Academic journal article Journal of Business and Entrepreneurship

Product and Firm Quality Signaling in E-Business: Interstices for Smaller Businesses

Academic journal article Journal of Business and Entrepreneurship

Product and Firm Quality Signaling in E-Business: Interstices for Smaller Businesses

Article excerpt

ABSTRACT

Interstices, or gaps created in the economy, are becoming apparent in the third phase of the E-Business life cycle and providing opportunities for entrepreneurs. Such opportunities may allow smaller firms to enter these spaces and create new businesses or partnerships. As an example of these interstices, product- and firm-quality signals can be communicated and coordinated well over the Internet. However, it is unclear if such information flows are currently being applied. An application to grocery E-Business ventures is advanced to highlight the current use, or non-use, of such quality signals. The entrepreneurial insights provided by a preliminary content analysis of some 21 E-Businesses within the grocery industry are generalized for a wider audience. Lessons learned from this study are then applied to consider the reasons for Webvan's demise.

INTRODUCTION

Where entrepreneurship is concerned, in growth there is opportunity. In the process of growth, interstices-which are cracks or spaces in the fabric of the economy-occur. For entrepreneurs, there is an opportunity to enter these spaces and create new businesses or partnerships. (An historic example would be the growth in the automobile industry that created niches for parts manufacturers, components suppliers, etc.). E-business is in the early stages of its life cycle, when growth occurs at an increasing rate. We have seen manifestations of such interstices in three broad waves in these early stages of E-Business growth.

First was the so-called dot-com phase, where many new, primarily small businesses launched on the Internet in the hope of establishing themselves as first movers. Some survived. Many did not. In a second on-going phase of E-Business, established firms recognized the advantages to be gained from augmenting traditional means of doing business with new E-Business options. These bricks and clicks efforts are being directed both at partners in the supply chain (B2B) and at the final consumer (B2C). Through these efforts, industry leaders as well as smaller firms are acquiring a Web presence. It is our hypothesis that this step marks the initiation of a third phase, the creation of new interstices (or niches) for entrepreneurial efforts.

There are two potential types of interstices. First would be those that exist because established firms may see E-Business primarily as an adjunct to their usual means of doing business. As such, these firms may not be willing to undertake the breadth of change that would enable them to profit from new ways of doing business. Regardless, these firms may be successfully integrating business activities on- and off-line as most analysts recommend, but are still basically applying their traditional business model to the Internet. This process fails to recognize the uniqueness of EBusiness opportunities. Entrepreneurial firms can step into this breech. second, opportunities may be created for entrepreneurial firms to partner with established firms in the delivery of products and services. If you can't beat them, join them!

This paper focuses on the ability of E-Businesses to effectively signal product and firm quality. The objective is to explore the nature of interstices and the possibilities for entrepreneurship in this new phase of E-Business by reference to one industry. It is our contention that interstices could occur in any industry, and that entrepreneurs stand to benefit from the systematic in-depth analysis of gaps in product- and firm-quality signaling online. We question the unique aspects of such business opportunities and challenges, recommending a closer assessment of the quality of information and the information about quality to be signaled to customers. Potentially, product and firm quality signals can be communicated and coordinated well over the Internet. However, we believe this is not currently evident in the grocery industry1 leading to interstices for entrepreneurs. …

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