Exploring the Digital Divide: Institutional Foundations for Electronic Commerce

Electronic commerce, by providing economic incentives for Internet use, could be a key to addressing the growing developed/developing country 'digital divide. ' Developing countries ' potential to reap the benefits of e-commerce will be partially determined by their institutional environment. Certainly, institutions that create barriers to traditional commerce will influence the potential of electronic commerce as well. Although expectations of these difficulties abound, little is known specifically about which institutions present the greatest problems and how they can be resolved. This research contributes to this knowledge through an exploration of the functioning of traditional commercial institutions in two cities: Dar es Salaam, Tanzania and San Diego, USA. By comparing a limited set of traditional commercial institutions relevant for business-to-business (B2B) e-commerce among small firms, institutions that pose the greatest problems can be identified. This results in a focused set of recommendations for policy makers concerned with facilitating e-commerce in Dar es Salaam and similar developing country environments. Furthermore, examining the differences in the potential for e-commerce between the two cities permits a realistic assessment of the potential for e-commerce to bridge the 'digital divide.' 1