scispace - formally typeset
Search or ask a question
Journal Article

Driving E-Business Excellence

01 Jan 2001-MIT Sloan Management Review (Massachusetts Institute of Technology)-Vol. 43, Iss: 1, pp 36-44
TL;DR: Barua et al. as discussed by the authors developed a research-backed model of e-business value creation, and the model's premise is deceptively simple: proper development of ebusiness drivers will lead to operational excellence, which will, in turn, generate improved financial performance.
Abstract: In trying to bring about e-business transformation, companies have paid too much attention to technology ? as if adding the right software or hardware could, on its own, bring about miracles. But systems do not work in a vacuum, and senior managers would do well to recognize the complementary nature of technology, business processes and e-business readiness throughout the value chain, from their suppliers to their customers. By taking a more holistic view, executives can turn these facets of a company's operations into the drivers of e-business excellence. To help company leaders see the bigger picture, authors Anitesh Barua, Prabhudev Konana, Andrew B. Whinston and Fang Yin of the University of Texas at Austin's McCombs School of Business developed a research-backed model of e-business value creation. The model's premise is deceptively simple: that proper development of e-business drivers will lead to operational excellence, which will, in turn, generate improved financial performance. The authors explain that if managers are to lead a successful digital transformation, they must carefully track such e-business operational measures as the percentage of goods purchased online from suppliers and the percentage of customer-service requests handled through the Web site. Companies that scored high on those (and other) measures in the authors' study also enjoyed significant increases in revenue per employee, gross profit margin, return on assets and return on investments. Once managers understand their company's relative degree of e-business operational excellence, they can develop the drivers that will raise those scores. The authors guide readers through the eight drivers their research uncovered, from mastering supplier-related processes to optimizing IT applications aimed at customers.
Citations
More filters
Journal ArticleDOI
TL;DR: The results suggest that integrated IT infrastructures enable firms to develop the higher-order capability of supply chain process integration, which results in significant and sustained firm performance gains, especially in operational excellence and revenue growth.
Abstract: Best practice exemplars suggest that digital platforms play a critical role in managing supply chain activities and partnerships that generate performance gains for firms. However, there is limited academic investigation on how and why information technology can create performance gains for firms in a supply chain management (SCM) context. Grant's (1996) theoretical notion of higher-order capabilities and a hierarchy of capabilities has been used in recent information systems research by Barua et al. (2004), Sambamurthy et al. (2003), and Mithas et al. (2004) to reframe the conversation from the direct performance impacts of IT resources and investments to how and why IT shapes higher-order process capabilities that create performance gains for firms. We draw on the emerging IT-enabled organizational capabilities perspective to suggest that firms that develop IT infrastructure integration for SCM and leverage it to create a higher-order supply chain integration capability generate significant and sustainable performance gains. A research model is developed to investigate the hierarchy of IT-related capabilities and their impact on firm performance. Data were collected from 110 supply chain and logistics managers in manufacturing and retail organizations. Our results suggest that integrated IT infrastructures enable firms to develop the higher-order capability of supply chain process integration. This capability enables firms to unbundle information flows from physical flows, and to share information with their supply chain partners to create information-based approaches for superior demand planning, for the staging and movement of physical products, and for streamlining voluminous and complex financial work processes. Furthermore, IT-enabled supply chain integration capability results in significant and sustained firm performance gains, especially in operational excellence and revenue growth. Managerial initiatives should be directed at developing an integrated IT infrastructure and leveraging it to create process capabilities for the integration of resource flows between a firm and its supply chain partners.

1,759 citations


Cites background from "Driving E-Business Excellence"

  • ...It has been suggested that operational performance impacts other key aspects of firm performance (Barua et al. 2001; MIS Quarterly Vol. 30 No. 2/June 2006 239 Mukhopadhyay et al. 1995)....

    [...]

Journal ArticleDOI
TL;DR: The study finds that technology competence, firm size, financial commitment, competitive pressure, and regulatory support are important antecedents of e-business use and that, while both front-end and back-end capabilities contribute to e- business value, back- end integration has a much stronger impact.
Abstract: Grounded in the innovation diffusion literature and the resource-based theory, this paper develops an integrative research model for assessing the diffusion and consequence of e-business at the firm level. Unlike the typical focus on adoption as found in the literature, we focus on postadoption stages, that is, actual usage and value creation. The model thus moves beyond dichotomous "adoption versus nonadoption" and accounts for the "missing link"--actual usage--as a critical stage of value creation. The model links technological, organizational, and environmental factors to e-business use and value, based on which a series of hypotheses are developed. The theoretical model is tested by using structural equation modeling on a dataset of 624 firms across 10 countries in the retail industry. To probe deeper into whether e-business use and value are influenced by economic environments, two subsamples from developed and developing countries are compared. The study finds that technology competence, firm size, financial commitment, competitive pressure, and regulatory support are important antecedents of e-business use. In addition, the study finds that, while both front-end and back-end capabilities contribute to e-business value, back-end integration has a much stronger impact. While front-end functionalities are becoming commodities, e-businesses are more differentiated by back-end integration. This is consistent with the resource-based theory because back-end integration possesses the value-creating characteristics of resources (e.g., firm specific, difficult to imitate), which are strengthened by the Internet-enabled connectivity. Our study also adds an international dimension to the innovation diffusion literature, showing that careful attention must be paid to the economic and regulatory factors that may affect technology diffusion across different countries.

1,537 citations


Cites background or methods from "Driving E-Business Excellence"

  • ...Drawing on the literature (Barua et al. 2001, Zhu and Kraemer 2002), we define e-business as using the Internet to conduct or support business activities along the value chain (Porter 2001)....

    [...]

  • ...…2005, pp. 61–84 issn 1047-7047 eissn 1526-5536 05 1601 0061 informs ® doi 10.1287/isre.1050.0045 ©2005 INFORMS Post-Adoption Variations in Usage and Value of E-Business by Organizations: Cross-Country Evidence from the Retail Industry Kevin Zhu Graduate School of Management, University of…...

    [...]

Journal ArticleDOI
TL;DR: The empirical analysis found a strong positive interaction effect between IT infrastructure and e-commerce capability, which suggests that their complementarity positively contributes to firm performance in terms of sales per employee, inventory turnover, and cost reduction.
Abstract: This study seeks to assess the business value of e-commerce capability and information technology (IT) infrastructure in the context of electronic business at the firm level. Grounded in the IT business-value literature and enhanced by the resource-based theory of the firm, we developed a research framework in which both the main effects and the interaction effects of e-commerce and IT on firm performance were tested. Within this theoretical framework, we formulated several hypotheses. We then developed a multidimensional e-commerce capability construct, and after establishing its validity and reliability, tested the hypotheses with empirical data from 114 companies in the retail industry. Controlling for variations of firm size and subindustry effects, our empirical analysis found a strong positive interaction effect between IT infrastructure and e-commerce capability. This suggests that their complementarity positively contributes to firm performance in terms of sales per employee, inventory turnover, and cost reduction. The results are consistent with the resource-based theory, and provide empirical evidence to the complementary synergy between front-end e-commerce capability and back-end IT infrastructure. Combined together, they become more effective in producing business value. Yet the value of this synergy has not been recognized in the IT payoff literature. The "productivity paradox" observed in various studies has been attributed to variation in methods and measures, yet we offer an additional explanation: ignoring complementarities in business value measurement implies that the impact of IT was seriously underestimated. Our results emphasized the integration of resources as a feasible path to e-commerce value--companies need to enhance the integration between front-end e-commerce capability and back-end IT infrastructure in order to reap the benefits of e-commerce investments.

708 citations


Cites background from "Driving E-Business Excellence"

  • ...This reflects a key strength of the Internet technologies— the ability to provide informational, transactional, and interactive capabilities to customers across time and space [7]....

    [...]

Posted Content
TL;DR: A conceptual model of satisfaction with ASP is developed and empirically test the predictions using data from 256 firms using ASP services to find empirical support for the influence of performance and disconfirmation on the satisfaction with ASPs.
Abstract: In spite of the promise and potential of improving the way organizations develop, operate and maintain information technology (IT) applications, application service providers (ASPs) have fared poorly in terms of attracting a large client base. Anecdotal evidence in the business press points to limited satisfaction among users of ASP, which calls for an assessment of determinants of satisfaction with ASP. In this paper, we draw upon the consumer satisfaction paradigm widely employed in marketing literature to analyze post-usage satisfaction with ASP services. We develop a conceptual model of satisfaction with ASP and empirically test the predictions using data from 256 firms using ASP services. Expectations about ASP service have a significant influence on the performance evaluation of ASPs, and experience-based norms have only limited significance in explaining satisfaction with ASP. We also find empirical support for the influence of performance and disconfirmation on the satisfaction with ASP. Implications for both ASPs and organizations adopting ASP services are discussed.

369 citations

Journal ArticleDOI
TL;DR: In this article, the authors report the results of a research project addressing the current state of e-procurement technologies and indicate that the final equilibrium may include several technologies, each one serving a different segment of the market.

366 citations