Academic journal article International Journal of Business Studies

How Different Governance Structures Influence E-Marketplaces and Purchasing Performance over Time

Academic journal article International Journal of Business Studies

How Different Governance Structures Influence E-Marketplaces and Purchasing Performance over Time

Article excerpt

Materials used by businesses for both production (direct) and accompanying administrative or operational (indirect) activities can be purchased via both offline and also online methods, such as electronic marketplaces (e-Marketplaces). Our paper examines the performance of such online e-Marketplaces under different types of governance structure (market or relational) and over time. This examination allows us to understand better the dynamic relationship between governance and purchasing performance. This provides important results for management in a variety of locations and over different times and stages of operations.

Key Words: e-Marketplace, Governance, Performance, Supply Externality, System Integration, Longitudinal Study.

I. INTRODUCTION

The growing interest from academics and management in electronic commerce (e-commerce) has brought much research, including its business-to-business (B2B) aspects (e.g., Bakos & Brynjolfsson, 1997; Benjamin & Wigand, 1995; demons et al., 1993; Heide & John, 1990; Lambert et al., 1999). Some commentators argue that the development of e-commerce is changing relationships between suppliers and buyers, which will evolve into a market mechanism, thus involving numerous companies with transactions (e.g., Malone et al., 1987; Nezu, 2000; Steinfield et al., 1995). In contrast, others counter that B2B transactions will ultimately be conducted by exclusive members in close relationships with regular logistic channels (e.g., Bakos & Brynjolfsson, 1997; Benjamin & Wigand, 1995; Clemons et al., 1993; Heide & John, 1990; Lambert et al., 1999).

Among various B2B transactions on the internet, our study focuses on electronic marketplaces (e-Marketplaces) which connect purchasers with suppliers in virtual space, thereby enabling easier approaches between them. Therefore, through competition products can be purchased at lower prices and sales increased through channel diversification and reduced sales costs. Also, e-market makers can charge fees for establishing new markets in virtual space and providing electronic transaction services and information content. Here we focus on the sale and purchase of maintenance, repair and operations (MRO) materials, which are generally high in standard levels compared to production materials, and considered more appropriate for such electronic transactions (Berryman et al., 1998). Prior research has not focused on MRO materials, but direct materials such as raw materials, assembly parts or capital goods such as high priced equipment.

Our study also focuses on governance structure, the mechanism that operates on the mutually dependent economic subjects through systematic devices and the management of relationships (Williamson, 1985). Our study examines how MRO e-Marketplace governance (market versus relational types) affects corporate purchasing performance. This issue is important given the lack of empirical research based on markets and cooperation in e-Marketplaces (Cannon & Homburg, 2001). In addition, our study examines changes over time.

This research is divided into six subsequent sections. The second section discusses the important concepts of the research as well as the theoretical background. The third section introduces the research model and hypotheses. The fourth section presents the operationalization of the concepts and the research methodology. In section five our hypothesis testing is conducted, followed by the discussion and implications and conclusion in the last two sections.

II. THEORETICAL BACKGROUND

The e-marketplace and MRO e-marketplace in Korea

Companies purchase, offline or online, both direct materials, used in production, and indirect materials, needed in accompanying administrative or operational activities, e.g. maintenance, compensation and office products. The e-Marketplace has a variety of names, including web or virtual marketplace, market space, market maker, electronic intermediary, exchange and E-hub, with diverse definitions (Bakos, 1997; Kaplan & Sawhney, 2000). …

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