1 Chapter Three E-Commerce and the Information Environment in an Emerging Economy: Russia at the Turn of the Century

2 Russia Click here to see what the CIA thinks it knows about Russiahere

3 Issues  Russia at the Turn of the Century  Transition Economies  What’s Really Going On?  The Role of Trust in Business  Communication as a Surrogate for Trust

4 Russia’s E-Commerce in 2000 Reasons for Russia’s slow progress in e- commerce:  Lack of capital investment in IT  Lack of domestic computer manufacturers  Unstable financial practices  Lack of security  Poor information environment due to poor data quality

5 Information Environment in Emerging, Transition Economies Investments required, desired for strategic goals (which?) Poor information environment/infrastructure for e-commerce Inadequate telecoms and market infrastructure Widespread skepticism about economies Poor public data management, fragmented markets Improvements in business culture Organizational shifts and technology shifts E-commerce will exaggerate digital divide

6 Information Environment Poor data quality:  The lack of means to acquire the timely, accurate, and complete data needed to create useful information  Causes of poor data quality: 1.Lack of established business culture 2.Inadequate public data collection 3.Continued impact of the previous Soviet system upon information resource  “Russia’s environment is characterized by deep-rooted information poverty” (Chepaitis, 1994)

7 Data Quality Components of data quality that determine competitive advantage for e-commerce in the 2000 (Harvard Business Review): 1.Intrinsic Data Quality – data have quality in their own right, such as accuracy and freedom from defects 2.Contextual Data Quality – relevance and value of the data for a specific task 3.Representation Data Quality – format and interpretability of the data 4.Accessibility Data Quality – accessibility and security of the data

8 Factors limiting e-commerce in Russia – Part A. Intrusive government planning and regulation Barriers to entry, dictated pricing Clandestine entrepreneurship, black markets Odd accounting practices Unanticipated shortages that disguise demand and inhibit consumption Political fear, widespread information hiding Unconvertible currencies, rudimentary regulation, poor financial services

9 Factors limiting e-commerce in Russia – Part B. Lack of information-based trust Proprietary attitudes towards data, IT, IS training IT- or technology-fostered elites Rigid and hierarchical management styles Reluctance to share information Reliance on oral (not written) traditions in retailing and record keeping Emphasis on price and availability to the exclusion of quality.

10 Information and Trust  Information is a surrogate for trust  Information between people can be covert or overt; the latter requires communication  Consider Prisoner’s Dilemma NY N Y A confesses? B confesses? 5/50/10 10/0 20/20 P/Q: P=Sentence for A Q=sentence for B

11 Beginning of the Transformation  Transition from a command to a demand economy  Availability and increasing affordability of personal computers  Spread of information technology, especially telecommunications  Increasing demand for IT  Utilization of commercial information

12 Comparisons Finland Malaysia USA Singapore  Note Figure 2, pg. 21. Does this still apply and how shall we alter it? Include discussions of other countries we have had.

13 How to Change??? Level of Economic Growth Political System Culture Key MIS Management Issues Multinational Business and IT Strategy Organizational and Departmental Success

14 IT-led Development Economic Payoffs Employment, Productivity and Economic Growth IT Diffusion IT Production and Use Environmental Factors Industrial Policy Industry Structure Education & Skills Technology Policy Infrastructure Indigenous vs. MNC R&D Political, Social and Economic Environment