e-Commerce Metrics for Net-Enhanced Organizations: Assessing the Value of e-Commerce to Firm Performance in the Manufacturing Sector

By Kevin Zhu, Kenneth L. Kraemer. Information systems research, 2002

873 citations recorded by the source corpus.

In this study, we developed a set of constructs to measure e-commerce capability in Internet-enhanced organizations. The e-commerce capability metrics consist of four dimensions: information, transaction, customization, and supplier connection. These measures were empirically validated for reliability, content, and construct validity. Then we examined the nomological validity of these e-commerce metrics in terms of their relationships to firm performance, with data from 260 manufacturing companies divided into high IT-intensity and low IT-intensity sectors. Grounded in the dynamic capabilities perspective and the resource-based theory of the firm, a series of hypotheses were developed. After controlling for variations of industry effects and firm size, our empirical analysis found a significant relationship between e-commerce capability and some measures of firm performance (e.g., inventory turnover), indicating that the proposed metrics have demonstrated value for capturing e-commerce effects. However, our analysis showed that e-commerce tends to be associated with the increased cost of goods sold for traditional manufacturing companies, but there is an opposite relationship for technology companies. This result seems to highlight the role of resource complementarity for the business value of e-commerce--traditional companies need enhanced alignment between e-commerce capability and their existing IT infrastructure to reap the benefits of e-commerce.

Subfields: Information Systems and Management, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/66fcd819260de29cbcaf871dff904dabddfe8160

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Citations in the corpus

Processes, antecedents and outcomes of dynamic capabilities (2014, background): “Even within the studies focusing on economic performance there is considerable variation, and very few rely only on objective measures (Wu, 2007; Zhang, 2007; Zhu & Kraemer, 2002).”
IT Assets, Organizational Capabilities, and Firm Performance: How Resource Allocations and Organizational Differences Explain Performance Variation (2007, positive): “The authors argue that inexperience and high learning costs may explain the surprising result that “the use of e-commerce, together with IT investment, is associated with increased COGS for traditional manufacturing companies” ( Zhu and Kraemer 2002, p. 288 ).”
Research Note - Information Technology in Supply Chains: The Value of IT-Enabled Resources Under Competition (2009, background): “contract manufacturers, logistic providers, and downstream partners ( Zhu and Kraemer 2002;”
Migration to Open-Standard Interorganizational Systems: Network Effects, Switching Costs, and Path Dependency (2005, methodology): “Based on previous studies on data integration (Goodhue et al. 1992), depth is measured by the extent to which Internet standards have been integrated with back-office systems and databases, as well as with suppliers’ databases (Zhu and Kraemer 2002, 2005).”
Organizational career growth, affective occupational commitment and turnover intentions (2012, background): “Finally, as shown in Table 2, the independent variables do not show statistically significant correlations above the .70 threshold (Zhu & Kraemer, 2002) indicating that these variables are distinct.”
Firms patterns of e-business adoption: evidence for the European Union-27. (2009, background): “E-business adoption becomes a significant research topic because it enables the firm to execute electronic transactions along value chain activities (Straub and Watson 2001, Zhu and Kraemer 2002).”
Examining the Impact of Interorganizational Systems on Process Efficiency and Sourcing Leverage in Buyer-Supplier Dyads (2005, background): “A plausible approach in such conditions is to closely integrate activities with the supplier base (Zhu & Kraemer, 2002).”
Business-to-business adoption of eCommerce in China (2007, background): “Firm size Refers to the number of employees in the whole organization, which is one of the most commonly cited factors in the innovation literature [25,83,84,89, 90 ]”
Impact of eBusiness technologies on operational performance: The role of production information integration in the supply chain (2007, methodology): “Consistent with extant literature in eBusiness technologies (Zhu and Kraemer, 2002) we use EFA to develop the constructs and CFA to confirm their properties.”