IMPACT OF CULTURAL TRAITS ON E-PROCUREMENT AND E-COMMERCE BEHAVIOR OF ENTERPRISES Bedri Kamil Onur Tas, Ahu Genis-Gruber TOBB University of Economics and Technology Ankara-Turkey ABSTRACT In the latest era, the significant increase in technology adoption enhanced the online procurement process. In this study, the factors affecting the usage and perceived acceptance of e-procurement have been studied. The relationship between cultural properties of the countries and e-Commerce activities of enterprises are found to be significant. This analysis is particularly important for successful implementation of E-Procurement systems. Using e-Commerce data from EU countries, the empirical analysis in this paper has been run using Hofstede’s cultural dimensions. Power Distance Index (PDI) and Uncertainty Avoidance Index (UAI) are found to be important cultural traits that impact e-Commerce behavior of enterprises. KEYWORDS e-Commerce, Cultural Dimensions, Culture, E-Procurement, Panel Data Regression 1. INTRODUCTION E-procurement is becoming increasingly popular in the latest era. Several governments like South Korea, Sweden and Italy are actively using online procurement (E-Procurement) systems and many governments, like Australia and Turkey, are taking actions to implement E-Procurement systems. This study investigates the factors affecting E-Procurement implementations. Our analysis indicates that the relationship between cultural properties of the countries and e-Commerce activities of enterprises is significant. The outputs of this analysis are particularly important for successful implementation of E-Procurement systems. E-Procurement provides increased competitive environment due to higher participation of suppliers. Higher participation of suppliers is essential for the success of E-Procurement (lower purchase prices). Several studies like Iimi (2006) and Onur, Tas and Ozcan (2008) find that increase in number of participants (suppliers) significantly decrease the purchase price of governments. This result is shown both theoretically and empirically. The results of this study argue that governments should take into account of the cultural properties while implementing and designing E-Procurement systems since culture plays an incremental role in technology adoption and E-Procurement participation behavior of enterprises. The countries that implement E-Procurement systems get savings up to 30% as mentioned in the report prepared by the Office of Government Commerce of UK 1 . The main reason of this high rate of saving is the competitive environment. Thus, a successful E-Procurement system requires high participation of enterprises. Using e-Commerce data from EU countries, the empirical analysis in this paper show that two of Hofsetede’s dimensions, Power Distance Index (PDI) and Uncertainty Avoidance Index (UAI), are significant cultural properties that impact e-Commerce behavior of enterprises. Hofstede has made the classification of cultures depending on the data that he has collected from IBM workers, from 64 national subsidiaries with 116.000 workers. His dimension were divided into four groups; Power Distance Index (PDI), Uncertainty Avoidance Index (UAI), Masculinity Index (MAS), and Individualism Index (IND). He contributed the fifth dimension, which is Long-Term Orientation (LTO), afterwards. In UAI, the tolerance of the society for uncertainty and ambiguity is measured. Being 1 UK OGC, 2005, “A Guide to E-Procurement for the Public Sector”. Available at http://www.ogc.gov.uk/ IADIS International Conference e-Commerce 2008 11