Determinants of E-Commerce Adoption of Philippine Businesses

Since the late 1990s, the internet has developed as a major force in transforming how companies do their business, which led to the rapid expansion of electronic commerce, or e-commerce. In 2016, the Department of Trade and Industry adopted the Philippine E-Commerce Roadmap in recognition of the potential of e-commerce in expanding Philippine businesses. In support to the Philippine E-Commerce Roadmap's first success criteria--having 100,000 Micro, Small, and Medium Enterprises (MSMEs) doing e-commerce, this study investigates the determinants of e-commerce adoption using the Philippine Statistics Authority's Survey of Information and Communications Technology as well as the Annual Survey of Philippine Business and Industry. The study finds that internal factors, such as firm size, availability of computers, access to the internet, and firm use of information and communications technology (ICT) in other aspects of firm operations, primarily determine e-commerce adoption in the Philippines. Further, external factors, such as the growth rate of the industry in which the firm belongs, as well as the market share of the firm have no statistically significant effects on e-commerce adoption. Given these results, this study recommends that bottlenecks caused by uncertainty and security concerns should be addressed. Government agencies also need to support MSMEs' e-commerce adoption, as well as assist firms in adopting ICT. The government can also help provide access to finance to firms intending to adopt e-commerce. Reducing the cost and improving the quality of internet services should be pursued.