Information & Management 41 (2004) 529–541

Measuring the impact of organizational constraints on the success

of business-to-business e-commerce efforts: a transactional focus
Frederick Kaefera,*, Elliot Bendolyb
a
Information Systems and Operations Management, Loyola University Chicago, 820 North Michigan Avenue, Chicago, IL 60611, USA
b
Decision and Information Analysis, Goizueta School of Business, Emory University, 1300 Clifton Road, Atlanta, GA 30322, USA
Received 27 March 2002; received in revised form 12 January 2003; accepted 28 June 2003

Abstract

This study investigated the impact of two organizational constraints, technological compatibility and operational capacity, on
the success of business-to-business (B2B) electronic commerce (e-commerce) efforts over a range of business settings. We
focused specifically on the transactional efficiencies gained through the use of B2B e-commerce. To accomplish this, we
considered an instrument originally developed to measure the benefits of intra-organizational information systems and applied it
in two inter-organizational contexts: electronic data interchange (EDI) usage, and B2B technology usage by firms without EDI.
Analysis was carried out on 86 firms in the consumer electronics industry, approximately half of which were product-
manufacturing firms and the other half service-providing firms. Our findings showed that the inter-organizational context had a
significant bearing on which constraints have a greater impact on the success of B2B e-commerce efforts.
# 2003 Elsevier B.V. All rights reserved.

Keywords: Business-to-business (B2B) e-commerce; Inter-organizational information systems; Transactional efficiency

1. Introduction efficiencies in inter-organizational communication

Electronic commerce (e-commerce) has captured
the attention of the business world as both a great
opportunity and as a source of competitive threat.
Specifically, it is projected that business-to-business
(B2B) e-commerce will greatly exceed business-to-
consumer (B2C) e-commerce as a means for many
organizations to simultaneously increase sales and
reduce operational costs. One reason is that larger
volumes of sales typically take place between business
partners than between the organization and individual
consumers. Another is the opportunity to gain
*
Corresponding author. Tel.: þ1-312-915-7063;
fax: þ1-312-915-7224.
E-mail address: fkaefer@luc.edu (F. Kaefer).
by exploiting emerging information system (IS) tech-
nologies. Indeed, many organizations feel it necessary
to engage in B2B e-commerce. If they do not, those
competitors that do make use of such technologies
threaten to outpace them in efficiency gains and hence
jeopardize their market position. In order to make an
effective decision, it is important to assess the benefits
and understand what conditions are optimal when
engaging in B2B activities.
A recent survey of business process issues in elec-
tronic commerce revealed that many senior managers
are no longer able to discern clear choices for building
B2B transaction-making infrastructures due to the
rapid pace of technological innovation [16]. In a
related examination of business-to-business electronic
commerce issues, it has been suggested that the cost

0378-7206/$ – see front matter # 2003 Elsevier B.V. All rights reserved.
doi:10.1016/S0378-7206(03)00088-0
530 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541
efficiencies from the automation of transactions might
easily reduce costs by a factor of 5, 10 or more [18].
The implication of these statements is that even
though the benefits of automating transactions are
impressive, the constraints that decision makers face
are complex and hard to measure. In an effort to obtain
a better understanding of the impact of organizational
constraints on the success of business-to-business e-
commerce efforts, we consider possible distinctions
between more established electronic data interchange
(EDI) technologies and emerging non-EDI B2B sys-
tems, such as electronic marketplaces.
EDI has been in existence for many years and its use
has been shown to have many potential benefits. In
fact, EDI continues to be cited as a crucial resource for
modern standardized communication between firms.
There are a number of new technological approaches
which threaten to replace traditional forms of EDI for
communication between firms, particularly the exten-
sible markup language (XML), enterprise application
integration (EAI), and Internet-based EDI. Although
XML holds great promise, supply chain analysts do
not see XML supplanting EDI soon [32]. One of the
reasons is that EDI is considered to be secure and a
means to avoid risk, and so more than 80% of the very
large organizations are still using EDI. EAI promises
to extend the batch orientation of conventional EDI to
support real-time transactions over the Internet; these
are integrated with back-end systems and processes,
with many application integration vendors finding
ways to support EDI [2]. In fact, recent evidence
supports the claim that EDI is guaranteed to be used
for some time, since major manufacturers like General
Motors have mandated EDI use for first-tier suppliers.
Additionally, Wal-Mart has recently mandated that all
of its suppliers begin to move all their EDI transactions
over the Internet [14]. This is significant, since Wal-
Mart has more than 14,000 suppliers who process
more than US$ 217 billion worth of transactions via
EDI annually. An important aspect of this evolution
from traditional EDI to Internet-based EDI is that a
relatively small investment is required and this enables
small- and medium-sized businesses to participate in
the electronic marketplace [1,7].
Despite the evidence of benefits for both traditional
and newer forms of EDI, surprisingly only a relatively
small percentage of firms have adopted the technology
[9,13,30]. To help understand why this remains the
case, both empirical and mathematical modeling
approaches have been applied. Two key issues identi-
fied through recent models of EDI adoption have been
the capacity for a firm to accommodate a large number
of buyers and the technological compatibility of those
buyers with various forms of EDI [12]. The relevancy
of capacity and compatibility limits emanating from
that research echo several of the valuation and con-
version barriers to e-commerce performance cited in
other research [5]. Our investigation examines the
effects that these constraining factors can have on
transactional efficiency gains in both EDI and non-
EDI B2B technology settings.
2. Background literature
The two categories of prior research that apply to
this study focus on the measures of efficiency used to
evaluate IS and the constraints on the potential effi-
ciencies gained. The measures of efficiency have been
previously developed and empirically validated in
intra-organizational contexts by Mirani and Lederer
[20]. Their study included a literature survey of major
contributions on IS/information technology (IT) ben-
efits, from which they tabulated 33 potential benefits
of IS projects, across strategic, informational and
transactional dimensions. These were based largely
on a previous study by Weill [31], whose interpretation
was, in turn, a formal derivative of Turner and Lucas’s
categorization [29].
Whereas the strategic and informational benefits
focus on issues such as competitiveness, quality, and
access, the concept of transactional efficiency was
developed with the often more tangible issue of cost
reduction. Although only partially justifying the adop-
tion of a technology, the analysis of anticipated cost
savings tradeoffs with anticipated financial invest-
ments in an IT project can provide particularly power-
ful support for or against system adoption. In some
cases, this support may point to the short- or medium-
term impracticality of a proposal, regardless of its
long-term potential. In other cases, the obvious sav-
ings anticipated so outweigh anticipated expenditures
that long-term objectives can be viewed merely as
fortuitous byproducts of adoption. The availability of
a metric that captures IT cost savings along various
sub-dimensions is therefore critical for both validating
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541
the cost justification of projects and the capability of
linking those benefits to the market and operational
characteristics or constraints of a firm.
Due to its rapid evolution, there is a scarcity of
research providing definitive evidence of the impact of
such characteristics on B2B e-commerce. Fortunately,
recent research has taken the view that cumulative
research on EDI is also generally extendable to B2B
e-commerce (see [27,28]). Furthermore, there are
already numerous studies on factors that affect the
benefits of EDI systems (e.g. [22]).
For transactional technologies, one characteristic
repeatedly studied has been transaction volume and
the impact it can have on anticipated benefits and
adoption decisions. However, in order to understand
the mechanisms at play, measures of current transac-
tional volume may be insufficient; they do not repre-
sent the actual volume feasibly effected by IT adoption
[4]. In contrast, issues such as relative physical capa-
city constraints may be more meaningful in assessing
the total number of transactions for which cost savings
would be anticipated.
Although not studied in great depth academically,
there have been a few studies that have made specific
efforts to focus on physical capacity constraints rather
than existing transaction volume. Jain et al. [11] con-
sidered the impact that supply constraints have on
innovation diffusion, where they focused on the adop-
tion of telecommunication devices. In addition,
Mukhopadhyay’s [21] operational concerns and net-
work externality dimensions, when considered simul-
taneously, support such a constraint. The total volume
of transactions faced over the planning horizon may be
dependent upon the total physical volume of goods and
services provided to contracted business partners, firms
necessarily gauge (directly or indirectly) their adoption
decision by the limitations of their own productivity
and the availability of trading partners [15].
Another issue often considered when discussing
inter-organizational technology is that of compatibility
among business partners. In one such study, Premkumar
et al. examined the relationship between cost and
compatibility measures and its impact on internal
and external EDI diffusion [24]. While their findings
supported the idea that greater internal compatibility
is associated with better adaptation to and diffusion
of EDI, the issue of inter-firm compatibility was
not considered in depth. Arunchalam’s survey of IS
531
managers revealed that 36.3% of the respondents con-
sidered non-automation and a lack of technical-sophis-
tication of customers to be serious barriers to EDI
adoption [3]. However, the specific form of such a
barrier was not suggested in that study. Yet another
study claimed that the adoption decisions made by firms
can be somewhat paradoxical when trade volume alone
is used as a predictor of EDI suitability [8].
Technological compatibility as a constraint to adop-
tion of a communications technology has also been
considered within Mukhopadhyay’s framework,
which incorporated issues of IT context and network
externality, and within Massetti and Zmud’s [19]
concept of diversity. Similar strategic concepts have
already been well established in the mass customiza-
tion and niche targeting literature of the operations
management and marketing disciplines [17,25].
Within such literature, it is generally accepted that
firms dealing with buyers that have diverse and con-
flicting needs may be forced into the adoption of a
broader set of communication technologies than firms
dealing with more homogenous buyers. At the same
time, when prohibitive diversity is the result of only a
limited number of buyers, firms may actively seek out
more homogenous subsets of buyers to avoid addi-
tional technology setup costs.
As with these studies, the constraints to efficiency
considered here include operational and technological
characteristics of associated business settings. We
propose that these constraints play a critical role in
justifying the adoption and use of the B2B technology.
Furthermore, whereas past studies have focused on the
consideration of these constraints in isolation, we view
their simultaneous consideration and potential inter-
action as critical to a more complete understanding of
their impact. These issues have been studied simulta-
neously only from mathematical and theoretical tech-
niques in the past.
3. Research factors and hypotheses
The objective of this research is to show that the 10
items that make up the transactional efficiency con-
struct (see Table 1) can be used to illustrate the impact
that technological compatibility and operational capa-
city can have on various facets of effectiveness. Recent
research has already suggested that firms capable of
532 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541
Table 1
Transactional efficiency items (categorizations by Mirani and
Lederer [20])
Communications efficiency
TE1 Saved us money by reducing travel costs
TE2 Saved us money by reducing communication costs
System development efficiency
TE3 Saved us money by reducing system modification or
enhancement costs
TE4 Allowed other applications to be developed faster
TE5 Allowed previously infeasible applications to
be implemented
TE6 Provided us with the ability to perform maintenance
faster
Business efficiency
TE7 Saved us money by avoiding the need to increase
the work force
TE8 Enhanced employee productivity or business efficiency
TE9 Increased our return on financial assets
TE10 Sped up transactions or shorten product cycles
catering to a large number of diverse buyers will be
driven to adopt a larger variety of communication
technologies than those dealing with smaller or less
diverse sets of buyers. Various factors influence this
capability, including the number of buyers in the
market, the operational capacity of a supplier to
engage in business contracts with a large number of
these buyers, and the basic willingness of such buyers
to use a variety of communication technologies. Simi-
larly, these drivers of adoption should be expected to
provide insight into the actual effectiveness of the
technologies, once adopted.
Two separate views of technological compatibility
involving modes of communication are required in
illustrating potential issues. First, greater technologi-
cal compatibility with EDI technologies among part-
ner firms increases the feasibility and benefits accrued
from the adoption of the technology. Second, the less
compatible partners are with non-EDI technology, the
greater the benefits from EDI usage and the more
critical the adoption of EDI in general.
The hypotheses designed to measure the impacts of
these factors using the transactional efficiency con-
struct are as follows:
H1. The higher the compatibility with EDI technol-
ogies among business partners, the greater the trans-
actional efficiencies observed for EDI technologies.
H2. The higher the compatibility with non-EDI B2B
technologies among business partners, the greater the
transactional efficiencies observed for non-EDI B2B
technologies.
The second issue of focus here relates to a firm’s
physical capacity to deal with a large number of
business partners, relative to the existing market. A
relative view is taken here to emphasize that although
certain markets may only have a few buyers, the
number of transactions that business with such buyers
generates may be sufficient to encourage variable cost
reduction efforts from EDI adoption. Furthermore,
relative capacity provides a measure of potential
market influence, or power, an issue cited in past
research as having a significant role in the adoption
decision of business partners [10]. Firms with greater
relative levels of capacity may therefore also represent
those more capable of ensuring adoption by their
buyers.
Similar to the earlier hypotheses, the relationship
between operational capacity and transactional effi-
ciency is hypothesized as follows:
H3. The greater the relative capacity of a firm to
accommodate market demand, the greater the transac-
tional efficiencies observed through the use of EDI
and non-EDI B2B technologies.
In quantitatively operationalizing compatibility and
relative capacity, we follow the recommendation of
Kaefer and Bendoly in their analytical study of EDI
users.
4. Methods and analysis
The data used for this investigation was provided by
a survey of the 186 consumer electronics firms
involved in the IT Horizons Project. This project is
an on-going joint effort by university researchers and
firms associated with ManufacturingNet, host of one
of the most popular on-line forums for manufacturers,
intended to determine the status of B2B, B2C and ERP
proliferation in the manufacturing community. The
survey consisted of the 10 items as well as questions
regarding the number of available communica-
tion technologies, the number of products/services
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541 533

Table 2
Descriptive statistics for the transactional efficiency items and independent factors

Item Mean S.D. Correlation

TE1 TE2 TE3 TE4 TE5 TE6 TE7 TE8 TE9 TE10 CA MCE
TE1 3.78 1.51
TE2 5.22 1.41 0.33**
TE3 2.85 1.40 0.01 0.04
TE4 3.28 1.58 0.26** 0.17 0.24**
TE5 3.62 1.62 0.15 0.03 0.17 0.43**
TE6 3.19 1.60 0.20* 0.16 0.25**
0.30** 0.26**
TE7 4.17 1.57 0.04 0.14 0.19* 0.12 0.17 0.11
TE8 4.74 1.46 0.09 0.17 0.03 0.06 0.18 0.06 0.35**
TE9 3.92 1.72 0.08 0.22* 0.08 0.20* 0.03 0.22* 0.14 0.10
TE10 5.17 1.43 0.10 0.05 0.28** 0.21* 0.15 0.17 0.05 0.08 0.41**
CA 0.74 0.32 0.12* 0.01 0.12 0.05 0.01 0.11 0.03 0.09 0.18 0.13
MCE 3.40 0.28 0.29** 0.04 0.23* 0.01 0.06 0.05 0.06 0.07 0.10 0.07 0.16
MCN 0.46 0.33 0.12 0.02 0.06 0.12 0.01 0.16* 0.03 0.04 0.17** 0.03 0.11* 0.19**
*
Significant at the P < 0:05 level.
**
Significant at the P < 0:01 level.

delivered annually, and the average buyer demand.
Items appearing in the questionnaire and relevant to
the current study are provided in Appendix A.
Out of the firms surveyed, 86 provided sufficiently
complete responses to be used in the regression
analysis of this work, for an overall response rate
of 46%. It should be further noted that 124 responses
(67%) were sufficiently complete regarding the con-
straining factors, indicating that many respondents
had difficulty in estimating benefits. Based on
descriptions of the value-propositions of these firms,
respondents could ostensibly be grouped into either
product-manufacturing firms or service providers to
the manufacturing industry. Product-manufacturing
firms included electronics manufacturers (approxi-
mately 17% of all respondents), industrial equip-
ment manufacturers (10%), instrument fabricators
(11%), and machine tool manufacturers (13%). The
remainder consisted of service firms, included logis-
tical service providers (approximately 10% of all
respondents), system/application service providers
(13%) and accounting/financial service providers
(10%), as well as retailers, wholesalers and training
firms (16%).
Checks against non-response bias were performed
by comparing respondent demographics to those of
the original set of firms to which the survey was sent.
No noticeable representative differences were appar-
ent. Descriptive statistics including correlations for
the transactional efficiency items, as well as the
independent factors to be discussed, are provided in
Table 2. As in past studies, high correlations among
many of these items were observed, suggesting the
appropriateness of data reduction techniques.
To reduce this set to a handful of meaningful
constructs, we began our investigation with the use
of principal components analysis followed by var-
imax rotation for the 10 indicators. Not wishing to
overly constrain the data reduction procedure, we
allowed the statistical package used (SPSS) to per-
form this task by applying a factor determination
criteria of eigen-values greater than 1. Although we
may have constrained the mechanism by forcing the
construction of exactly three factors, as observed by
Mirani and Lederer, we felt that the use of a more
flexible approach would add credence to reliability
if it reflected the original results independently. In
fact, this did appear to be the case. Table 3 provides
the resulting loading factors from this reduction
procedure. A total of four factors were extracted.
To emphasize the association of specific items with
derived factors, the highest loadings of each row are
given in bold. As apparent in Table 3, each items
loaded strongly (>0.5) on only one of the four factors
(an indication of high convergent validity), while all
other factor loadings for these items remained below
the 0.34 criteria recommended by Churchill [6] as an
indication of strong discriminant validity. Although
534 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541

Table 3
Factor analysis for the 10 transactional efficiencies indicators

Transactional efficiency item Factor

Communication System Personnel Capital

development

TE1 Saved us money by reducing travel costs 0.756 0.204 0.105 0.012
TE2 Saved us money by reducing communication costs 0.755 0.011 0.228 0.057
TE3 Saved us money by reducing system modification or enhancement costs 0.239 0.820 0.059 0.035
TE4 Allowed other applications to be developed faster 0.304 0.689 0.101 0.168
TE5 Allowed previously infeasible applications to be implemented 0.101 0.686 0.204 0.064
TE6 Provided us with the ability to perform maintenance faster 0.272 0.528 0.025 0.230
TE7 Saved us money by avoiding the need to increase the work force 0.060 0.213 0.793 0.048
TE8 Enhanced employee productivity or business efficiency 0.147 0.046 0.808 0.049
TE9 Increased our return on financial assets 0.242 0.074 0.122 0.857
TE10 Sped up transactions or shorten product cycles 0.164 0.306 0.012 0.783
Variance accounted for by factor (%) 14.8 18.8 14.2 14.4
Note: Component matrix values following varimax rotation with Kaiser normalization.

Cronbach a reliabilities are typically not assessed for
factors of less than three items, a values can ostensibly
be constructed. For each factor, these a values were
above the 0.7 standard suggested by Nunnally [23],
thus supporting construct reliability.
A closer examination of the interpretability of these
results showed that two of the resulting factors
appeared to genuinely reflect the communication effi-
ciency and system development efficiency sub-dimen-
sions originally observed by Mirani and Lederer, with
the other two representing an apparent split within
their business efficiency sub-dimension. Furthermore,
this split appeared to be logical, in that it divided
human resource benefits from those gained through
other operational avenues. The logical sub-groupings
and otherwise strong agreement with Mirani and
Lederer’s categorizations provided face validity in
accordance with the recommendations of Sethi and
King [26]. Here, we refer to these two sub-dimensions
as personnel and capital efficiency, respectively. In
order to develop the specific quantitative representa-
tions of each of these four factors, the items for which
loadings on a given factor were above the 0.5 criteria
were summed and the resulting index normalized (i.e.
mean-centered and divided by the standard deviation
of the summed index). This transformation was
designed specifically to facilitate comparability in
effect size for subsequent analysis, while at the same
time avoiding any adverse effects on statistical results.
Measurement of the situational factors regarding
compatibility and capacity followed the conceptual
framework of Kaefer and Bendoly’s analytical study.
Along these lines, we refer to the ratio of expected
usable to available EDI technologies cited by respon-
dents as EDI technological, or modal, compatibility
(MCE), and the ratio of usable to available non-
EDI technologies as non-EDI compatibility (MCN).
As for capacity considerations, the availability of
demand information on all clientele in a market
would be ideal, however, given a potentially large
number of such buyers the request for data on each
from every supplier in a target survey population
would have proved impractical. The assessment of
average demand per buyer was a much more manage-
able task in the context of supplier targeted survey
work. Operational capacity (CA) was therefore cal-
culated as the ratio of current maximal operating
capacity to the product of average demand per buyer
times the number of potential buyers in the market as
a whole.
Given these definitions, we were able to test the
adequacy of the transactional efficiency sub-dimen-
sions in determining the impacts of technological
compatibility and operational capacity effects. In
order to begin such an investigation, we considered
the nature of the sample population available. Based
on the descriptions provided by these firms, the
sample was split into two separate populations:
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541 535

one consisting of firms whose primary source of Table 4

Differences in normalized EDI attributed efficiency between
income reported was production oriented (44 com-
product and service firms
plete responses) and one consisting of firms whose
primary focus was manufacturing service oriented Firm type Mean S.D. Significance
(42 complete responses). For the remainder of our Communication
discussion, these two types of firms are referred to as Product 0.991 0.49 0.000
product and service firms, respectively. Such sepa- Service 0.676 0.36
rate consideration is well in line with prior research System development
that emphasized the role that exogenous factors can Product 0.102 0.90 0.225
have on mechanisms of EDI adoption and use. The Service 0.665 0.54
analysis proposed was conducted for both popula- Personnel
tions and, as would be anticipated, with distinct Product 0.807 0.52 0.000
findings identified for each. Service 1.130 0.41
Capital
4.1. Case #1: EDI technologies Product 0.273 0.37 0.004
Service 0.624 0.32
The first sub-population consisted of those firms
possessing EDI technologies and reporting on the
efficiency gains attributed to these technologies. Using Table 5 provides results of these regressions. Standard
the regressed factor forms derived through the earlier errors estimates on the coefficients are also provided.
principal components analysis, the four transactional In Tables 5, 6, 8 and 9, coefficients shown to be
efficiency sub-dimensions were compared across pro- statistically significant (i.e. non-zero) at the 10% level
duct and service firms. Table 4 summarizes the differ- are denoted by a single asterisk, while those significant
ences observed and their significance as gauged via at the 5% level or better are denoted by double
independent sample t-tests. asterisks. According to these results, support for H1
For every sub-dimension, service firms appear to is provided with respect to both the system develop-
report higher levels of efficiency gains than do product ment and capital sub-dimension, while support for H3
firms. Furthermore, the differences are shown to be is provided by these same sub-dimensions and by the
significant for all but the system development sub- personnel sub-dimension. A similar analysis was con-
dimension. With these distinctions in mind, we felt ducted for service firms. Table 6 provides the results of
that the evaluation of our earlier hypotheses might be this second set of regressions.
best conducted separately for the two groups. General Here, support for H3 is provided by every sub-
linear regressions of the four transactional efficiency dimension of transactional efficiency, while support
sub-dimensions as functions of the technological com- for H1 is found only in the capital sub-dimension. In
patibility and operational capacity factors were there- general, however, these findings were relatively similar
fore first performed for the product firms in this case. to those provided by the product firm analysis. For both

Table 5
Regression summaries for the four transactional efficiency sub-dimensions in the EDI product firm case

Communication System development Personnel Capital

(R2 ¼ 0:136) (R2 ¼ 0:237) (R2 ¼ 0:157) (R2 ¼ 0:241)

b S.D. Significance b S.D. Significance b S.D. Significance b S.D. Significance

 
Constant 1.267 0.43 0.608 0.69 0.660 0.29 0.224 0.49
 
MCE 0.970 0.81 0.980 0.32 0.973 0.93 1.341 0.63
MCN 0.275 0.55 0.631 0.90 0.525 0.63 0.349 0.63
  
CA 0.242 0.54 1.197 0.57 0.387 0.61 0.908 0.42
536 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541

Table 6
Regression summaries for the four transactional efficiency sub-dimensions in the EDI service firm case

Communication System development Personnel Capital

(R2 ¼ 0:228) (R2 ¼ 0:257) (R2 ¼ 0:317) (R2 ¼ 0:472)

b S.D. Significance b S.D. Significance b S.D. Significance b S.D. Significance

 
Constant 0.176 0.35 2.067 0.74 1.837 0.42 0.300 0.25

MCE 0.742 0.60 1.428 1.26 0.025 0.71 0.703 0.33
MCN 0.121 0.50 0.611 1.04 0.386 0.59 0.285 0.36
   
CA 1.052 0.47 1.573 0.98 1.102 0.45 0.720 0.31

firm types, capital efficiency seemed dependent on both Table 7

EDI compatibility across business partners and relative Differences in normalized non-EDI B2B attributed efficiency
between product and service firms
capacity. The role of capacity also seemed to be impor-
tant in system development and personnel efficiency Firm type Mean S.D. Significance
metrics. Partner compatibility with non-EDI technol- Communication
ogy did not appear to play a significant role in any Product 0.194 0.49 0.000
metric, as might have been predicted, since this case Service 0.796 0.58
examines firms using EDI modes. System development
Product 0.091 0.85 0.470
4.2. Case #2: non-EDI B2B technologies Service 0.428 0.94
Personnel
Our second case was that of firms not possessing Product 0.853 0.43 0.003
EDI technologies but which have adopted an alter- Service 0.237 0.51
native technology that they qualified as a form of B2B Capital
E-commerce. As before, the regressed form of the Product 0.253 0.59 0.059
reduced factor sub-dimensions were compared Service 0.194 0.54
between product and service firm categories. Table 7
provides these results.
In contrast to the first case examined, service firms for product firm performance with non-EDI B2B
only showed statistically higher levels of performance technologies along the sub-dimensions relative to
in communication efficiency. Furthermore, for the gains observed through EDI usage. The subsequent
personnel and capital sub-dimensions, product firm planned regressions were designed to add clarity to
reports appeared to be significantly greater than those this mechanism.
of service firms. This was particularly interesting, Through this analysis, as shown in Table 8, H2
suggesting that a separate mechanism may account found support across every sub-dimension, reinforcing

Table 8
Regression summaries for the four transactional efficiency sub-dimensions in the non-EDI B2B product firm case

Communication System development Personnel Capital

(R2 ¼ 0:358) (R2 ¼ 0:255) (R2 ¼ 0:159) (R2 ¼ 0:411)

b S.D. Significance b S.D. Significance b S.D. Significance b S.D. Significance

 
Constant 0.068 0.70 0.175 1.19 1.014 0.76 1.037 0.74
MCE 0.666 1.00 0.464 2.21 0.306 1.41 1.451 1.38
   
MCN 3.179 1.31 0.831 0.58 0.865 0.48 2.309 1.06

CA 0.270 1.06 1.930 0.69 0.344 1.15 1.623 1.12
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541 537

Table 9
Regression summaries for the four transactional efficiency sub-dimensions in the non-EDI B2B service firm case

Communication System development Personnel Capital

(R2 ¼ 0:147) (R2 ¼ 0:181) (R2 ¼ 0:293) (R2 ¼ 0:152)

b S.D. Significance b S.D. Significance b S.D. Significance b S.D. Significance


Constant 1.166 0.38 1.100 0.87 0.134 0.63 0.437 0.92
MCE 0.036 0.33 0.810 0.77 0.071 0.66 0.724 0.82
  
MCN 0.124 0.39 0.643 0.41 1.701 0.56 0.793 0.46

CA 0.426 0.41 0.591 0.56 0.211 0.69 0.092 1.01

the criticality of partner compatibility in non-EDI B2B
modes when the decision not to utilize EDI technology
was made. On the other hand, H3 consistently lacked
significant support across these metrics, with the
exception of the system development sub-dimension.
Once again, these trends could be contrasted with the
results illustrated in the first case. Apparently, the
issue of technological compatibility was much more
critical to several of these metrics in non-EDI B2B
settings, while efficiencies through EDI use were more
reliant on relative capacity. The existence of well-
established EDI standards may be one reason for these
observed differences in compatibility reliance. At the
same time, the market encouraging nature of modern
Internet applications, as well as subsequent focus on
alternate issues, such as price and service, may have
de-emphasized relative capacity effects in the use of
non-EDI B2B technologies.
The final regressions, performed for service firms
in this case, could likewise be contrasted with the
results of the first examination. Table 9 provides the
results. Once again, H3 found support only in the
system development sub-dimension, while H2 found
support in almost all sub-dimensions, with the excep-
tion of communication efficiency. This represented a
shift in dynamics similar to that observed for product
firms in the two cases, suggesting that the mechan-
istic shift may be generally universal across firm
types and predominantly dependent on the IT system
context.
5. Conclusion
The goal of this research was to obtain a better
understanding of the circumstances under which
specific types of B2B technology generated transac-
tional efficiencies, and the form of these efficien-
cies. To achieve this, we utilized a multi-item survey
in an attempt to capture the effects of technological
compatibility and operational capacity constraints
within various environments. Based on an analy-
sis of survey data collected across 86 firms, our
findings revealed that the multi-dimensional nature
of transactional efficiency appeared to be capable of
distinguishing idiosyncrasies associated with alter-
nate technologies (EDI versus non-EDI B2B tech-
nologies) as well as performance differences
associated with alternate firm orientations (product
versus service).
The distinctions were investigated across each of
the four transactional efficiency sub-dimensions
observed (communication, system development, per-
sonnel and capital). Various levels of support for the
theoretically hypothesized effects have been summar-
ized in Table 10. For example, H2 was fully supported,
while H3 found support along all but one performance
sub-dimension in EDI settings. It was consistently
supported along the system development sub-dimen-
sion in all settings. Overall, support for H1 remained
relatively weak.
While the system development sub-dimension did
not show significant differences between product and
service firm perceptions of efficiency gains for either
technology case, the other sub-dimensions investi-
gated did. Particularly interesting was the fact that
product firms showed significantly fewer gains, on
average, than did service firms in the EDI case. In
contrast, in the non-EDI B2B case, product firms
showed significantly greater gains in the personnel
and capital efficiency sub-dimensions. This was not
entirely surprising given the potentially divergent
538 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541
Table 10
Summary of research hypothesis support by system, firm and performance metric
Hypothesis EDI
Product
H1 (EDI compatibility among System development,
partners ! transactional capital
efficiency for EDI users)
H2 (non-EDI compatibility – –
among partners ! transactional
efficiency for non-EDI users)
H3 (greater relative operating System development,
capacity ! transactional personnel, capital
efficiency regardless of B2B type)
purposes of the two technologies. Specifically, while
traditional EDI technologies have been geared
towards usage in established long-term partnerships,
where volume economies are critical, this is not the
case for all contemporary non-EDI B2B technologies.
Instead, such applications are often associated with a
much larger community of potential short-term part-
nerships and smaller spot purchases aimed at reducing
impending surpluses and shortages. Therefore, while
price remained an issue, availability and an ability to
rapidly meet spot specifications may have provided a
more critical issue than volume.
Differences in the mechanisms by which efficien-
cies were gained were also observed with respect to
the hypothesized effects that technological compat-
ibility and operational capacity constraints had on
the sub-dimensions. For both product and service
firms, operational capacity seemed to have a rele-
vant role in impacting observed efficiency gains
through EDI across the transactional sub-dimen-
sions. For the non-EDI B2B case, however, techno-
logical compatibility with non-EDI technologies
seemed to play a more common role. As expected,
in neither case was compatibility with alternate
Non-EDI
Service Product Service
Capital – –
Communication, system Communication,
development, personnel, system development,
capital personnel, capital
Communication, System development System development
system development,
personnel, capital
technologies associated with significant effects on
efficiency gains.
Therefore, along with the implication that existing
metrics can be used in distinguishing alternative
dynamics in e-commerce contexts, the nature of these
distinctions is considerably intriguing. The observa-
tion that relative capacity issues seem to be more
important in efficiency gains through EDI use is most
likely linked to the relatively volume focused nature of
this technology. Flexibility, on the other hand, has
generally been a more predominant issue in the use of
more recent non-EDI B2B technologies, such as on-
line auctions and marketplace environments. Shorter-
term buyer–supplier relationships have been typical of
the characterizations of these environments in the
press, as have alternate issues, such as quality assur-
ance and spot availability. For these reasons, the
relatively greater importance of technological com-
patibility may be more an artifact of the relative
decrease in the importance of volume than anything
else. The fact that product firms seem to fare better
with respect to certain efficiency gains through non-
EDI B2B usage, relative to service firms, may stem
from this as well.
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541 539

Appendix A. Questionnaire items for measurement

540 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541
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Frederick Kaefer is an assistant profes-
sor of information systems in the School
of Business Administration of Loyola
University Chicago. He has his PhD
degree in MIS from the University of
Iowa. His research interests include the
planning and use of communication
systems, neural networks and decision
support systems. He has published in
journals such as Decision Support
Systems, European Journal of Operations
Research, Informs Journal on Computing, and Journal of
Electronic Commerce in Organizations.
 F. Kaefer, E. Bendoly / Information & Management 41 (2004) 529–541 541

Elliot Bendoly joined the Goizueta
Business School in 2001 after receiving
his PhD degree in the fields of operations
management and decision sciences
from Indiana University. He has pub-
lished in the Journal of Applied Psycho-
logy, European Journal of Operational
Research, Decision Support Systems, Information & Manage-
ment and Computers & Operations Research, among other
outlets. Before entering academia, he worked as a research and
design engineer for Intel’s Polymer Core and as a survey analyst
for MIT’s International Motor Vehicle Program at the Weather-
head School of Management’s Center for Regional Economic
Issues.