Theodore H. Clark

Market process reengineering through electronic market systems: opportunities and challenges

Over the past few years, various electronic market systems have been introduced by market-making firms to improve transaction effectiveness and efficiency within their markets. Although successful implementation of electronic marketplaces may be found in several industries, some systems have failed or their penetration pace is slower than was projected, indicating that significant barriers remain. This paper analyzes the economic forces and barriers behind the electronic market adoptions from the perspective of market process reengineering. Four cases of electronic market adoptions--two successful and two failed--are used for this analysis. Economic benefits are examined by investigating how the market process innovation enabled by information technology (IT) reduces transaction costs and increases market efficiency. Adoption barriers are identified by analyzing transaction risks and resistance resulting from the reengineering. Successful deployment of electronic market systems requires taking into account these barriers along with the economic benefits of adoption. The paper presents suggestions based on these case studies, which are relevant to the analysis, design, and implementation of electronic market systems by market-making firms.

Impacts of the electronic marketplace on transaction cost and market structure

Electronic markets have become increasingly popular alternatives to traditional market forms over the last few years. This article explains how electronic markets can be used either to create new markets or to strengthen existing markets, and provides examples of the impact alternative electronic market applications can have on firm competitiveness and market structures. The central claim of this article is that it is necessary to analyze the impact of electronic market implementation on search, price discovery, and trade settlement in order to understand the impact of the electronic marketplace on firms and markets. Two forms of electronic marketplaces-electronic brokerage and electronic auction--are examined from the perspective of fundamental economic factors that influence total transactions costs and the efficiency of alternative market structures. Social and organizational barriers to successful adoption of electronic markets are also discussed.

Performance, interdependence and coordination in business-to-business electronic commerce and supply chain management

After discovering the inadequacy of traditional relationships across the value‐chain, many organizations today are establishing new forms of interorganizational systems with their suppliers and customers in an effort to improve total channel performance. Electronic commerce linkages are being created between independent organizations in multiple industries, including manufacturing, financial services, transportation, and retailing. Efforts to improve channel efficiency using business‐to‐business electronic commerce systems generally require increased interdependence and expanded coordination between independent firms to capture the potential benefits enabled by tighter interorganizational integration of operations. Participating firms can gain dramatic benefits from establishing electronic linkage only when the system is used to increase interdependence and to expand coordination between firms involved in the new interorganizational relationship. Drawing on theoretical and empirical research on electronic communications and inter‐firm designs, we develop and test a model for the relationship between performance, interdependence and coordination of firms involved in interorganizational relations within the US grocery channel. The research design includes qualitative case study analysis and quantitative survey data analysis to validate the key case study findings. Both qualitative and quantitative findings indicate that channel performance, interdependence, and coordination are closely related for firms in interorganizational relationships.

Electronic intermediaries: trust building and market differentiation

As electronic commerce becomes increasingly popular, new intermediaries are emerging and transforming marketing and distribution channels. Intermediaries in electronic marketplaces provide the IT and business infrastructure to facilitate the completion of commercial transactions over interorganizational computer networks. If electronic intermediary services are introduced to wholesale markets where qualities vary, the provision of IT alone cannot create reliable electronic marketplaces for traders who have no pre-established relationships. To build trust among market participants, electronic intermediaries should establish policies and processes that regulate responsibilities and duties of market participants and legitimate transactions. Institutional policies and processes reduce risks and help establish trust among market participants. This paper provides empirical evidence that trust building processes by electronic intermediaries can lend to concentration of electronic transactions on high quality products, thus differentiating electronic and traditional markets.

A Hierarchical Model of Supply-Chain Integration: Information Sharing and Operational Interdependence in the US Grocery Channel

This paper examines costs of and motivations for interconnectivity within the grocery supply chain, employing evidence from multiple case studies and survey data to develop a seven-level model of technology-enabled supply-chain connectivity and channel interdependence. This theoretical model, built around a modified transactions-costs framework, is illustrated using examples of processes that span multiple levels of interconnectivity and interdependence within the grocery channel between different groups of customers and suppliers. Our analysis suggests that while a discernible hierarchy of levels of IT-enabled interorganizational connectivity exists, not all relationships necessarily evolve to the highest level of “virtual integration”. Indeed, limits on executive attention preclude this level from being achieved by more than a small fraction of trading partners. The model generates eight testable hypotheses for further study.

Interorganizational business process redesign: merging technological and process innovation

Interorganizational business process reengineering is a logical extension of discussions in the 1980s of the potential for interorganizational systems to fundamentally redefine relationships between buyers and sellers and even competitors within an industry context. The paper presents a framework or model describing the relationship between technological and process innovations, and describes the interdependence of these two forces in the context of interorganizational business process redesign. This framework can be used to examine unique characteristics of reengineering within a single organization and across multiple organizations. This model is used to explain the inconsistency in the literature regarding the benefits of EDI and other interorganizational systems, which are described as providing strategic competitive advantage in some articles, and as providing little or no benefits for implementing firms in other articles. The framework describes the importance of merging technological and process innovations in order to achieve the potential to transform both organizations and interorganizational processes and relationships.

Examining the Cognitive Style Effects on the Acceptance of Online Community Weblog Systems

Weblog is increasingly important over time with researchers anxious to learn why millions of Internet users are so eager to post their own diary on the web everyday. This study collected views from 265 business school undergraduate students on their opinions concerning the use of weblog. In this questionnaire, cognitive style was used to analyze potential significant differences among various user types. Cognitive style measured respondents in a spectrum of two extremes that is, the intuitive, who had nonlinear thinking at one end; while the analytic, who used a rational type of information processing at the other end. Group analysis found that there were significant differences between the two cognitive groups: (1) performance expectancy was significantly higher; while (2) effort expectancy and social influence were significantly lower towards intention to use in the analytical group. Nevertheless, differences in facilitating conditions towards intention to use were found not significant.

EDI-enabled channel transformation: extending business process redesign beyond the firm

This paper examines the relationship between process reengineering and channel performance for firms implementing electronic data interchange (EDI) ordering within the U.S. grocery industry. Both quantitative and qualitative data sources are combined to demonstrate that channel transformation (interorganizational reengineering) involving both technological innovation (EDI) and redesign of replenishment processes enables performance improvements more than an order of magnitude greater than implementation of EDI ordering alone. New replenishment processes, enabled by EDI, provide retailers with 50-100 percent higher inventory turns for products using continuous replenishment processes (CRP) relative to retailer performance using traditional ordering processes. Firms adopting EDI for ordering without reengineering ordering processes have failed to realize statistically significant improvements in inventory levels or stockouts. This demonstrates the potential for extending the business process reengineering concept to include the entire supply chain.

Electronic commerce for agricultural transactions: role of intermediaries and accurate pricing

This paper addresses the functional structure of agricultural electronic marketplaces, together with associated pricing mechanisms. The analysis of transaction costs suggests that electronic commerce with intermediaries provides more efficient trading environments than electronic marketplace without intermediaries. This indicates that existing intermediary institutions will remain important for agricultural transactions even after the adoption of electronic market systems. Compared to other industries or markets, agricultural markets are characterised as competitive markets and pricing is a key factor for efficient resource allocations. Pricing mechanisms being used by agricultural markets are contrasted with those of the Internet-based retail electronic commerce. This paper suggests that the current pricing in the Internet-based commerce is not efficient for agricultural electronic marketplaces, and that development of an alternative pricing mechanism is required to ensure efficient and accurate pricing for agricultural electronic commerce.

Security First Network Bank: a case study of an Internet pioneer

In the US banking industry, the universal view appears to be that achieving larger scale is the only means for survival among the megabanks of the nation and the world. However, one of the smallest banks in the USA, Security First Network Bank, has shaken up traditional bankers by introducing branchless banking via the Internet. The implications of widespread Internet banking for the industry are still unclear for the future of the industry structure, but it is clear that the largest banks in the industry are watching closely to see how the Internet and other forms of electronic commerce will affect banking services, profitability and economies of scale in the industry. The advent of Internet banking could lead to radical shifts in economies of scale, as well leading to a new set of critical success factors for future banks that may be quite different from the requirements of succeeding in the current environment. This case study raises issues that are important for both academics and practitioners to examine in greater depth through additional research. Although this case study is unable to support or refute the research hypotheses suggested in this paper, it does provide important insights regarding the potential for electronic commerce to dramatically alter the structure of the banking industry. In addition to highlighting important issues for researchers to consider in examining the potential impact of the Internet on the banking and financial services industries, this case study may also be useful for academics in teaching students about the potential for this technology to transform industry structures.