The Relationship between E-Commerce and Firm Performance: The Mediating Role of Internet Sales Channels

ABSTRACT

This paper postulates that the effect of e-commerce on firm performance is not direct and needs to be examined using mediating factors. The Ordinary Least-Squares (OLS) model was employed with the data of the Flash Eurobarometer 439 Survey entitled The Use of Online Marketplaces and Search Engines by small and medium enterprises. The obtained findings provide support for the mediating hypothesis. To be more precise, while the relationship between e-commerce and firm performance is negative, it is positively mediated by certain types of internet sales channels. In particular, the benefits of e-commerce in terms of higher sales are more pronounced when firms use commercial websites and online marketplaces. On the other hand, the interaction between e-commerce and search engines has an insignificant effect on firm performance. This study advances research on e-commerce by emphasizing the importance of mediating effect.