A Study of the Value and Impact of B2B E-Commerce: The Case of Web-Based Procurement

TLDR

Web-enabled B2B e‑commerce improves inter‑organizational coordination, reduces transaction costs, and offers competitive sourcing, yet firms remain uncertain whether it outperforms legacy systems such as EDI. The study seeks to quantify the value of B2B e‑commerce for buyers and identify the factors that most influence its realization. A framework is proposed and applied to a midwestern heavy‑equipment manufacturer’s web‑based procurement system to measure value and determine influencing factors. Preliminary results show that the value of web‑based procurement is driven primarily by process characteristics, business‑unit organization, and the extended enterprise.

Abstract

Web-enabled business-to-business (B2B) e-commerce enhances interorganizational coordination, resulting in transaction cost savings and competitive sourcing opportunities for the buyer organization. However, organizations are uncertain whether this is an improvement over existing information technology, such as EDI. In particular, what is the value of B2B e-commerce to a buyer organization, and how can it be measured? What factors most affect the realization of the value of B2B e-commerce? Using the case of Web-based B2B procurement systems, a framework is proposed to quantify and measure the value of B2B e-commerce systems and identify the factors that determine it. The methodology is applied to help a major heavy-equipment manufacturer located in the midwestern United States evaluate the potential of its Web-based procurement system. The preliminary results indicate that, even though all stages of B2B procurement are affected by the Web, the value of Web-based procurement is most determined by the process characteristics, organization of business units, and the "extended enterprise."