Cross-country evidence of e-commerce SME internationalization and the role of policy

Abstract

This paper provides an exploratory analysis of international e-commerce activity using cross-country data for SMEs from around the world. We explore how legal origin, institutional development, infrastructure, and policy variation affect SME e-commerce activity, challenging common assumptions about which institutional combinations best support innovative areas of economic activity. Our analysis uses fuzzy-set qualitative comparative analysis (fsQCA) and draws on contextual metrics and data from the Future of Business Survey - a collaboration between Facebook, the OECD, and the World Bank. Counter-intuitively, our findings show that high-intensity e-commerce SME exporters in emerging markets report greater satisfaction with domestic policies than their counterparts in developed countries with more mature institutional frameworks. Moreover, SMEs from common law systems do not seem to enjoy inherent advantages, despite assumption that these countries can better foster successful outward-oriented entrepreneurship. We explore potential explanations for these unexpected results. Finally, although light regulation is often promoted as key to business growth, our findings suggest that SMEs with high export intensity value consistency and coherence in policy and regulation. We draw implications from our study for both theory and policy.