personal IT knowledge of a few of these executives was competitive with that of executives in more developed countries.

Where they had a competitive weakness was in the quality of local rivalries that might drive innovation. The one industry that had significant internal rivalries was the tourism industry. This industry is so significant that the University of West Indies offers degrees in tourism and hotel studies, through a specialized campus in the Bahamas. A supply of educated and experienced managers is available to all firms. So this industry can be pushed to innovation just by seeing what the neighbors are doing. The famous Sandals hotel chain, acknowledged to be one of the innovators in all-inclusive tourism, is a Caribbean owned and managed enterprise.

But many other businesses work in isolation. A good example is DirecOne, a call center in Trinidad. It is growing rapidly and is a commercial success, but it is the only significant call center on the island. As a result, it has to train all of its employees from the ground up – none has experience at another firm. All its managers are similarly learning the business. Additionally, when it approaches the local telecom provider for additional bandwidth, it goes alone, not at the head of a group of call centers. As a result, it has to work harder to get the bandwidth it needs and to lobby the government. Unfortunately, during the course of our interviews, we saw no industry or any approach to e-commerce other than tourism where a cluster of competitors would drive innovation.

The Role of Chance:

The most significant chance event influencing business in the Caribbean is the 9/11 attacks in the U.S. With a increased desire to find multiple sources spread all over a more fragile world, many U.S. companies that had been relying exclusively on outsourcers in India or China, were now willing to look at other providers. The Caribbean became a place of interest because it is in the same time zone as the Eastern U.S., speaks English as the native language, and has a large pool of well-educated workers. DirecOne’s successful call center is a direct consequence of this new opportunity.

But most of the businesses in the Caribbean experienced only negative consequences of the attack. Changing customs processes in the U.S. led to much more burdensome record-keeping requirements, much longer delays in customs, and frequent occurrences of products being destroyed in the process of being examined. Starfish Oils had a shipment of candles drilled into and broken apart as agents checked them for contraband. The shipment was ruined and the company had to take a total loss on the order. Other companies experienced such difficulty shipping to the U.S. that they simply stopped doing so. One consequence was an effort by companies (Super Plus Foods Stores, FarFan and Mendes) to sell goods online that would be purchased by expatriates, but delivered to local relatives. This strategy was proving to be very successful, but of course does nothing about the problem of selling to customers elsewhere in the world.

An alternative strategy adopted by Sacha Cosmetics and being developed by Caribbuy was to set up distribution centers in the U.S. They would ship several months’ inventory in bulk and so encounter the customs services on fewer occasions. Once in the U.S., the goods could now be shipped with the speed e-commerce customers have come to expect. Of course these distribution centers require additional expense and can only be developed by larger firms with the capital necessary to invest.

The Role of Government:

Interviewees described recent efforts in several of these nations to break up the telephone monopoly, an event that was already reducing phone costs and stood the chance to improve service. Regional governments were also hard at work trying to improve the quality of primary, secondary and tertiary education. However, with limited budgets this will prove to be a long uphill struggle. Particular attention is being paid to training in technology and engineering. The Government of Trinidad and Tobago has recently opened the University of Trinidad and Tobago. The early focus of the university is on producing technically competent graduates to work in Trinidad’s energy industry. The government of Jamaica has upgraded its College of Applied Science and Technology to the University of Technology.

Regional governments are having far less success controlling an escalating crime rate. Many of the islands are used as transshipment points for drugs originating in South America, destined for the United States, Canada and Western Europe. Poverty and drug addiction have led to spikes in violent crime, directly affecting the tourism industries. Local businesses are forced to devote scare resources to protecting the executives, employees and property. Many seasoned executives, fearing for the safety of their families, have migrated to the United States and Canada.

Discussion

Numerous other studies of business development efforts in developing countries have also described difficulties companies face when they attempt to initiate ecommerce efforts (Lake, 2000; Wresch, 2003; Farhoomand, 2000; Bingi, 2000). Attempting to sell goods and services on-line creates a substantial potential market for these companies, but demands sophisticated support systems and business infrastructures that are daunting to say the least. Yet the companies visited in these five countries were all having at least some success with this sales channel. Several of the companies were obtaining 70-90% of their income through this channel. The individual skills of the entrepreneurs we visited must be credited for much of their success, but it was also clear that national characteristics played a role in their successes and in their limitations.

National advantages included a well-educated work force with many individuals skilled in information technology, adequate (if slow) telephone systems, proximity to the United States, English as the national language, a unique culture that produces demand for local specialty goods, a substantial expatriate market, professional computer societies, and governments that support education and business.

We did not ask the executives we spoke with to prioritize the national advantages they had available to them, but conversations with them repeatedly came back to matters of education and language. They were happy with their employees and proud of their skills. We concur about the quality of workers in the region, but would also note that the unique culture of the region also presents a significant opportunity at least to small businesses. Cultural artifacts can be manufactured in the region and sold globally – at least to the expatriate market.

National disadvantages included escalating crime rates and crime in government agencies, an over-reliance on niche markets, an immature banking sector, the small size of businesses and industries on these small islands, and the burdens the threat of terrorism has placed on exporting nations.

Government policy makers hoping to promote electronic commerce will need to find a way of promoting increased competition on the telecommunications and banking sectors with the goal of lowering costs and improving services. Furthermore the governments in developing countries must look at some of the logistical challenges faced by their small exporters – perhaps to the extent of funding, at least in the short run, a fulfillment center in each of the major markets. Finally, each nation must continue to develop information literacy and online marketing skills if they are to continue to meet the needs of increasingly sophisticated customers in the US, UK and Canada.

In sum, in each of the five nations we visited, successful business executives encountered strengths and weakness in their national competitive environment. Fortunately for the people of this region, there were more advantages than disadvantages, and leading executives were able to build successful businesses even in the technologically demanding realm of electronic commerce.

Sources

Bingi, P, Mir, A. & Khamalah, J. (2000) The Challenges Facing Global E-Commerce. Information Systems Management, 17(4), 26-39.

Chen, S. & Ning, J. (2002) Constraints on E-Commerce in less developed countries: The Case of China, Electronic Commerce Research 2(2) 31.

Farhoomand, A & Tuunainen, V. (2000). Barriers to Global Electronic Commerce: A Cross-country survey of Hong Kong and Finland. Journal of Organizational Computing and Electronic Commerce, 10(1), 23-49.

Lake, S. (2000). E-Commerce and LDCs: Challenges for enterprises and governments, paper presented at the E-Commerce and LDCs Roundtable, Kathmandu, Nepal. United Nations Conference on Trade and Development (UNCTAD).

Porter, M.E. (1990) The Competitive Advantage of Nations. New York: The Free Press.

Wresch, W.C. (2003) Initial E-commerce Efforts in Nine Least Developed Countries: A review of national infrastructure, business approaches, and product selection. Journal of Global Information Management, 11(2), 68-79.

Appendix A -- Interview Questions

For companies exporting a tangible product:

How long have you been using e-commerce to advertise your products? What

percentage of your sales come through this channel? How is your web site

linked to other marketing efforts? What is your primary target market? What have you done to increase the visibility of your web site?

What competitive advantages does e-commerce give your business? What

competitive disadvantages do you face? What barriers do you face in

order fulfillment (e.g. shipping, customs, taxes, duties)?

If you need to import materials to produce your product, what barriers

do you face there?

How much of a threat do you feel from companies in other countries that

might try to sell to your customers via e-commerce?

What could your national government be doing to help you compete

internationally?

What are the biggest advantages and disadvantages of your national

technical infrastructure (e.g. phones, companies to host web sites,

skilled workers, telecommunications costs)?

What is the biggest barrier you face to growing this part of your

business?

Technology? National policy? Human Resources?

For companies selling a digital product (most tourism sites)