E-business: Revolution, evolution, or hype?

California Management Review

Volumn , Issue 1, 2001, Pages 57-86

  Coltman, Tim ^a   Devinney, Timothy M ^a   Latukefu, 'Alopi ^a   Midgley, David F ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0035731801     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166111     Document Type: Article

References (86)

1. For some examples: D.F. Aldrich, Mastering the Digital Marketplace: Practical Strategies for Competitiveness in the New Economy (New York, NY: John Wiley & Sons Inc., 1999); L. Downes and C. Mui, Unleashing the Killer App: Digital Strategies for Market Dominance (Boston, MA: Harvard Business School Press, 1999); J. Hagel and A. Armstrong, Net Gain: Expanding Markets Through Virtual Communities (Boston, MA: Harvard Business School Press, 1997); E.I. Schwartz, Digital Darwinism (New York, NY: Broadway Books, 1999).
2. For some examples: D.F. Aldrich, Mastering the Digital Marketplace: Practical Strategies for Competitiveness in the New Economy (New York, NY: John Wiley & Sons Inc., 1999); L. Downes and C. Mui, Unleashing the Killer App: Digital Strategies for Market Dominance (Boston, MA: Harvard Business School Press, 1999); J. Hagel and A. Armstrong, Net Gain: Expanding Markets Through Virtual Communities (Boston, MA: Harvard Business School Press, 1997); E.I. Schwartz, Digital Darwinism (New York, NY: Broadway Books, 1999).
3. For some examples: D.F. Aldrich, Mastering the Digital Marketplace: Practical Strategies for Competitiveness in the New Economy (New York, NY: John Wiley & Sons Inc., 1999); L. Downes and C. Mui, Unleashing the Killer App: Digital Strategies for Market Dominance (Boston, MA: Harvard Business School Press, 1999); J. Hagel and A. Armstrong, Net Gain: Expanding Markets Through Virtual Communities (Boston, MA: Harvard Business School Press, 1997); E.I. Schwartz, Digital Darwinism (New York, NY: Broadway Books, 1999).
4. For some examples: D.F. Aldrich, Mastering the Digital Marketplace: Practical Strategies for Competitiveness in the New Economy (New York, NY: John Wiley & Sons Inc., 1999); L. Downes and C. Mui, Unleashing the Killer App: Digital Strategies for Market Dominance (Boston, MA: Harvard Business School Press, 1999); J. Hagel and A. Armstrong, Net Gain: Expanding Markets Through Virtual Communities (Boston, MA: Harvard Business School Press, 1997); E.I. Schwartz, Digital Darwinism (New York, NY: Broadway Books, 1999).
5. A.B. Perkins and M.C. Perkins, The Internet Bubble: Inside the Overvalued World of High-Tech Stocks - And What You Need to Know to Avoid the Coming Shakeout (New York, NY: HarperBusiness, 1999).
6. Booz-Allen & Hamilton, Competing in the Digital Age: How the Internet will Transform Global Business (New York, NY: EIU, 1999).
7. BBC Two, "The Money Programme," March 14, 2001.
8. "Clicked When They're Down," , March 13, 2001.
9. T.M. Devinney, T. Coltman, and D.F. Midgley, "The Strategy Application of e-Intelligence," unpublished report, Australian Graduate School of Management and INSEAD, May 2001.
10. "The Ubiquitous Internet," , February 2001.
11. M. Bensaou and M. Earl, "The Right Mind-Set for Managing Information Technology," Harvard Business Review, 76/5 (September/October 1998): 119-128.
12. Internet guru John Hagel III, quoted in Knowledge@Wharton, March 15, 2001.
13. Devinney et al., op. cit. Note that these numbers represent large bricks-and-mortar players.
14. C. Christensen describes the transistor in terms of its disruptive capability when compared to existing vacuum tube technology. C. Christensen, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Boston, MA: Harvard Business School Press, 1997). The theory of disruptive technology he developed initially to describe innovation in hard disks has since been applied across a range of industries to explain why successful firms loose competitive position. The continual desire by competent managers to produce products and services of ever improving variety and quality eventually creates a situation where functionality outstrips our capacity to use them. This exposes the company to the threat from unexpected disruptive technologies. We account for this dilemma in our treatment by suggesting that revolutionary technology must meet the criteria of pervasiveness and process orientation. Thus revolutionary technology, with its potential to disrupt many industries, is a broader but compatible perspective to Christensen's. That is, some disruptive technologies (for example, the transistor) can also be revolutionary; while others may only disrupt specific industries (for example, polyester tire cord).
15. A. Reinhardt, "The Online Grocery that Works: How Tesco Succeeds Where the Dot-Corms Failed," Business Week (European Edition), October 1, 2001, p. EB14-20.
16. C. Argyris and D.A. Schon, Organizational Learning (Boston, MA: Addison-Wesley, 1978).
17. M. Symonds, "Business and the Internet: The Net Imperative," The Economist - Survey Business and the Internet, 1999.
18. . Some experts think online penetration will never exceed 10 to 15 per cent of book sales [New York Times, April 16, 2001]. For retail business more generally, an international market research firm states that worldwide e-commerce penetration stands at 10 per cent [Taylor Nelson Sofres, July 2000]. However, these numbers relate to having made a purchase in any category in the last month, rather than to the share online spending represents of the value in each category.
19. "Orbitz Causing Dogfight in the Friendly Skies," , March 26, 2001. Significant proportions of these sales are business-to-business transactions rather than consumer purchases.
20. Schwartz, op. cit. This statistic likely still holds. Since 1999 there has been dramatic consolidation in the online grocery industry and the remaining players have restricted their operations to fewer cities than originally envisaged.
21. F.R. Kardes, Consumer Behavior and Managerial Decision Making (New York, NY: Addison-Wesley, 1999).
22. R. Tedeschi, "A Market that Dwarfs Retail E-Sales," New York Times, April 19, 1999, p. 1.
23. L. Garicano and S. N. Kaplan, "The Effects of Business-to-Business E-Commerce on Transaction Costs," Working Paper 8017, National Bureau of Economic Research, November 2000.
24. Nielsen/NetRatings data points to a change in the surfing behavior of North American households toward the end of 2000 with a significant fall in hours spent online. This has been attributed to the novelty of the Internet wearing off. Forrester's Technographic surveys point to the emergence of a small proportion of mature "web-based consumers" at the same time.
25. G.S. Day and P.J.H. Shoemaker, "Avoiding the Pitfalls of Emerging Technologies," California Management Review, 42/2 (Winter 2000): 8-33.
26. P. Timmers, "Business Models for Electronic Markets," Electronic Markets, 8/2 (1998): 3-8.
27. C. Shapiro and H. Varian, Information Rules: A Strategic Guide to the Network Economy (Boston, MA: Harvard Business School Press, 1998).
28. "Building eBusiness Leadership," , April 2001, and "ROI of Europe's B2B Commerce Sites," , May 2001, document these problems, as do many others.
29. R. Kalakota and A. B. Whinston, Frontiers of Electronic Commerce (Boston, MA: Addison-Wesley, 1996).
30. As an example, Schwartz [op. cit.] states that in 1998 E*Trade spent $150 million on mass-media advertising, more than 3 times the amount spent by traditional brands such as Schwab or Merrill Lynch.
31. P. Barwise, "Brands in a Digital World," Journal of Brand Management, 4/4 (1997): 220-223.
32. E.J. Johnson, W. Moe, P. Fader, S. Bellman, and G.L. Lohse, "On the Depth and Dynamics of World Wide Web Shopping Behavior," working paper, Columbia Business School, May 2000. E.J. Johnson, S. Bellman, and G.L. Lohse, "What Makes a Web Site Sticky? Cognitive Lock In and the Power Law of Practice," working paper, Columbia Business School, October 4, 2000.
33. E.J. Johnson, W. Moe, P. Fader, S. Bellman, and G.L. Lohse, "On the Depth and Dynamics of World Wide Web Shopping Behavior," working paper, Columbia Business School, May 2000. E.J. Johnson, S. Bellman, and G.L. Lohse, "What Makes a Web Site Sticky? Cognitive Lock In and the Power Law of Practice," working paper, Columbia Business School, October 4, 2000.
34. R. Schmalensee, "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, 9/2 (Autumn 1978): 305-327.
35. R. Smiley, "Empirical Evidence on Strategic Entry Deterrence," International Journal of Industrial Organization, 6/2 (June 1988): 167-180.
36. J.K. Han, N. Kim, and H-B Kim, "Entry Barriers: A Dull-, One-, or Two-Edged Sword for Incumbents? Unraveling the Paradox from a Contingency Perspective," Journal of Marketing, 65/1 (January 2001): 1-14.
37. Although it could be argued that Internet 2 - with its real-time video - will meet these requirements, in terms of access by typical households, Internet 2 is over a decade away.
38. P. Evans and T. S. Wurster, "Getting Real About Virtual Commerce," Harvard Business Review, 77/6 (November/December 1999): 84-94.
39. Boston Consulting Group, The State of Online Shopping, Boston, MA, 1999.
40. We are grateful to the reviewer who pointed out that Web-bot technology can also be used for collusive purposes.
41. E. Brynjolfsson and M. Smith, "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, 46/4 (April 2000): 563-585.
42. F. Scott Morton, F. Zettelmeyer, and J.S. Risso, "Internet Car Retailing," Working Paper 7961, National Bureau of Economic Research, October 2000.
43. J.R. Brown and A. Goolsbee, "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Working Paper 7996, National Bureau of Economic Research, November 2000.
44. For case studies, see Garicano and Kaplan, op. cit. For commercial data, see .
45. Devinney et al., op. cit. They identify three dominant constraints (cited by more than 50 per cent of respondents as a very significant or significant constraint) - in order of importance: access to skilled people, system integration, and system cost.
46. M.D. Smith, J. Bailey, and E. Brynjolfsson, "Understanding Digital Markets: Review and Assessment," in E. Brynjolfsson and B. Kahin, eds., Understanding the Digital Economy (Boston, MA: MIT Press, 1999). The two car studies are: H.G. Lee, "Do Electronic Marketplaces Lower the Price of Goods," Communications of the ACM, 41/1 (1997): 73-80; Garicano and Kaplan, op. cit. Neither study was completely able to control for heterogeneity in quality. Also, the second study points out that the increased price may be somewhat offset by lower transaction costs to the buyer over the Internet.
47. M.D. Smith, J. Bailey, and E. Brynjolfsson, "Understanding Digital Markets: Review and Assessment," in E. Brynjolfsson and B. Kahin, eds., Understanding the Digital Economy (Boston, MA: MIT Press, 1999). The two car studies are: H.G. Lee, "Do Electronic Marketplaces Lower the Price of Goods," Communications of the ACM, 41/1 (1997): 73-80; Garicano and Kaplan, op. cit. Neither study was completely able to control for heterogeneity in quality. Also, the second study points out that the increased price may be somewhat offset by lower transaction costs to the buyer over the Internet.
48. M.D. Smith, J. Bailey, and E. Brynjolfsson, "Understanding Digital Markets: Review and Assessment," in E. Brynjolfsson and B. Kahin, eds., Understanding the Digital Economy (Boston, MA: MIT Press, 1999). The two car studies are: H.G. Lee, "Do Electronic Marketplaces Lower the Price of Goods," Communications of the ACM, 41/1 (1997): 73-80; Garicano and Kaplan, op. cit. Neither study was completely able to control for heterogeneity in quality. Also, the second study points out that the increased price may be somewhat offset by lower transaction costs to the buyer over the Internet.
49. We are also grateful to the same reviewer for this point.
50. Smith, Bailey, and Brynjolfsson, op. cit.
51. N.I. Farag and M. Van Alstyne, "Information Technology - A Source of Friction? An Analytical Model of How Firms Combat Price Competition Online," Proceedings of the 2nd ACM conference on Electronic Commerce, October 17-20, 2000, Minneapolis, MN.
52. G. Gilder, Life After Television: The Coming Transformation of American Life (New York, NY: W. W. Norton Company, 1994).
53. S. Carson, T. Devinney, G. Dowling, and G. John, "Understanding Institutional Designs Within Marketing Value Systems," Journal of Marketing, 63 (special issue) (1999): 115-130.
54. C. Schmitt, "Disintermediation in Electronic Commerce: Myth or Reality," masters thesis, HEC Lausanne, April 1999.
55. E. Dyson, Release 2.0: A Design for Living in the Digital Age (New York, NY: Broadway Books, 1997).
56. The phenomenon of network externalities is described in M. Katz and C. Shapiro, "Network Externalities, Competition and Compatibility," American Economic Review. 75/3 (June 1985): 424-440.
57. S.J. Liebowitz and S.E. Margolis, "Network Externality: An Uncommon Tragedy," The Journal of Economic Perspectives, 8/2 (1994): 133-150. These authors also present evidence that, in contrast to the accepted view, VHS was actually technically better than Beta. This would weaken our example a little, suggesting perhaps that the ability of VHS to overtake Beta was a function of scale and product advantage, rather than scale alone.
58. Downes and Mui, op. cit.
59. G.J. Tellis and P. N. Golder, "First to Market, First to Fail? Real Causes of Enduring Market Leadership," Sloan Management Review, 37/2 (Winter 1996): 65-75.
60. J.G. Davis and T.M. Devinney, "The Newton Saga," in J.G. Davis, ed., The Essence of Corporate Strategy (Sydney: Allen & Unwin, 1997), pp. 145-146.
61. "Bricks and Mortars Challenge Amazon's Lead," , November 28, 2000.
62. B.H. Boar, The Art of Strategic Planning for Information Technology (New York, NY: John Wiley & Sons, 2001 ), pp. xii; Downes and Mui, op. cit.
63. B.H. Boar, The Art of Strategic Planning for Information Technology (New York, NY: John Wiley & Sons, 2001 ), pp. xii; Downes and Mui, op. cit.
64. R.H. Frank and P.J. Cook, The Winner-Take-All Society (London: Penguin Books, 1996).
65. L.A. Adamic and B.A. Huberman, "The Nature of Markets in the World Wide Web," working paper, Xerox Palo Alto Research Center, May 6, 1999. Others [such as T. Noe and G. Parker, "Winner Take All: Competition, Strategy, and the Structure of Returns in the Internet Economy," working paper, , 2000] use a winner-take-all structure to explain participation in Web markets.
66. L.A. Adamic and B.A. Huberman, "The Nature of Markets in the World Wide Web," working paper, Xerox Palo Alto Research Center, May 6, 1999. Others [such as T. Noe and G. Parker, "Winner Take All: Competition, Strategy, and the Structure of Returns in the Internet Economy," working paper, , 2000] use a winner-take-all structure to explain participation in Web markets.
67. B. Nalebuff, "Bundling," working paper, School of Management, Yale University, 1999.
68. B. Arthur, "Increasing Returns and the New World of Business" Harvard Business Review, 74/4 (July/August 1996): 100-109; Y. Bako and E. Brynjolfsson, "Bundling and Competition on the Internet" Marketing Science, 19/1 (Winter 2000): 63-82.
69. B. Arthur, "Increasing Returns and the New World of Business" Harvard Business Review, 74/4 (July/August 1996): 100-109; Y. Bako and E. Brynjolfsson, "Bundling and Competition on the Internet" Marketing Science, 19/1 (Winter 2000): 63-82.
70. Mathematical proofs can be found in G. Parker and M. Van Alstyne, "Information Complements, Substitutes, and Strategic Product Design," working paper, , 2000.
71. Parker and Van Alstyne [op. cit.] do suggest, however, that bundling frequently represents a dominant strategy.
72. Liebowitz and Margolis, op. cit.
73. R. Buzzell, "Are There Natural Market Structures?" Journal of Marketing, 45/1 (Winter 1981): 42-51.
74. Booz-Allen & Hamilton, op. cit.
75. M. Castells, The Information Age: Economy, Society and Culture (Malden, MA: Blackwell, 1996), pp. 30-31.
76. P. van Slambrouck, "Newest Tool for Social Protest: The Internet," Christian Science Monitor, June 18, 1999, p. 3; M. Martinez, "Networked Protests: WTO Demonstrators Use Web to Connect and Coordinate," , December 1, 1999.
77. P. van Slambrouck, "Newest Tool for Social Protest: The Internet," Christian Science Monitor, June 18, 1999, p. 3; M. Martinez, "Networked Protests: WTO Demonstrators Use Web to Connect and Coordinate," , December 1, 1999.
78. Castells, op. cit.
79. L. Margherio and D. Henry et al., The Emerging Digital Economy (Washington, D.C.: Secretariat on Electronic Commerce, U.S. Department of Commerce, 1998).
80. Devinney et al., op. cit.
81. D.W. Jorgenson and K.J. Stiroh, "Productivity Growth: Current Recovery and Longer-Term Trends - Information Technology and Growth," The American Economic Review, 89/2 (May 1999): 109-115.
82. J. Bruce Harreld in D. Tapscott, A. Lowy, and David Ticoll, Natalie Klym, eds., Blueprint to the Digital Economy: Creating Wealth in the Era of e-Business (New York, NY: McGraw-Hill, 1998).
83. L. Lessig, Code and Other Laws of Cyberspace (New York, NY: Basic Books, 1999), pp. 63-64.
84. M. Geis, "Is There a There There? Towards Greater Certainty for Internet Jurisdiction," working paper, University of Ottawa, School of Law, 2001.
85. P. Drucker, "Beyond the Information Revolution," The Atlantic Monthly (December 1999), pp. 47-57.
86. Aldrich, op. cit.