Assessing the impact of institutional environment quality on the development of e-commerce in developed and developing countries

Abstract

This study uses the new institutional economic theory and demonstrates how the quality of the institutional environment can be correlated with the development of e-commerce in different countries. The goal is to analyze the impact of international indices that assess the institutional environment on e-commerce penetration in countries with varying levels of economic development. The international indices used include the Networked Readiness Index, the E-Government Development Index, components of the Index of Economic Freedom, and indicators from The Worldwide Governance Indicators, such as control of corruption and rule of law. The level of e-commerce penetration was measured by its share in retail trade. The study analyzed developed countries with high e-commerce penetration, like the USA, the UK, Germany, South Korea, and Singapore, alongside developing countries, such as China, Turkey, Mexico, and Kazakhstan. The relationships between e-commerce penetration and international indices were identified using correlation analysis with the calculation of Spearman’s coefficient, followed by an assessment of the statistical significance of the obtained coefficients. The analysis revealed varying degrees of association between institutional quality and e-commerce penetration. Notably, the E-Government Development Index and the Networked Readiness Index showed positive correlations with e-commerce levels in all studied countries. However, the rule of law, control of corruption, and Investment Freedom indices showed varying correlations, indicating that these relationships are influenced by factors beyond economic development, such as political systems and regulatory approaches.