On the Road of Electronic Commerce -- a Business Value Framework, Gaining Competitive Advantage and Some Research Issues

This paper addresses the issue of understanding the components of the business value an organization can derive from using electronic commerce. This subject is currently a hot discussion topic, with some companies contemplating cutting back on their electronic commerce presence, as they cannot see the short term benefits. We therefore propose a framework consisting of ten components of the business value of electronic commerce, showing how they can improve, transform or redefine current products, processes or business models. We illustrate these by examples of successful early adopters from the retail, banking and travel industries. These components are formulated as a set of propositions, which will need to be validated through empirical evidence. The paper then addresses some general effects of electronic commerce, such as its potential for competitive advantage and its effect on intermediation in an industry. We link the ten business value propositions with Porter’s model for competitive advantage within an industry. We finally review some of the current issues in dealing with electronic commerce systems and conclude by arguing that before any major project is undertaken, a solid strategy should be formulated, including the understanding of the sources of its business value and its strategic impact.