Examining the Impact of E-Commerce on Business Performance in A Business-to-Business Environment: A Buyer's Perspective

Abstract

Abstract We examine the concepts of electronic commerce in the light of the business to business transaction. Ourassessment results in the development of four propositions regarding the impact of electronic commerce onbusiness performance. Our propositions link the adoption of electronic commerce through information flow andspeed of decision making to business performance. From these propositions, we suggest a model of the impactof electronic commerce adoption on business performance. The model implies a mediated link between theadoption of electronic commerce and business performance. If our model is correct, we would anticipate thatthe rate of adoption of business-to-business electronic commerce, while slow to date, would rapidly accelerateand the impact on business performance will be noticable.IntroductionThe ability of the World Wide Web (WWW) to facilitate communication has triggered the need for businesses tothink about new ways of conducting their affairs (Herbig and Hale, 1997 ; Pattinson and Brown 1996 ; Hamill,1997) . As the medium has been suffering from substantial hype, it would appear that business-to-businessoperators have been reluctant to participate in the ecommerce environment, although various research houses arepredicting phenomenal growth in the near future. Forrester Research and Killen and Associates both assess thetotal ecommerce market to be in the trillions in the near future. The similarities of their predictions end there. Ifthe existing ratio between business to consumer (B2C) and business to business (B2B) markets holds in the “neweconomy” then it is expected that the B2B market should be 100 times larger than the B2C market (Caralli,1995). Against this background of uncertainty and potential (Venkatesh 1998), is an opportunity to conductextensive academic research into ecommerce from the perspective of the B2B operation. This paper explorescurrent theory on B2B transactions in the “old economy” and then translates them into an ecommerce setting.These translations are then examined for their likely impact on businesses that adopt the “new economy”approach to business.Conceptual FrameworkIn order to assess the impact of electronic commerce on business to business dealings, we need to first start withthe already well established literature on buyer behaviour. Starting in the late sixties (Strauss 1962) ; (Robinson,Farris and Wind 1967) , organisational buyer behaviour has been dissected and analysed in great detail. One ofthe main thrusts of the more recent work has been to examine the impact of information on the buying process.Duncan and Moriarty (1998) discuss the relationship between the notions of exchange, communication andtechnology setting the stage for more detailed investigation in the future. Earlier work (Larson 1994) indicatedthat there was a strong relationship between information flow and business performance. When this work is heldup beside the recent trend toward electronic commerce, it begs the question of the impact of WWW oncommunications. If increased communication sparks increased performance, then a communication revolutionshould revolutionise performance. Interestingly enough, there are also counter arguments to the likely impact ofthe WWW on performance. (Dawes, Lee and Dowling 1998) suggests that information will have an impact onperformance only when there is a differential in the amount of information available to various firms. Thisimplies that the WWW might well be a zero sum game. However, others (e.g., Lilien et al. 1998) suggest thatany increase in information, and more importantly, information use, will result in a net gain of overall efficiency

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