Firms are undertaking growing numbers of e-commerce initiatives and increasingly making significant investments required to participate in the growing online market. However, empirical support for the benefits to firms from e-commerce is weaker than glowing accounts in the popular press, based on anecdotal evidence, would lead us to believe. In this paper, we explore the following questions: What are the returns to shareholders in firms engaging in e-commerce? How do the returns to conventional, brick and mortar firms from e-commerce initiatives compare with returns to the new breed of net firms? How do returns from businessto-business e-commerce compare with returns from business-to-consumer e-commerce? How do the returns to e-commerce initiatives involving digital goods compare to initiatives involving tangible goods? We examine these issues using event study methodology and assess the cumulative abnormal returns to shareholders (CARs) for 251 e-commerce initiatives announced by firms between October and December 1998. The results suggest that e-commerce initiatives do indeed lead to significant positive CARs for firms ’ shareholders. While the CARs for conventional firms are not significantly different from those for net firms, the CARs for businessto-consumer (B2C) announcements are higher than those for business-to-business (B2B) announcements.

The literature on electronic commerce (EC) and electronic marketplaces has long recognized the importance of different kinds of intermediaries and the different functions they serve [5]. The Internet is most often discussed in connection with digital intermediaries [76], as the displacement of traditional intermediaries. In this research, we propose a new conceptual framework for understanding how competition in business-tobusiness (B2B) EC in the presence of information technology (IT) innovations changes firm-level strategy choices and the structure of the marketplace. We also identify and discuss the economic forces that lead to these changes. In this context, we further describe a recurring pattern of intermediation, disintermediation and reintermediation through an "IDR framework." We also explain the impetus for technological reintermediation, where a disenfranchised traditional player is able to compete again, by leveraging technological innovations with co-specialized assets. W...

Forthcoming as the lead article in a special issue of Information Technology and Management, 2006.

Information technology (IT) has long been applied to support the exchange of goods, services and information between organizations. Early on, when interorganizational information systems (IOIS) like EDI systems were introduced, electronic markets emerged for business purchasing. However, it is only with the advent of Internet-based e-procurement systems and business-to-business (B2B) electronic markets that the real opportunities for any-to-any (A2A) online transactions have opened up across space and over time. The extensive connectivity offered by online trading networks creates value by lowering communication and search costs. But this benefit is just one aspect of what is desired by adopting firms. The other aspect is that purchasing firms expect to maintain established long-term relationships with preferred suppliers. As a result, private aggregating and negotiating mechanisms are being adopted for large quantity business supply purchases, while public market mechanisms are more often adopted when firms face uncertain and high variance demand. This paper draws on IS and economics theory to investigate the motivation for the various online business models, and the adoption requirements of purchasing firms, through the examination of a set of mini-cases. Keywords: Business-to-business e-commerce, buyer-supplier relationships, e-business, electronic markets, e-procurement, interorganizational information systems. _____________________________________________________________________________________ 1.

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Results of this research concern incentive principles which drive information sharing and affect database value. Many real world centralization and standardization efforts have failed, typically because departments lacked incentives or needed greater local autonomy. While intangible factors such as "ownership" have been described as the key to providing incentives, these soft issues have largely eluded formal characterization. Using an incomplete contracts approach from economics, we model the costs and benefits of restructuring organizational control, including critical intangible factors, by explicitly considering the role of data "ownership." There are two principal contributions from the approach taken here. First, it defines mathematically precise terms for analyzing the incentive costs and benefits of changing control. Second, this theoretical framework leads to the development of a concrete model and seven normative principles for improved database management. These principles may be instrumental to designers in a variety of applications such as the decision to decentralize or to outsource information technology and they can be useful in determining the value of standards and translators. Applications of the proposed theory are also illustrated through case histories.

We present an economic model that enables the study of incentives for business-to-business (B2B) e-procurement systems investments which permit inventory coordination and improved operational control. We focus on the information technology (IT) adoption behavior of firms in the presence of transaction costs, agency costs and information uncertainty. We conclude that it is appropriate to rethink the prior theory and develop an extended transaction cost theory perspective that incorporates the possibility of shocks. We distinguish among three kinds of B2B e-procurement systems platforms. Proprietary platform procurement systems involve traditional electronic data interchange (EDI) technologies. Open platform procurement systems are associated with e-market Web technologies. Hybrid platforms involve elements of both. We specify an analytical model that captures the key elements of our perspective, including the conditions under which strong conclusions can be made about the likely observed equilibrium eprocurement solutions of the firms. Our results explain the co-existence of both proprietary and open platforms, showing that larger firms tend to adopt costlier procurement technology solutions, such as proprietary EDI which provides greater supply certainty. Smaller firms adopt

framework, George John for his valuable comments and insights, and Robert Kauffman and Alina Chircu for the introduction to incomplete contract theory. DRAFT VERSION available online at

This paper examines the effects of information technology (IT) on the governance of vertically related firms. We propose that a highly relation-specific IT system in inter-firm transactions plays a key role in the resulting inter-firm governance as a mutual sunk-cost commitment, in terms of leading to both less vertical integration (i.e., a change in governance mode as a first-order effect) and a smaller number of suppliers (i.e., a change within a governance mode as a secondorder effect). As a result, this highly relation-specific IT system (bilateral investment) can be an alternative governance mode of electronic integration that acts as a substitute for managerial hierarchy and vertical financial ownership. From a strategic management perspective, this paper provides transaction costs and resource-based explanations on IT systems ’ impact on the organizational boundary decision and its impact on the likelihood of the firm achieving sustainable competitive advantage. Copyright © 2006 John Wiley & Sons, Ltd. ‘Flawed ’ modes of economic organization for which no superior feasible mode can be described are, until something better comes along, winners nonetheless. (Williamson, 1985: 408) Even though technology advances breathlessly, the economic principles we rely on are durable. The examples may change, but the ideas will not go out of date. (Shapiro and Varian, 1999: x)

This paper reviews the literature on interorganizational information systems. It has long been argued that information technology can have profound effects on the structure and process of inter-firm relationships. This proposition has gained additional importance with the advent of internet, and resultant forms of business to business transactions over the web. Despite the interest and volume of research on this topic few theoretical generalizations have emerged. The lack of theorization has been compounded by the fact that the literature has grown in many directions to address various technological and practitioner concerns. To date, there have not been many reviews that put this body of work in perspective. To address this gap we propose a framework to review this field of research, and provide a means to reconcile the differences and appreciate the complementarities that run through this research stream. Our framework is based on two important themes, Interorganizational information systems, and interorganizational relationships. We argue that the research in this area can be effectively analyzed by understanding the persuasion of the researchers regarding these two central themes. The review is followed by a discussion of future research directions in this area.