This paper presents the results of an empirical analysis of the determinants of e-business activity across a sample of 26 developed countries and 52 emerging markets. Several "e-readiness" indicators predict actual e-business activity, including Internet infrastructure, computer infrastructure, affordable telephone service, literacy rates, English language capabilities, and logistics infrastructure. No support was found for a linkage between e-business and institutional factors (i.e., country risk, economic freedom, and transparency) or payment infrastructure. Moreover, evidence of path dependence suggests that sustainable first-mover advantages are. conveyed upon early adopters of Internet technologies. Important regional differences also exist, with Asia leading other emerging markets and Eastern Europe lagging. Finally, analysis of a subsample of countries suggests that entrepreneurship rates drive e-business activity. The results document the persistence of the global digital divide and support a broad view of e-readiness, whereby a country's e-business activity depends not only upon information and communication technology (ICT) infrastructure but also upon human capital and logistics infrastructure. The absence of a link between institutional factors and e-business suggests that e-business arises not only when supporting economic institutions exist but also as a means of overcoming inadequate institutional conditions.
