Danish Model for E-Commerce Diffusion

The forerunners of the EDI Action Plan from 1996 were two policy statements published by the government and prepared for the Danish Parliament. The first statement, "From Vision to Action—Info-Society 2000" (Ministry of Research and Information Technology, 1995) was used as a lever to create awareness of the information revolution's significance. It was stated that the movement towards the Information Society was a public movement affecting everybody. Similar to initiatives in Italy (Kumar, Dissel, & Bielli, 1998) and Hong Kong (Damsgaard & Lyytinen, 1998), the strategy for the EDI Action Plan should be based on a Danish model, ensuring that market forces should not be the only factor determining this development. Although the statement primarily focused on building a strong infrastructure, it also stressed the public sector's obligations to engage in the movement. However, the role of Danish companies was by no means underestimated. It was acknowledged that the opportunities created by the Information Society would be a great challenge to Danish companies. The policy statement pointed out:

"Danish companies must not only effectively introduce new technology for rationalization purposes, it certainly also means that they must be able to transform new technology into new products to respond to special customer requirements."

It was suggested that if companies adopted EDI, it "would result in considerable rationalization gains and a closer interplay between organizations." However, there were no specific directives showing how to achieve the rationalization gains and a closer interplay between organizations. It was announced that the Ministry of Research and IT, the Ministry of Business and Industry, the Danish EDI Council, and the relevant industry and trade associations were about to launch a campaign to further the use of EDI and e-mail in businesses and public administration. However, it was decided to publish another political IT statement before launching the EDI Action Plan.

The next political IT statement, published in 1996, was named "The Info-Society for All—The Danish Model" (Ministry of Information Technology and Research, 1996c). The statement announced:

"… this new technology presents a number of opportunities and problems, which demand political consideration and action. A cohesive, aggressive strategy for how we wish to form developments in Denmark is necessary."

Included in the potent strategy was the EDI Action Plan. The 1996-policy statement stated:

"The importance of a fast, effective, and consistent implementation of, e.g., EDI could hardly be overestimated."

First and foremost, it argued that technological landmarks such as EDI would give Denmark an international lead, improving efficiency of working procedures and the development of new products and production processes.

The EDI Action Plan aimed at providing the necessary conditions for companies and the public sector to reap the gains enabled by EDI. The authors of the EDI Action Plan acknowledged that the growing globalization of commerce made it essential for Denmark to follow the trend of doing business electronically across borders. The parties involved in the EDI Action Plan agreed that EDI as such was not a novelty. However, the diffusion of IT in the Danish society and the decrease in software and hardware prices were likely to create a fertile environment for diffusion of EDI. It was recognized that most Danish companies had a sufficient level of experience and know-how of IT to implement EDI. When the EDI Action Plan was launched in 1996, 50% of the Danish companies in the industry segment exchanged data via telephone or network technologies. Especially exchange of electronic messages to financial institutions had a high diffusion rate among Danish companies (H rl ck, 1996). The relatively new Internet had already been adopted by one out of five companies, and it was reported that 30% of all businesses planned to adopt the Internet in the near future (Ministry of Information Technology and Research, 1996b).

Thus, the time appeared to be ripe for a coordinated effort to spread electronic communications from a few sectors to all sectors in industry and trade. Based on this broad agenda, the EDI Action Plan was launched to the business community and the public sector. The foreword to the EDI Action Plan stated:

"The plan is to provide dynamism and accelerate growth. This will be achieved through the public sector joining forces with a large number of commercial organizations to create joint solutions. By this approach, we will avoid a situation in which everyone waits for everyone else, or in which the approaches chosen are not coherent."

To create the necessary dynamics and consistency, seven initiatives were formulated. The initiatives aimed primarily at supporting the diffusion of EDIFACT-based transactions between private companies and the public sector. There were high expectations to the public sector's capacity in relation to development and implementation. It was clear that the public sector had to take the lead and show a best practice. By the time the EDI Action Plan was formulated, EDIFACT was considered the dominant standard framework for safe interchange of data between computers in different companies. Although some of the international companies used ANSI X.12 as well, the battle on standardization was more concerned with proprietary standards versus EDIFACT than with discussing EDIFACT versus other standards. The policy consensus was that the development of EDIFACT standards would facilitate B2B e-commerce diffusion.

The EDI-agenda had three major objectives:

• End-to-end integration of data from business-to-business, thus eliminating costly reformatting of data and speeding up business cycle times.

• Long-term focus on the use of standards such as EDIFACT within organizations to provide them with security in operations within an increasingly inter-organizational business environment.

• The use of VANS initially to achieve a more "open" data exchange, and format and transport media allowing greater flexibility of choice, costs, and value-addition for large and small organizations.

There was a general process of negotiation between the participants involved in the formulation of the EDI Action Plan, with the goal of strengthening the application of e-commerce in a B2B relationship. The target was to establish technical, organizational, and educational facilities for EDIFACT-based communication in all business sectors, including the financial sector and the public sector's exchange of data with private companies before the end of 1998. The aim was to propagate the application of EDIFACT-based communication within all relevant areas by the year 2000 (Ministry of Research and Information Technology, 1996a).

In the introduction to the EDI Action Plan, it was acknowledged that the project was ambitious and would require involvement from several business sectors and institutions. The timeframe for the adoption and implementation of EDI was short. It was expected that the use of EDIFACT-based communication could be tested and diffused among all relevant sectors by the year 2000. As initiatives one to four in Table 1 show, it was expected that EDI could be implemented by 1998. The means to meet this end included awareness campaigns arranged by the Danish EDI Council. Another approach dealt with making the necessary arrangements to execute public procurement via EDI. However, it was the adopters that carried the main responsibility for acting according to the recommendations in the EDI Action Plan. This strategy was in accordance with the IT policy statement from 1996 entitled, "The Info Society for All—The Danish Model," which stated:

Table 1: Content of the EDI Action Plan from 1996

Initiative	Policy consensus
Establishment of EDI standards in all sectors	No later than 1998, the EDIFACT standard must be established in all industries and sectors, for all commercial documents of significance, such as orders, invoices, payment messages, transport notes, and registration of real property. The goal is to ensure the availability of a vital prerequisite for companies' options to participate in the electronic marketplace within trade, manufacturing, transport, finance, etc.
EDI for public procurement contracts	Through forthcoming EU framework agreements, the public sector will include its suppliers' ability to participate in fully electronically based document interchange as an integral part of its tendering conditions, no later than 1998.
Handling EDI in public-sector financial systems	By the end of 1998, public-sector financial systems will be able to handle all relevant commercial documents in EDIFACT format.
EDIFACT-based interchange of administrative information with the public sector	In order to ease the administrative burden on companies, the opportunity must be created before the end of 1998 for companies operating in areas in which serviceable standards exist to undertake EDIFACT-based electronic reporting to the public sector. Initiatives will be aimed at areas in which there is a need for new standards.
Development of EDI software	A number of initiatives are being aimed at software developers. These initiatives are intended to promote the development of a range of EDI software products destined for the market. The price and functionality of these products must satisfy the needs of all types of companies, regardless of an individual company's level of ambition concerning the use of EDI.
Legislation on digital signatures and electronic documents	New legislation on digital signatures will prepare the way for ensuring that the use of electronic communications is just as secure and clear-cut as the use of conventional communication on paper.
Danish EDI Council as initiator and coordinator	The Danish EDI Council will assume a central initiating and cross-sectorial role in the implementation of the action plan.
Source: Adapted from Ministry of Research and Information Technology (1996a)

"One decisive feature of 'the Danish model' is that without grandiose plans, but precisely through dialogue and effective action, we are in a position to implement the necessary infrastructure quickly and to remove the barriers to it."

This attitude can historically be linked to the long and successful tradition of establishing cooperative dairies and abattoirs in the 19th century. The cooperative movement led to a social and economic lift for a large number of small and often impoverished farmers. The establishment of cooperative dairies and abattoirs improved the quality and quantity of the production benefiting the export of agricultural products to, e.g., Great Britain, which at that time was engaged in industrialization. From a political point of view, the cooperative movement is seen as an important factor in the development of parliamentary democracy. The parallel to the cooperative movement clearly reflected the expectations to the industry and trade associations and individual organizations.

Although the individual initiatives had to be carried out by the industry and trade associations in concert with individual organizations' action plans, the EDI Council was appointed as a coordinating unit. The ministries involved provided limited financial resources. The two ministries granted DKK 24.6 millions (about US$3.5 million). DKK 18 million (about US$2.7 million) were earmarked for the EDI Council's information initiatives and DKK 6.6 million (about US$0.8 million) were made available to projects dealing with standardization issues. The EDI Council would administer the funds.

But although the EDI Council was appointed to monitor implementation of the EDI Action Plan, it had no fiscal authority in relation to the private or public sector. The active role played by the EDI Council mainly resulted in support of several projects and provision of information and publications on EDI to the business community. In their efforts to propagate information about EDI in the business community, the EDI Council presented a definition of EDI to support a shared understanding of the term:

"The term EDI is defined as the exchange of structured, electronic messages. This exchange is conducted with a minimum of human interaction. A requirement for defining an electronic exchange as EDI is that messages are exchanged in a standard agreed upon in advance. The format may be an individual proprietary standard or an international standard, e.g., EDIFACT."

The definition includes the elements outlined in the contemporary definitions used in academia by Hansen and Hill (1989) and Pfeiffer (1992). In this context, it is very interesting that the Danish business and administration environment was exposed to this definition. Compared to the EDI Action Plan, the EDI Council broadened the definition by including proprietary standards. The EDI Action Plan on the other hand favored the EDIFACT standard and encouraged organizations to adopt this standard.

The two IT policy statements focused on building a telecommunication infrastructure to support the Internet, and to gain the benefits and opportunities embedded in this means of transportation of information. The EDI Council's definition of EDI solely outlines the electronic exchange of messages connected to EDI, whereas the means of transportation was considered less relevant. In a similar manner, the degree of organizational integration is subject to individual interpretation, mentioning a minimum of human interaction as the ultimate goal.

Figure 1: Overview of the Two Policy Statements and the EDI Action Plan