Title: Global e-business: firm size, credibility and desirable modes of payment

Authors: Xia Pan, Angappa Gunasekaran, Ronald E. McGaughey

Addresses: College of Business and Management, University of Illinois at Springfield, UH 4042, One University Plaza, Springfield, IL 62703, USA. ' Department of Management, Charlton College of Business, University of Massachusetts – Dartmouth, 285 Old Westport Road, North Dartmouth, MA 02747–2300, USA. ' Department of Management Information Systems, College of Business, The University of Central Arkansas, Conway, AR 72035–0001, USA

Abstract: This paper explores the impact of company size on an important financial consideration affecting the decision to adopt e-business in international trade. We assert that firm size will influence the choice of payment method in global e-commerce. When a Letter of Credit (L/C) is used among global supply chain partners in the e-business setting, payment flows will move faster than the physical flow of products. This asymmetric speed is not preferable for importers, particularly small importers. In this case, the diffusion of e-business adoption will likely be upstream rather than down. We predict that the usance Letter of Credit and usance L/C payable at sight will become more popular as payment modes in global e-business, particularly for Small- to Medium-size Enterprises (SMEs). New ICC regulations for e-business, if actually implemented, will likely popularise a payment mode similar to the current usance Letter of Credit.

Keywords: international trade; payment methods; payment credibility; e-business; electronic business; international supply chain; firm size; supply chain management; SCM; globalisation; SMEs.

DOI: 10.1504/IJBIS.2006.008958

International Journal of Business Information Systems, 2006 Vol.1 No.4, pp.426 - 438

Published online: 07 Feb 2006 *

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