The Emergence of Business-to-Consumer E-Commerce: New Niche Formation, Creative Destruction, and Contingency Perspectives

By Tangpong, Chanchai; Islam, Muhammad et al. | Journal of Leadership & Organizational Studies, November 2009 | Go to article overview
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The Emergence of Business-to-Consumer E-Commerce: New Niche Formation, Creative Destruction, and Contingency Perspectives


Tangpong, Chanchai, Islam, Muhammad, Lertpittayapoom, Nongkran, Journal of Leadership & Organizational Studies


This study examines the emergence of business-to-consumer (B2C) e-commerce from new niche formation, creative destruction, and contingency perspectives. Based on multiretail-sector data, this study supports the contingency perspective.

The findings suggest that in digitally related sectors, B2C e-commerce has emerged through a creative destruction process whereby B2C e-commerce expands at the expense of traditional retailing; thus, addressing the e-commerce trend becomes traditional firms' strategic imperative. Conversely, in digitally unrelated sectors, B2C e-commerce has emerged through a new niche formation process whereby B2C e-commerce coexists with traditional retailing; thus, embracing the e-commerce trend becomes the traditional firms' strategic choice.

Keywords: E-commerce; organization form; new niche formation; creative destruction; contingency theory

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Since the commercialization of the Internet, many scholars and members of the business press have envisioned and publicized electronic commerce's (e-commerce's) driving business transformations, making the traditional business model obsolete. E-commerce transactions have grown significantly during the past years (Grover & Teng, 2001) and are expected to continue growing with double-digit annual growth rates (Daniels, Sehgal, & Vogel, 2008). Business-to-consumer (B2C) e-commerce and online retail sales reached $175 billion in 2007 and are predicted to reach $204 billion in 2008, $235.4 billion in 2009, $267.8 billion in 2010, $301 billion in 2011, and $334.7 billion in 2012 (Mulpura, 2008).

The phenomenon of B2C e-commerce, which is an area for the development of B2C transactions, has become increasingly important and has attracted significant attention from business practitioners as well as scholars (Melian-Alzola & Padron-Robaina, 2007). As Porter (2001) pointed out, it affected the industry structure in general. Although the competition among businesses is heightened, the buyers' bargaining power is raised as a result. Based on the premise of e-commerce growth and business transformation, number of companies have vastly invested in information technology (IT) and e-commerce to ensure their viability in the future. Despite many successful transformations, we have also witnessed many failures whose number seems to surpass the number of successful cases (Silverstein, Stanger, & Abdelmessih 2001). The business press has been quick to reason the failures, and management consultants have been swift to provide business solutions. All of these attempts tend to focus specifically on certain particular areas--for example, specific industries or product categories---or specific points in time--for example the time for an annual report or quarterly reports. As a result, we tend to experience bits and pieces of such explanation over a period of time. The need for the holistic view of this phenomenon as well as an observation of organizational transformation calls for systematic theoretical explanation. Yet the theoretical explanation for the process of how B2C e-commerce has emerged has not been systematically developed and empirically tested although B2C e-commerce has evolved during a decade. Despite its potential, B2C e-commerce is often popularized as a threat to brick-and-mortar traditional business. The most current example is the economic downturn that began toward the end of 2008 and has resulted in several retail chains' going out of business and many retail stores' closing down, as appeared in several news sources, although the business of online retail giants such as Amazon.com and eBay.com still appears to be strong (Shields, 2008). Nonetheless, there is no empirical test of whether this e-commerce model will indeed make the traditional business model obsolete and bring an end to the traditional business model.

Two theories that could potentially explain the emergence process of B2C e-commerce are (a) new niche formation theory and (b) creative destruction theory.

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