Acquisition ofElectronic Commerce Capability: The Cases ofCompaq and Dell in Sweden Michael Kaplan AKADEMISK AVHANDLING Som for avlaggande av ekonomie doktorsexamen vid Hal1delshogskolan i Stoclffiolm framlaggs for offentlig granskning fredagen den 3 maj 2002, kl10.15, i sal Ruben, Handelsll0gskolan, Saltmatargatan 13-17 Acquisition ofElectronic COll1ll1erce Capability: The Cases ofCOll1paq and Dell in Sweden ,,~ STOCKHOLM SCHOOL OF ECONOMICS ~.~~~.~ EFI, THE ECONOMIC RESEARCH INSTITUTE EFIMission EFI, the Economic Research Institute at the Stockholm School ofEconomics, is a scientific institution which works independently ofeconomic, political and sectional interests. It conducts theoretical and empirical research in management and economic sciences, including selected related disciplines. The Institute encourages and assists in the publication and distribution ofits research findings and is also involved in the doctoral education at the Stockholnl School ofEconomics. EFI selects its projects based on the need for theoretical or practical development ofa research donlain, on methodological interests, and on the generality ofa problem. Research Organization The research activities are organized in twenty Research Centers within eight Research Areas. Center Directors are professors at the Stockholm School of Economics. ORGANIZATION AND MANAGEMENT Management and Organisation; (A) ProfSven-Erik Sjostrand Center for Ethics and Economics; (CEE) Adj ProfHans deGeer Center for Entrepreneurship and Business Creation; (E) ProfCarin Holmquist Public Management; (F) ProfNils Brunsson Information Management; (1) ProfMats Lundeberg Center for People and Organization; (PMO) ProfJan Lowstedt Center for Innovation and Operations Management; (T) ProfChrister Karlsson ECONOMIC PSYCHOLOGY Center for Risk Research; (CFR) ProfLennart Sjoberg Economic Psychology; (P) ProfGuje Sevon MARKETING Center for Information and Communication Research; (CIC) Adj ProfBertil Thomgren Center for Consumer Marketing; (CCM) Acting ProfMagnus Soderlund Marketing, Distribution and Industrial Dynamics; (D) ProfLars-Gunnar Mattsson ACCOUNTING, CONTROL AND CORPORATE FINANCE Accounting and Managerial Finance; (B) ProfLars Ostman Managerial Economics; (C) ProfPeter Jennergren FINANCE Finance; (FI) ProfClas Bergstrom ECONOMICS Center for Health Economics; (eHE) ProfBengt Jonsson International Economics and Geography; (lEG) ProfMats Lundahl Economics; (S) ProfLars Bergman ECONOMICS STATISTICS Economic Statistics; (ES) ProfAnders Westlund LAW Law; (RV) ProfErik Nerep Chairman ofthe Board: ProfHflkan Lindgren. Director: Associate ProfBo Sellstedt. Adress EFI, Box 6501, S-113 83 Stockholm, Sweden • Internet: www.hhs.se/efi/ Telephone: +46(0)8-736 90 00 • Fax: +46(0)8-31 62 70 • E-mail [email protected] ii Acquisition ofElectronic Commerce Capability: The Cases of COll1paq and Dell in Sweden Michael Kaplan ,:1;:\ STOCKHOLM SCHOOL OF ECONOMICS ~'~J EFI, THE ECONOMIC RESEARCH INSTITUTE iii Dissertation for the Degree ofDoctor ofPhilosophy, Ph.D. (Business Administration) Stockholm School ofEconomics © EFI and the author ISBN 91-7258-596-X Keywords: Capabilities, Capability Acquisition, Customer Relationship Management, Distribution Systems, Electronic Commerce, Organisational Learning, Network Learning, Relationship Marketing, Resources, Routines. Cover layout: The "Golden Calf' water color Bible illustration was done in Bogota Colombia by an unknown artist. It is now part of the World Mission Collection. Permission to use the picture has been granted by the Wisconsin Evengelical Lutheran Synod, 6633 W.Wartburg Circle, Mequon, WI 53 092. Printed by: Elanders Gotab, Stockholm, 2002 Distributed by: EFI, The Econoll1ic Research Institute Stockholm School ofEconomics P.O. Box 6501, SE-113 83 Stockholm, Sweden iv Preface When starting writing this thesis in the autumn of 1997, the interest in electronic commerce was gaining momentum in the US, Sweden and elsewhere, but generally speaking the phenomena was still not at the forefront ofpublic interest. During 1998-2000 Sweden experienced a booming interest in electronic commerce, inspired and fed by the media, venture capitalists and investment banks. Driven by a mix of strong business aspirations, curiosity and ego, numerous entrepreneurs tried to exploit electronic commerce technology for the sale of socks, CDs, flowers and everything else you could think of. Electronic commerce was momentarily the "Golden Calf'. Naturally, this tum of events affected the thesis, guided the interviews and the questions and made the research questions more pertinent. Furthermore, as entrepreneurs in Sweden struggled to come up with the right fonnula, working around the clock to find the right mixture of capabilities, the shifts and turns during this bubble highlighted various aspects and problems with electronic commerce. At the outset, it seemed to nle that Compaq and Dell, both stellar perfomlers, would provide solid examples of electronic commerce put into practice, and therefore important objects to study. Coming closer to the finns revealed that electronic commerce was a more complicated matter than I thought. Access has been excellent and I am grateful for the time, openness and attention that I have received from both firms. I take this opportunity of expressing my thanks to both for their co-operation. The research project has been funded from a number of sources. The Economic Research Institute -and Stockholm School of Economics has provided funds for starting, concluding, and apply for external financing. My key source of financing has been the LE Lundberg Foundation that has supported my work. Without the generosity and patience of the Economic Research Institute, Stockholm School of Economics and the LE Lundberg foundation I would not have been able to carry out the project. I would like to extend my warm thanks for the financial support over the years. To bring this work about I have received tremendous support from fellow colleagues in the Marketing Area at the School. Anders Lundgren recruited me to the D-section that focuses on distribution, marketing and marketing dynamics. He inspired me, and during the time that we worked together he led me onto the path that I have taken. In a similar fashion, Bertil Thomgren has greatly stimulated my thinking by making infornlation and thoughts about electronic commerce accessible. Ivan Snehota read my manuscript through, providing me with valuable insights and comments. With his strong grasp ofthe literature, I was able to gain a better understanding ofwhere my thesis fitted in and to see how my work was linked to the thoughts of others and how I could contribute to the literature. Thank you! v Udo Zander put in a lot ofeffort in a careful reading ofmy manuscript. Udo checked my thoughts and their relevance for the resource-based view. He gave the dissertation a partly new, but fruitful direction, by providing criticism at "the pie senlinar", which proved a critical juncture in the process. Thank you! Magnus Soderlund, Anders Liljenberg and Mats Edenius have focused on the introduction, method and methodology. They have helped nle to sort out and clarify my stances and positions. Mats Vilgon and Ulf Essler have stinlulated my thinking and engaged me in ample discussions, exchanging ideas, helping me carry out the work on a day-to-day basis over the years. VlfEssler, with his focus of electronic commerce, has read my manuscript carefully on several occasions. His attention to detail, logic and clarity has been extremely valuable. George Cook has read through the manuscript and greatly improved the English, flow and logic of the text. Claes-Fredrik Helgesson helped me extensively to improve the presentation ofthe text. Thank you all! Per Andersson and Lars-Gunnar Mattsson have been my tutors. Per has time after time read my texts, forcing me to constantly move ahead by showing where things could be improved. By adding new aspects and perspectives, Per's comments and suggestions have greatly enriched the thesis and introduced depth in the discussion and analysis. Lars-Gunnar has skilfully and patiently supported the writing. He has generously made himself available to me. Without this guidance, I doubt that I would have arrived at all. By creating a relaxed atmosphere, being open to new ideas and theories, regardless of their origin Lars-Gunnar has allowed me to explore my subject freely. This openness has put learning and searching for new insights at the forefront, to a large extent explaining the nature of the results. As one of Lars-Gunnar's last doctoral students, I feel proud to be a small part ofhis legacy and ofhaving had the opportunity ofsitting in his sofa. My parents and family have supported me patiently, but from time to time they have been wondering what I have been doing all these years: "Should it be this difficult to get an education?" At last I have something to show them. Thank you for the care and love. Finally, thank you Maria for being there. Always. Stockholm, March 20, 2002 Michael Kaplan vi Contents 1. Introduction 1 Empirical Preview 1 Problem Area 2 Purpose 6 The Concept ofCapability Acquisition 7 Focus and Delimitation 9 Structure 12 2. Methodological Considerations 13 Choice ofResearch Object 13 Choice ofResearch Method 14 Finding the Research Questions 14 Case Study Design 16 Information Sources 18 Presentation ofthe Cases 21 Understanding and Explanation 23 Dependent and Independent Variables 25 The Role ofManagers 27 The Quality ofthe Results 30 3. The State ofElectronic