THE DOT COM EFFECT: THE IMPACT OF E-COMMERCE ANNOUNCEMENTS ON THE MARKET VALUE OF FIRMS

Mani Subramani
msubramani@csom.umn.edu

Eric Walden
ewalden@csom.umn.edu
University of Minnesota
321, 19th Avenue S, Minneapolis, MN 55455

MISRC Working Paper No. WP 99 -02

MIS Research Center

University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Phone: (612) 624-6565
Fax: (612) 624-2056
Web Site: http://misrc.umn.edu


The media hype surrounding the growth of electronic commerce has led to considerable firm interest in making the significant investments required to participate in this growing market. However, the evidence on benefits to firms from e-commerce is far from unequivocally positive, as popular accounts would lead us to believe. In this paper we explore the following questions: What are the economic returns to firms from engaging in ecommerce?

How do the returns to non-net, brick and mortar firms from e-commerce initiatives compare with returns to the new breed of net firms? How do returns from business-to-business e-commerce compare with returns from business-to-consumer e-commerce? We examine these issues using event study methodology and assess the cumulative abnormal returns (CARs) for 305 e-commerce announcements between October and December 1998. The results suggest that e-commerce initiatives announced in this period do indeed lead to positive CARs for firms.
However, the hypothesis drawing on the resource based view of the firm: that the CAR to nonnet firms is significantly more than the CAR to net firms is not supported. Further, the CARs
associated with business-to-consumer e-commerce announcements is higher than the CARs for
business-to-business e-commerce, a result contrary to the hypothesized direction. The results are robust to the removal of outliers and time windows of varying length between firm announcements and capital market adjustments of prices. Most importantly, the magnitudes
of CARs (between 3 to 11 percent) observed in response to e-commerce announcements are
considerably larger than those observed for a variety of firm actions in the prior literature.

This paper presents the first empirical test of the dot com effect, validating the popular notion that capital markets recognize the transformational potential of e-commerce and expect significant future benefits to firms entering into e-commerce arrangements.

BUSINESS MODELS FOR INTERNET-BASED E-PROCUREMENT SYSTEMS

Qizhi Dai
Doctoral Program in Information and Decision Science
qdai@csom.umn.edu
Robert J. Kauffman
Associate Professor of Information and Decision Science
Carlson School of Management
University of Minnesota
rkauffman@csom.umn.edu
Last revised: July 27, 2000
Submitted to the 34th Hawaii International Conference on Systems Science, January 2001, Maui, HI.
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ABSTRACT
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 onlywith 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.
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Diffusion of e-marketplaces in slovenia

Diffusion of e-marketplaces inSlovenia
By Informest

Abstract:
The fact that there are no “Slovene” B2B e-marketplaces in operation should not be seen as an obstacle for Slovene companies, especially SMEs. E-marketplaces represent new and exciting opportunities aswell as challenges for these companies. Slovenia is a new EU member state, and has the chance to operate and compete in the common European and global market. Utilisation of e-marketplaces will contribute to this.

Doing business via electronic markets is not common in Slovenia where it is not widely known that the use of electronic marketplaces can simplify company business processes, increase the effectiveness of searching for new buyers and suppliers, or increase the speed of entry to new markets. Infact, currently, there are no B2B e-marketplaces operating in Slovenia. The only real electronic marketplace is BTC City (www.btc-city.com), an e-shopping centre that is primarily B2C. (Kokalj, 2002)

Furthermore, though the benefits of doing business on the web are clear and Slovene small companies can access foreign e-marketplaces today, the uptake has been low. Reasons are the costs associated and the time investment required. Also the costs associated with business processes reengineering and integration technologies are still prohibitive for most.

However, on the positive side, there are some Slovene organizations that are participating in e-marketplaces worldwide and are winning business as a result. Usually Slovene organizations enter an e-marketplace on the buyer’s request, and this e-marketplace participation may be required if they are to compete with other potential suppliers for the buyer’s business. E-marketplaces, Slovene or not, can become a powerful tool for both Slovene SMEs and large organizations. (Gajšek, Pucihar, 2004)

Concept and Model for an Internet

Olaf PETERS, Jörg ZABEL, Frithjof WEBER
Bremen Institute of Industrial Technology and Applied Work Science (BIBA) at the
University of Bremen, P.O. Box 330560, D-28335 Bremen, Germany
Tel: +49-421-218-5568; Fax. +49-421-218-5551; Email: olf@biba.uni-bremen.de

Abstract.
This paper describes the efforts to establish a broker service for tiles and related products in the supply chain of the tile industry to innovate the bidding and procurement processes. The actors, relations and goods of the supply chain are presented and the chosen architecture for the electronic marketplace and the supportive tools are described. The core functionality of the broker service, e.g. data exchange, repository access and negotiation, is outlined by means of UML use cases.

1. Introduction

The tile industry continues to use a traditional procurement process, which is both slow and expensive. While there are emerging internet services and technologies to handle bidding and procurement processes, none of them are specifically focused on meeting the needs of the tile industry. The e.bip project aims to develop an electronic brokerage system which is, in contrast to existing e-commerce platforms, focussed on the specific business-to-business co-operations and procurement activities in the supply chain of the tile industry.

SMEs are reluctant to being bound to mainly one retailer or wholesaler and want to cooperate with a small set of them instead. The objective of the e.bip project is to overcome the drawbacks of the traditional bid preparation and procurement processes of SMEs by providing quick access to up-to-date product information, improved product characteristics including colour information and common product identifiers to support the selection of the “right” product, advanced price requests for negotiation support, and direct and ICT based ordering of product components defined in the bidding process.

Different business models for electronic brokerage systems have been identified and analysed (cf. [6], [7]) and led to the system presented in this paper. Special attention has been paid to support the workflow by integrating the marketplace with existing legacy systems for easier data exchange, thus leading to a higher acceptance of the solution.

Section 2 outlines the actors, relations and goods of the tile supply chain. Section 3 presents the chosen architecture for the electronic marketplace and its supportive tools, while section 4 describes the core functionality of the broker service, e.g. data exchange, repository access and negotiation, by means of UML use cases.

Managing In The Context of The New Electronic Marketplace

By

Norm Archer
Michael G. DeGroote School of Business
McMaster University
1280 Main St. West
Hamilton, ON L8S 4M4
Canada

Judith Gebauer
Research Fellow
Fisher Center for IT and Marketplace Transformation
Haas School of Business
University of California, Berkeley
Berkeley, CA 94720-1930
U.S.A.

Last revised: December 15, 1999

Presented at the 1st World Congress on the Management of Electronic Commerce, held January 19-21, 2000, in Hamilton, Ontario, Canada

Abstract

Electronic marketplaces (EMs) are virtual marketplaces where buyers and suppliers meet to exchange information about prices and product and service offerings, and to negotiate and carry out business transactions. They are at the centre of the current growth in Internet electronic commerce, both in business-to-business (B2B) and business-to-consumer (B2C) markets, although the value of B2B electronic commerce is proportionately five times B2C and is expected to exceed ten times its value by 2003.

In this paper, we trace the evolution of EMs, from their initial beginnings as computer-to computer links between corporate trading partners, to their current forms as multi-vendor Webbased catalogs and ordering systems that service B2B customers. We also describe in detail B2B electronic marketplaces, including sell-side, buy-side, and intermediary-supported multi-vendor catalog systems that link customers and suppliers. We discuss the role of management in
guiding firms through this difficult transition period, including choices that depend on the 2
economics and the advantages and disadvantages of each form of electronic marketplace for both suppliers and customers.

Keywords: Electronic marketplace solutions, implementation choices, business-to-business
e-commerce.

The First World Congress on the Management of Electronic Commerce

The Authors
Nick Bontis (nbontis@mcmaster.ca) is as Assistant Professor of Strategic Management, and
Akemi De Castro is a research associate at the Michael G. DeGroote School of Business,
McMaster University, 1280 Main Street West, Hamilton, Ontario, Canada, L8S 4M4.

Keywords
electronic commerce, World Congress, Internet, conference


Abstract
This paper summarizes some of the key findings of academic papers presented at the First World Congress on the Management of Electronic Commerce, which took place in January, 2000 in Hamilton, Ontario, Canada sponsored by McMaster University. The conference was attended by 243 delegates from more than 25 countries. The paper outlines two meta-management issues including: the importance of taking a strategic approach to Internet ventures as well as considering infrastructure design during implementation. Several of the papers presented fell into three broad functional categories including operations, human resources and marketing. Finally, a summary of internationalization and education implications is discussed.

Introduction

The universal definition of e-commerce can be summarized as the buying and selling of goods
and services via electronic means such as the Internet. However, the Internet is no longer a
business medium solely for information technology (IT) companies. It has now infiltrated all
industries from banking to automotive to travel and all corporate departments including
marketing and operations to name a few. E-commerce has also changed the characteristics of the knowledge economy in which competition, market valuation and the role of monetary exchange are all taking on new identities.

The objective of this paper is to highlight some of the key micro and macro issues relating to the management of e-commerce which were presented at the First World Congress on the Management of Electronic Commerce hosted by the Michael G. DeGroote School of Business, McMaster University in Hamilton, Ontario, Canada on January 19 – 21, 2000 (EC Congress). A survey of academic participants was taken to develop an understanding of the direction of e-commerce as a field of research and to evaluate whether and how business schools should be incorporating e-commerce into their curriculum.

Managing In The Context of The New Electronic Marketplace

Norm Archer
Michael G. DeGroote School of Business
McMaster University
1280 Main St. WestHamilton, ON L8S 4M4Canada

Judith Gebauer
Research Fellow
Fisher Center for IT and Marketplace Transformation
Haas School of Business
University of California, BerkeleyBerkeley, CA 94720-1930U.S.A.

Abstract :
Electronic marketplaces (EMs) are virtual marketplaces where buyers and suppliers meet to exchange information about prices and product and service offerings, and to negotiate and carry out business transactions. They are at the centre of the current growth in Internet electronic commerce, both in business-to-business (B2B) and business-to-consumer (B2C) markets, although the value of B2B electronic commerce is proportionately five times B2C and is expected to exceed ten times its value by 2003.

In this paper, we trace the evolution of EMs, from their initial beginnings as computer-to-computer links between corporate trading partners, to their current forms as multi-vendor Web-based catalogs and ordering systems that service B2B customers. We also describe in detail B2B electronic marketplaces, including sell-side, buy-side, and intermediary-supported multi-vendor catalog systems that link customers and suppliers. We discuss the role of management in guiding firms through this difficult transition period, including choices that depend on the economics and the advantages and disadvantages of each form of electronic marketplace for both suppliers and customers.Keywords: Electronic marketplace solutions, implementation choices, business-to-business e-commerce.

To obtain a full copy of this article, please contact the authors directly.