Documents will not open in browser

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SharePoint

I am having trouble configuring my sharepoint documents to open in a browser. I have the library set to Open documents in the browser under advanced settings, but the documents still open in Microsoft word, not the browser, and there is no option to open in browser when I click the drop down arrow next to the document.

I have read something about web apps being used to open documents in the browser, is this something that needs to be installed on each computer? My reason for wanting to do this is because most people in our office do not use internet explorer and I am trying to find a way to allow sharepoint document links in emails to open in web browsers. At the moment, unless the default browser is set to internet explorer, clicking a link in an email for a sharepoint document results in the document opening in a local folder, not on the sharepoint server.

Thanks for you help. Kate.