Information Society Watch

December 1999, Charles Steinfield and Pamela Whitten

In this paper, the authors suggest that it is important to consider how electronic commerce may influence the health of local economies. Their research suggests that local merchants typically go online in order to better access distant markets, but are often unprepared to cater to remote customers and hence do not fare well. Despite the rhetoric that electronic commerce is free from the constraints of geography, they argue that there are good reasons to reconsider the role of physical location in making e-commerce policies. As electronic commerce grows, an important socio-economic side effect is increased competition with the traditional businesses in any given local community. The authors show that using transaction cost and competitive advantage approaches, supplemented by perspectives from research on social networks and trust, it is possible to develop locally sensitive Web strategies for businesses in a given community. They highlight generic strategies that local businesses can use to leverage their physical presence in a market with electronic commerce in order to better compete with distant Web-based companies (Authors).

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