Towards Theory Building in E-Commerce: Identification of Pertinent Research Streams

and a Call for Further Research

Nalini Govindarajulu
Ph.D. Student
Management Dept., MSC 3DJ
New Mexico State University, Las Cruces, NM 88003
Phone: (505) 646-5053, Fax: (505) 646-1372, [email protected]

Shalini Devi
Ph.D. Student
Computer Science Dept., MSC CS
New Mexico State University, Las Cruces, NM 88003
Phone: (505) 646-3723, Fax: (505) 646-1002, [email protected]

Yiling Ge
Ph.D. Student
Management Dept., MSC 3DJ
New Mexico State University, Las Cruces, NM 88003
Phone: (505) 646-1201, Fax: (505) 646-1372, [email protected]

Maria Gonzalez
Ph.D. Student
Industrial Engineering Dept., MSC 3449
New Mexico State University, Las Cruces, NM 88003
Phone: (505) 646-7234, Fax: (505) 646-3549, [email protected]

David T. Loyd
Chief, Quality Assurance, Reliability & Safety Office
NASA JSC White Sands Test Facility
NS3, PO Box 20, Las Cruces, NM  88004
Phone: (505) 524-5282, Fax: (505) 524-5544, [email protected]

Bonnie Daily
Associate Professor
Management Dept., MSC 3DJ
New Mexico State University, Las Cruces, NM 88003
Phone: (505) 646-2015, Fax: (505) 646-1372, [email protected]

Abstract No: 002-0373

Second World Conference on POM and 15th Annual POM Conference, Cancun, Mexico,
April 30 - May 3, 2004.

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 Towards Theory Building in E-Commerce: Identification of Pertinent Research Streams

and a Call for Further Research

ABSTRACT

E-commerce technology is increasingly attracting the attention of researchers and

managers in the 21st century. Despite this keen interest, the literature on e-commerce remains

fragmented and ambiguous. Furthermore, an in-depth literature review shows that only few

studies have examined major competencies in e-commerce that are relevant to the field of

operations management.

Analysis of e-commerce issues in operations management will aid understanding and

improvement of the challenges faced by organizations. In addition, firms will be able to

formulate strategies and invest resources appropriately, when the specific factors that enhance

manufacturing and service performance are determined. Moreover, knowledge of e-commerce

issues is pertinent to achieving competitive advantage in an ever-changing economy.

Hence, the objective of this study is to highlight potential e-commerce research themes

within the realm of operations management. This article reviews relevant literature on e-

commerce in manufacturing and service operations. Employing focus group methodology, this

paper also identifies pertinent research questions that are suitable for further conceptual

modeling and empirical testing.

INTRODUCTION

Rapid changes in technology, products, processes, employee and customer needs, severe

competition, and trends towards globalization, force organizations to do business in new ways in

order to survive and be successful. One of these new trends is e-commerce, a form of

entrepreneurial activity, which transforms the manner in which firms operate using the Internet.

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This introduction of technology has been used mostly as a tool to deliver value to the customer

(Starr, 2003) as a way to increase the core competencies. E-commerce has changed the

traditional ways of business-to-customer (B2C) communication and business-to-business (B2B)

communication (Steward, Callaghan, & Rea, 1999) and increased information-sharing among its

members (Vakharia, 2002). Apparently, this new topic has attracted the attention of several

researchers and practitioners.

Some researchers have focused on investigating the factors leading to the success of B2C

e-commerce (Kendall & Kendall, 2001; Wolfinbarger & Gilly, 2001; Wu, 2003). Others have

been more interested in studying how to increase the performance of supply chains through B2B

e-commerce (e.g. Barnes, Hinton, & Mieczkowska, 2003; Hackney, Griffiths, & Ranchhod,

2002). However, researchers have pointed out that it is necessary for organizations to integrate

demand chain and supply chain to be successful (Walters, 2002). Despite the recognizing the

importance of integrating supply and demand chains, very few studies have considered the

simultaneous implementation of e-commerce in B2C and B2B. In addition, few studies have

compared the implementation issues between manufacturing and service organizations.

Moreover, existing studies have not clearly captured the concept of e-commerce. Finally, the

abundance of literature that exists seems very fragmented in nature.

Accordingly, the purpose of this paper is to provide a research outline for future studies in

e-commerce. This framework includes determination of key factors that possibly influence e-

commerce success by simultaneously considering suppliers and customers in the value chain.

This paper is organized as follows: The first section discusses the methodology employed

to generate this research framework. Subsequent sections focus on identifying research

problems and placing these issues within the relevant literature review. The research streams

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identified are organized into the following sections: (i) definition and conceptualization of e-

commerce, (ii) e-commerce issues in B2B and B2C, (iii) e-commerce in manufacturing, and

(iv) e-commerce in services. The last section concludes the paper with some helpful guidelines

on conducting research in this area.

METHODOLOGY

A focus group involves a small group of six to eight participants who engage in

structured but open-ended discussions about a particular topic. The focus group process has been

popular in marketing research (Goldman, 1962). This study used such a focus group procedure

to discuss the future research agenda for e-commerce in operations. Accordingly, a group of six

people with diverse academic and managerial expertise, including national and international

experience, actively participated in this brainstorming session. This group consisted of an

operations management faculty member, two senior doctoral students from operations

management, two senior graduate students from industrial engineering, and a senior graduate

student from computer science. All the group members had in-depth knowledge of the e-

commerce and operations management literature. In addition, all the members were aware of the

purpose of the focus group. The brainstorming session took place as part of a 3-hour doctoral

seminar class in operations management.

The group analyzed the definition of e-commerce and the ambiguities associated with

several descriptions in the literature. Next, the group focused on the manufacturing-end and

outlined aspects of e-commerce (e.g., EDI, ERP, and intranet) that are currently utilized or could

be utilized to improve efficiencies and effectiveness in manufacturing. Then the discussion

moved to logistics issues (e.g., shipping, handling, & warehousing) to identify specific aspects of

e-commerce that can improve logistics operations. Subsequently, the focus was on issues related

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to the final customer (e.g., website design, web-based responsiveness, and web-based reliability).

Finally the focus was on back-end operations and technical issues related to e-commerce. Here,

the group discussed involvement of the workforce and online service providers in offering

products and services using e-commerce technology.

Discussion of each area involved the following: (i) current research in the field, (ii) gaps

in the literature, and (iii) guidance for future studies.

RESULTS AND ANALYSIS

Definition and Conceptualization of E-commerce:

Although e-commerce is widely discussed and studied, the definition is somewhat

arbitrary. Besides, a single, clear definition delineating all the dimensions of e-commerce does

not exist in the literature. This section lists some of the various definitions present in the

literature.

The General Accounting Office (2002) provides a list of definitions of e-commerce

defined by different organizations. For example, The U.S. Census Bureau defines e-commerce

as “the value of any monetary transaction completed over a computer-mediated network that

involves the transfer of ownership or rights to use goods and services.” This conceptualization

includes the Internet, Intranet, Extranet, and EDI transactions. Similarly, eMarketer defined e-

commerce as “Internet transactions in which the buyer completes the purchase order or

transactional contract via the Internet.” This description includes only Web-based EDI. Another

description given by Zwass (1996) includes e-commerce as “the sharing of business information,

maintaining business relationships, and conducting business transactions by means of

telecommunications.” This explanation is very broad, including all telecommunication

transactions. Similarly, (Garrett & Skevington, 1999) describe e-commerce as “trading by means

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of new communication technology”, which “includes all aspects of trading, including

commercial market making, ordering, supply chain management, and the transfer of money.” In

their thesis, e-commerce is not only defined as a new way of doing business, but also as a

strategy which is associated with business models and practices enabling continuous

improvements in transactions though internet.

Poulymenakou and Tsironis (2003) identified four categories of e-commerce: business-to-

business (B2B), which comprises electronic transactions among business that cover business-to-

business activities across supply chains; business-to-consumer (B2C), which links electronic

transactions and communication between a firm and its final consumers; government-to-

business, which emerges as an important policy and implementation instrument for global e-

commerce market and global information society expansion; and government-to-citizen, which

comprises the strategic use of the Internet as a channel for the provision of information and

services to the citizens in public service sections. In addition, General Accounting Office (year)

identified a new type of online interaction that is Consumer-to-consumer (C2C), such as eBay.

Existence of numerous definitions in the literature makes it challenging for researchers

and practitioners alike to take further steps in studying the factors influencing e-commerce and

the impact of e-commerce on manufacturing or organizational performance. In addition, the

literature suggests various dimensions of the concept. Some of the ambiguous issues in the

literature include the following questions: (i) Is there a concept called e-commerce (i.e., does it

exist)?

(ii) What are the specific technologies that are required for e-commerce? (iii) Are these

technologies purely web-based or do they include usage of telephone, fax, and

videoconferencing media? (iv) Does e-commerce entail information sharing among business

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partners only, or does it include consumers? (v) Does the conceptualization of e-commerce

specify different dimensions for B2B, B2C, and C2C users? (vi) Is e-commerce considered to be

an operation, marketing, or business strategy, or a mere tool to aid information flow? (vii) Do e-

commerce transactions have to be based on monetary value? (viii) Besides, does money have to

be a direct (e.g., buying/selling products), or an indirect consequence (e.g., sharing inventory

data or product designs that will ultimately result in exchange of money) of the transaction?

We propose that a first step in e-commerce research is to demonstrate a clear description

of the concept. This should include specific dimensions that can be empirically measured with a

validated scale. In this regard, we strongly encourage authors to study the literature carefully,

conduct interviews with managers and users of e-commerce, and adopt rigorous qualitative and

quantitative analyses to validate the concept.

Research on Business to Consumer (B2C) e-commerce:

According to the UCLA Center for Communication Policy, (2003), the number of

Internet users in the U.S. increased from 66.9% in 2000 to 72.3% in 2001. However, the number

who shopped online decreased from 50.7% in 2000 to 48.9% in 2001 and dropped even more to

44.5% in 2002. In order to narrow the gap between the stable increase in Internet access and

decrease in number of consumers shopping online, studies have concentrated on B2C e-

commerce to identify the factors that influence customers’ intentions to purchase online. For

example, Wolfinbarger & Gilly (2001) identified four specific attributes that attract most e-

shoppers: convenience and accessibility, selection, availability of information, and lack of

sociality. All these attributes could provide customers with freedom and control. Similarly, Park

& Kim, (2003) surveyed 602 customers online and indicated that information quality, user

interface quality, and security perceptions affect information satisfaction and relational benefits.

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These factors are in turn significantly related to customers’ commitment to the website and actual

purchase behavior. Also, Wu (2003) identified 9 factors which will significantly influence

customers’ attitudes towards online shopping: effectiveness and modern, purchase convenience,

information abundance, multiform and safety, service quality, delivery speed, homepage design,

selection freedom, and company name familiarity.

Research on Business-to-Business (B2B) e-commerce:

B2B e-commerce manages a company’s internal operations and supply chain cooperation

activities in a wide range of industry (Steward, Callaghan, & Rea, 1999). Those business

activities include order processing, invoicing, inventory control, collaborative product promotion

and distribution, procurement, and supply chain management, (Poulymenakou & Tsironis, 2003).

Based on the U.S Census Bureau (2003), B2B transactions account for 93% e-commerce revenue

in the current market.

Basically, e-commerce provides companies the chance to collect, access, and analyze

real-time information, thereby enhancing supply chain management decision-making (Vakharia,

2002). Studies showed that implementing e-commerce could help organizations and supply

chains increase inventory turnover, lower costs, and faster delivery (e.g., Gavirneni, Kapuscinski,

& Tayur, 1999; Iyer & Bergen, 1997; Lee, So, & Tang, 2000; Thonemann, 2000). As a result,

some studies in B2B area focused on how to utilize real-time information sharing to improve the

performance of the supply chain.

Studies in B2B e-commerce tend to be relatively broader in scope. For example, some

researchers have studied ecommerce implementation from a strategy perspective (Barnes,

Hinton, & Mieczkowska, 2003; Hackney, Griffiths, & Ranchhod, 2002). Others have

investigated the application of different information systems and technology (Bensaou, 1997;

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Heart & Pliskin, 2002). Also, researchers have analyzed the influence of real-time information

on different business activities (Bourland, 1996; Thonemann, 2002).

Research on B2B and B2C:

Even though many studies on e-commerce exist, their focus is either on final customers

(demand chain activities) or on suppliers (supply chain activities). Very few studies have tried to

integrate B2C and B2B ecommerce. This is contrary to value chain theory, which suggests that

integrating supply chain management and demand chain management will provide all enterprises

in the chain with new opportunities to create market value (Walters, 2002). Furthermore,

implementation of value chain management will facilitate customer satisfaction and competitive

advantage in today’s competitive business world (Walters, 2002). As a result, it is necessary for

researchers to investigate e-commerce from the perspective of value chain. Specifically,

researchers need to investigate factors determining success of the whole value chain, rather than

focusing only on certain aspects of it.

Based on the brainstorming session, we identified pertinent research questions that need

to be examined in the future. These include: (i) what type of e-commerce technology will be

most effective in communicating and integrating the final customer’s needs with all traders in the

value chain (i.e, enhance B2B and B2C transactions and information flow simultaneously)? (ii)

What are the barriers to effective implementation of e-commerce technology in the entire value

chain? In this regard, it would be beneficial to identify barriers relevant to suppliers,

manufacturers, retailers, transportation providers, consumers, and other members involved in

producing and consuming products and services. Also, how can organizations minimize or

eliminate these obstacles? (iii) What factors impede information flow across the value chain?

How can organizations reduce or remove these impediments? (iv) What factors hinder co-

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ordination efforts in the value chain? How can organizations reduce or remove these barriers? (v)

What is the most effective combination of ‘brick’ (offline) and ‘click’ (online) factors to enhance

productivity or other measures of performance? (vi) Is e-commerce technology the panacea for

all operations problems? Specifically, are some types of value chains more efficient/effective

without implementation of electronic commerce technologies?

Research on E-commerce in Manufacturing:

The achievement of quality products at low manufacturing costs is no longer a core

competency among manufacturing firms (Soliman & Youseff, 2001). Firms have been

increasingly trying to develop unique competencies by including e-commerce as an operation

management strategy in the current globalized market (Silveira, 2003). Seeking e-commerce

strategies has allowed firms to evolve into a flexible manufacturing environment in which the

customer can ask for specific features in the design of the product (Soliman & Youseff, 2001).

This evolution requires the transformation of the firm into a well-organized business

characterized by the dynamic flow of information with both internal and external customers

(Frazier, 1998). In order to achieve such transformation, a firm should determine a knowledge

base of the company, structural, upstream and downstream competencies (Silveira, 2003).

Subsequently, the adoption of technical tools such as CAD/CAM systems for manufacturing and

design, business software as ERP (Enterprise Resource Planning), and EDI (Electronic Data

Interchange) can ease the firm’s operations in every aspect including managing orders, inventory,

accounting, logistics and training (Min & Galle, 1999). As a result the firm will experience an

actual improvement in current activities performed such as just-in-time policies (Min & Galle,

1999), as well as an evolution from a brick company into a network of virtual teams in which the

transfer of data between suppliers can be done effectively on regular basis.

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 The literature on e-commerce in manufacturing highlights the importance of electronic

commerce tools in facilitating information flow, reducing inventories, speed of delivery, and

implementation of other techniques such as just-in-time practices. The literature also suggests

ease in usage of virtual teams with e-commerce. Finally, theory highlights the significance of e-

commerce tools in providing customer value, satisfying the customer, and creating a competitive

edge.

While the research points out the impacts of e-commerce on organizational goals and

outcomes, little research exists in the following areas: (i) how can e-commerce tools aid ‘virtual’

factories? (ii) Which e-commerce tool(s) (e.g., Internet versus EDI) is most effective for

manufacturing firms? (iii) What are the specific e-commerce tools required for the creation,

maintenance, and easy usage of a ‘knowledge’ base? (iv) Does e-commerce promote better

quality relationships among traders (e.g., suppliers, manufacturers, carriers, wholesalers, &

retailers) in the value chain? (v) What are the shortcomings or limitations of e-commerce

applications in the virtual factory? (vi) How can compatibility issues between different e-

commerce tools (e.g., EDI used by suppliers & web-based technology used by producers) be

solved? (vii) What are the specific types of employee training needed for effective

implementation and use of e-commerce technologies in manufacturing? (viii) Will e-commerce

technology, specifically web-based medium become a requirement (like ISO 9000) for suppliers

and other traders to do business in the future? (ix) How can e-commerce technology enhance the

selection, evaluation, and formation of partnership agreements with potential suppliers, buyers,

and other traders in the value chain? (x) What challenges will manufacturers and other traders

face in dealing with paperless transactions across the globe? The last two questions are

especially relevant in today’s manufacturing environment distinguished by global outsourcing.

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Research on E-commerce in Services:

In the new world of e-commerce, perhaps the greatest challenge lies in understanding how to

identify and capture the newest breed of customers. Many of the same service quality

characteristics remain, but nuances are evolving every day with respect to the “e-customer’s”

elusive mood, demographic, economic strength, and enthusiasm filtered through the keyboard

and mouse.

To understand this new e-customer we must explore the basics of customer service before

the home computer age. The most prominently cited characteristics of service quality is

provided by Parasuraman et al (1985), who identify five attributes of service quality: Reliability,

Responsiveness, Assurance, Empathy, and Tangibles. The authors’ SERVQUAL scale

consisting of these dimensions continues to be used by academics and practitioners till date.

Additionally, Voss (2003) proposed that the most obvious difference between typical service

quality and “e-Service” is the lack of the human element – he dismisses “empathy” as a viable

service characteristic in e-commerce. De-emphasizing the human element in e-commerce may

mean the death of less empathetic e-businesses. Voss cites Bill Gates warnings about the

necessity of human interaction in services. In the end, intelligent and empathetic qualities may

be irreplaceable for services that emphasize: building trust and reassurance; providing diagnostic

information; or simply answering specific concerns when e-mail or pre-established menu

selections are not enough to meet customer needs.

Based on Parasuraman et al (1985), dimensions of service quality and other literature on

services, some fruitful research questions were identified. These include: (i) Which e-commerce

tool (e.g., Internet versus EDI) is most effective for service firms? (ii) Do the SERVQUAL

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dimensions have the same impact and importance to customers operating in a vastly different

“virtual” environment? (iii) Is empathy a service element that can be dismissed in order to

achieve the greatest possible understanding of the e-customer? We believe dismissing any

service quality elements is limiting the potential scope of e-commerce as a whole. Hence, further

research is needed to adequately assess the importance and impact of SERVQUAL in e-

commerce technology. (iv) Who are e-customers and what factors determine the growth of this

market? (v) What does the e-customer value most in e-commerce? (vi) What opportunities can e-

commerce seize to achieve e-customer loyalty? (vii) What are specific types of employee

training needed for effective implementation and use of e-commerce technologies within

services?

CONCLUSION

The literature on e-commerce issues in operations management has been somewhat

limited in its focus and scope. One of the evolving theories in operations is the concept of value

chain. However, few studies have examined e-commerce implementation issues in the value

chain. Since extant research has stressed on either upstream (supply chain) or downstream

(customer/demand chain) activities, we call for an integrated research agenda that studies both

streams’ (value chain) operations simultaneously.

We have proposed a research outline on electronic commerce for manufacturing and

service operations in the value chain. We have also identified four streams of research that are

suitable for future research. We believe the development of a theoretical framework, the main

contribution of this paper, will encourage debate about the direction of future scholarly research

in this field. Besides, this research outline will help provide a focus and guide future research

efforts.

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 Most of these research questions identified in this paper require analysis of either: purely

technical issues (e.g., web design or online security), behavioral issues (e.g., motivation or

intention to shop online), organization design issues (e.g., structural design within and across

organizations in the value chain), strategy and policy making issues (e.g., which types of

products should be sold online), performance issues (e.g., what factors impact profitability the

most), and/or a combination of all these issues.

It must also be noted that analysis of e-commerce issues across the value chain are

inherently cross-disciplinary in nature. Readers and practitioners will be better able to

understand and assess the impact of e-commerce issues when they are presented in an integrated

framework. Accordingly, researchers should not be hesitant to employ multi-functional

perspectives that address the research problems most effectively.

Furthermore, we strongly encourage researchers to consider different types of research

methods in analyzing these research questions. These include but are not limited to best practices

research, case studies, interviews, and survey research. Researchers can also use mathematical

modeling such as simulation or optimizing techniques when addressing these issues. Given the

global expansion of e-commerce, it would also be valuable to study these research questions in

other countries. Finally, explicit consideration of type of product, process, and service, and firm

size is necessary to derive meaningful conclusions.

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