Academic journal article Journal of Electronic Commerce Research

Internet Technology: The Strategic Imperative

Academic journal article Journal of Electronic Commerce Research

Internet Technology: The Strategic Imperative

Article excerpt


Organizations continue to struggle with identifying the appropriate drivers for Internet success. They must realize that investment alone will not lead to successful deployment of the Internet, but a strategic approach based on business principles is a sounder alternative. Organizations are also unclear on the appropriate way of measuring the tangible and intangible impact of the Internet on their business. This study develops measures for Internet Performance and Business Internet Use to help identify the necessary drivers for success and the correct dimensions for performance. Data from over 250 IT managers was collected to empirically test the validity and reliability of the derived constructs, and to validate the relationship between Business Internet Use and Internet Performance at the construct and dimension level. This study found that there is a significant relationship between Business Internet Use and Internet Performance, which further strengthens the argument that for proper implementation of Internet technology, a business-driven strategic approach is the optimal path for success.

Keywords: Internet, Strategy, Performance, Structural Equation Modeling, Electronic Commerce

1. Introduction

Many organizations ventured into the world of Internet technology to open up new channels of doing business to reap the "unparalleled" benefits and wealth creation that were promised [Amit and Zott, 2001]. The expected benefits include improvements in revenues, competitiveness, and profits. However, while there are some early success stories resulting from the use of Internet (e. g. Ebay, Dell, Cisco, and Amazon), there are also numerous stories of businesses that failed in their quest for success, such as Webvan, eToys, Boo, etc. [Straub et al., 2002, Frohlich, 2003]. Even for businesses that did not fail, there is still the question of whether there are any benefits from the use of Internet technology since it may be hard to determine whether the benefits of doing business via the Internet outweigh its costs. This inability to assess the impact of Internet technology stems from two basic issues that need to be addressed in order to facilitate a better understanding of the efficacy of the movement towards Internet technology. One, organizations need to identify the basic rationale for the applicability and use of Internet technology for their particular business needs. They need to have a strategic viewpoint for Internet deployment based on sound business principles. Two, organizations need to identify performance measures that will allow them to assess the effectiveness of the introduction of Internet technology.

The present study addresses these two issues through (1) the conceptual development of Business Internet Use and its measurement, (2) the development of a measure for Internet Performance, and (3) an analysis of the nature and strength of their relationship. The development of these measures should prove useful to both researchers and practitioners in understanding the impact of this technology. Existing Internet technology literature is still in its infancy and lacks such validated measures. The development of the empirical measures for this study was done using data collected from a large-scale survey questionnaire. Over 250 organizations responded to this survey, which was conducted through the Internet. These measures were then validated using structural equation modeling.

The remainder of this paper is organized as follows. The next section reviews the available literature to provide a rationale for the development of the constructs Business Internet Use and Internet Performance. This is followed by the research methodology section, which describes the processes of item generation for the questionnaire, the data collection, and the instrument assessment. The paper then discusses the implications of this approach and examines the relationship of the constructs at its dimension level, followed by limitations and a conclusion. …

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