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Critical success factors for B2B

e-markets: a strategic fit


perspective
Michael Johnson
Aston Business School, Aston University, Birmingham, UK
Abstract
Purpose The objective of this paper is to explore and determine a set of factors that are critical to
the success of business-to-business (B2B) e-markets in the aerospace and defence, healthcare, higher
education and local government industry sectors, in order to advance our current understanding of
what factors facilitate e-market adoption and success. The paper examines critical success factors
(CSFs) for e-markets from a strategic fit perspective.
Design/methodology/approach The study adopted a semi-inductive qualitative approach based
on a review of the literature, followed by a pilot study and 58 indepth semi-structured interviews
with senior level executives in buyer, supplier, e-market and third-party organisations. Qualitative data
analysis software, QSR N6, was used to code and analyse the interview data for citations that
corresponded with the candidate e-market CSFs that had been identified either in the literature, pilot
study or during the course of the interviews with respondents. The CSFs for e-markets were ranked
by the frequency of respondents citing a particular CSF.
Findings The study found eight factors that are critical to e-market success and four factors (critical
mass, integration issues, value proposition, and leadership participation) were found to be conducive
to e-market success in all four industry sectors. Likewise, four factors (industry knowledge, revenue
model, branding and reputation, and rich content) were found to be only conducive to e-market success
in three of the four industry sectors.
Practical implications The paper can help academic researchers, managers, consultants,
practitioners and other professionals better understand what factors are critical to the success of
e-markets and other online enterprises operating in the B2B marketspace.
Originality/value There have been numerous calls for more empirical research on the dynamics of
e-market adoption for more than a decade. To date, research on the CSFs for e-markets has been
largely anecdotal and sporadic with a paucity of studies noting factors that are likely to be favourable
to e-market success. This study addresses the call for more research on e-markets and imparts
empirical evidence on factors that are perceived to be conducive to the success of e-markets.
It contributes to the base of knowledge on e-markets by relating the concept of CSFs with the theory
of strategic fit as, to date, no known study has examined CSFs for e-markets from a strategic
fit perspective. The study also presents the benefits capabilities-industry participants needs fit
conceptual model as a precursor for theory building in future studies on B2B e-markets and informs
stakeholders involved in developing e-markets or other online B2B ventures to better comprehend the
conditions and determinants of success.
Keywords Critical success factors, Business-to-business marketing, Electronic commerce,
B2B e-markets, E-market capabilities, Strategic fit, Dynamic capabilities, Buyers, Suppliers,
Industry participants, Benefits, Needs, Qualitative research
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-4503.htm
Received 1 June 2012
Revised 17 October 2012
2 February 2013
Accepted 21 February 2013
Marketing Intelligence & Planning
Vol. 31 No. 6, 2013
pp. 698-727
rEmerald Group Publishing Limited
0263-4503
DOI 10.1108/MIP-10-2013-001
The author would like to thank all the interviewees and organisations who gave their time
selflessly to participate in the study, and the two anonymous reviewers for their constructive and
helpful comments on an earlier draft of the paper.
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1. Introduction
The success of any business operating in a business-to-business (B2B) environment is
contingent on their ability to market their products and services effectively to buyers,
suppliers and other third-party organisations. In addition to the receptivity of the
market, their sustainable future is also contingent on a number of factors (e.g. tangible
and intangible assets, competences, resources and capabilities) that they possess.
Those factors must be aligned to, or fit with, market expectations and differentiate
their offerings from those of their competitors. Observing that some companies
thrive in environments characterised by turbulence and uncertainty while others
experience catastrophic failure suggests that successful companies possess and
exploit a set of factors that are critical to their success in a given environment, whereby
success is determined by their superior long-term performance over competitors.
Such factors, referred to as critical success factors (CSFs), have been studied in a
variety of industrial and organisational contexts (Huotari and Wilson, 2001) over the
past five decades.
While several streams of research (e.g. Al-Mashari et al., 2006; Slevin and Pinto,
1987; Teo and Ang, 1999) have identified CSFs in traditional bricks and mortar
industries, relatively few studies have examined CSFs for online service organisations
such as B2B electronic markets (e-markets). Consequently, the dearth of empirical
research pertaining to CSFs for e-markets has resulted in numerous calls for more
empirical research on the subject. Fong et al. (1997) argue that there is a need to better
understand of the characteristics of e-markets and identify factors that underpin their
success. Fairchild and Peterson (2003) note that there is still a fundamental need
for more empirical research that provides relevant insights and understanding of
e-markets. Joo and Kim (2004) suggest that research on identifying factors that
influence the proliferation of e-markets is a topic for further research. Likewise,
Hadaya (2006) states that very few empirical studies have endeavoured to identify the
factors that induce firms to adhere to e-markets. More recently, Chong et al. (2010)
suggest identifying the CSFs associated with the performance of e-markets as a topic
for further research to consider. Similarly, Standing et al. (2010) suggest identifying
the factors that enable organisations to successfully participate in e-markets as a key
research question for future research to consider. E-markets constitute a significant
part of the digital economy and are proliferating into every sphere of economic activity
in the developed world and are growing in use in developing countries. Thus, their
growing importance and impact on supply chain organisations in both industrial
markets and the public sector, and their contributions to regional, national and global
economies denote that further research on e-markets [is] required that elucidate the
factors that are conducive to their success ( Johnson, 2011a, p. 114).
There has been a recent resurgence of research interests on e-markets (e.g. Balocco
et al., 2010; Chien et al., 2012; Chong et al., 2010; Johnson, 2012, 2014; Loukis et al., 2011;
Matook, 2013; Saprikis, 2013; Wang et al., 2012) because they represent one of the most
promising opportunities for improving supply chain efficiency, growth and profitability
in interconnected and globalised markets, given that 90 per cent of all supply chain
transactions are B2B (Attaran and Attaran, 2007). Increasingly greater amounts of
B2B trade is being channelled through e-markets. In North America alone, it was
anticipated that more than 40 per cent of all B2B trade (amounting to more than US$2.9
billion) would be channelled through e-markets by 2006 (Truong and Jitpaiboon, 2008).
The global market for B2B applications and technologies was anticipated to reach
US$1.3 trillion by 2009 (Ratnasingam, 2007).
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Rationale for the study
There has been considerable interest in e-markets among practitioner audiences
(Petersen et al., 2007) and academics (Li and Li, 2005; Saprikis, 2013; Truong and
Jitpaiboon, 2008). Notwithstanding, many of the key issues concerning e-markets have
not received the attention they deserve in the literature (Chien et al., 2012; Johnson,
2012). Furthermore, the number of empirical studies that exist on e-markets is paltry
(Truong and Jitpaiboon, 2008) and although over a decade of research has been
published on e-markets, Standing et al. (2010) note that many questions pertaining to
e-markets still remain unanswered or need clarification. For example, empirical studies
on success factors for e-markets are so few, that Li and Li (2005, p. 119) suggest that a
study to deduce such factors is very necessary.
The commercial environment has become increasingly more complicated
(Nagati and Rebolledo, 2012) especially due to the advent of e-business and other
digital technologies. Accordingly, e-markets operate in high velocity environments
characterised by significant turbulence and great uncertainty due to the emergent and
rapidly changing nature of the B2B marketspace (Ganesh et al., 2004; Wang et al., 2012).
This requires e-markets to continuously modify their business models to evolve with
changes in their environment. While a number of high profile e-markets have failed
(Cuganesan and Lee, 2006; Day et al., 2003; Doyle and Melanson, 2001; Oliver, 2001;
Truong and Jitpaiboon, 2008), many others have thrived and new e-markets continue
to emerge globally, particularly in rapidly developing markets and economies. For
example, Wang et al. (2012) suggest that although the number of e-markets in China
exceeded 4,500 in 2007, the potential market size for e-markets in China remains
substantial given that a myriad of small and medium-sized enterprises (SMEs) are
especially keen to launch new products, establish their brands and grow their markets
through e-markets which are key drivers of e-market proliferation in China.
The success and failure of e-markets serve to indicate that there is a requirement for
a much better understanding of the CSFs pertaining to such systems (Vaidya et al.,
2006). Identifying e-market CSFs can provides some important insights that can better
inform entrepreneurs launching new e-markets and managers in existing ones to
recognise and focus on the key areas of their business where intervention is required
(Francoise et al., 2009). For example, redefining their strategy, business model or value
proposition (Balocco et al., 2010), managing resources more effectively and developing
dynamic capabilities that respond to the needs of buyers and suppliers in the industries
in which they operate, given that some e-markets find it difficult to attract and retain
industry participants (Chien et al., 2012) and because industry participants exploit the
competition between e-markets by participating in those which furnish them with
the greatest value (Miller and Niu, 2012). Therefore, the aim of this empirical study is to
determine a set of CSFs for e-markets by answering the research question: What are
the CSFs for B2B e-markets?
This paper addresses the numerous calls for more empirical research on identifying
factors that are perceived to be critical to the success of e-markets and explicates how
they are important. It contributes to the base of knowledge on e-markets by relating
the concept of CSFs with the theory of strategic fit as, to date, no known study has
examined CSFs for e-markets from a strategic fit perspective. The study also presents
the e-market benefits capabilities industry participants needs fit conceptual model
as a precursor for theory building in future studies on B2B e-markets and informs
stakeholders involved in developing e-markets or other online B2B ventures to better
comprehend the conditions and determinants of success.
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2. Background
CSFs
CSFs were initially observed in the early 1960s by Daniel (1961) who noted that there
were typically between three and six factors that govern an organisations success
within the majority of industry sectors. Rockart (1979) first defined the concept of CSFs
in the management literature and suggested they were measurable constructs directly
linked to the attainment of organisational goals and the competitive performance
of firms, which may differ between managers in an organisation and between similar
organisations in the same industry. CSFs are contingent on the context in which they
are being examined and, therefore, several definitions exits. According to Rockart
(1979), CSFs are [y] the limited number of areas [of a business] in which results,
if they are satisfactory, will ensure successful competitive performance for the
organisation. They are a few key areas where things must go right for the business to
flourish (Rockart, 1979, p. 85). However, this definition does not make it explicitly
apparent that some CSFs relate to the external environment in which organisations
operate. Moreover, the extant literature (e.g. Daniel, 1961; Rockart, 1979; Boynton and
Zmud, 1984; Slevin and Pinto, 1987; Peffers and Gengler, 1998) suggests that CSFs
relate to organisational information needs which have implications for organisational
planning and control activities. It follows that an inference can be made that CSFs
relate to managerial decisions that affect an organisations current and future
operations. Thus, for the context of this study, a definition of CSFs should also relate to
an organisations future, as provided by Boynton and Zmud (1984) who define CSFs as
[y] issues vital to an organizations current operating activities and to its future
success (Boynton and Zmud, 1984, p. 19).
E-markets and measures of their success
E-markets, which are sometimes referred to as B2B exchanges, digital markets
or industrial e-markets, are service-based firms that operate in the online B2B
marketspace within the private and public sectors. They are operated by either
a major buyer or supplier within a market, a multi-firm consortium or an independent
third-party (Strader and Shaw, 1997) to support the basic economic transactions of
demand and supply and information exchange that facilitate market efficiency.
Johnson (2011b) defines e-markets as inter-organisational trading systems that seek to
smooth out supply chain inefficiencies by facilitating buyer-supplier information
exchange on products, services, prices and transactions in an integrated and
synchronous internet-based environment ( Johnson, 2011b, p. 97).
The relative newness of e-markets makes it difficult to establish rigourous measures
of success (Ordanini et al., 2004). Johnson et al. (2001) suggest that e-market success is
determined by the extent to which the business benefits they provide address the
supply chain needs of industry participants and the financial benefits the owners of
e-markets gain. E-market success can also be determined by their profitability (Li and
Li, 2005), positive cash flow and high volume of transactions (Sehwail and Ingalls,
2005). However, e-market success is ultimately defined by their longevity in the
marketspace, i.e. their ability to out-perform competitors and competing mechanisms
of market co-ordination and exchange. A number of studies on e-markets and other
B2B e-commerce systems infer a number of factors that are perceived to contribute to
the success of e-markets. These factors are summarised in Table I below. While such
factors are considered to be important to e-market success, a comprehensive framework
that examines the factors that influence e-market success has not been developed to date
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CSFs for
B2B e-markets
nor do existing theoretical frameworks and models of adoption adequately explain
e-market adoption in all contexts (Gengatharen and Standing, 2005). According to
Wang et al. (2012), a coherent theory of e-market performance (i.e. success) has not been
developed to date. This may stem from the notion that there is a lack of knowledge on
how the performance (i.e. success) of e-markets can be determined (Matook, 2013).
Notwithstanding, the success of e-markets can be examined from a strategic fit
perspective.
Strategic fit
The concept of strategic fit (alignment or co-alignment) has also been used to assess
organisational performance outcomes in different contexts for more than four decades
(Venkatraman, 1989). While several definitions of strategic fit exist, Smaczny (2001)
offers an interpretation which suggests that managers must collect and respond to
market intelligence pertaining to the internal and external domains of their
organisations in order to be successful. According to Smaczny (2001), strategic fit
results from [y] the ability to make decisions concerning a companys market
positioning based on external and internal environmental conditions (Smaczny, 2001,
p. 799). A number of studies on strategic fit (e.g. Bensaou and Venkatraman, 1996;
Venkatraman and Prescott, 1990; Venkatraman and Ramanujam, 1986) also argue that
the fit of organisational variables with the internal and external environment is related
to organisational performance. Miles and Snow (1994) maintain that organisations
possess a set of factors (i.e. resources and capabilities), which must have both an
internal fit within the organisation and an external fit with the external environment,
that must be constantly aligned with the internal and external environments in order to
remain in fit and achieve superior performance over competitors in the industries
in which they operate. Furthermore, fit is both a state and a process whereby, to
achieve strategic fit, organisations must [y] create, understand, develop, and sustain
a distinctive competence in the production of high-value goods or services that the
market desires (Miles and Snow, 1994, p. 186). In other words, organisations must
develop unique capabilities that provide exceptional benefits which address the needs
and desires of their customers.
Several studies on enterprise systems (e.g. Al-Mashari et al., 2003; Croteau and Li,
2003; Holland and Light, 1999; Hong and Kim, 2002; Lu et al., 2006; Soong et al., 2001;
Umble et al., 2003) support the view that the success of such systems is contingent on
how well they fit with the needs of stakeholders, the provision of benefits that match
perceived needs or other organisational variables. While Bensaou and Venkatraman
(1996) examined the performance of B2B relationships using the theory of strategic fit,
to date, no known study has examined the performance outcomes (i.e. success) of
e-markets from a strategic fit perspective. In the context of B2B relationships, such as
between a buyer and supplier, Bensaou and Venkatraman (1996) argue that achieving
a close fit between the information processing needs of one firm with the information
processing capabilities of another was a strong determinant of performance.
Extrapolating to the broader context of the B2B e-marketspace, it is analogous
that e-markets must possess capabilities that provide benefits that address the
supply chain needs of industry participants over and above competing means of
co-ordinating market exchange in order to be successful. Furthermore, an e-market
must continually develop dynamic capabilities that respond to the changing needs
of industry participants and do this better than its rivals in a given industry in order
to sustain its competitive advantage and long-term survival. There is no universal
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framework for categorising the benefits that can be derived from e-market participation
( Johnson, 2011c). However, Shang and Seddon (2002) provide a useful framework for
assessing the types of higher level benefits that buyers and suppliers can gain from
e-market participation as noted in the extant literature (see Johnson, 2011a, b, c).
3. Methodology
Research approach
A semi-inductive qualitative means of enquiry, informed by the literature, was chosen
to answer the research question because CSFs are context-dependent and the research
was exploratory. There is a strong tradition of using qualitative approaches based on
the use of case studies and/or semi-structured interviews in research pertaining to
CSFs (e.g. Al-Mashari et al., 2006; Boynton and Zmud, 1984; Daniel, 1961; Fairchild
et al., 2004; Hong and Kim, 2002; Rockart, 1979) and B2B e-commerce (e.g. Bakker et al.,
2008; Lancastre and Lages, 2006; Petersen et al., 2007; Sehwail and Ingalls, 2005;
Vaidya et al., 2006) given that these approaches offer contextual richness which
emphasises the importance of the social context (see Bonoma, 1985; Gummesson,
2003). Furthermore, it has been argued that phenomenological approaches (e.g.
descriptive and interpretive) are legitimate modes of enquiry in qualitative studies
seeking to understand how contextual factors impinge on organisations adopting
information systems (Galliers and Land, 1987), which is pertinent to this study given
that it formed the basis of a larger research project on the organisational adoption
dynamics of e-markets in private and public sector environments.
Data collection
A research protocol, shown in Figure 1, was used to record the numerous stages
involved in the research process to improve the rigor, replicability and reliability of the
study as advocated by Yin (1994). A review of the literature pertaining to e-markets,
business and industrial marketing, and operations and supply chain management
relating to e-markets, B2B e-commerce and e-procurement systems was conducted to
identify candidate CSFs for e-markets. A pilot study was conducted that involved
14 in-depth interviews with e-market CEOs, managing directors, business development
managers and independent industry consultants to provide conceptual clarification
for a comprehensive set of candidate CSFs that corroborated or refuted any of the
candidate CSFs derived from the literature review, thereby operationalising
the measures of construct validity (see Yin, 1994). Table I shows the candidate CSFs
derived from a review of the literature and pilot study.
The main data collection phase involved the identification of potential e-markets
and key interview respondents that could participate in the research. A number of
e-market, buyer, supplier and third-party organisations were contacted by telephone
over an 18 months period between March 2002 and July 2003 to request their
participation in the study. A follow-up cover letter explaining the purpose of the
research was also e-mailed to potential respondents. The cover letter offered
respondents confidentiality and anonymity in order to engage their participation in
the research, encourage them to speak with candour about their experiences and
to freely express their opinions. It also mitigates against any possible apprehensions of
participating in the research especially where discussions relate to sensitive issues
(Oppenheim, 1992). Respondents agreed to participate in the project on the basis that
they and their organisations would be anonymised. Therefore, pseudonyms are used
for organisations in the study.
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CSFs for
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The e-markets in this study, shown in Table II, exhibited a diverse range of
characteristics in terms of ownership, transaction mechanism, business model and
supply chain focus that were prominent in their respective industry sectors at the time
of data collection. Table III shows the breakdown of respondents who had agreed
to participate in the research. They were selected for interview based on their
ability to answer the interview questions given their job roles and the industry
knowledge they possessed about the research context, as noted in the literature
(see Leidecker and Bruno, 1984), and because such industry insiders represent what
Eid et al. (2002, p. 111) identify as an excellent source of CSFs. The snowball
sampling technique (see Oppenheim, 1992; Robson, 1993) was used to recruit further
respondents to participate in the study as the data collection process proceeded. The
data in this paper relates to 54 (14 face-to-face and 40 telephone) in-depth interviews
with senior level executives in buyer, supplier, e-market and third-party organisations
in the aerospace and defence, healthcare, higher education and local government
industry sectors that occurred between April 2002 and August 2003. Open-ended
.
Figure 1.
Research protocol
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questions were used to minimise researcher bias, enable interviewees to respond in
their own vernacular and to allow for a good conversational exchange that provides a
high degree of understanding about the research question. Such interviews enable a
researcher to concentrate on uncovering deeply held and shared themes among
respondents (Ringberg and Gupta, 2003, p. 610) in addition to observing any
idiosyncrasies that occur between interviews and any emergent themes that develop
during the course of the data collection process or subsequent analysis of the data.
During the interviews respondents were asked what they considered to be the
CSFs for their e-market (e-market companies), e-markets in which they participate
(buyer and supplier organisations) or e-markets in their industry sector (third-party
organisations). The approach of interviewing industry insiders, who are deeply
immersed or directly involved in the research context, is consistent with those
Candidate CSF for
e-markets Source to support candidate CSF for e-markets
Branding and reputation Hof and Hemelstein (1999), Calder (2000), Zott et al. (2000)
Business model Pilot interviewees
Critical mass Sculley and Woods (1999), Sehwail and Ingalls (2005), Wise and
Morrison (2000)
Deep integration Pilot interviewees
Deep pockets Pilot interviewees
Degree of industry
fragmentation
Pilot interviewees
E-commerce standards Pilot interviewees
E-market management
team
Pilot interviewees
Governance Bakos (1998), Zaheer et al. (1998), Agrawal et al. (2001)
Industry knowledge Timmers (1999), Sculley and Woods (1999), Baumgartner et al. (2001)
Industry standards Pilot interviewees
Industry structure Bailey and Bakos (1997), Bakos (1998), Gulati et al. (2000)
Leadership participation Sculley and Woods (1999), Ramsdell (2000), Dewan et al. (2000),
Markus et al. (2003)
Market attractiveness Pilot interviewees
Market readiness Pilot interviewees
Neutrality Sculley and Woods (1999), Timmers (1999), Cunningham (2000)
Organisational strategy Evans and Wurster (1999), Porter (2001), Raisch (2001), Sawhney and
Parikh (2001), Sehwail and Ingalls (2005)
Outsourcing Sculley and Woods (1999), Zott et al. (2000), Porter (2001)
Partnerships Ramsdell (2000), Werbach (2000), Ratnasingam (2000), Agrawal et al.
(2001)
Product characteristics Malone et al. (1987), Bailey and Bakos (1997), Bakos (1998)
Revenue model Pilot interviewees
Rich content Armstrong and Hagel (1995), Werbach (2000), Agrawal et al. (2001),
Raisch (2001)
Scope for diversification De Figueiredo (2000)
Transparency Sculley and Woods (1999), Timmers (1999), Cunningham (2000)
Trust Bailey and Bakos (1997), Bakos (1998), Timmers (1999), Soh and
Markus (2002), Zaheer et al. (1998), Cunningham (2000), Zott et al.
(2000)
Value proposition Dittrick (2000), Vaidya et al. (2006), Ramsdell (2000), Wise and
Morrison (2000), Agrawal et al. (2001), Soh and Markus (2002)
Table I.
Candidate CSFs
for e-markets
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CSFs for
B2B e-markets
advocated by Leidecker and Bruno (1984). The interviews relating to this paper lasted
47 minutes, on average, and were tape-recorded where interviewees had granted prior
permission to do so. Recording the interviews, where permitted, preserved the veracity
of their content. It also increases the validity and reliability of qualitative studies
(Oppenheim, 1992). Detailed interview notes were taken to capture the content of
interviews where an interviewee did not grant permission to record their interview
and also safeguarded against the tape recorder failing to capture the contents of the
interviews where permission had been granted to record the interviews. No noticeable
difference was observed between the face-to-face and telephone interviews in terms
of establishing rapport with respondents because they were acutely aware that the
purpose of the interview was to engage them in research. The interviews were
transcribed verbatim and each respondent was presented with the opportunity to
review the transcript of their interview to ensure the veracity of their statements was
preserved.
Data analysis
Each interview transcripts was loaded onto the QSR N6 because qualitative data
analysis programmes can facilitate the analysis and interpretation of qualitative
data (Gummesson, 2003). The data was subsequently coded and analysed in a
systematic manner, whereby the process of coding and analysis was the same for
each interview transcript. It is suggested (see Coffey and Atkinson, 1996; Miles and
Aerospace and defence Healthcare Higher education Local government Total
E-markets 1 2 2 2 7
Buyers 3 7 5 9 24
Suppliers 2 11 7 0 20
Third-parties 0 0 2 1 3
Total 6 20 16 12 54
Table III.
A breakdown
of interviews by
sector and type of
interview respondent
E-market Established
Industry sector(s)
served Ownership
Geographic
scope
AeroDefence 2000 Aerospace and defence Buy-side
consortium
International
Lab-Procure 2001 Higher education and
life sciences
Independent UK
Education Exchange 2002 Higher education Independent UK
International Medical
Exchange
2000 Healthcare Supply-side
consortium
International
Public Sector Marketplace 2000 Healthcare and local
government
Independent UK
Local Authority Marketplace 2002 Local government Independent UK
Southern Council eXchange
a
2001 Local government Independent UK
Northern Council eXchange 2002
Note:
a
Southern Council eXchange and Northern Council eXchange are operated by the same parent
organisation
Table II.
E-market profiles
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Huberman, 1994) that this approach increases the reliability and validity of qualitative
studies. Nodes corresponding to the candidate CSFs were created in N6 to categorise
and rank their importance based on the citation frequency relating to particular CSFs.
Free nodes were also created within N6 to account for CSFs that emerged from
the interviews with respondents or from analysing the data. Content analysis; i.e. the
systematic examination of a particular body of material [y] to identify patterns or
themes (Gengatharen and Standing, 2005, p. 422); is the most widely utilised technique for
analysing text-based data (Silverman, 2000). It has been utilised in studies on e-markets
and related research on B2B e-commerce, supply chain management and enterprise
resource planning systems (see Cullen and Webster, 2007; Finney and Corbett, 2007;
Johnson, 2012; Power, 2005) to extricate issues of relevance and ascribe meaning to the
data. The technique was used to analyse respondents interview responses for key words,
threads and comments relating to each CSF whereby excerpts of text relating to each CSF
were coded against corresponding nodes. This approach is consistent with other studies
on CSFs for B2B e-commerce systems (e.g. Sehwail and Ingalls, 2005; Vaidya et al., 2006)
that use the frequency or percentage of citations relating to a given CSF to assess their
relative importance. In other words, thematic content analysis was used to distil important
issues out of the data. A sample of interview data was test coded by another researcher
sufficiently acquainted with the research context to compare with the original coding to
evaluate the inter-coder reliability between the two sets of coding to ensure the consistency
of the original coding, to increase the overall rigour and reliability of the coding, and
the integrity of subsequent findings and the conclusions of the study (see Miles and
Huberman, 1994). The process also mitigates against any potential criticism relating to
qualitative studies lacking the rigour often associated with quantitative studies. The CSFs
were ranked according to the number of respondents citing a reference to each CSF. ACSF
was required to be cited by respondents in at least three of the four industry sectors to
qualify to be ranked and included in the research findings. Respondents statements that
expressed the importance of a given CSF were chosen as citations in the findings.
4. Research findings
The top eight e-market CSFs reported by respondents are shown in Table IV. The top
four CSFs were found to be cited by respondents across all four industry sectors while
the other four CSFs were only cited across three industry sectors.
A critical mass of actively trading participants
A critical mass of actively trading buyers and suppliers on e-markets is important
because they provide the cash flow derived from transaction revenues and other fees
that e-markets need to sustain its long-term survival. Achieving a critical mass of
e-market participants is linked with the revenue model an e-market utilises because
industry participants are unlikely to join e-markets charging excessive fees. On the
other hand, e-markets have to charge fees that enable them to attract a large share of
the marketspace in which they operate so that they can generate revenues to expand
their operations:
The critical mass is a critical success factors [in terms of] how much the e-marketplace can
grow in terms of the number of hospitals joining and also the number of suppliers that they
have on board. Although it [IME] is a not-for-profit organisation for equity members, they are
going to need to bring revenue in and that will only come from non-equity members and
hospitals. I guess they are going to have to make it [IME] available for a wider number of
organisations really (European Supply Chain Manager, supplier, healthcare industry sector).
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Critical mass also relates to the value proposition because buyers and suppliers adopt
e-markets to receive business benefits over and above the conventional means of
market co-ordination and exchange but at minimal cost:
Getting suppliers and buyers on board is an issue of critical mass which is driven by the
ability of the e-marketplaces to deliver [benefits] at low cost. The benefits you are looking to
offer are cost savings on things that have already been negotiated and agreed so you [i.e. the
e-market] cant introduce much more additional cost. It needs critical mass and the need to be
cost efficient (Education Sector Manager, third-party, higher education industry sector).
Deeply integrating buyers and suppliers
Many of the supply chain benefits e-markets deliver to industry participants cannot
be delivered without achieving a deep level of integration between e-markets
and industry participants. Therefore, it is critically important that e-markets are able
to deeply integrate with a significant number of buyers and suppliers disparate back-
office enterprise systems to deliver on their value proposition. Examples of such
benefits include the provision of more management information, seamless error-free
transactions and auto-population of their finance systems. However, the degree to which
the value proposition is deliverable to buyers and suppliers is contingent on the type
of enterprise or finance systems industry participants have in place and the level of
integration that can be achieved with an e-market. In some low-tech industries buyers and
suppliers may be using antiquated finance systems that are not readily compatible with
e-markets which may result in only some of the procurement or supply processes being
supported. Partial integration will result in only partial benefits being delivered especially
where old finance systems are not using current industry standards for data exchange:
They [e-markets] need to be able to integrate with legacy systems. The standard upon which
everyone is developing it is on the cXML, and there are several legacy systems that you will
never be able to integrate with cXML. You should put 90 per cent of your time into
implementing the solution at a workable human level and make sure that the processes that
you are going to be using the e-marketplace for are complementary to the ones that you have
in existence (Post-Implementation e-Procurement Manager, large buyer, local government
industry sector).
Number of respondents who cite CSF by industry
sector
Rank
E-market
CSFs
Total number of
respondents
who cite CSF
b
Aerospace
and defence Healthcare
Higher
education
Local
government
1 Critical mass 37 4 15 13 5
2 Deep integration 30 3 10 9 8
3 Value proposition 25 4 8 5 8
4 Leadership participation 23 3 8 8 4
5 Industry knowledge 21 4 10 7
6 Revenue model 20 3 6 11
7 Branding and reputation 14 1 10 3
8 Rich content 8 3 3 2
n 6 n 20 n 16 n 12
Note:
b
n 58 based on the 58 interviews with 54 respondents
Table IV.
Critical success factors
ranked by frequency
of citation
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In some instances, industry participants have modernised their ICT infrastructure and
replaced their old legacy systems in order to fully integrate with e-markets and receive
the full benefits of participation. In other instances, organisations have introduced
middle-ware applications to standardise the connection between their disparate and
old enterprise or finance systems and e-markets. The level of integration between
e-markets and industry participants also affect the transaction fees e-markets receive.
The more benefits e-markets can deliver to participants the more they can justify the
fees they charge participants:
In order to get that level of transactions there are certain CSFs that are key. The whole
implementation process is absolutely key [and] the ability to integrate with different ERP
systems is really key [because] at the end of the day you have to have people that are happy
using your system so that you can generate revenues from transaction charges, and if youre
making money, the chances are you are going to stay around (E-market Implementation
Consultant, third-party, higher education industry sector).
The e-market value proposition
The value proposition is important because industry participants are primarily
interested in the various organisational and supply chain benefits they will gain from
e-market participation that are over and above competing offerings of competitors and
alternative means of co-ordinating market exchange. The link between the business
benefits e-markets offer industry participants and their ability to attract a critical mass
of participants is clear. An e-market must offer greater value to industry participants
than its competitors in the marketspaces in which it operates in order to survive.
Notwithstanding, two e-markets providing services to industry participants in the
same marketspace can co-exist by focusing on different niches within the supply chain.
For example, in the healthcare industry sector, IME was perceived to focus on catering
to the needs of NHS Trusts with the provision of medical instruments and surgical
products from the large national and international suppliers who typically provided
up to 80 per cent of what the buy-side community ordered. Public Sector Marketplace,
on the other hand, was perceived to focus on providing the buy-side community with
a diverse range of medical and non-medical products from national and regional
suppliers:
It boils down to critical mass as they have to have enough buyer-supplier links. They will
achieve this by giving good value to their customers and by easing that link between the
buyer and the supplier. They have to do this better than the competition. In the UK that is
Public Sector Marketplace [i.e. compared to IME]. [y] Globally, Public Sector Marketplace is
probably one of the better competitors in terms of the value they give to their clients (Finance
and IS Manager, Supplier, healthcare industry sector).
However, the value proposition must be aligned to the cost of participating. In the
aerospace and defence industry sector, AeroDefence had to revise the subscription and
transaction fees it charged suppliers because many of the smallest suppliers in the
industry could not afford to participate in the e-market. This initially affected the speed
of which the e-market could recruit a critical mass of SMEs particularly as the benefits
for SMEs were questionable:
Another critical success factor would have to be the value proposition that the exchange
offers, and extricably linked to that is the whole cost model as well. I think that where a lot of
exchanges have gone wrong in the past is because they have not aligned the cost model with
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CSFs for
B2B e-markets
the value proposition. AeroDefence certainly got it fundamentally wrong at the start. Initially
they were going for a supplier pays transaction-based charging model. [y] For small
suppliers there is a questionable value proposition for them joining the e-marketplace
other than their buyers suggesting that it would be a very good idea if they joined the
e-marketplace (E-commerce Sales Manager, large buyer, aerospace and defence industry
sector).
The participation of industry leaders
The participation of large industrial buyers or suppliers on e-markets is important
because they can help e-markets gain credibility and market acceptance through brand
association. Industry participants are attracted to e-markets that have their largest
trading partners on board. The participation of industry leaders can form a significant
proportion of an e-markets critical mass and, therefore, comprise part of the e-markets
value proposition which serves to attract other industry participants:
You also need the big players on board and that comes with the critical mass. If you dont
have the big players then you wont have a large market share. On the one hand, you need to
have diversified suppliers and, on the other hand, your ten big players will take about 70 to 80
per cent of what hospitals order. So if you [an e-market] miss five of them out you will never
achieve critical mass, because big names have big money (Head of E-Commerce for Europe,
Supplier, German healthcare industry sector).
In the aerospace and defence industry sector, the participation of five of the industrys
largest buyers gave AeroDefence instant credibility and a high likelihood of success,
particularly given their full order books, the significant volume throughput they
would provide through the e-market and the transaction revenues that would be
accrued from it:
So coming back to the critical factor success question, the very fact that we have a very large
piece of the aerospace and defence prize [market share], we feel that immediately the
exchange is more likely to succeed than any other, purely because of the number of big
players involved and the fact that our supply-base has a very significant overlap (E-commerce
Procurement Manager, large buyer, aerospace and defence industry sector).
Industry knowledge within the e-market domain
In-depth knowledge of an industry is important for an e-market because it is the basis
on which the supply chain needs within the industry are identified, and the e-market
business model, organisational strategy, technology strategy and value proposition are
formulated to address those needs. Consortia e-markets, such as AeroDefence and
IME, can capitalise on the substantial amount of domain-specific knowledge they
possess about issues that affect their supply chain:
Our industry knowledge of the medical supply chain and the human resources we employ
are the best people for the job. It means understanding the market and building a solution
[an e-market platform] that fits customers needs, and understanding that both buyers and
suppliers are customers that need to have equal attention (European Communications
Spokesperson for IME, healthcare industry sector).
Independent e-markets are frequently created by individuals or organisations that
often have in-depth knowledge of the industries in which they operate. For example,
Public Sector Marketplace was created by a clinician within the NHS and sponsored
by prominent figureheads within the NHS who were on its Board of Directors, who
clearly had much understanding of the industry. In contrast, e-markets developed
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on a generic platform but tweaked for different industries may lack the industry-
specific knowledge to be able to formulate a value proposition that closely meets the
supply chain needs of any particular industry. Lack of industry-specific knowledge can
serve to alienate industry participants, particularly where an e-market has a direct
competitor with superior industry knowledge. According to an industry respondent,
the company operating the Northern and Southern Council eXchanges lacked
specialist knowledge of procurement in local government compared to their rival, Local
Authority Marketplace, which was developed by local government officers:
One of the main problems with the Northern Council eXchange is that their understanding of
the local authority procurement arena is poor, and poor is being kind. I think it is only with
the Northern Council eXchange and the Southern Council eXchange. [y] They should
concentrate on getting the basics to an art before they move on. [In contrast] the Local
Authority Marketplace is staffed by individuals who have been or are actively involved with
the local authorities and national health [service] type procurement scenario so they are aware
of all the hopes and difficulties that local authorities are faced with (Director of Procurement,
large buyer, local government industry sector).
Revenue model
The revenue model that an e-market employs is important because it is a key
determinant of an e-markets ability to attract, establish and maintain a critical mass of
industry participants based on the value proposition being offered, compared to
competitor offerings and alternative modes of market co-ordination and exchange. It is
the means by which e-markets gain revenue to sustain their longevity as noted above:
From their [AeroDefence] point of view and from a payment point of view, they will need
a critical mass of suppliers, as they charge fees from each of their suppliers for using it
[the e-market]. For survival, inevitably it will matter (Direct Materials Procurement Manager,
large buyer, aerospace and defence industry sector).
In the higher education industry sector Lab-Procure charged buyers joining and
consultancy fees to participate and charged suppliers transaction fees of between 3 and
10 per cent depending on their position in the supply chain. In contrast, Education
Exchange charged all suppliers a 1 per cent transaction fee and buyers were charged
consultancy fees only, which helped buyers and suppliers to mitigate their perception
of risk in adopting the e-market:
The fact that we are offering this [the e-market] free of charge, you simply cant ignore that is
a critical success factor. That fact is based on the perception of risk. The biggest fear among
institutions is laying out significant amounts of money on technology that may become
redundant or would prove inappropriate for them. So that is a risk. If you are not asking for any
money to sign them up then their risk is very minimal because even if we fell flat on our face
and the technology became redundant they will have lost very little. So I think that is a very
important factor (Managing Director of Education Exchange, higher education industry sector).
The branding and reputation of e-markets
Branding and reputation is important for e-markets to create credibility and
establish themselves within their industries. Education Exchange and Local Authority
Marketplace were marketed as the solution for the sector by the sector in their
respective industry sectors to create rapport with industry participants by conveying
the notion that they could relate to their needs. Public Sector Marketplace changed its
original name to expand its offering and reach beyond the healthcare market into
the local government domain because the company realised that its original brand
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CSFs for
B2B e-markets
name prevented it from operating outside the healthcare industry. In other words,
a well-established brand name can become an obstacle to expanding or diversifying
an e-market offering:
We were originally called Healthcare-Buyer[1] [which was] set up to specifically look at the
use of e-commerce exchange services within the UK healthcare industry. We then spent
some months consulting with buyers and suppliers on their requirements. [y] It has been a
gradual process of expansion and in January 2002 we made a decision to expand the offering
to local government as well, and hence the name changed to Public Sector Marketplace (CEO
of Public Sector Marketplace, healthcare industry sector).
In the higher education industry sector, Lab-Procure found it difficult to fully convey to
the buy-side community (higher education institutions) that it traded in non-scientific
products after the e-market widened its scope and diversified its product offerings to
include office equipment and other maintenance, repair and operations (MRO) type
products. The brand name of the e-market was very well established and was
synonymous with laboratories and scientific products in the minds of the higher
education community, which was a perception that subsequently became very difficult
to change, especially given that the e-market decided not to rebrand itself:
With branding you need awareness because if people dont know who you are they will never
come to you. These are the things that need to be taken into account. I think that [the name
Lab-Procure] was a major branding issue because it started off as Lab-Procure and
Lab-Procure is associated with science. What was interesting was that it was a very strong
and recognisable brand. It had the highest prompted and unprompted brand name for a
neutral public e-marketplace in the UK. It was something that they wanted to hang onto.
It was interesting because the company did explore: now that we are providing more than
just life science products and consumables, what do we do with this brand name? So in their
communication they always promoted the idea that they did more than just life sciences
products. It was basically an issue that was never resolved (E-market Implementation
Consultant, third-party, higher education industry sector).
It follows that how an e-market chooses to brand, position and promote itself is a
strong determinant of gaining a critical mass of participants because they will only
attract industry participants that identify themselves with what the brand image and
reputation conveys.
Rich content
Rich content is important because suppliers want e-markets to provide their buyers
with information and other content that makes purchasing their products easier.
Some suppliers want catalogue-based e-markets to match their web site functionality
in terms of the amount of rich content it provides to buyers as a way of diminishing
the effects of comparison shopping by differentiating their offering from those of
competitors:
Researchers may have a need for up-to-date technical information. It would be difficult for us
to maintain data catalogues for [every] buyer. So from my point of view as a supplier, punch-
out is more attractive. I think it better fulfils our needs to differentiate ourselves, and it makes
odious comparisons based on price more difficult for the customer to do. I believe it [punching
out to their transactional website] provides more value-add for the customer because we put
an immense amount of scientific and technical content on our website. So its good to give
customers that at the time that they are looking for a new product or a new technique or
whatever (Director of Marketing, large supplier, higher education industry sector).
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Buyers also want e-markets to provide rich content, such as pictures of products in
many dimensions, so that procurement staff can gauge the aesthetics of what they
intend to purchase. They seek content tools that provide ease-of-use, facilitates
purchasing, semi-automates processes to save time, decrease their transactional error
rates and decrease their information asymmetry. Buyers also want the e-market to
provide them with content tools with good search facilities that supports their
purchasing decisions. If an e-market does not facilitate the purchasing process, buyers
tend to revert back to the traditional methods of purchasing goods and services offline,
which does not reinforce contract compliance nor procurement best practice:
An e-marketplace needs to be easy to use, not that difficult to operate, and it has to be able to
store a lot of standard details like your billing address, your contact details, and your
purchase card number which are very useful. It [Southern Council eXchange] is based around
the principle of three-clicks-to-buy. It is a linear purchasing process and we try to make it
appear as similar to a manual process as possible in the fact that you go and find your goods
and there are pictures and descriptions in the catalogue. It has features like favourite
purchases where you can re-order things that you buy on a regular basis without keying in all
the details. This is very important when you populate a catalogues with 15,000 items. It has a
reasonably good search engine which is very important. The most frustration that you get
with users occurs when they cant find what they want to buy, so the tendency is to pick up
the phone to contact the suppliers (Post Implementation e-Procurement Manager in the local
industry government sector).
5. Discussion
It is interesting to note that the value proposition, the set of proposed benefits that
an e-market formulates to initially attract and subsequently retain a critical mass
of industry participants, was not considered to be the most primary CSF. This is
especially pertinent given that how e-markets are perceived to serve industry
participants is considered to be crucial to their success (Xing et al., 2012). Furthermore,
the provision of benefits can help e-markets generate a competitive advantage within
the industries in which they operate (Ordanini and Pol, 2001). This is because the
provision of benefits is a key criterion affecting the decision of industry participants to
adopt e-procurement systems (Yu, 2007) and the primary driver for organisations
to implement e-commerce systems (Cullen and Taylor, 2009). Nevertheless, a critical
mass of buyers and suppliers was found to be a key CSF in this study which concurs
with other research on e-markets and B2B e-commerce (e.g. Balocco et al., 2010;
Gengatharen and Standing, 2005; Lee and Lim, 2007). However, to sustain the
longevity of an e-market, such buyers and suppliers must also be active participants
(Fong et al., 1997; Li and Li, 2005) who regularly conduct their transactions through the
e-market to give it liquidity and transactional revenue (Sculley and Woods, 1999; Wise
and Morrison, 2000). Deep integration was also found to be important for e-markets,
which aligns with the observations of Vaidya et al. (2006) who note that systems
integration is positively associated with a high likelihood of engagement with
e-procurement systems. Deep integration enables e-markets to deliver on their value
proposition and thus receive transaction fees, and industry participants to receive the
full benefits of e-market participation as noted in the literature (e.g. Lin and Lin, 2008;
Lee et al., 2009). The value proposition must provide benefits that address the needs of
both the buy-side and supply-side communities (Li and Li, 2005) but importantly such
benefits should also entice SMEs to participate in e-markets, as a poorly articulated
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CSFs for
B2B e-markets
value offering is likely to lead to e-market failure (Wise and Morrison, 2000).
This is particularly the case where industry participants cannot decode the benefits on
offer (Gengatharen and Standing, 2005). However, realisation of the value proposition
is also contingent on industry participants effecting the necessary organisational and
technical changes that facilitate receipt of those benefits ( Johnson, 2010b; Vaidya et al.,
2006). Similarly, where e-markets are unable to realise the business benefits they offer
industry participants, such unmet expectations lead to high attrition rates among
participants (Tao et al., 2007). The value proposition also distinguishes an e-market
from its competitors (Porter, 2001). Therefore, the success of an e-market is contingent
on its ability to offer and deliver greater value than competing e-markets and over
and above competing modes of co-ordinating market exchange, but at a cost that is
optimally aligned and proportionate to the organisational size of participants. It was
noted in the previous section that big names have big money. This concurs with
the observations of Ordanini (2006) who notes that e-markets receive three times the
transaction revenues from large organisations compared to SMEs. Large buying
organisations make large volume purchases (Angeles and Nath, 2007) that often
translate into large transaction revenues for e-markets. Industry leaders often bring their
trading partners with them when they join e-markets ( Johnson, 2011a) which expedite
e-markets reaching a critical mass of participants. Therefore, the participation of
industry leaders on an e-market is a strong determinant of e-market success as noted in
the literature (Li and Li, 2005).
The previous section highlights the notion that lack of in-depth knowledge about
an industry can serve to alienate industry participants. This is because in-depth
knowledge of an industry enables an e-market to articulate a value proposition
that aligns well with the needs of industry participants. It also gives e-markets
the credibility needed to gain industry acceptance and can act as an entry barrier
(Sculley and Woods, 1999). The revenue model is a strong determinant of whether
industry participants accept or reject an e-markets value proposition that addresses
their needs and, therefore, directly affects an e-markets long-term economic viability,
as the longevity of e-markets is contingent on their generating sufficient revenues from
fees (Fong et al., 1997). Ordanini (2006) observes that e-markets that earn most of their
revenues from transaction fees are likely to grow (i.e. succeed) compared to those who
earn most of the revenues from subscriptions, advertising and non-e-market services.
However, high e-market participation fees acts as a deterrent to e-market participation
as noted by Johnson (2010a). Therefore, the revenue model should be aligned to the
different types of participants and how much trade they are anticipated to conduct
through the e-market as noted by Johnson (2011c).
How an e-market chooses to brand, position and promote itself is a strong
determinant of attracting and retaining industry participants who accept the value
proposition and relate to what the e-market brand image and reputation conveys.
Having a very strong and recognisable brand name usually serves to help firms
become established in their industry. However, it can also become its Achilles heel
where an e-market subsequently decides to diversify its offering to a wider or new
market, unless it quickly rebrands with a more neutral brand name as in the case of
Public Sector Marketplace when it wanted to expand into the wider public sector.
Other e-markets (e.g. Education Exchange and Local Authority Marketplace) promoted
their brands and offerings based on the empathic message the solution for the sector
by the sector in order to identify with and build trust among industry participants.
This is consistent with, and reinforces, the notion that customers first and foremost
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look for trusted brands when they deal online (Hof and Hemelstein, 1999). An e-market
must provide rich content and content tools (Sculley and Woods, 1999) and other
value-added services (Gengatharen and Standing, 2005; Li and Li, 2005) that inform
and facilitate the purchasing process. In other words, ease of use and usefulness
are key attributes of an e-market that serve to attract and retain industry participants,
which has been noted in the literature (see Chien et al., 2012; Johnson, 2011c).
For example, the ease of use and usefulness of e-markets in streamlining and
semi-automating parts of the procurement process can offer time savings of between 25
and 50 per cent that enable purchasing staff to engage in other value-added tasks
( Johnson, 2011c).
The eight CSFs discussed above support the observations of Gengatharen and
Standing (2005) who posit that it is a combination of characteristics of the e-market
participants, the firm operating the e-market, the underlying technology and the
environment that determine the success of e-markets. The eight CSFs are associated
with e-market goals and their competitive performance, as posited by Rockart (1979),
because each CSF is aligned to the goal of attracting industry participants to grow the
e-market and sustain its performance over competitor offerings and competing modes
of co-ordinating market exchange. The CSFs appear to be interrelated suggesting that
it is the collective, synchronous and synergistic effect among them that creates
and sustains an e-markets longevity in the B2B marketspace. This lends support to the
notions of Li and Li (2005) who suggest that CSFs are interconnected, the observations
of Akkermans and van Helden (2002) who suggest that CSFs seem to reinforce one
another, and the findings of Vaidya et al. (2006) who conclude that no single CSF is
overly dominant in the implementation of e-procurement systems. Although Li and Li
(2005) note that CSFs for e-markets differ from one another based on industry, region,
stage of development and other variables, this study found eight CSFs to be important
for e-market success. Four CSFs were found to be universally cited across all four
e-market industry sectors examined, which is consistent with Daniels (1961) premise
that in most industries there are between three and six critical factors that determine
the success of firms.
6. Research considerations and implications
Methodological considerations
Different research approaches and their associated means of data collection and
analyses have limitations which represent trade-offs between alternatives (see
Bonoma, 1985; Gummesson, 2003). A qualitative approach using a semi-inductive
means of enquiry, informed by the literature, was chosen to yield an information rich
empirical study (see McIvor and Humphreys, 2004) that identified and explicated a set
of factors that are perceived to be conducive to e-market success according to industry
insiders. The semi-inductive approach reconciles the need for themes to emerge out of
the data with the interviews being semi-structured and utilising open-ended questions
that are informed by the literature. While it could also be argued that coding densities,
i.e. the proportion of the interview that [is] coded against each theme (Hall et al.,
2003, p. 497), could have been used to evaluate the relative importance of the CSFs,
using N6 to assess the relative importance of the CSFs based on their frequency
of citation is consistent with similar studies on B2B e-commerce technologies
(e.g. Sehwail and Ingalls, 2005; Vaidya et al., 2006). Nevertheless, it could equally be
argued that both methods of analyses have comparable merit in the gamut of data
analysis techniques deployed in qualitative research. Moreover, neither approach
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inherently distinguishes between positive and negative comments relating to CSFs in
the assessment of their relative importance or any other constructs they are being
applied to. It could also be argued that ranking the e-market CSFs that emerge out of
the qualitative data may constitute a quantitative step in a study utilising a
qualitative paradigm. However, it could equally be argued that presenting data in an
order of perceived relative importance helps to make sense of, and ascribe meaning to,
the data by giving it structure. It also addresses a limitation and trade-off inherent in
some qualitative approaches and does not detract from the notion that the research is
principally a qualitative study.
Implications for practice
CSFs for e-markets differ in importance among disparate groups of stakeholders
because managers perceptions of what they consider to be important are influenced
by their assumptions, perceptions and assessment of their organisational strengths
and weakness, and the opportunities and threats they are exposed to in the external
environment in which they operate. Furthermore, CSFs are temporal and thus their
assessment is also contingent on the stage of the industry life cycle at which the
e-markets is situated. Consequently, new CSFs are likely to emerge as e-markets evolve
along the industry life cycle. Therefore, senior managers within e-markets will need to
periodically assess their internal and external environments on a continuous basis,
and review and recalibrate their resources, capabilities and the associated CSFs aligned
to those environments accordingly in order to sustain their strategic advantage over
competitors as noted in the literature (e.g. Miles and Snow, 1994; Rockart, 1979; Slevin
and Pinto, 1987). Conversely, failure to periodically examine CSFs increases the
probability of poor performance or catastrophic failure. Thus, this paper may also help
entrepreneurs setting up a new e-market and senior management teams in new
e-markets to better understand how they can market and manage their service offering
to expedite their time to market and succeed in the B2B e-marketspace.
Implications for theory
This study proposes that the theory of strategic fit and the conceptual model
in Figure 2 are primers with which future research can examine factors that are
considered to be conducive to e-market success. The theory of strategic fit is an
important conceptual tool with which organisational performance can be examined
(Galbraith and Nathanson, 1979; Venkatraman and Prescott, 1990). This is particularly
the case from a CSFs perspective given that a number of studies (e.g. Miles and Snow,
1994; Rockart, 1979) suggest that effective management of CSFs directly relate to
organisational success, the provision of benefits for stakeholders (e.g. Al-Mashari et al.,
2003; Croteau and Li, 2003; Holland and Light, 1999; Lu et al., 2006; Soong et al., 2001)
or how well they meet the needs of stakeholders (e.g. Umble et al., 2003). It follows that
organisations must focus their resources, capabilities and activities on achieving CSFs
in order to be successful (Teo and Ang, 1999). In particular, they must focus on
developing, continuously managing and utilising market-oriented CSFs that will
furnish them with market intelligence relating to the changing needs of industry
participants (Veen-Dirks and Wijn, 2002). The use of market intelligence should also
enable them to anticipate future customer requirements in order to lead in the industry
marketspaces in which they operate. In the context of e-markets, their internal
capabilities and their ability to provide services that make use of market opportunities
are key determinants of success (Wang et al., 2012). Stated differently, the success of
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Figure 2.
E-market benefits
capabilities industry
participants needs fit
conceptual model
717
CSFs for
B2B e-markets
e-markets is contingent on their internal resources, the capabilities that extend from
those resources and the value-added services (i.e. benefits) those capabilities provide
that respond to the needs of industry participants. Moreover, a turbulent and rapidly
changing marketspace requires e-markets to respond dynamically to the rapidly
changing needs of buyers and suppliers by acquiring resources that develop dynamic
capabilities that service those needs. In other words, e-markets must constantly
monitor whether their resources and capabilities (internal environment) are providing
benefits that fit with the changing needs of industry participants (external
environment) in order to maintain being in a state of strategic fit.
The success of an e-market is contingent on how it serves or is perceived to serve
industry participants (Xing et al., 2012) given that the provision of various
organisational and supply chain benefits is a measure of B2B e-commerce success
(Cullen and Taylor, 2009). A number of the CSFs identified in this study can be mapped
to some of the benefits e-markets provide to buyers and suppliers as shown in Table V.
Some studies (e.g. Johnson, 2011a, b, c) have categorised such benefits along five
dimensions developed by Shang and Seddon (2002) that relate to five corresponding
dimensions of supply chain needs as shown in the e-market benefits capabilities
industry participants needs fit conceptual model in Figure 2. The conceptual model
can be used as a means of assessing the performance or success of e-markets.
Assumptions of the conceptual model include:
(1) Two types of e-market CSFs relate to their current operating activities and
their future success:
.
CSFs pertaining directly to e-market resources and capabilities to deliver
benefits that align with the supply chain needs of industry participants; and
.
CSFs pertaining to the external e-market environment, i.e. industry-specific
CSFs.
(2) The closer the fit between the benefits delivered by the e-market capabilities
and the supply chain needs of industry participants the more successful the
performance outcomes will be for both the e-market and its members.
(3) The benefits that e-market members gain from participation and the revenues
e-markets earn from transactions and other participation fees represent some
of the key performance measures for e-markets.
7. Contributions and limitations of the study
Contributions
This study addresses the many calls in the extant literature for more empirical
research on elucidating the factors that are conducive to the success of e-markets
(see Chong et al., 2010; Fairchild and Peterson, 2003; Fong et al., 1997; Hadaya, 2006;
Johnson, 2011a; Joo and Kim, 2004; Li and Li, 2005; Standing et al., 2010). The research
differs from previous studies on CSFs for e-markets because it represents the combined
perspectives of respondents in e-market, buyer, supplier and third-party organisations
in four disparate industry sectors of the economy. The study answers the research
question by highlighting factors that are perceived to be critical to the success of
e-markets and how they are important. The paper makes a theoretical contribution to
the academic literature on e-markets by relating the concept of CSFs with the theory of
strategic fit as, to date, no known study has examined CSFs for e-markets in the
718
MIP
31,6
E-market CSF
Example of
need(s) being
addressed Examples of benefit(s) to e-market members
Critical mass Operational Increased liquidly of transactions within e-market
Increased trading partners and economies of scale and/or
scope
Deep integration Operational
Managerial
ICT
Deep integration of buyers and suppliers
Seamless error-free transactions
Low cost trading platform for one-to-many or many-to-
many communication channel
Reduction of paper and paper-related costs
Enables auto-population of buyers and suppliers finance
systems with transaction data
Realisation that the organisation needs new IT
infrastructure to reap the full benefits of participation
Value
proposition
All Consultancy services to cater to the needs of buyers or
suppliers (e.g. training in best-value/best practice
procurement for buyers)
Exposure to wider industry participants or wider markets
through inter-operability agreements with other e-markets
Punch-out to suppliers so that suppliers can manage the
customer experience
Additional value-added services such as escrow services,
logistics, financing, tracking, mass customisation of some
products in some industry sectors, inventory management,
demand forecasting, order fulfilment, collaboration,
workflow
Can level the playing field for SMEs to compete with their
larger competitors
Leadership
participation
Strategic Economies of scale for participants in vertical e-markets
Economies of scope for participants in multi-vertical
e-markets
Industry
knowledge
All Consultancy services that provide benefits that address the
supply chain needs of participants in the industry sector(s)
the e-market operates
Articulate and provide benefits that meet the needs of
buyers and suppliers
Revenue model Operational
Strategic
Can be a lowcost mechanism for trading goods and services
(especially for SMEs)
Addresses the need for buyer or suppliers to engage in
e-commerce (especially for SMEs) to gain a strategic
advantage or to remain competitive
Branding and
reputation
Strategic Can raise the profile of participants (particular SMEs or low
profile companies and organisations)
Rich content Managerial
Operational
Strategic
Semi-automation of processes to facilitate purchasing
decisions
Differentiation of suppliers product offerings through
punch-out
Industry information, charts and white papers, transaction
histories, rich product descriptions and catalogues, tools for
comparison shopping
Auction tools, RFQ and RFI tools, collaboration
tools
Table V.
Mapping e-market
CSFs to market needs
and benefits
719
CSFs for
B2B e-markets
context of strategic fit. It combines the two disparate theoretical constructs to develop
the e-market benefits capabilities industry participants needs fit conceptual model
which serves as a precursor for theory building in future studies on B2B e-markets.
It also makes a practical contribution because it informs stakeholders involved in
developing e-markets or other online B2B ventures to better comprehend the conditions
and determinants of success.
Limitations
While the concept of strategic fit is a useful tool with which the performance or success
of organisations can be examined (Galbraith and Nathanson, 1979; Venkatraman
and Prescott, 1990), no universal definition of strategic fit is applicable in all contexts
(Venkatraman, 1989). Similarly, lack of consensus within the literature as to what
constitutes a CSF (Veen-Dirks and Wijn, 2002; Vaidya et al., 2006) and no consensus of
approach in determining CSFs among researchers (Bergeron and Begin, 1989) may be
criticisms that could be levelled at studies on CSFs. However, given that different
sectors of the economy have different e-market adoption contexts ( Joo and Kim, 2004;
Li and Li, 2005), there is an intuitive logic of asking key industry insiders to identify
what factors they consider to be critical to the success of e-markets in their
environment. For that reason, the paper did not take into account the views of the 20
non-adopters of e-markets who also participated in the wider scope of the research
project. Nevertheless, the approach used in this study is consistent with approaches to
uncovering CSFs in other studies (see Leidecker and Bruno, 1984; Sehwail and Ingalls,
2005; Vaidya et al., 2006) particularly where few empirical studies exist and in
exploratory research using inductive or semi-inductive approaches. As Gummesson
(2003) notes [y] inductive research lets reality tell its story on its own terms and not
on the terms of received theory and accepted concepts (Gummesson, 2003, p. 448).
Notwithstanding, criticism could also be raised that qualitative studies on CSFs may
not be readily generalisable outside their domain context and so make it difficult to
compare research findings. However, the purpose of the study was to advance current
knowledge and understanding of factors that are considered to be critical to the success
of e-markets rather than to seek generalisations beyond the context of the study.
Nonetheless, the findings and implications of this study are likely to be applicable to
other B2B online service firms operating in industrial markets.
8. Conclusions and future research
Conclusions
This exploratory study substantiates a broad definition of CSFs as issues that are
essential to an organisations current operating activities and its future success as
posited by Boynton and Zmud (1984). The findings of the study represent a snapshot
of e-market CSFs at a specific point in time when the e-markets were at a relatively
early stage of development and, therefore, some CSFs will change with time as
e-markets move along the growth curve for their industry. The research findings are
interesting because they appear to be counter-intuitive. For example, aggregating a
critical mass of active e-market participants is contingent on the collective, synchronous
and synergistic contribution of all the other seven CSFs. These findings are consistent
with other studies on CSFs that highlight what is considered to be critical for success in
their particular context and not necessarily the order or sequence of their importance
given that some CSFs are temporal and contingent on the stage of development or
industry/product life cycle of the research phenomenon being examined.
720
MIP
31,6
Future research
Although the study illuminates and expounds eight factors that are considered to be
conducive to the success of B2B e-markets, there is still a requirement for more
empirical and longitudinal research on factors critical to the successful evolution and
spread of B2B e-markets in a global context. This is especially the case as e-markets
mature, given their increasingly important impact on supply chains, markets and
economies around the world. Therefore, it would be very useful for future research to
examine whether the CSFs for B2B e-markets identified in this research extend to other
e-markets in other industry sectors from both qualitative and quantitative
perspectives. Similarly, it would also be useful for future research to examine the
extent, if any, to which the CSFs for B2B e-markets are transferable to B2C e-markets.
There is a distinct need for further research to explore performance measures for e-
markets and on developing a more comprehensive conceptual model based on the
concept of strategic fit with which the success of e-markets can be examined. Moreover,
examining the factors that facilitate the globalisation of e-markets is a key research
question for future research to consider. Likewise, examining the impact of culture
(e.g. entrepreneurial, organisational and national), the organisational change issues
among adopters and how the services marketing mix affects e-market adoption are
avenues for further research on the organisational adoption dynamics of e-markets.
Note
1. Pseudonym for the original name of the company.
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Further reading
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of enterprise resource planning implementations, Proceedings of the 34th Hawaii
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About the author
Michael Johnson is a Sessional Lecturer in Marketing at Aston Business School. His research
interests include e-business and the digital economy, services marketing and management,
the organisational adoption dynamics of innovative technologies in service environments,
organisational change, business excellence, entrepreneurship and enterprise. His research has
been published in Management Decision, Industrial Management & Data Systems, International
Journal of Services and Operations Management, International Journal of Business Innovation
and Research, International Journal of Services Technology and Management and the Journal of
Enterprise Information Management.
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