Rule of law and the international diffusion of E-commerce

A conceptual model of various factors that could explain the differences among countries in the adoption of e-commerce is presented. Firms' technology adoption decisions and output growth depend upon the efficiency of the capital markets, which diversify the risks of adopting new technologies and thus encourage early adoption of e-commerce. Countries with an active direct marketing industry experience higher levels of e-commerce activities because companies do not need to educate customers about the nature of the remote purchases. The development of e-commerce may be slow in countries without strong and effectively enforced commercial laws, despite having the necessary conditions to accelerate e-commerce.