Electronic Commerce Research and Applications 3 (2004) 389404 www.elsevier.

com/locate/ecra

Analysis of E-commerce innovation and impact: a hypercube model

Jen-Her Wu
a

a,b,* ,

Tzyh-Lih Hisa

a,c

Department of Information Management, National Sun Yat-Sen University, 70 Lien-Hai Road, Kaohsiung 80424, Taiwan b Institute of Health Care Management, National Sun Yat-Sen University, Kaohsiung, Taiwan c Department of Information Management, Chinese Navel Academy, Kaohsiung, Taiwan Received 17 February 2004; received in revised form 19 April 2004; accepted 19 May 2004 Available online 2 July 2004

Abstract Electronic commerce (E-commerce) innovating applications have posed novel, technical, organizational and commercial challenges. This study uses a hypercube model to investigate these innovative changes and focuses on their impacts on E-commerce stakeholders: providers, E-commerce companies, customers, and complementors. The results indicate that mobile commerce (M-commerce) diers substantially from Web-based commerce in some technological components, yet both share common business model. However, from Web-based to M-commerce, innovation is architectural for customers and E-commerce companies, but a radical change for complementors. From M-commerce to Ucommerce, innovation is modular to customers, architectural to complementors and radical to E-commerce companies and providers. Thereafter, the critical impacts of E-commerce innovations on the stakeholders are identied. 2004 Elsevier B.V. All rights reserved.
Keywords: Innovation; E-commerce; Web-based commerce; M-commerce; U-commerce

1. Introduction Rapid developments in information and telecommunication technology have substantially changed the landscape of organizational computing. Electronic commerce (E-commerce), including
Corresponding author. Tel.: +886 7 525 2000x4722; fax: +886 7 525 4799. E-mail address: jhwu@mis.nsysu.edu.tw (J.-H. Wu).
*

Web-based commerce, mobile commerce (M-commerce) and ubiquitous commerce (U-commerce), is based not only on developments pertaining to the Internet compound, but also on prior technological and organizational innovations arising from the combination of telecommunications and organizational computing [33]. In the past decade, E-commerce via the Internet (i.e., Web-based commerce) has substantially aected the business world and will continue to be important.

1567-4223/$ - see front matter 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.elerap.2004.05.002

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Complementor Customer E-commerce Company Provider Change in Business Model Architectural Changed Innovation Incremental Unchanged Innovation Reinforced Radical Innovation Modular Innovation Overturned Stakeholders

Today, the world of business is witnessing profound changes under the inuence of wireless technology. The opportunity for M-commerce has opened. M-commerce broadly refers to any transactions with monetary value that is conducted over a wireless telecommunication network [5]. Market researchers have predicted that, by the end of the year 2005, nearly 500 million wireless device users will exist, generating more than $200 billion in revenue [13]. Predictably, with the progress in telecommunication technology, the continuous growth of wireless bandwidth and connectivity will drive the frontier of U-commerce forward. U-commerce is a dynamic convergence of the physical and the digital, the interface of traditional commerce with ubiquitous computing technologies to support personalized and uninterrupted communications and transactions [10,15,16,23]. It strives to integrate traditional computing into everyday activities in a seamless manner. The age of U-commerce will state in the next 510 years [15]. Thus E-commerce innovations will have signicant impact on the capabilities and assets of existing stakeholders and result in many novel change management issues. Understanding the nature of innovation is a crucial rst step in managing the changes associated with any innovation [12]. The objectives of this paper are therefore to: (1) elucidate the major changes among E-commerce innovations using the hypercube model, (2) explore the impact of E-commerce innovations on the stakeholders involved in transition from todays systems to M-commerce and U-commerce, and (3) identify a set of propositions for guiding future research.

Change in Core Components

Fig. 1. The E-commerce hypercube innovation model.

2. The E-commerce hypercube innovation model An innovation, such as a system or a product, can be seen as a historical change in the way a thing is done and as creative destruction [25]. We adopted a hypercube model, following Afuah and Bahram [2], to examine E-commerce innovation and its impact on E-commerce stakeholders. The hypercube model includes three dimensions: core components, business models, and stakeholders, as shown in Fig. 1. Core compo-

nents are distinct portions of the product that embody the core design concept and perform a welldened function. Business models are the way in which the components are integrated and linked into a coherent whole. The subject of change can be described in terms of the core components and business model. The possible changes that an innovation creates can be classied into four types: radical, architectural, modular, and incremental. The classication is based on the intensity in which change overturns the existing components and business model [2,12]. Here, we examine the major dierences and/or changes among E-commerce innovations based on core components and business model dimensions. The impacts of E-commerce innovation on the stakeholders are then examined. The E-commerce stakeholders can be divided into four groups: provider, E-commerce company, customer and complementor [3,29]. Provider includes three types: content provider, software/application provider and hardware provider. The E-commerce company is the entity that sells products or services over online channels. The customer is the existing or potential end user of E-commerce. The complementor is a rm that produces complementary goods or services for E-commerce industry products. The complementor entity may be further divided into several segments: service providers, backbone operators, market-makers, brokers/ agents, portal, and retail outlets [3,5,28]. The business model involves a coherent framework that takes technological characteristics and potential as inputs and converts them, through

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the marketplace, into economic output [7]. The Ecommerce value chain model consists of three core components: the technological infrastructure, services provided, and content [5,28,32]. The detailed business model and three core component dimensions for comparison are further described as:  Business model consisting of a value proposition, market segment, cost structure, prot potential, and value network [4,7].  Technological infrastructure consisting of a network infrastructure, application platform, and devices [5,21,31,32].  Content consisting of content creation, content packaging, and content distribution [5,21,24].  Services consisting of the nature and facility for supporting the consumer decision-making process [5,18].

3. The hypercube innovation comparison of Webbased, M-, and U-commerce 3.1. Analysis by core components 3.1.1. Technological infrastructure Web-based commerce technologies are embodied in the Internet infrastructure, which is supported by the standard Transformation Control Protocol/Internet Protocol (TCP/IP) and global wired networking infrastructure. The salient features of the Internet include: reliance on an open and packet switching protocol, data-oriented transmission, the absence of centralized control and ease in linking additional networks via routers. The World Wide Web (WWW) has served the Internet as a medium for the global distribution of passive hyperlinked multimedia information [32]. By relying on the client-server architecture, the Web provides an interoperable and adaptive connection model that provides an independent and standardized distributed computing application development platform environment. The legacy system and databases are easy to integrate with the Internet via Web-based applications and middleware [31]. In addition, Web-based applications rely

mainly on the static terminal device, e.g., PCs, which have desktop computing, a powerful processor, a large memory, a big screen, and complete input model features. Web-based commerce has inherited these technological features. In contrast with the Internet, mobile transmission devices are wireless, connection-based, message-oriented, device-dependent, geographically located, limited bandwidth, regional coverage, and unreliable [22,28]. However, they possess unique functionality (such as mobility, portability, ever present and location-aware) that reduces the location constraint of the conventional client terminal [13]. In past years, although multifarious mobile technologies have been announced, including satellites, General Packet Radio Service (GPRS), Code Division Multiple Access (CDMA), TCP/ IP (v6), wireless LANs (WLAN; IEEE 802.11), Bluetooth, 3G, etc., these systems are incompatible local vendor standards supported by various network operators. Because of a lack of interoperability standards, M-commerce application development and system integration are more complex than those of the Internet. However, various handheld devices have emerged that have dierent capabilities and functionalities that those oered in terminal devices. These additions include cellular phones, personal digital assistants (PDAs), and tablet PCs. Such devices can be characterized as either communicationscentric or computing-centric [28]. In contrast to desktop PCs, they dier in size, weight, performance, storage capacity, display (screen), and input mode. In the ubiquitous computing environment, every computer-embedded device is seamlessly connected to other devices in a broadband channel [30]. Such a technology originates from integration mobility and a pervasive computing functionality [15]. This integrates wired and wireless computing and multimedia-based representation services into a single channel. The features of a ubiquitous network are technologically heterogeneous, geographically dispersed, context-sensing, architecturally exible, and without a centralized control mechanism [6]. Thus, the network infrastructure should be a standard platform that ensures full

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interoperability, multicasting, stability, reliability, and persistence. Any ubiquitous computing device, while moving with us, can build incrementally dynamic models of its various environments and congure its proactive service accordingly [16]. In practice, a ubiquitous device is equipped with mobility and embedded processors, a new user interface, and a variety of sensors and eectors [26]. Table 1 summarizes the major technological infrastructure dierences between Web-based, M-, and U-commerce based on the network infrastructure, application platform, and device factors. 3.1.2. Content Content is the information, transactions, or other products that are delivered over the network. Three important activities are involved in content management: creation, packaging, and distribution [5,24]. In the Web-based environment, most of the content is hypermedia. The creation of such information-intensive content mainly follows the hypertext transport protocol standard (HTTP). Accordingly, hypertext can be easily edited, combined, and customized using some standard description language such as the hypertext markup language (HTML), extensible markup language (XML), or Java. In general, hypermedia content is packaged and displayed on Web sites. Content transmission utilizes pull-oriented navigation and client-server accessing models via the WWW. Content is mainly message-based in a mobile environment; this involves primarily text and voice. However, dierences in their methods for content creation and distribution are insignicant between Web-based commerce and M-commerce [5]. Mobile devices do induce special requirements for content representation. This includes customization, time-dependence and thin-format. However, transforming the Internet-facilitated content into mobile consumption is a major challenge. Recently, several techniques have been developed that attempt to ease the task of uses of wireless devices in accessing Web-based content; methods include Wireless Markup Language (WML), compact HTML (cHTML), and Extensible Style Sheet Language (XSL) [5,31]. However, such content creation must be considerably more

compact than that for a web page: the format is called a business card (vCard) in WML. Typically, the overall content is therefore split into cards and navigation in the M-commerce environment [19]. The nature of content in an ubiquitous environment is more information intensive than in a mobile or Web-based environment. Ubiquitous content includes both transaction-related and need-based information to deal with the context in which users are involved. This consists of various attributes, such as physical location, physiological state, personal prole, behavioral patterns, and so on [26]. Since this heterogeneous information will be seamlessly distributed via heterogeneous media and devices, a new content design method will be required. Table 2 summarizes the major dierences among Web-based, M- and U-commerce in the content dimension. 3.1.3. Service Service is the transaction support for customers. Essentially, in Web-based commerce, the nature of service is transaction aware, and this focuses on surmising what activity customers are performing at a given time. However, M-commerce is a location aware service that focuses on accurately pinpointing the customers location [1,13]. The U-commerce service is context aware, and it focuses more on actively sensing dierent customers roles through both time and location specicity [10,15]. Web-based services involve a set of emerging standards [11]. In the Web-based environment, a well-designed web site that connects a company to its customers can provide support for the main customer decision-making processes (i.e., need recognition, performing a search for information, evaluating, purchase and post purchasing). For instance, in the pre-purchase stage, web sites construct a worldwide market-space where customers can recognize their needs without geographic and timing limitation. Search engines, customized services and intelligent agents enable customers to gather rich merchant information easily. In the purchase stage, Web-based commerce provides sophisticated and safe electronic transaction facilities and payment mechanisms, such as the Secure

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Table 1 Dierences in the technological infrastructure dimension Factors Network infrastructure Web-based commerce 1. 2. 3. 4. 5. 6. Wired networking Connectionless-based Data-oriented network Internet channel Unlimited bandwidth Standards: TCP/IP M-commerce 1. Mobile/wireless networking 2. Connection-based 3. Voice-based network 4. Mobile phone network channel 5. Limited bandwidth by spectrum 6. Standards: GPRS, PCS, CDMA, WLAN, TCP/IP(v6), Bluetooth, or 3G 1. 2. 3. 4. Mobile computing Device-dependent Specic development tools Dicult to integrate with other systems U-commerce 1. 2. 3. 4. 5. 6. Ubiquitous networking Connection-based Remote control technique Multicast channel Broadband network Standards: N/A

Application platform

1. Desktop computing 2. Device-independent 3. General programming tools 4. Easy to integrate with other systems 1. Computing-centric 2. Stationary location 3. Dominated by PCs 4. Powerful CPU, large memory, and big screen 5. Full input model 6. Position may not be identied

1. 2. 3. 4.

Mobile computing and pervasive computing Cross-platform Specic development tools Seamlessly integrate with other systems

Devices

1. Communication-centric and computing-centric 2. Mobile location 3. Dominated by handheld devices (e.g., mobile phones, PDAs) 4. Limited CPU, Small memory, Small screen, and Slow bearers 5. Limited input model 6. Positioning and user identity capability

1. Communication-centric and computing-centric 2. Ubiquitous location 3. Heterogeneous device 4. Combination of handheld devices and remove control devices (e.g., sensors and eectors) 5. Multiple input model 6. Geo-positioning and remember capability

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Socket Layer (SSL) or Secure Electronic Transaction (SET). Because web-based applications can be easily integrated with backend enterprise information systems, these applications can eciently support delivery service logistical operations. Moreover, the e-mail and virtual community have input to help improve real-time post purchase services. In contrast to Web-based commerce, mobile services are predominantly simple, less information-intensive exchanges and interactions, and usually available only in a specic region. In M-commerce, the mobility and location-aware services can proactively push relevant messages (advertisements or sale alerts) to consumers anywhere and anytime [16]. Customers can continue their instantaneous interaction with any aspect of their commercial activities through relevant mobile services. NTT DoCoMos iMode (Information Mode) service is one of the most successful M-commerce applications in Japan; it allows subscribers to shop, send instant messages, play on-line games, or download music. In practice, popular mobile services include the Wireless Application Protocol (WAP), Short Message Service (SMS), Multimedia Message Service (MMS), and iMODE. The dierences in the security mechanisms for payment services for Web-based commerce and M-commerce are insignicant [1]. Some build-in carrier payment mechanisms, such as mobile cash that refers to cash stored (via SIM or credit card) have become mature [5], but the security standards have not been fully unied. The security technologies include Wireless Transport Layer Security (WTLS), based on SSL technology, WML Script Cryptolibrary, and wireless Public Key Security (PKI). In contrast to M-commerce, U-commerce is built upon a fundamental context-aware service concept that includes spatial awareness (e.g., the specic position and orientation of a customer) and temporal awareness (e.g., the scheduled time of public and private events) [26]. U-commerce focuses on spontaneous needs, current location, and customer arrival time, and a concern for the prole data built upon the customers past behavior, situation, and purchase patterns. This helps by dynamically conguring and migrating to meet

1. Cyber media 2. Need-based 3. Transaction and context information

1. Voice and text 2. Message-based 3. Transaction and location information

1. vCard (e.g., WML, cHTML, XSL) 2. Inter-card navigation mode 1. Hypertext (e.g., HTML, XML) 2. Hyperlink navigation model Content packaging

Table 2 Dierences in the content dimension

Web-based commerce

Content distribution

Content creation

Factors

1. Client/server (three tiered) distribution model 2. Pull oriented 3. Global distribution

1. Hypermedia 2. Information-intensive 3. Transaction information

1. Mobile distribution model 2. Push oriented 3. Regional distribution

M-commerce

1. Ubiquitous distribution model 2. Push oriented and Pull oriented 3. Universal distribution

U-commerce

N/A

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the customers dynamic needs and changing the interaction with the customer [28]. In addition, these services provide highly personalized services that allow the customers to dedicate their attention to the context with minimal distraction due to the need for recognition and information search. They also allow customers to perform purchase and payment activities easily both in virtual or physical context. As an example, if you enter a department store and are carrying a cell phone equipped with a ubiquitous device, the U-commerce system recognizes your location and presents you with service categories for shopping, such as discount information, a personalized purchase prole, etc. You can choose a product comparison service on the cell phone to evaluate products, order them and then pay using a digital payment service or cash. In summary, the characteristics of U-commerce services are content-aware, proactive, and highly personalized. U-commerce uses fundamental advanced marketing and operations methods to provide more choice, more convenience, more personal attention, and more adaptation to customers [6,11]. Table 3 summarizes the major dierences between Web-based, M-, and U-commerce based on the service dimension. 3.2. Analysis by business model A business model provides a coherent link that takes the E-commerce core components, discussed preciously as inputs, and coverts them through markets into economic value. In this section, the business model dierences among Web-based, M-, and U-commerce are investigated in terms of ve attributes: value proposition, market segment, cost structure, and prot potential and value network [4,7]. Table 4 summarizes the major dierences. Based on the open Internet infrastructure, low cost, high speed and less limited bandwidth attracts customers to enter the global commercial world easily. Rich information exchanges, facilitated by the Internet, eliminate the information asymmetry between customers and sellers and thus create a nearly friction-free marketplace where buyers and sellers are directly connected [20]. Both e-commerce companies and customers have realized the value arising out of reduced search costs,

transaction costs, and lead time or improved responsiveness [31]. In practice, Web-based business model applications can be classied into Businessto-Consumer (B2C), Business-to-Business (B2B), Consumer-to-Business (C2B), and Consumer-toConsumer (C2C) modes. In contrast to Web-based commerce, the value propositions for M-commerce are mobility, localization, personalization, and convenience [8]. The primary advantage of mobile technology is to provide a superior value-for-time oering that Webbased commerce cannot achieve. The agility and accessibility provided by mobile devices is convenient for users in retrieving information and performing transactions from virtually any location on a real-time basis. Additionally, mobile devices are typically used by a sole individual. As an example, a company could track a customers movements across aisles when he or she shops and collect the customers transaction information, including and combining the prole data stored in the SIM card of the handheld device. This is ideal for a personalized target marketing services. In general, the current M-commerce applications include B2B, B2C, and Business-to-Employee (B2E). B2C currently dominates these applications [13]. U-commerce will be dierentiated from conventional E-commerce based through its ability to actuate the advantages germane to ubiquitous devices. The unique features of ubiquitous devices are high levels of mobility, consequent large-scale services and infrastructure, and a diversity of ways in which data are processed and transmitted. This is often called digital convergence. Accordingly, the additional values created for users by these emerging technologies are transparency, pervasiveness, convergence, convenience, and adaptation [14,16]. U-commerce will seamlessly integrate both the virtual and physical marketplace into a universal market that expands over both Web-based and M-commerce [10]. The increasing use of Ucommerce will inuence the physical retail environment with dynamic pricing models [13]. In terms of market segment, most early Web-based commerce customers were highly educated PCs users who were self selected from a stationary workforce with Internet connections. However,

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Table 3 Dierences in the service dimension Factors Nature Web-based commerce 1. Transaction-aware 2. Passive service 3. Mass customization 1. Worldwide range of products and services oered 2. Geographic dispersed 3. On-line advertising or Web sites navigation 1. Universal searching 2. Virtual navigation search 3. Rich product information and easy to search 1. Sophisticated interaction applications 2. Facilities: cross sites comparisons, intelligent agents, or discussions in newsgroups 1. Digital payment 2. Third party payment systems 3. Security standards: SET or SSL M-commerce 1. Location-aware 2. Proactive service 3. Personalization 1. Regional range of products and services oered 2. Location-specic services 3. Message-based advertising (e.g., SMS, MMS,WAP,or iMode) 1. Location-specic searching 2. Virtual navigation search 3. Simple and critical product information U-commerce J.-H. Wu, T.-L. Hisa / Electronic Commerce Research and Applications 3 (2004) 389404 1. Context-aware 2. Proactive service 3. High personalization 1. Specic range of products and services oered 2. Location-specic and temporal-critical services 3. Multi-channel

Need recognition

Information search

1. Context-specic searching 2. Virtual and physical navigation search 3. Rich and full product information

Evaluation

1. Simple interaction applications 2. Facilities: discussions in charts via WAP or iMode.

1. Continuous interaction 2. Facilities: multi-discipline

Purchase

1. Digital payment or Bill 2. Build-in carrier payment system 3. Security standards: WTLS, WML Script Cryptolibrary, or wireless PKI 1. Limited connection to backend system 2. Services deliver to mobile customers 3. Instantaneous feedback

1. Multi-discipline digital payment and traditional payment 2. Build-in carrier payment system or physical stores 3. Security standards: open Platform, Visas XML invoice 1. Seamless connection to backend system 2. Services deliver to mobile customers 3. Ubiquitous feedback

Post purchase

1. Easy connection to backend system 2. Services deliver to xed location 3. Irregular feedback

Table 4 Dierences in the business model dimension Factors Value proposition Web-based commerce 1. 2. 3. 4. 1. 2. 3. 4. Low cost High speed Global communication Friction-free marketplace Global market PCs users with Internet connection Most of users are highly educated Wide customer base M-Commerce 1. 2. 3. 4. 1. 2. 3. 4. Mobility Localization Personalization Convenience Regional market Mobile device users Business mobile workers and young people Targeted customer base U-Commerce 1. 2. 3. 4. 1. 2. 3. 4. Transparency Pervasion Digital convergence Adaptation Universal market Heterogeneous users Unlimited demographics Heterogeneous customer base J.-H. Wu, T.-L. Hisa / Electronic Commerce Research and Applications 3 (2004) 389404

Market segment

Cost structure

1. Low technology, application development, networking, and content delivery cost 2. High content creation cost 3. High logistic cost for physical goods and low logistic cost for information goods

1. High technology cost, application, development cost, networking and content delivery cost 2. Low content creation cost 3. Low logistic cost for physical goods and high logistic cost for information goods 1. Improve eciency of mobile workforce and task 2. Revenues of mobile servicing and networking fee are major prot source 3. High networking and service charge

1. High technology cost, application development, and content creation cost 2. Low networking and content delivery cost 3. Low logistic cost for physical goods, and information goods 1. Lower cost, improved trust, enhanced dierentiation, and market extension 2. Revenue of value-added servicing and product selling are major prot source 3. Low networking and high service charge 1. Network operators 2. Ubiquitous service, geo-positioning service, application, and content providers 3. Ubiquitous device manufacturers 4. Internet and mobile portals 5. Bricks-and-mortar stores

Prot potential

1. Lower transaction, labor, promotion cost, service and inventory cost 2. Revenues of servicing, advertising and content subscribing are major prot source 3. Low networking and service charge

Value network

1. Backbone operators 2. Internet service, application, and content providers 3. Network infrastructure providers 4. Internet portals

1. Telecom operators 2. Mobile service, application, and content providers 3. Mobile device manufacturers 4. Internet and mobile portals

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the Internet population demographic is now more heterogeneous. In contrast, most M-commerce consumers are mobile phone adopters. They are mainly modern young people or mobile workforce who are functionally computer illiterate and technologically unsophisticated [9,31]. Previous investigations showed that the young users form the primary segment for most mobile services [1]. The M-commerce market area is regional and narrower than Web-based commerce; the customer bases are much smaller [13]. With respect to Ucommerce, because it is considered an integration of dierent channels (from Internet to brick and mortar), the size of the potential customer base will be greater than Web-based and M-commerce. Hence, the customers will be most heterogeneous as they are in the physical marketplace. Therefore, in U-commerce adoption, eectively segmenting customers and implementing dierential marketing strategies across the dierent channels becomes a very important factor [15]. The rapid growth of Web-based commerce was stimulated primarily by the net-wide use of TCP/ IP, open standards, and low Internet overhead costs. It points to the same trend that occurred with e-mail: Web site design and networking fees and software are becoming almost free of charge. All these reduced Web-based commerce development costs (e.g., technology, application development, and networking) lower the business entry barrier [31]. Conversely, M-commerce is rooted in paid-for communication services in the network operator industry. It involves infrastructure, bandwidth and customer prole resources. Hence, a company that attempts to enter the M-commerce market may require high development and investment costs in negotiating with the mobile operator industry. Predictably, the emerging ubiquitous technology will create new interoperable network infrastructure and software platform standards and thus create an open environment like the Internet [6]. In general, both physical and information goods can be sold via wired and wireless channels. Logistical costs (i.e., content creation, products delivery, or operation) and the underlying cost structure for dierent E-commerce applications are

dierent. For physical products, the cost of delivering and operating from a remote site in Webbased commerce is higher than oering products and services locally or contextually in M- and Ucommerce. On the other hand, for information goods, because the content presentation is simpler by using handheld devices, the initial cost for content creation in Web-based commerce is much higher than in M-commerce. However, the cost for content delivery in Web-based commerce is much lower than that in M-commerce [31]. Content delivery savings become possible in a ubiquitous environment that is based on an open network, but the cross-media content creation cost may be dominants for U-commerce [6]. Web-based commerce allows companies to link directly to customers; thereby signicantly reducing transaction, labor, promotion, service and inventory costs [32]. For instance, General Electronic (GE) cut $500$700 million o its purchasing costs and reduced labor costs by 30% and inventory costs by 520% by using the Internet over a three-year period. In Web-based commerce, the servicing commissions, advertising revenue, and content subscriptions are the main prot sources compared with bricks-and-mortar stores. In contrast, limited transaction processing capabilities and high mobile networking costs prevent Mcommerce from taking any advantage today. However, M-commerce oers tremendous prot potential by expanding the existing Web-based commerce market by providing mobile services to improve the eciency of mobile tasks. Networking fees and paid-for service operations will generate extra revenue for mobile service providers and telecom operators in M-commerce [31]. Additionally, U-commerce operations that rely on the integration of physical and virtual channels will provide essential benets, including lower costs, improved trust, dierentiation through valuedadded services and geographic and product market extension [27]. Thus the innovative company can reap prot from the successful exploitation of the synergies between such multiple channels [10,13,27]. The value network created around a business shapes the role that suppliers, customers, and complementors play in inuencing the value resulting

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from an innovation [7]. In the value network of Web-based commerce, the key stakeholders include: backbone operators, Internet service providers, application service providers, content providers, Internet portals, and so on. In the case of M-commerce, the key stakeholders are: telecom operators, mobile service providers, application providers, content providers, mobile device manufacturers, Internet and mobile portals, etc. The increased level of mobility will intensify the scope and complexity of interorganizational coordination involving multiple stakeholders [16]. Accordingly, we believed the coverage of U-commerce value network and the relationships between stakeholders within the value network will be more complex than Web-based and M-commerce (see Table 4). One of the signicant trends in the U-commerce market is that collaboration and partnerships are becoming increasingly important. Table 4 summarizes the major business model dierences between Web-based, M- and Ucommerce. 3.3. The hypercube of E-commerce innovation 3.3.1. Innovation from Web-based commerce to Mcommerce As previously mentioned, mobile technology has lead to a fundamental change in the Webbased technological infrastructure while the core content and service components in current Mcommerce applications are nearly the same as those already in Web-based commerce. In addition, signicant dierences were found between Web-based commerce and M-commerce in the business model dimension. With respect to providers, the current Mcommerce can be considered a modular innovation, because the majority of the core components had to be reworked or redesigned with only the business model unchanged. Because M-commerce creates new value propositions and market opportunities, an incumbent E-commerce company will need to recongure its existing business model with the unique features of M-commerce [17]. The evidence indicates that M-commerce is simply an architectural innovation for E-commerce companies. From the consumer standpoint, we consider

M-commerce also an architectural innovation, because the terminal devices, networking fees, cost structure and value propositions are dierent from those of Web-based commerce. M-commerce is a radical innovation for existing complementors; thus, they must recongure their products, services, sales channels and partnerships by choosing enabling mobile technologies and standards to match the new value methods and opportunities when using M-commerce. Such changes will destroy the existing commercial capabilities of complementors. In summary, the innovations from Web-based commerce to M-commerce are modular for providers, architectural for E-commerce companies and customers, but radical for complementors. This means that M-commerce is primarily a supplement rather than a substitute for Web-based commerce [1]. Fig. 2 shows a zone map that represents the range of possible impacts from M-commerce innovations on the various stakeholders. The zone map is a simplied two-dimensional version of the hypercube, where incremental = 1, modular = 2, architectural = 3, and radical = 4.
From Web-based commerce to M-commerce
4 3 2 1

E-commerce Provider Customer Complementor Company 1= incremental, 2= modular, 3= architectural, and 4= radical

Fig. 2. Zone map for innovation from Web-based commerce to M-commerce.

3.3.2. Innovation from M-commerce to U-commerce The innovation from M-commerce to Ucommerce is a radical change for providers, especially in the adaptive networking, pervasive computing, ubiquitous device, heterogeneous content, and context-aware service features. Moreover, U-commerce will aect many business model aspects involving how and when it is constructed. This is a fundamental change for incumbent E-commerce companies in business operations, customer relationship management, and collaboration with alliance partners [10]. In addition to

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improving a product or rening a distribution channel, E-commerce companies also need to leverage superior customer insights to develop powerful branded solutions with value outside their traditional markets [23]. In the U-commerce world, a physical presence channel, wherever products and services are used, will become a competitive necessity [10]. Additionally, they will have to forge alliances with network operators, device manufacturers, content providers, retail outlets, and brick-and-mortar stores that will appeal to the customer segments they have targeted [17]. Therefore, building new collaboration and alliance business models will be a great challenge for Ecommerce companies [13]. For customers, U-commerce will be a modular innovation because it can be considered an integration of wired and wireless commerce. However, U-commerce will change the way people use terminal devices. Because of the multiple industries involved in U-commerce scenarios, strategic collaboration and partnerships have become increasingly important for complementors. Coordination between multiple partners is necessary to address challenges such as standards, interoperability and security [23]. Thus, complementors must reinforce their technological capabilities in ubiquitous computing and also build collaborative relationships with new partners to retain their competitive advantages. U-commerce innovation is architectural for complementors. The zone map is shown in Fig. 3.
From M-commerce to U-commerce

tive advantage may rest on collaborative relationships such as a value network with their co-opetitors [29]. An E-commerce companys coopetitors include the stakeholders (providers, customers and complementors) with whom it must collaborate and compete. Co-opetitors must engage in co-opetition as they collaborate via alliances and compete via coalitions in value network. They provide a critical source of innovations, complementary resources, and critical assets for collectively garnering competitive advantage as a value network or complementary competencies [3,4]. An innovation that impacts the capabilities of a businesss co-opetitors should have an impact on the performance of the business [3]. According to the results previously discussed here, in this section, we analyze the impact of E-commerce innovation on the capabilities of E-commerce companies and on the capabilities of their coopetitors. 4.1. Impact of the E-commerce innovations on coopetitors 4.1.1. Providers M-commerce is a modular change for providers, but this change does not strongly threaten existing provider situations. The commercial capabilities that providers have developed from Web-based commerce give them an advantage over new entrants. Although M-commerce allows providers to remain competitive over the short term, providers must invest in novel wireless technology to reinforce their competitive advantage. U-commerce is a radical innovation for providers. This means that the capabilities required to develop U-commerce are dierent from those to develop M-commerce and thus providers previous capabilities may become obsolete or even handicap them. During this competencedestroying change, providers will have diculties in maintaining any previously existing advantage. Conversely, this situation may create new opportunities for a new entrant in the industry, because they did not experience the previous burden of exploiting the new technology, and thus they are less likely to have diculty in developing the new technologies, contents and services using ubiquitous technolo-

4 3 2 1
Provider E-commerce Customer Complementor Company 1= incremental, 2= modular, 3= architectural, and 4= radical

Fig. 3. Zone map for innovation from M-commerce to Ucommerce.

4. The impact of the E-commerce innovation on the stakeholders As companies nd more and more of their business being conducted over the web, their competi-

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gies. To cope with this radical change, a providers capabilities to recognize and identify new market space, determine their potential opportunities, execute business innovation, and match with an emerging technology are central for business surviving [29]. Therefore, the following proposition is formulated: Proposition 1. More providers capabilities are rendered obsolete when innovating from Mcommerce to U-commerce than from Web-based commerce to M-commerce. 4.1.2. Customers A rms relationship with its existing customers can be a source of competitive advantage. However, this advantage can become useless if an innovation renders existing customer capabilities obsolete [3]; movement from Web-based commerce to M-commerce is an architectural innovation for customers. The core component capabilities that underpin the M-commerce environment are reinforced, yet the value propositions have changed. This indicates that M-commerce is capability-enhancing due to the use of mobile devices but capability-destroying due to the need to adopt new mobile applications for customers. There are several interesting phenomena involving M-commerce adoption:  First, the M-commerce attraction for current Web-based commerce users is weaker than for those who have never used the new technology; most new users misunderstand the usefulness and potential value of M-commerce.  Second, the acceptance of M-commerce by users that have Internet prociency is high because the existing experiences were helpful in underpinning M-commerce adoption. In general, the willingness to use mobile service is low but to use certain conventional services (such as e-mail) is exceptionally high. These facts were also discovered to be important by Anckar and DIncau [1]. Therefore, when moving from Web-based commerce to M-commerce, improving potential customer understanding of the value propositions provided by the mobile technology is necessary to make the customer willing to use M-commerce.

From M-commerce to U-commerce is a modular innovation for customers. This technological change reinforces the customers capabilities and the value they perceive for M-commerce, if the customer is willing to upgrade and relearn the special devices and functions. We predict that customers that had used M-commerce will have greater intention to adopt U-commerce. Additionally, the switching cost for device upgrades and the successful experience from using Mcommerce are critical successful factors in Ucommerce adoption. Therefore, the following is proposed: Proposition 2. More customers capabilities are rendered obsolete when innovating from Web-based commerce to M-commerce than from M-commerce to U-commerce. 4.1.3. Complementors As discussed above, Web-based to M-commerce is a radical innovation for complementors. The changes include diering M-commerce technological capabilities and business model. Thus, the existing complementors experience greater difculty in entering M-commerce, because their earlier methods may not apply. The roots of that diculty lie in the novel wireless technology, the new alliance relationships, and the means used to access the surrounding resources. They may relearn and develop the ability to manage the huge threat eectively if they invest in novel technological capabilities, ambidextrous collaborations and critical resources. New entrants are likely to have more opportunities in developing competitive products/services using the new wireless technology than incumbent complementors. Moving from M-commerce to U-commerce is an architectural innovation for complementors. The emerging ubiquitous technologies trigger changes in business models. The ubiquitous technologies remains largely unchanged from traditional technology (i.e., wired and wireless technology), but the fresh by integrated digital convergence may show or even stop existing capabilities from providing new technological complementary products/services. This situation seems

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favorable for potential new entrants. Therefore, the following is proposed: Proposition 3. More complementors capabilities are rendered obsolete when innovating from Webbased commerce to M-commerce than from Mcommerce to U-commerce. 4.2. Impact of E-commerce innovations on E-commerce companies During period of innovation, a businesss performance is dependent on the direct eect of its own reduction or improvement in capabilities and the indirect eect of the impact of the innovations on its co-opetitors [3]. For an E-commerce company, moving from Web-based commerce to M-commerce is an architectural change. Moving to U-commerce is a radical change. Here, the differences are that an E-commerce companys existing capabilities during U-commerce innovation may be and often are rendered obsolete. The change from Web-based commerce to Mcommerce uses the same technology. Thus, when an E-commerce companys technology becomes obsolete the company will perform badly in Ucommerce adoption. Therefore, the following is proposed: Proposition 4. More E-commerce companys capabilities are rendered obsolete when innovating from M-commerce to U-commerce than from Web-based commerce to M-commerce. Additionally, co-opetitors may be either a competitive advantage or a handicap for a business, depending on the co-opetitors capability-destroying or capability-enhancing ability [3]. We therefore explored the indirect impact on an E-commerce company from a standpoint of the eects of E-commerce innovation on co-opetitors capabilities. Because the change from Web-based commerce to M-commerce is a modular one, the value network and supply relationships do not change greatly. These tacit complementary resources may mitigate the impact of M-commerce on E-commerce companies. Conversely, during a radical U-commerce innovation, the incumbent E-commerce companies will face more challenges

in deciding whether to stay with their current supplier or switch to new ones. If they choose the former, they must grapple with the risks that their providers face during the change. However, if they choose the latter, they must invest more in rebuilding the value network. This change must be amortized with trust building mechanisms over time to minimize the risk of opportunistic behavior, but this technique is usually dicult and time-consuming. In general, the more a companys providers capabilities are rendered obsolete by an innovation, the poorer the rm will perform. Businesses that switch to new providers may perform better than those that stay with old ones in the face of radical change [3]. Accordingly, we infer that their relationships with providers are a critical resource for E-commerce companies in moving from Mcommerce to U-commerce. Therefore, the following is proposed: Proposition 5. Innovating from M-commerce to Ucommerce an E-commerce company with a strong capability that builds tight relationship with new providers will perform better than ones that stay with an old provider. Thus, the impact on customers in M-commerce change is greater than that in U-commerce change. However, the eects indirectly impact the performance of the E-commerce company when adopting M-commerce. An E-commerce company deciding a change to M-commerce may retain the advantage in moving to U-commerce. Thus, we believe that successful experiences by the customer in using M-commerce can be helpful in U-commerce acceptance and there is a need for a E-commerce company to attract and segment existing customers (wired and wireless users) when changing to U-commerce. Complementor competence destruction also means fewer complementary products. The fewer complementary products, the less value it has for customers. Alternatively the consequences can be attributed to network externalities: introducing a new technology clearly impacts the performance of a business [3]. Because the M-commerce is radical change for the complementors, their capability-destroying eect may negatively aect the performance of the existing E-commerce

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companies, leading to complementary resources becoming more dicult to retain. Thus, the fewer complementary resources, the less existing E-commerce company advantages are likely to remain. In an M-commerce to U-commerce change, the architectural change renders the complementors capabilities obsolete. The indirect eect could cause E-commerce company performance deterioration. Therefore, the following is proposed. Proposition 6. E-commerce companies with strong capability holding more new complementary resources due to the innovation will perform better than those that do not.

5. Conclusions The E-commerce innovation analyzed via the hypercube innovation model provides a better understanding of how innovation will aect the capabilities of E-commerce stakeholders (providers, E-commerce companies, customers, and complementors). M-commerce diers substantially from Web-based commerce in certain technological components. However, both share a common business model for providers. U-commerce is however, a radical change for providers. The impact of innovation from Web-based commerce to Mcommerce is stronger on complementors than on E-commerce companies and customers. In contrast, the impact of innovation in moving from M-commerce to U-commerce on E-commerce companies is stronger than on the customers and complementors. This impact can have important implications for stakeholders during E-commerce innovation. We believe that M-commerce and Ucommerce should not be simplistically regarded as an extension of Web-based commerce. An E-commerce company should take a much broader view of the emerging technology, market opportunities, and co-opetitor relationships in this novel commercial world. It is important to rethink the value and opportunity provided by new E-commerce innovations, especially if the opportunity is congruent with current capabili-

ties. Market niches should be identied with the unique features of these innovations. Valuable services must be developed to leverage the potential advantages. Attempting to duplicate the previous capabilities and business models is impractical in the rapid E-commerce innovation stream. Customers with successful experience in using previous E-commerce innovation will be more likely to embrace the next innovation. Therefore, reducing the customers switching cost and resistance and developing an eective transitional solution to enable early adopters to migrate to the new technological environment are critical issues for E-commerce companies, providers, and complementors. M-commerce and U-commerce are still not mature. U-commerce is especially immature. This brings many challenges to M-commerce and Ucommerce adopters. Predictably, standardization, interoperability, and security are still crucial issues. Integrating content, software and hardware design and reconguring an eective business model to implement M-commerce and U-commerce requires careful study and decision making.

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