Assessment of Business-To-Business (B2B) E-Marketplaces' Performance
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2007:22 DOCTORAL T H E SI S Assessment of Business-to-Business (B2B) e-Marketplaces’ Performance Anne Engström Esmail Salehi-Sangari Luleå University of Technology Department of Business Administration and Social Sciences Industrial Marketing & e-Commerce Research Group 2007:22|: 02-544|: - -- 07⁄22 -- Assessment of Business-to-Business (B2B) e-Marketplaces’ Performance Anne Engström Esmail Salehi-Sangari Luleå University of Technology Department of Business Administration and Social Sciences Industrial Marketing & e-Commerce Research Group 2007 ABSTRACT Electronic marketplaces (e-marketplaces) are new business venues for buying, selling, and supporting customers, products, and services in many industries. The emergence of business-to-business (B2B) e-marketplaces has opened up opportunities for efficient online transactions between firms. While large capital investments were made in numerous B2B e-marketplace initiatives, a significant number of these firms ended up going bankrupt. Today, many e-marketplaces are still struggling to survive and are trying to understand the characteristics of viable business models and strategies for becoming successful. Research within this field is scarce and provides only fragmented insights into the area. Thus, the research problem of this thesis was designed to investigate holistically how the business performance of a B2B e-marketplace can be analyzed. Based on literature review and a pilot study, four research questions were developed and a theoretical framework was then created. A qualitative research approach, investigating six B2B e-marketplaces in Europe and the US, was adopted. Results from this study indicate that differences exist between B2B e- marketplaces in several aspects of their strategic position; thus, the existing taxonomy of B2B e-marketplaces can be questioned. Findings also indicate that several factors can determine the success and/or the failure of B2B e- marketplaces. Having technological expertise and a critical mass of companies trading through the e-marketplace are crucial to the e-marketplace’s success. Results also suggest that the common challenges facing B2B e-marketplaces are business related, rather than technically oriented. Major challenges e-marketplaces have to address to perform successfully include, for example, creating liquidity and keeping a balance between the diverse interests of stakeholders. Concerning the critical impact business model components have on the success and/or failure of B2B e-marketplaces, it could be concluded that the companies’ internal capabilities and assets, in particular, as well as their cost and revenue model, have an important role to play. Finally, the outcome of the study shows it may be possible to utilize the emerged frame of reference as a foundation to understand B2B e-marketplaces holistically. ACKNOWLEDGEMENTS This thesis has benefited from the financial support of the European Union Structural Funds, Innovationsbron Luleå AB, Luleå University of Technology, Längmanska Företagarfonden, Nordbankens Norrlandsstiftelse, Norrbottens forskningsråd and Sparbanksstiftelsen Norrbotten. Although the two of us conducted the actual study and wrote this thesis, many people have contributed to its completion, and we would like to express our gratitude to all of them. First of all, we thank our supervisor, Professor Leyland Pitt, for his guidance, support and constructive comments. We also thank Professor Deon Nel who ran our final preparation seminar and gave us valuable feedback for the improvement of the thesis, and Professor Tawfik Jelassi for his insightful suggestions during the initial phase of this research. We are also grateful to all our colleagues at the division for their valuable thoughts and comments. A very special thanks goes to Peter Lageson, who generously helped us to get in touch with relevant industry people. Finally, we would like to express our gratitude to all respondents at the investigated B2B e-marketplaces, and to the experts in the field, who made themselves available for interviews and provided us with indispensable information and insights. Luleå, April 2007 Anne Engström and Esmail Salehi-Sangari On a personal level, my deepest thanks goes to my family, Eilert, Emelie, Frida, Tomas and Linnea for their support and understanding during the process of writing. Anne I would like to thank my family, Sila, Ali and Amir for their support and for not asking why I’m doing this again…… Esmail TABLE OF CONTENT CHAPTER ONE: INTRODUCTION AND PROBLEM AREA ................................ 1 1.1 Introduction............................................................................................1 1.1.1 e-Commerce and e-Business 1 1.1.2 B2B e-Commerce 3 1.1.3 e-Marketplaces 5 1.2 Problem Area .........................................................................................9 1.3 Outline of the Study.............................................................................10 CHAPTER TWO: OVERVIEW OF LITERATURE..................................................13 2.1 Introduction..........................................................................................13 2.2 B2B e-marketplace Characteristics, Roles and Benefits ..................14 2.3 Value Creation through B2B e-Marketplaces...................................32 2.4 Business Model and Business Strategy ..............................................43 2.4.1 What Distinguishes “Strategy” from “Business Model”? 44 2.4.2 Business Strategy 45 2.4.3 Business Model Definition and Components 46 2.4.4 e-Marketplace Business Models 56 2.5 B2B e-Marketplace Challenges...........................................................61 2.6 B2B e-Marketplace Success and Failure ...........................................65 2.6.1 Defining and Measuring Success of e-Marketplaces 65 2.6.2 Critical Success Factors 66 2.6.3 Critical Failure Factors 72 2.7 Evolution of e-Marketplaces and Trends ..........................................75 2.8 Summary...............................................................................................78 CHAPTER THREE: PROBLEM DISCUSSION,RESEARCH PROBLEM,RESEARCH QUESTIONS AND CONCEPTUAL FRAMEWORK.….…..…..79 3.1 Introduction..........................................................................................79 3.2 Problem Discussion and Research Problem......................................79 3.2.1 Pilot Study 81 3.2.2 Research Questions 88 3.2.3 Delimitations 92 3.3 Conceptual Framework.......................................................................92 3.3.1 Strategic Position 94 3.3.2 Critical Success/Failure Factors 96 3.3.3 Challenges 98 3.3.4 Business Model Components 98 3.3.5 Environment 100 3.4 Summary.............................................................................................100 CHAPTER FOUR: METHODOLOGY..................................................................101 4.1 Introduction........................................................................................101 4.2 Research Purpose...............................................................................102 4.3 Research Approach............................................................................103 4.4 Research Paradigm............................................................................104 4.5 Research Strategy ..............................................................................106 4.5.1 Case Study Design and Unit of Analysis 107 4.6 Research Methods..............................................................................108 4.6.1 Literature Review 108 4.6.2 Case Selection 109 4.6.3 Data Collection Methods 110 4.6.4 Presentation and Analysis of Empirical Findings 112 4.7 Quality Criteria..................................................................................115 4.8 Summary.............................................................................................116 CHAPTER FIVE: EMPIRICAL DATA PRESENTATION ......................................117 5.1 Introduction........................................................................................117 5.2 Company A.........................................................................................118 5.2.1 The Company 118 5.2.2 Strategic Position 118 5.2.3 Critical Success/Failure Factors 123 5.2.4 Challenges 125 5.2.5 Business Model Components 127 5.2.6 Environmental Factors 130 5.2.7 Emerging Trends 131 5.2.8 Summary 132 5.3 Company B.........................................................................................135 5.3.1 The Company 135 5.3.2 Strategic Position 135 5.3.3 Critical Success/Failure Factors 140 5.3.4 Challenges 141 5.3.5 Business Model Components 142 5.3.6 Environmental Factors 145 5.3.7 Emerging Trends 145 5.3.8 Summary 146 5.4 Company C.........................................................................................149 5.4.1 The Company 149 5.4.2 Strategic Position 149 5.4.3 Critical Success/Failure Factors 154 5.4.4 Challenges 155 5.4.5 Business Model Components 155 5.4.6 Environmental Factors 158 5.4.7 Emerging Trends 158 5.4.8 Summary 158 5.5 Company D.........................................................................................161 5.5.1 The Company 161 5.5.2 Strategic Position 161 5.5.3 Critical Success/Failure Factors 163 5.5.4 Challenges 166 5.5.5 Business Model Components 167 5.5.6 Environmental Factors 169 5.5.7 Emerging Trends 169 5.5.8 Summary 170 5.6 Company E.........................................................................................173