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E-commerce and globalisation a case


study of Egypt
DATASET MARCH 2014

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Ibrahim Elbeltagi
University of Plymouth
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CCM
14,3

E-commerce and globalization: an


exploratory study of Egypt
Ibrahim Elbeltagi

196

Plymouth Business School, Cookworthy Building, Drake Circus,


Plymouth, UK
Abstract
Purpose The purpose of this paper is to address how cultures could affect the way different people
use the internet. The study showed that there is a great potential for e-commerce in Egypt in
particular and Arab world in general. However, there are many challenges, where people are used to
paying cash for what they buy, the credit or debit card as an instrument for buying things is not
readily acceptable by public Egyptians.
Design/methodology/approach This is an exploratory study based on analysing secondary
data and observation. The reason for choosing this approach in this stage of research is the lack of
research that deals with this particular issue in the chosen case study.
Findings The results showed that e-commerce has some merit in targeting global customers, if it
considers cultural differences when adopting and applying global marketing strategy. Although there
are many governmental initiatives to adopt ICT on all levels in Egypt, the reality still far behind and
there is still a lot need to be done from both government and private sector to gain the benefits
required.
Research limitations/implications Limitations include the use of secondary data and
observation as the research method in this study. Empirical data and sampling will be required
for further research. A comprehensive cross culture study among Arab countries and how a
framework of culture could affect the online shopping behavior will be required for further research.
Managerial implications are discussed with respect to formulating suitable marketing strategy to fit
with the cultural differences of the Middle Eastern courtiers especially the language, values and
religion.
Originality/value Provides insights for future researchers.
Keywords Electronic commerce, Globalization, Communication technologies, Culture, Egypt
Paper type Research paper

Cross Cultural Management: An


International Journal
Vol. 14 No. 3, 2007
pp. 196-201
# Emerald Group Publishing Limited
1352-7606
DOI 10.1108/13527600710775748

1. Introduction
Developed countries that have been offering e-commerce have shown impressive
improvement in their respective economies (Javalgi et al., 2005) however Middle East in
general, and Arab countries in particular, still lag behind in e-business. The
particularity of local culture, politics and ICT infrastructure are playing an important
role in adopting and usage of global systems (Elbeltagi et al., 2005; Stahl and Elbeltagi,
2004). For example, local usage of Geographical Information Systems in India is
affected by cultural attitudes to maps and cartography. Using maps is not seen as
important in a country where it is usually easier to ask someone for directions
(Walsham, 2001). In China, customers would not choose electronic business for the
reason of convenience, unless the commodities are cheap enough, which is an obvious
fact (Yu, n.d.). In a cross culture study between USA and Greece, it found that there was
a difference between the two countries in terms of uncertainty avoidance which shows
that there is a growing influence of globalization in e-commerce. There are a lot of
authors argue that in the new knowledge economy, in general and e-commerce in
particular, is expected to remove barriers of language, culture and national boundaries
causing a globalize and unified societies (Sagi et al., 2004; Raman, 2000). However, in

order to appreciate how this will come about, one must look at the cultural differences
among countries and the way these differences impact e-commerce. Otherwise
potential consumers might resist and reject the whole idea of buying from international
companies that does not give enough thoughts about their particular culture, political
systems, values and may be religion. Companies that expect to take advantage of
globalization and cater to a world market must be aware of the varying ways cultures
affect e-commerce, in order to be able to use the right strategy that suit its potential
markets.
2. E-commerce challenges and potentials in Egypt
Egypt is moving steadily toward knowledge economy this has been marked by the
formation of Ministry of Communications and Information Technology (MCIT) in
October 1999. Since this date the Egyptian government have set national plans to
encourage private sector participation, to increase and leverage ICT-related
investments, and to create job opportunities; all this because the government is
ambitious and want to use ICT to raise the standards of living of individuals and to
create a prosperous society. That is along with preparing the next generation from
enabled youth to deal with this technology and use it to achieve the development
needed for making of a dynamic society. A society that is so transparent, in terms of
information and speed of decision making, a society that we call now a Global
Information Society (Hashem, 2002).
The business potential of e-commerce technologies is seemingly irrefutable given
the nearly more than 1 billion internet users worldwide by end of 2005. Of these
1 billion users, the largest share, 175 million with an estimated 43.7 million
broadband households, reside in USA (Stylianou et al., 2003). Although growth in
both the USA and abroad is expected to continue unabated, analysts predict that the
US share of this global market will gradually decline. In contrast, other parts of the
world are expected to grow at a faster pace, for example, in Africa and Arab
countries internet users have grown by 400 per cent according to CIA World Fact
book. According to International Telecommunications Union Egypt came on top of
all African countries in terms of internet users. If we consider that most users in
Egypt and other African countries access internet via cafes and other multi-user
locations such as schools and offices, which make an exact count difficult. Egypt in
particular, is expected to gain market share particularly in light of the prediction
that it will surpass other parts of the world especially if the oil prices is continued
to grow as it is at the moment and the change in the perception of both customers
and businesses that the internet applications potentials is booming (Aladwani,
2003). However, there are still many challenges for internet usage in general and
e-commerce in particular. One of the main challenges is internet remains English
language-dominated, and this poses a particular challenge for speakers of languages
which are not written in the Roman alphabet. The World Wide Web and Arabic
browsers have ameliorated that problem somewhat, but text-based areas such as
E-mail remain problematical. The expense of computers, the uncertain quality of
some countrys telephone infrastructure, and governments fear that the new medium
will provide an easy way for dissidents to publish their manifestos and reach
ordinary citizens. One should not be deceived by the rapid growth rates, where there
is, in most of Arab countries, some sort of censorship and surveillance of access to
the internet.

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On the other side most of Arab countries have initiatives to encourage their own
citizen to adopt ICT as a step toward creating information Society, which these
governments think it is paramount step for development either economically or
socially. For example Egypt has initiative called PC for every home. In addition to
that the MCIT have introduced many initiatives to transform both the Egyptian society
and the Egyptian economy (All initiatives can be accessed from the MCITs homepage:
www.mcit.gov.eg/index.asp).
In addition to these initiatives, ICT sector in Egypt witnessed a lot of attention and it
become one of the high priorities of the Egyptian government especially after the first
minister of MCIT, Dr. Ahmed Nazif, promoted to the position of Prime Minister in
August 2004.
There are several critical factors for successful implementation of these initiatives.
These include strong governmental support; a suitable legislative and investment
environment, as well as a state of the art infrastructure and investment in human
resources. When we read and interpret all these initiatives it comes to our mind that a
fully functioning, effective Egyptian Information Society is now just around the corner.
Is these initiatives are taken seriously and followed through? This question needs
another research itself to answer it.
3. E-commerce and globalization
Internet and E-commerce which have been responsible for continuing gradual removal
of barriers of language, culture, values, legal and national boundaries will play an
important role in globalization and accelerate international trade (Raman, 2000; Lee
and Littlejohn, 2004). The internet and e-commerce make use of smart cards to
facilitate payment, doing of our banking online, and a variety of other online services
relevant to e-commerce, common for most western citizens and potentially easy to use
and useful among the majority of Arab consumers (67 per cent) as indicated by some
researchers (Aladwani, 2003; Lee and Littlejohn, 2004). However, internet and ecommerce in a setting of globalization could mean many different things to different
people, because of cultural ways of doing things. In some conservative countries in
Arab world Internet has seemed a dangerous beast until now in other countries it just
medium for elite to use. Also there is a variation in how access is obtained. In several
countries, the government telecommunications monopoly is the only Internet Service
Provider (ISP). In others, including Egypt, Jordan, and Tunisia, there are multiple
competing ISPs.
Bin et al. (2003) indicated that: most American companies today are so focused on
their domestic market that they do not pay any attention to the overseas markets.
Nevertheless, e-commerce is global in nature and the international markets represent
immense potential. Many researchers highlighted that there is a significant cultural
differences regarding online shopping between different regions in the world especially
between western users and others, i.e. Korean internet users and American internet
users (Park and Jun, 2003). Even among what we could perceive as a common western
cultures, researchers found differences in the way that people use the Internet
(Sagi et al., 2004). In addition to that when a comparison is made between the
Internet use among Arab and non-Arab states in general, it is seen that the Arab
countries in general are lagging behind where most of Middle East countries usage of
internet are not Arab, i.e. Turkey and Israel. Even more there are differences among
Arab countries in use of the internet, where most of the use is in the gulf states
(Aladwani, 2003).

As Jupiter Communications reported at the beginning of 2001, two-thirds of


leading USA web sites ignore the needs of non-USA or non-English speaking
visitors and it revealed that because of that the USA share will drop
significantly which will give room to other growing economies, i.e. Europe, China,
South East Asia and other regions to use this opportunity and focus more on
e-commerce.
Egypt as the largest internet market in Africa and in Arab countries would increase
its Internet share considerably as it has the largest number of Internet service
providers. Only about 5 per cent of Egypts population is online (see Figure 1), which
means that there is a great potential for this industry to grow in the near future.
The cultural differences that some US companies in Egypt like Micro Soft and
ORACLE are experiencing include a combination of language and habits of people.
The differences as well include values and infrastructure, which includes payment
system, logistic system, laws, and taxation to name some elements. In the USA, people
are more likely to pay online using a credit card. Seventy per cent of Americans who
shopped online have used a credit card. In Egypt, people are used to paying cash for
what they want, and so the most common method that Egyptians use for ordering
things online is paying cash when the product is received. Most of the shopping sites
established their branch offices in the big cities of Egypt. Part of the reason for this is
that Egypt does not have real credit cards system that reach out to the general public of
the Egyptians either because the commercial banks offer these kinds of services to
elite customers or due to the high level of illiteracy among Egyptians (more than
30 per cent according to informal reports). Egypt as well does not have effective
centralized settlement system and the inherent attitude of the Egyptians people is to
pay cash for what they buy. The Egyptians are also reluctant to get involved in the
internet banking to any great extent if it is available at all (where most of Egyptian
banks still in the process of introducing this service) and even the uptake of the service
for the banks that offer this service is in all means does not match the investments and
the expectations.
It is estimated by the end of year 2007, there would be about 15-20 million people in
the Arab world, or 10 per cent of the total Arab population would have the Internet
connection. As indicated by Pons et al. (2003) and Aladwani (2003) that e-commerce
would greatly revolutionize trade between the Arab countries and other countries and
it is expected that 80 per cent of consumers in this region will use e-commerce if they
have the opportunity to do so.

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Figure 1.
Internet users in Egypt,
MCIT Report, 2005

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4. Conclusion
There are a lot of differences in the way different people use the internet and
e-commerce, and this is largely due to their cultures and their habits. Some people, like
western countries, use credit card as part of their way of life, so that the internet and
e-commerce provides the opportunity for them to expand their operations. In Egypt,
where people are inclined to trust their locality because of the personal touch of
providing the service and the social bonds that could come out of these type of
transactions. In addition to that the habits of paying cash for what they buy explains
why smart card as an instrument for buying things is not readily popular among
Egyptians, especially with the majority of the people from lower and middle class.
Only people in high class use credit and debit cards to pay for their shopping as a
way of showing their class. Therefore, to expect expansion of business through
the Internet would be disappointing for a Western company that hopes to do business
on the Internet in a foreign country that does not use credit card or debit cards as a
way of life.
Based on this it could be concluded that the e-commerce in Arab countries in general
and Egypt in particular depends on unique traits of the society, values, culture,
language and may be religion. Therefore, though e-commerce has some merit in
targeting global customers, it should consider cultural differences when adopting and
applying global marketing strategy. Eventually, proper cultural transformation in
international marketing will be necessary, even in the Internet age.
5. Limitation and future research
This study has some limitations owing to its exploratory stage, and presents several
challenges with respect to theory building and methodology. Empirical data and
sampling will be required for further research. A comprehensive cross culture study
among Arab countries and how a framework of culture could affect the online
shopping behavior will be required for further research.
References
Aladwani, A.M. (2003), Key Internet characteristics and e-commerce issues in Arab countries,
Information Technology and People, Vol. 16 No. 1, pp. 20-32.
Bin, W., Chen, S.-J. and Sun, S.Q. (2003), Cultural differences in e-commerce: a comparison
between the US and China, Journal of Global Information Management, Vol. 11 No. 2.
Elbeltagi, I., McBride, N. and Hardaker, G. (2005), Evaluating the factors affecting DSS usage by
senior managers in local authorities in Egypt, Joural of Global Information Management,
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Hashem, S. (2002), Bridging the Digital Divide in Egypt: Facing the Challenges, UNCTAD
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Stahl, B.C. and Elbeltagi, I. (2004), Cultural universality versus particularity in CMC, Journal of
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Corresponding author
Ibrahim Elbeltagi can be contacted at: i.elbeltagi@plymouth.ac.uk

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