Electron Commer Res (2010) 10: 83–97

DOI 10.1007/s10660-010-9046-0

A review of e-commerce literature on India

and research agenda for the future

Sridhar Vaithianathan

Published online: 21 February 2010

© Springer Science+Business Media, LLC 2010

Abstract Firms across the globe have adopted e-commerce (EC) in their operations
and have reaped benefits thereof. While firms in technologically developed countries
like US and UK has deployed EC to its advantage, whereas firms in developing coun-
tries like India failed to follow the suit. Though it has been widely acknowledged by
the researchers that the adoption of EC by businesses in developing countries is an
important economic indicator of growth; many firms in India still have not realized
the potential benefits of EC. This study examines the existing status of EC in India
and reviews the available literature on E-commerce adoption in India and puts forth
opportunities for future research. The study might serve as a starting point for further
research in e-commerce in India.

Keywords E-commerce adoption · E-commerce in India · E-commerce literature

review · E-commerce research agenda

1 Introduction

With the advent of Internet and its commercialization since 1994 [28, 29] a new
medium of commerce popularly known as ‘E-Commerce (EC)’ rapidly emerged in
the modern global economy. E-commerce can be defined as “the use of the Internet
and other networking technologies for conducting business transactions” [39]. Fur-
ther, EC not only involves selling and buying online but it also involves a host of
activities spanning the firm’s value chain like promotion of product/services on the
web, integrating invoicing and payment from customers, secure transactions, and han-
dling customer queries online. In short, EC is an umbrella concept to integrate a wide

S. Vaithianathan ()
IBS, Hyderabad—a Constituent of IFHE, Dontanapalli Campus, S. No.156/157, Shankarpalli
Mandal, RR District, Hyderabad 501 504, India
e-mail: sridhar_we@yahoo.com
84 S. Vaithianathan

Table 1 World Internet usage and population statistics

World regions population % share Internet usage, % population Usage % Usage

(2008 Est.) of world June 30, 2008 (penetration) of world growth
population 2000–2008

Africa 955,206,348 14.3 51,065,630 5.3 3.5 1,031.2%

Asia 3,776,181,949 56.6 578,538,257 15.3 39.5 406.1%
Europe 800,401,065 12.0 384,633,765 48.1 26.3 266.0%
Middle East 197,090,443 3.0 41,939,200 21.3 2.9 1,176.8%
North America 337,167,248 5.1 248,241,969 73.6 17.0 129.6%
Latin America/ 576,091,673 8.6 139,009,209 24.1 9.5 669.3%
Caribbean
Oceania/ 33,981,562 0.5 20,204,331 59.5 1.4 165.1%
Australia

World total 6,676,120,288 100.0 1,463,632,361 21.9 100.0 305.5%

Source: www.internetworldstats.com

range of existing and new applications [17, 43].Based on the type of applications; EC
can be classified into three categories;
1. Inter-organizational (B2B)
2. Intra-organizational (within business) and
3. Business to Customer (B2C)
Inter-organizational EC or Business to Business (B2B) EC can be defined as market-
link transaction in which businesses, governments, and other organizations depend
on computer-to-computer communications as a fast, an economical, and a depend-
able way to conduct business transactions. Intra-organizational EC can be defined as
market-driven transactions in which company becomes market driven by dispersing
throughout the firm’s information about its customers and competitors; by spreading
strategic and tactical decision making so that all units can participate; and by contin-
uously monitoring their customers’ commitment by making improved customer sat-
isfaction as an ongoing objective. Business to Customer (B2C) EC can be defined as
market-place transaction in which customers learn about products differently through
electronic publishing, buy them differently using electronic cash and secure payment
systems, and have them delivered differently. This study deals with EC adoption in
general which includes all the three types of application of EC.
Internet users across the world have been increasing ever since its beginning in
late eighties (refer Table 1) enabling many EC applications online.
Though Internet has diffused profusely and has brought a paradigm shift in the
way of conducting businesses across the globe, the diffusion of e-commerce is not
uniform among developed and developing countries. A cursory glance at Table 2 will
reveal that though developing countries like China and India lead in terms of number
of Internet users the Internet penetration among population in developing countries is
very low when compared to the developed countries such as USA or Canada. As a re-
sult of the high Internet penetration among its population, the developed countries are
able to deploying EC to its advantages, whereas developing countries are still trail-
A review of e-commerce literature on India and research agenda 85

Table 2 Top 20 countries with highest number of Internet users

# Country Internet users, Penetration % of world Population User growth

or region June 30, 2008 (% population) users (2008 Est.) (2000–2008)

1 China 253,000,000 19.0 17.3 1,330,044,605 1, 024.4%

2 United States 220,141,969 72.5 15.0 303,824,646 130.9%
3 Japan 94,000,000 73.8 6.4 127,288,419 99.7%
4 India 60,000,000 5.2 4.1 1,147,995,898 1, 100.0%
5 Germany 52,533,914 63.8 3.6 82,369,548 118.9%
6 Brazil 50,000,000 26.1 3.4 191,908,598 900.0%
7 United Kingdom 41,817,847 68.6 2.9 60,943,912 171.5%
8 France 36,153,327 58.1 2.5 62,177,676 325.3%
9 Korea, South 34,820,000 70.7 2.4 49,232,844 82.9%
10 Italy 34,708,144 59.7 2.4 58,145,321 162.9%
11 Russia 32,700,000 23.2 2.2 140,702,094 954.8%
12 Canada 28,000,000 84.3 1.9 33,212,696 120.5%
13 Turkey 26,500,000 36.9 1.8 71,892,807 1, 225.0%
14 Spain 25,623,329 63.3 1.8 40,491,051 375.6%
15 Indonesia 25,000,000 10.5 1.7 237,512,355 1, 150.0%
16 Mexico 23,700,000 21.6 1.6 109,955,400 773.8%
17 Iran 23,000,000 34.9 1.6 65,875,223 9, 100.0%
18 Vietnam 20,159,615 23.4 1.4 86,116,559 9, 979.8%
19 Pakistan 17,500,000 10.4 1.2 167,762,040 12, 969.5%
20 Australia 16,355,388 79.4 1.1 20,600,856 147.8%

TOP 20 Countries 1,115,713,572 25.4 76.2 4,388,052,548 284.5%

Rest of the World 347,918,789 15.2 23.8 2,288,067,740 391.2%
Total World—Users 1,463,632,361 21.9 100.0 6,676,120,288 305.5%

Source: www.internetworldstats.com

ing far behind. Apart from this, other issues such as lack of technology infrastructure,
lack of awareness, lack of skilled human resources, and the lack of government initia-
tives, including various economical and social factors are cited as hurdles that prevent
pervasive EC adoption in developing countries. On the flip side of it, some firms in
developing countries do adopt EC in spite of the hurdles mentioned above.
This study examines the status of EC existing in India and examines the available
literature on E-commerce adoption in India and puts forth opportunities for future
research.

2 Internet and E-Commerce development in India

The Republic of India is the fourth largest economy, with US$ 3 trillion GDP in terms
of Purchasing Power Parity (PPP) after USA, China, and Japan.1 It is the seventh

1 http://india.gov.in/knowindia/india_at_a_glance.php. Accessed on 10th February, 2008.

86 S. Vaithianathan

Table 3 India’s expected real GDP growth: 2007–2012

2007 2008 2009 2010 2011 2012

Real GDP growth (%) 7.8 7.5 7.2 7.3 7.7 8.0

Source: http://www.economist.com, the economic intelligence unit—country data

Table 4 Growth of cyber-café in India

Year 2001 2002 2003 2004 2005E

No. of cyber cafes 18,000 33,400 48,750 74,000 105,350

Year 2006E 2007E 2008E 2009E 2010E

No. of cyber cafes 126,420 151,704 182,045 218,454 262,145

Source: IMRB-CII Report Broadband

largest country in the world and covers an area of 3.3 million Sq km. India has a
population of 1.028 billion in 2001, with an annual growth rate of 1.6 percent in 20082
and the population as on July 2008 is 1.15 billion (exact figures—1,147,995,904).
India has 28 states and 7 union territories. As of 2008, the GDP per capita (PPP) of
the country stood at US$ 2900.3 In terms of GDP-composition by sector, services
sector contribute 56%, agriculture sector and Industry sector contribute 22% each.
Indian economy’s Real GDP growth (on an expenditure basis) is forecast to slow
from an estimated 7.8% in fiscal year 2007/2008 (April–March) to an annual average
of 7.5% in 2008/2009–2012/2013 (see Table 3).
As per IMRB the cybercafé market has grown at higher rates, averaging a YoY
growth of 45% over the last 5 years. (refer Table 4.)
The size of B2C e-commerce Industry for the year 2006–2007 was computed to
be around Rs. 7080 crores. The market is expected to reach the mark of Rs. 9210
crores by the end of 2007–2008, a growth of about 30% over the current year [14].
As per datamonitor report [9], the Indian Internet access market generated a to-
tal revenue of $2.6 billion in 2007, representing a compound annual growth rate
(CAGR) of 38.2% for the period spanning 2003–2007. In comparison, the Chinese
and Japanese markets grew with CAGRs of 19.7% and 18.7%, respectively, over the
same period, to reach respective values of $14.1 billion and $13.7 billion in 2007.
Further, the market consumption volumes have increased with a CAGR of 55.7% be-
tween 2003 and 2007, to reach a total of 108.7 million users in 2007. The market’s
volume is expected to rise to 322.4 million users by the end of 2012, representing a
CAGR of 24.3% for the 2007–2012 period. It is further estimated that India generates
a 6.3% share of the Asia-Pacific Internet access market. In comparison the Chinese
market accounts for 33.8% of the regional market revenues.

2 http://www.censusindia.gov.in/Census_Data_2001/India_at_glance/glance.aspx. Accessed on 10th Feb-

ruary, 2008.
3 https://www.cia.gov/library/publications/the-world-factbook/geos/in.html. Accessed February 2009.
A review of e-commerce literature on India and research agenda 87

Table 5 Key indicators of Internet growth

Key indicators (Year:2007) India China USA

Broadband subscribers (per 100 people) 0.28 5.04 21.75

Internet users (per 100 people) 17.80 15.91 72.94
Mobile phone subscribers (per 100 people) 20.80 41.46 84.67
Secure Internet servers (per 1 million people) 1.00 0.68 1060.39
Telephone mainlines (per 100 people) 3.49 27.69 54.10
Personal computers (per 100 people) [year:2006] 2.79 5.65 80.33

Source: World development indicators—WDI online

Besides, the number of mobile phone subscribers in India is estimated to be 260

million at the end of March 2008 as compared to 262 million in the US. The total
number of wireline and wireless telephone connections in India has also crossed 300
million connections. India may now be second only to China, which had about 540
million connections at the end February, 2008 [1]). Some of the key indicators of
Internet growth in India in comparison with China and US are given in Table 5.
India also has achieved growth in leaps and bounds in telecommunication sector;
with tele-density increased by 18% in the past decade comparing to the growth of
mere 1.92% in 50 years from 1948 to 1998. India now has the fourth largest telecom
network after China, USA, and Russia with lowest tariff.4 With an impressive growth
in Information and Communication Technology (ICT)5 sector mainly after liberal-
ization in 1991, Indian firms were well poised to reap the benefit of the e-commerce
applications, but so far have not realized the potential.
Regarding software and services exports, India’s exports are expected to cross
USD 40 billion and the domestic market is expected to touch USD 23 billion in FY
2008 (NASSCOM6 ). Indian IT Sector revenue is aggregated at USD 64 billion in
FY 2008, and expected to cross USD 73–75 billion in overall software and services
revenues, by FY2010.7 The ICT industry has been an important driver of India’s eco-
nomic growth in recent years and will continue to be so in future. The ICT industry
has already contributed 5.4 percent of GDP in 2006, up from 4.8 per cent in 2005.
The ICT sector is also a major source of employment in India; the number of ICT
professionals employed increased from 284,000 professionals in 1999 to 1.3 mil-
lion in 2005, and it is nearly 1.6 million in 2007.8 According to NASSCOM, ICT

4 http://www.trai.gov.in/achievments/achievment.pdf. Retrieved January 2008.

5 Definition: The term “Information and Communication Technologies” (ICT) refers to technologies de-
signed to access, process and transmit information. ICT encompass a full range of technologies—from
traditional, widely used devices such as radios, telephones or TV, to more sophisticated tools like comput-
ers or the Internet. The mix of technologies used should be determined mainly by the specific local context
and demand.
6 NASSCOM stands for National Association for Software and Services Companies. NASSCOM® is the
premier trade body and the chamber of commerce of the IT-ITeS industries in India.
7 http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=53404. Retrieved 14th February
2008—The Strategic Review 2008, NASSCOM Report.
8 Source: NASSCOM, Indian IT Industry—Fact Sheet, February 2007. http://www.nasscom.in.
88 S. Vaithianathan

related service exports (NASSCOM definition of ICT related services includes Busi-
ness Process Outsourcing (BPO) services, Information Technology (IT) software and
services) grew by 34.6 per cent (CAGR) annually between 2000 and 2006, from US$
4 billion to US$ 23.6 billion respectively. It is estimated that the export value could
reach US$ 60 billion in 2010.
Gartner industry research firm has estimated India’s Information and Communica-
tion Technology (ICT) market to reach $24.3 billion by 2011, with an annual growth
of 20.3 per cent.9 With the positive climate for ICT growth, India is struggling to
make inroads in terms of successful EC adoption. Hence it is very important for a de-
veloping country like India to examine the issues encompassing EC adoption, which
would help the widespread adoption of EC across the country and reap the benefits
there of.

3 Literature review

Firms across the world have implemented EC and have reaped the benefits that ac-
crued due to the EC adoption. Some of the benefits include improvements in opera-
tional efficiency and revenue generation by integrating e-commerce into their value
chain activities [5], access to wider range of markets [4, 12, 13, 32], greater po-
tential for partnership with suppliers and vendors [18, 38], improved customer ser-
vices [2, 6, 38], 24 * 7 accessibility [10, 23], flexibility in administration and part-
nership [4], information update [3, 33, 38], lower transaction costs [2, 7, 25, 38],
product/service differentiation [4, 6, 19], ability to enter supply chain of larger com-
panies [11, 19], so on and so forth. Though adoption of EC provides various benefits
as mentioned above and also, it has been widely acknowledged that the adoption
of EC by businesses in developing countries is an important economic indicator of
growth [26, 40], many firms in the developing countries like India, China or South
Africa still have not realized the potential benefits of EC.

3.1 Review of EC adoption literature in India

Keyword search on “E-Commerce adoption in India” “e-business in India”

“E-Commerce and India” and “e-business and India” in various databases like EB-
SCO, ProQuest, and Emerald Management Xtra found the following ten
e-Commerce/e-business research articles done in Indian context. Table 6 provides
overview of the studies discussed below.
Raven et al. [30] compared India and China’s approaches in adoption of
e-business. Based on the literature survey and secondary data, the study analyzed
various factors influencing the growth of e-businesses in the two countries. The fac-
tors examined include government policy and focus, existing technology infrastruc-
ture regulatory environment, experience and understanding of business operations,
and culture, among others. The study concludes that China appears to be ahead of

9 http://www.ibnlive.com/news/india-tech-market-pegged-at-243-bln-by-2011-gartner/58372-11.html.
Retrieved on 8th February, 2008.
A review of e-commerce literature on India and research agenda 89

India in the infrastructure, but India is ahead in e-readiness. Further, it states that both
countries are poised for rapidly increasing e-business, however, problems of poverty
and inequality between urban and rural connectivity must be resolved to really take
advantage of e-business in both the countries.
Malhotra and Singh [24] studied the determinants of Internet banking adoption by
banks in India. Panel data of 88 banks in India covering the financial years 1997–1998
to 2004–2005 was collected through CMIE (Centre for Monitoring Indian Economy)
database. Logistic regression analysis was used, the dependent variable is categor-
ical with a value of 1 if a bank adopted Internet banking during the study period
and 0 otherwise. Independent variables included in the study are firm size, firm age,
bank deposits ratio, average wages, expenses (fixed assets & premises), ROA (ratio of
average net profits to average assets), market share, average number of branches, per-
centage of banks adopted Internet banking. The results of the study prove that Bank
type (Private), firm size, bank deposits ratio, firm age, market share, average number
of branches, percentage of banks adopted Internet banking and expenses, are found
to be significant in adoption decision. Wage and ROA are found to be insignificant.
This study contributes to the empirical literature on diffusion of financial innova-
tions, particularly Internet banking in Indian context. Most of the study on adoption
of technology was related to developed markets like US and Europe, this study is
an important contribution to evolving literature as it dealt the problem of technology
adoption in developing country context.
Study by Tarafdar and Vaidya [36] examined the factors that determine the orga-
nizational inclination to adopt E-Commerce (EC). The study proposes a framework
based on the qualitative data on four financial firms in India collected through mul-
tiple case study design. Face to face interview was used to collect primary data and
existing database, company documents, press reports and websites are used to collect
secondary data. The framework describes two broad factors—leadership character-
istics and organizational characteristics—to explain the influence of organizational
factors on the propensity to employ EC technologies. The study found that both
leadership and organizational characteristic influence EC adoption. It establishes that
leadership characteristics influence adoption of EC technologies in centralized orga-
nization and organizational characteristics influence EC adoption in de-centralized
organization. The study also found that characteristics of Information Systems pro-
fessional and organization structure influence EC adoption.
Another study by Tarafdar and Vaidya [36], analyzes organizational and strate-
gic imperatives that influence Information System (IS) assimilation in Indian orga-
nizations. IS assimilation here refers to the extent to which a system or technology
becomes diffused in organizational processes. The study is based on multiple case
study method. Data on nine firms which have deployed IS was collected through
face to face structured interview involving middle managers, senior managers of IS
and other departments. The study examines the nature of the system present—data
processing/transaction oriented, operational, strategic—and how these systems af-
fected key operational processes. Strategic imperatives are examined by analyzing
the environmental factors—presence or absence of government regulation, pressure
from customers, suppliers and competitors, and strategic stance—whether product
and process changes, and the consequent IS deployment were proactive or reactive.
90 S. Vaithianathan

Organizational imperatives were investigated by qualitatively assessing six factors—

top management support; IS department knowledge of business, technology and in-
volvement in IS deployment, IT literacy of managers, management style; presence
of IT champions and availability of IT resources. Data was analyzed across-case
and within-case. The study identifies three categories of organizations—innovative
IS users, enlightened IS users and reluctant IS users—with respect to IS assimilation,
and describes strategic and organizational factors characteristics of each group. The
study also traces the evolution of the IS application portfolio in each of the studied
firms and analyses accompanying changes in strategic and organization factors. In
short, the paper presents an integrated and first level analysis of strategic and orga-
nizational imperatives that have influenced the assimilation and evolution of IS in
Indian organizations.
Viswanathan and Pick [42] examined the issue of e-commerce in India and Mex-
ico from the framework of developing countries as suggested by Tallon and Krae-
mer [34]. The framework included critical factors that might impact the diffusion
of e-commerce. The factors are government policy, legal framework, technology in-
frastructure, relationship with developed economies and extent of e-commerce us-
age by individual, corporate and government. The study’s primary focus is on India.
Mexico is analyzed more briefly, and compared with India based on common interna-
tional datasets. The analysis and the data presented in this paper represent a synthesis
of data from secondary research and data from interviews conducted with senior ex-
ecutives in the IT industry in India and Mexico. The study suggests that substantial
efforts have to be made to invest in telecommunications infrastructure, and to create
a culture of electronic payments and e-commerce usage that will support economic
growth.
Lal [22] examined the determinants of the adoption of e-business technologies by
manufacturing firms in India. Data was collected using questionnaire as survey in-
strument on 51 firms located in New Okhla Industrial Development Area (NOIDA),
India. The main objective of the study is to identify and analyze factors that discrim-
inate advance users of e-business technologies from others. The paper used forward
stepwise multivariate discriminate technique to identify the discriminants of three
types of firms, that is, offline, online and portal using firms. Offline firms include
the firms that use electronic mail systems for business activities, online firms include
all the firms with dynamic web sites capabilities, and portal based e-business firms
are the one that uses latest technology. The variables used in the analysis include
managing directors’ educational qualifications, technology collaboration, bandwidth,
wage rate, firm size, export intensity, profit margin and perceived usefulness mea-
sured by efficiency in business transaction and competitiveness. Wage rate and scale
of operations emerged as significant discriminates of advanced users of e-business
technologies. It was also found that firms that are more internationally oriented uti-
lize high bandwidth, that is, the study establish positive association between types of
e-business technology used by firms and bandwidth. Study suggests that in order to
boost the diffusion of Internet, the country should legalize audio/video/data commu-
nication on existing high frequency medium such as video cables. Also it suggests
creating proper local, national and global information infrastructure to derive maxi-
mum benefit from Information Communication and Technology (ICT) revolution.
A review of e-commerce literature on India and research agenda 91

Table 6 E-commerce literature in Indian context

Study Objective Variables Type of study
(data source)

Raven et al. [30] e-business in India and Environmental (regulatory, Conceptual

China—Comparative government policy), technological (secondary data)
study and cultural characteristics
Malhotra and Determinants of Internet Organizational and Market Empirical (secondary
Singh [24] banking adoption in characteristics data using CMIE
India database)
Tarafdar and Influence of Leadership characteristics and Case study
Vaidya [35] organizational factors on organizational characteristics (structured interview)
the propensity to employ
EC technologies
Tarafdar and Analyze organizational Organizational and Case study
Vaidya [36] and strategic imperatives Environmental characteristics (structured interview)
that influence
Information System (IS)
assimilation in Indian
organizations
Viswanathan and Comparative study on Environmental (government Conceptual
Pick [42] issues in e-commerce policy, legal framework), (secondary data
adoption in India and technological relationship with sources and
Mexico developed economies and extent interviews)
of e-commerce usage by
individual, corporate and
government
Lal [22] Determinants of the Managing directors’ educational Empirical
adoption of e-business qualifications, technology (questionnaire)
technologies by collaboration, bandwidth, wage
manufacturing firms in rate, firm size, export intensity,
India. profit margin and perceived
usefulness
Kuthiala [20] Opportunities and Discusses issues relating to Conceptual
challenges that India E-commerce standards, online (secondary data
faces in adoption of security, legal, government sources)
e-commerce support so on and so forth
Dasgupta and Analyze status of Discusses features of e-insurance Conceptual
Sengupta [8] e-commerce in Indian in comparison with traditional (secondary data and
insurance industry insurance business. Features of market reports)
online insurance and highlights
the potential to reach rural
consumer in India
Vishwasrao and Examine the ongoing No. of collaboration, Empirical (secondary
Bosshardt [41] technology adoption collaboration—foreign or data using CMIE
behavior of otherwise, age of firm, total database)
foreign-owned and assets, total sales, net profit,
domestic firms in India herfindhal index, R&D
expenditures by industry as
percentage of sales
Lal [21] Determinants of Entrepreneur characteristics Empirical
adoption of Information measured by entrepreneur’s (semi-structured
Technology (IT) in India qualification, importance given to questionnaire)
market share, R&D and quality
consciousness, import and export
intensity, work force skill and
firm size
92 S. Vaithianathan

Kuthiala [20] discusses the opportunities and challenges that India faces in adop-
tion of e-commerce. The study is exploratory in nature and based on secondary data
obtained from various sources. It outlines the prospects of e-commerce adoption and
potential gains that India can make in the global business by e-commerce adoption.
It discusses that India stand to gain from shifting to e-commerce. Quoting the NASS-
COM study done in 1999, the study states that India has the potential to create e-
business worth $1.5 billion by 2004 and around $10 billion by 2008. Lots of opportu-
nities exist for small and medium enterprises to make use of opportunities offered by
e-commerce. Finally it urges government to take initiatives in promoting e-commerce
enterprises, in providing secure online transactions, and suitable legal environment.
Dasgupta and Sengupta [8] paper on e-commerce in Indian insurance industry dis-
cusses the features of e-insurance in comparison with the traditional offline insurance
service. The authors put forth that e-insurance offers benefits such as reduction in
search cost and hidden cost, price comparison for customers, and benefits such as
opportunity to have niche market, first mover advantage and product bundling for
insurance companies going online. Further, it discusses that status of e-insurance in
India is still formative stage, but stands to gain particularly from the rural markets
since the availability of insurance agent is very less compared to urban markets. The
study is conceptual in nature and offers insights based on market reports and data
from secondary sources.
Vishwasrao and Bosshardt [41] used a theoretical framework developed by Katz
and Shapiro (1987) to examine the ongoing technology adoption behavior of foreign-
owned and domestic firms. Firm level data on 1400 medium to large Indian firms from
1989 to 1993 was used to test the model. Probit and Poisson estimation was used to
analyze the data and model. Variables included in the study are no. of collaboration,
nature of collaboration—foreign or otherwise, firm age, total assets, total sales, net
profit, herfindhal index, R&D expenditures by industry as percentage of sales. Results
of the study throw some interesting light on technology adoption behavior of foreign
firms. In general, it shows that liberalization happened in India after 1991 has positive
impact on technology adoption, but it is found that foreign firms are quick to take
advantage than domestic firms. R&D expenditure is found to be not significant for
technology adoption, firm size (large firms are more likely to adopt) and age of firm
are found to be significant. Also it is found that foreign firms adopt new technology
when profits are down, and doesn’t adopt technology in competitive markets.
Lal [21] studied the determinants of adoption of Information Technology (IT) in
India. The study was based on 59 electrical and electronic goods manufacturing firms
situated in NOIDA. Semi-structured questionnaire were used to collect the data. The
study examined the factors influencing the degree of IT adoption by firms. The factors
included are entrepreneur characteristics measured by entrepreneur’s qualification,
importance given to market share, R&D and quality consciousness, firm’s interna-
tional orientation factors measured by import and export intensity, work force skill
and firm size. The sample firms were divided into four categories depending on their
intensity of IT use, these are:
(1) non-IT firms (firms that do not use IT tools);
(2) low-level of IT users (firms using only MIS for office automation);
A review of e-commerce literature on India and research agenda 93

(3) moderate level of IT users (these firms have adopted CAD/CAM in addition to
MIS); and
(4) high level of IT using firms (firms that have adopted FMS in addition to
CAD/Cam and MIS).
Ordered probability model (PROBIT) was used since the dependent variable is cat-
egorical and follows ordinal ranking scale. The estimates were obtained by maxi-
mum likelihood method. The study found that entrepreneur’s qualification, impor-
tance given to market share, R&D, export intensity, work force skill and firm size
influence the degree of adoption of IT by the firms.
Apart from the studies mentioned above, there are quite handful of research reports
and survey based studies done by Internet and Mobile Association of India [14],
IMRB International [15], Datamonitor [9, 27], and Internet and Online Association
[16] which presents with quantitative figures, the status of e-commerce existing in the
country.

3.2 Implications and limitations

While the studies and research reports discussed above have given the needed initial
push and awareness about potential benefits of e-commerce adoption, still govern-
ment, firms and individuals alike have not been able utilize the opportunities that
e-commerce has in store. Further only handful of EC studies exists in Indian context
unlike in developed countries like US or UK. A cursory glance of Table 6 reveals
that most of the studies are conceptual in nature, and mostly based on secondary data
sources. Given the lack of literature on EC in India, these studies have greatly con-
tributed in understanding better the status of EC existing in India and have served
as point of departure for future research. But the subject as such hasn’t received its
attention due in Indian context.
Main limitations of the conceptual/case based studies mentioned above are that the
conclusions are based on exploratory findings and from previous literature and hence
need to be supported further by similar case studies in different setting or by statistical
testing. Also there is dearth of theoretical model or validated instrument to understand
the issues encompassing the EC adoption in Indian context. Given the complex nature
of phenomenon—here e-commerce—and numerous factors (technological, manage-
rial, cultural, social, economical and institutional) affecting the adoption decision, it
provides ample opportunity to conduct further research either to support the findings
or bring in new insights to help managers, policy makers and people to understand
better the phenomenon of EC and reap the benefits that it could offer.
The next section put forth the research agenda for the future.

4 Research agenda for the future

In all, numerous opportunities exist for India in order to expand the scope of
e-commerce research and to benefit from the same. Individuals, organizations, policy
makers and government alike are poised to gain from insights that could be offered
by research on EC. Some of the issues that could be worth researching are:
94 S. Vaithianathan

• Theoretical model for EC adoption from India’s stand point could be developed and
could be empirically validated across different firms’ size, and different industry
sectors like automotive, financial, retail so on and so forth.
• Further EC adoption factors might vary based on organization type (public, private
or government owned); organization size (small, medium, large and SMEs). Hence
research could be carried out to reveal the same and document the difference in
approaches and motives behind EC adoption by different type of firms.
• From the EC research done in developed countries, it is found that government
policy and support is one of the critical factors in ensuring wide spread adoption
of EC in a country. So role of government and related issues should be captured to
aid the government in taking necessary steps to ensure the same.
• Studies could be done specifically concentrating on rural firms and their inclination
to adopt EC and to identify critical success factors for rural sector to reap the
benefit that EC has to offer.
• Also individual user perception about utilizing various applications of e-commerce
like online buying and selling, Internet banking, stock trading, various bill pay-
ments services can be researched. The antecedents and consequents of individual
usage might throw light on motives behind their online usage pattern. The firms can
accordingly deploy their strategies to lure the consumer to buy products/services
online.
• A comparative study on adopters and non-adopters might well unfold facilitating
and inhibiting factors for the firms to go online. The same study can be repeated
for different sectors to find whether the motivating and demotivating factors vary
across different sectors.
• Further role of Culture, trust and individual values in EC adoption can be re-
searched at individual level and organizational level.
• Furthermore, impact of EC adoption on firms’ performance can be studied to clar-
ify and capture how far the EC adoption has improved the firm’s bottom line.
• Also there are many validated theoretical framework on EC adoption like Diffu-
sion of Innovation [31], Technology–Organization–Environment [37] done in de-
veloped countries context, the applicability and validity of those models could be
assesses from businesses in India.

5 Conclusion

It is quite understandable from the facts presented so far that a little research on
e-commerce adoption exists in Indian context. With the Internet users in India well
beyond 1 billion [9] in 2008 and increasing year on year, there are lots of benefits that
this Internet based e-commerce will bring to the fore. To mention a few benefits, or-
ganizations can achieve cost reductions, can improve their revenues, and can provide
enhanced services by incorporating EC. For the individuals, online buying/selling can
save time, search costs and can avail best offers/discounts associated with purchase
of products/services.
Also given the facts that India’s economy is growing steady at a GDP of 7.5%, size
of B2C E-commerce growing at an annual rate of 30%, IT sector revenue expected
A review of e-commerce literature on India and research agenda 95

to cross USD 73–75 billion in overall software and services revenue by FY2010
and telecommunication sector’s impressive growth with 300 mn wired and wireless
telephone subscribers, the country has lagged behind in the application of EC. The
growth of EC could provide a major contributor for economic growth in India. Draw-
ing a leaf from the pages of organizations in developed countries that has effectively
realized the benefits offered by EC, it is time that India should jump in to the band-
wagon and follows the suit before being left behind.
From the literature review, it can be understood that so far scant attention has
been paid to the EC research in India, more and more research on this field in the
areas outlined in the previous section will surely make the firms to appreciate and
realize the advantages of EC adoption. Thus the paper aims to put forth that there is
more to organizations/individuals and country as a whole to be benefitted by wide
spread adoption of EC by firms across the country. India has positive climate for the
growth of EC in terms of good telecommunication network, increasing Internet users,
reasonably good technology infrastructure, but still has not realized the potential of
EC. One way to achieve the widespread adoption of EC by firms is to understand the
factors and issues influencing the EC adoption and thereby taking necessary measures
to counteract the same. In short, a problem well understood is half solved and research
is one sure way to achieve it, if not the only way.

Acknowledgements I am grateful to Dr. V. Nagi Reddy for his able guidance and invaluable suggestions
in completing this paper. My thanks are due to two anonymous reviewers for their valuable comments.
I acknowledge the support provided by Mrs. Parameswari Sridhar.

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Sridhar Vaithianathan is an assistant professor in Information Sys-

tems department and a doctoral candidate at IBS, Hyderabad—a Con-
stituent of Icfai Foundation for Higher Education (IFHE), Hyderabad,
India. He is in the field of education and training for eight years. He
received his BE and MBA degrees from M.S. University, Tamilnadu
and National Institute of Technology (NIT), Warangal respectively. He
is also a NET (National Eligibility Test for lectureship and research in
India, a test conducted by the national educational testing bureau of
University Grants Commission (UGC)) qualified faculty in manage-
ment studies.
He had been to University of Toledo, USA as a visiting scholar for
about a year where he got the opportunity to do research alongside
with some of the distinguished professors and international scholars.
He has attended and presented papers in renowned conferences both
national and international. Some of them include, conferences hosted
by Midwest Decision Sciences Institute (DSI), Association of Information System (AIS), Indian Institute
of Management (IIM) and Pacific Asia Conference on Information Systems (PACIS). His teaching and re-
search interests include e-commerce adoption in developing countries, Information Security, RFID and
Technology Adoption.