Bringing the “e” to Corporate America An Analysis of eBusiness Adoption and its Impact on Firm Performance

1、bringing the “e-” to corporate america: an analysis of e-business adoption and its impact on firm performancefang wu*+department of marketingmccombs school of businessuniversity of texas at austinaustin, tx 78712tel: (512) 232-2764fax: (512) 471-1034e-mail: vijay mahajandepartme

2、nt of marketingmccombs school of businessuniversity of texas at austinaustin, tx 78712tel: (512) 471-0840fax: (512) 471-1034e-mail: sridhar balasubramanian*department of marketingmccombs school of businessuniversity of texas at austinaustin, tx 78712tel: (512) 471-5471fax:

3、 (512) 471-1034e-mail: june 2001we thank anitesh barua, richard briesch, linda golden, phillip zerrillo, raji srinivasan, james westphal, other faculty and doctoral students, and various seminar participants at the mccombs school of business, ut austin for their

4、useful suggestions.* support from the center for customer insight (cci) at the mccombs school of business is acknowledged.+ support from the dora bonham memorial fund at the university of texas is acknowledged. bringing the “e-” to corporate america: an analysis of e-business adoption and its impact

5、 on firm performanceabstractacross industries, firms are actively engaged in the adoption and integration of e-business tools and practices to better manage their internal processes, as well as their interfaces with the external environment. while the importance of e-business initiatives has been wi

6、dely accepted, little is known about (1) how firms differ in their levels and kinds of e-business adoption and integration, (2) the antecedents of such variations across firms, and (3) the impact of the intensity of e-business adoption on firm performance. in this study, a fine-grained framework tha

7、t captures the antecedents and implications of e-business adoption is proposed and empirically tested using data collected from senior managers in four industries (i.e., the telecommunications, computer hardware, semiconductor, and manufacturing equipment industries). applying an adoption matrix tha

8、t captures the depth of e-business adoption across four business function domains, we find that firms differ significantly in the intensity of e-business adoption across these domains, and that the performance implications of e-business adoption are best studied in a domain-specific context. the fin

9、dings of this paper provide new insights into the actual e-business adoption patterns across firms, the antecedents of those adoption patterns, and the firm-level performance implications of e-business strategy.introductionreal economic life, it seems, is a tad more complicated than the input-output

10、 models of economic theorists. pumping investment into a powerful new technology does not instantly and automatically yield productivity gains. at the start of the steam engine-electric motor transition, steam-based investments still worked and were still carried on company balance sheets. to reap t

11、he full promise of electricity, an almost endless number of practical details had to be worked out. that took time and enormous creativity. as with todays dream of the paperless office, no one knew what a fully electrified factory would be like or how best to manage it.-michael rothschild in forbes

12、asap (march 1993)the uncritical praise regarding the rise of the “dot-coms” and subsequent lamentations of their downfall have both obscured a quieter, wide-based adoption and integration of a range of e-business tools and practices across industries. increasingly, both managers and researchers real

13、ize that the power and properties of information can be leveraged in creative ways across functional domains, and that selling online to customers (i.e., e-commerce or e-marketing focused activities) constitutes but a sliver of the potential possibilities engendered by e-business. in parallel, there

14、 is an growing understanding that information technology (it) itself will solve few of a firms problems, and that e-business is less about “throwing away the past and putting in a shiny new future” and more about “leveraging what you already have” (los angeles times, april 2 2001, p. u1).numerous ex

15、amples of forerunners in e-business adoption have been written up in the popular press with much hope, and some hype. for example, according to the economist (1999, p.11 ), dell computer has achieved an “integrated value chain through e-business,” whereas cisco systems has “virtualized” its business

16、 to offer a constant supply of real-time information (p. 12). gm has worked on facilitating both online browsing of dealer inventory and the delivery of “e-price” quotes of the dealers full-line of cars and trucks (wall street journal, march 21, 2001). in the transportation industry, national transp

17、ortation exchange and cargor offer shippers ways to coordinate shipments via digital exchanges (infoworld, dec 4, 2000). newer and better e-business applications allow vendors to conduct advanced auctions as part of their procurement processes (business wire, april 23, 2001).while jargon-laden anecd

18、otal accounts of such advances and numerical statistics extolling their effectiveness are not difficult to find, there is a need to bring a more structured, theoretical focus to bear toward understanding the adoption process within, and implications of e-business adoption for, corporate america. whe

19、reas there have been numerous discussions in the popular press, and more recently, a few academic research efforts in the area, several issues remain unanswered. first, how should the adoption and integration of e-business by firms be measured? for any phenomenon to be studied rigorously, it is cruc

20、ial that it first be measured appropriately. in reality, “e-business” can reflect a blend of a variety of forms and contents related to it adoption and integration. however, the present state of attention to construct measurement in the context of e-business adoption is inadequate. the first contrib

21、ution of this paper is to introduce an e-business adoption matrix with a set of associated scales that captures various facets of e-business. these scales constitute a set of operational measures with established properties that can be employed in further theory testing. our empirical results presen

22、t a snapshot of the current e-business adoption patterns within u.s. corporations and make a strong case for a fine-grained approach toward the study of e-business. (this contribution is consistent with both the gold research priorities demarcated by the marketing science institute, viz., the study

23、of e-business adoption, and the development of firm/marketing performance metrics).next, little is known about the antecedents that influence the variation in the form and extent of e-business adoption in corporate america. by characterizing e-business at a fine-grained level, we are able to demarca

24、te the differential impact of adoption antecedents on various facets of e-business. an organization seeking to implement a particular facet of e-business would find it useful to identify the pivotal elements conducive to launching such a transformation, and pushing it along the desired strategic and

25、 tactical paths. the second contribution of this paper, therefore, is to theoretically motivate and empirically establish the antecedents that influence specific facets of e-business adoption, enabling a deeper understanding of where a firm should focus its attention and resources. finally, the impa

26、ct of e-business on firm performance is worthy of careful examination. in fact, the relationship between it and firm productivity is itself insufficiently established. in grappling with the well-known “productivity paradox” of it, many studies have failed to indicate a strong, positive link between

27、it investments and productivity at both the firm and economy levels (e.g., roach 1987; loveman 1994; barua, kriebel, and mukhopadhyay 1995; strassmann 1990). nobel laureate robert solow pungently observed that “we see computers everywhere except in the productivity statistics.” in this paper we adop

28、t a fine-grained measurement of e-business adoption and examine a series of linkages between these aspects of e-business adoption and measures of firm performance including efficiency, sales performance, customer satisfaction and relationship development. we avoid applying input-output models that d

29、irectly link aggregate it spending statistics with aggregate measures of performancerather, we carefully delineate the effects of specific facets of e-business adoption on performance. this represents the practical reality that certain facets of e-business are more likely to impact selected measures

30、 of performance than others. for example, it is likely that e-business adoption related to the firm-market interface is more likely to impact customer relationships, compared with adoption related to the supplier firm interface. further, a serious confounding effect exists when measures of adoption

31、obtained at an sbu or division level are linked to financial statistics that are generated at the firm level. our field research indicated that e-business adoption patterns can vary widely across divisions/sbus within a single firmhence such associations can be misleading. rather, we measure both ad

32、option and performance at the sbu/division level. therefore, the third contribution of this paper is to examine the differential implications of each facet of e-business for specific dimensions of firm performance. this paper is organized as follows. we first review the relevant literature. then, ba

33、sed on field interviews, we propose an e-business adoption matrix that spans four business functionscommunications, internal coordination/administration, order-taking and e-procurement. the overall framework that links (1) the antecedents of e-business adoption, (2) the adoption intensity, and (3) t

34、he impact of adoption on firm performance, is presented next. we then describe the survey methodology, data collection and scale development. the empirical results are presented next, followed by a discussion of the managerial and research implications of our findings, and the limitations of this st

35、udy.literature reviewour conceptual framework is based both on extant studies and independent theoretical arguments. since e-business is a relatively new phenomenon, there is limited literature that directly addresses its adoption patterns and antecedents within the firm. however, parallel streams o

36、f relevant research exist in the context of organizational adoption of it and innovations, and the development of innovative products. an innovation has been defined as the adoption of an internally generated or purchased device, system, policy, program, process, product, or service that is new to t

37、he adopting organization (daft 1982; damanpour and evan 1984). the antecedents of organizational innovations may exist at individual, organizational, and/or environmental levels, but the organizational factors have constituted the main focus of research. numerous studies, mainly in the management li

38、terature, have examined the role of a range of organizational factors in this context, including, but not limited to: specialization (kimberly and evanisko 1981), functional differentiation (baldridge and burnham 1975), professionalism (pierce and delbecq 1977), formalization (pierce and delbecq 197

39、7), centralization (thompson 1965), managerial tenure (kimberly and evanisko 1981), technical knowledge resources (dewar and dutton 1986), administrative intensity (damanpour 1987), external and internal communication (miller and friesen 1982), and vertical integration (hull and hage 1982). scholars

40、 have also proposed that a number of variables moderate these direct effects on innovation adoption. the proposed moderators variables include (a) organizational type that differentiates between entrepreneurial and conservative firms (miller and friesen 1982), between mechanical, organic, and mixed

41、firms (hull and hage 1982), between manufacturing and service firms (damanpour 1991), and between for-profit and non-for-profit firms (damanpour 1991); (b) the type of innovation that differentiates between administrative and technical innovations (kimberly and evanisko 1981), product and process in

42、novations (ettlie 1983), and radical and incremental innovations (e.g., dewar and dutton 1986; nord and tucker 1987); (c) the stage of innovation that differentiates between initiation and implementation (zmud 1982); and (d) the scope of innovation that differentiates between small and large innovat

43、ions (damanpour 1991). in addition, the hypothesis of schumpeter (1942) that larger organizations are more intensely innovative than smaller ones has itself been studied in over 100 research articles (acs and audretsch 1991).in the marketing arena, gatignon and robertson (1986, 1989) propose and tes

44、t a model of innovation adoption using a set of explanatory variables that capture the demand-side competitive environment (including industry concentration, price competitiveness, demand uncertainty, communication openness), supply-side competitive environment (including the degree of vertical coor

45、dination and the availability of supplier incentives), organizational characteristics (including company centralization and task complexity), and decision maker information-processing characteristics (including tolerance for negative information and positive attitudes toward information heterogeneit

46、y). they find that supply-side factors and information-processing characteristics are particularly influential.another stream of literature has dealt with the relationship between market orientation, innovation, and firm performance. gatignon and xuereb (1997) examine the conditions under which each

47、 of three strategic orientations (customer, competitor, and technology) represents the best choice while developing product innovations. they demonstrate that the firms choice of strategic orientation should be sensitive to both its specific strategic objective and the characteristics of the marketp

48、lace. for example, they demonstrate that a pure technology orientation best suits a firm that aims to lead the marketplace in terms of product superiority, but that a combination of consumer- and technology-orientation is more appropriate in markets characterized by uncertain demand. han, kim, and s

49、rivastava (1998) examine how the three core components of market orientation (i.e., customer orientation, competitor orientation, and interfunctional coordination) affect the two core components of organizational innovativeness (technical versus administrative innovation) en route to affecting corpo

50、rate performance. related literature has examined the linkages between innovation and organizational learning, memory, and/or knowledge. for example, hurley and hult (1998) note that a lack of constructs related to innovation has led to a significant void in market orientation models. they find that

51、 higher levels of innovativeness are associated with a greater capacity for adaptation, and with cultures that emphasize learning, development, and participative decision-making. however, the ability to institutionalize learning in the form of organizational memory may not always lead to favorable r

52、esults. moorman and miner (1997) demonstrate that when the environment is highly turbulent, high memory dispersion can detract from creativity and hinder innovation. likewise, chandy and tellis (1998) demonstrate that a willingness to cannibalize existing investments and assets (including existing p

53、roducts and stocks of knowledge) can be an important precursor to successful radical product innovation.li and calantone (1998) examine how external factors (customer “demandingness,” competitive intensity, and technology change) and internal factors (perceived importance of market knowledge) togeth

54、er influence aspects of market knowledge competence (customer knowledge process, marketing-r&d interface, competitor knowledge process) and r&d strength. they demonstrate that these variables affect advantage embodied in the resulting new products (including product quality, reliability, newness, an

55、d uniqueness), resulting in superior market performance. more generally, numerous scholars across disciplines have examined the construct of organizational learning, and its role in engendering an innovative culture and enhancing competitive advantage (e.g., cyert and march 1963; argyris and schen 1

56、978; daft and weick 1984; sackman 1991; sinkula 1994; sinkula, baker, and noordwier 1997). organizations may also adopt innovations to address fears of being left behind or being singled out. this “bandwagon effect” has been discussed in studies that adopt an institutional, rather than an economic o

57、r efficiency perspective of innovation adoption (e.g., dimaggio and powell 1983; abrahamson and rosenkopf 1993). during innovation diffusion, early adopters are more likely to seek efficiency and profit gainshowever, later adopters are more in the pursuit of legitimacy (westphal, gulati, and sortell

58、 1997). however, mahajan, sharma, and bettis (1988) note that it is important to also examine alternative models of innovation adoption, other than those that reflect a pro-diffusion bias. they find that a “white-noise” random walk model of adoption possesses superior explanatory power compared with

59、 innovation diffusion models in explaining the growth pattern of the m-form organization. a stream of research in the information systems (is) area has examined the adoption of information technology (it) by firms (e.g., dewar and dutton 1986; swanson 1994; zaheer and venkatraman 1994; jarvenpaa and ives 1996). antecedent variables considered here includ