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A B S T R A C T
Article history:
Received 26 September 2006
Accepted 26 May 2010
Available online 1 June 2010
Today, IT has a major inuence on commercial activities, accelerating the adoption of e-procurement and emarketplace participation in many industries. We examined rm motivations for adopting e-procurement
for their operations in thee-marketplace and measured their performance to assess its benets. Trust was
considered as a moderating variable between the relationship of e-procurement adoption and emarketplace participation. A two-stage analysis, including both a qualitative and quantitative approach,
was applied. Hypotheses were developed and a model constructed. A research questionnaire was
developed and distributed followed by data analysis and testing. The results showed that rms that
adopted e-procurement were more likely to participate in the e-marketplace and that the rms
performance was enhanced after such participation. Trust was shown to have a moderating effect upon
rm willingness to adopt e-procurement when it was considering participation in the e-marketplace.
Crown Copyright 2010 Published by Elsevier B.V. All rights reserved.
Keywords:
e-Procurement
e-Marketplace
Trust
Firm performance
1. Introduction
Innovative IT not only enables rms to enhance their overall
performance and facilitate inter-organizational relationships and
transactions; it also effectively solves the problem of asset
specicity and product description. Therefore, future orientation
is mainly focused on market rather than hierarchy-based economic
activities. At the same time, the Internet has changed the way the
rms do business by reshaping of traditional buyer-seller
relationship, the improvement of core processes, and in ways to
reach new markets. The evolution of information and communication technology has already improved supply chain performance, because of higher process efciency and integration in B2B
e-commerce.
e-Commerce may be divided into three categories: e-procurement led by buyers, e-distribution led by sellers, and e-marketplace led by a third party. The e-marketplace is an online
intermediary designed to establish buyer-seller relationships
and to facilitate the transactions between them; it generally
facilitates trading activities between partners who have not had
prior interaction; these are often trilateral, involving buyers,
sellers, and an e-marketplace provider [17]. The focus of our study,
e-procurement is one important element of the e-marketplace.
In recent years, e-procurement and the e-marketplace have
proliferated and been applied in an ever-extending set of domains.
0378-7206/$ see front matter . Crown Copyright 2010 Published by Elsevier B.V. All rights reserved.
doi:10.1016/j.im.2010.05.002
263
based ordering, invoicing, and tracking into electronic documents can reduce all costs related to procurement, such as
accounting and record keeping. Indeed, the objective of eprocurement is not to lower suppliers prices or margins but to
achieve savings in procurement and administration.
(2) Process conformance: Most e-commerce sites now provide
interfaces for procurement, such as online ordering. As the
need for integrating activities and information ow increases;
optimizing the process has become a prerequisite for success in
all rms [2]. The most obvious stems from the elimination of
redundant or unnecessary processes, improved resource
allocation and system-wide standardization.
2.2. e-Marketplace participation
New technology allows producers to contact end-users directly
and helps electronic intermediary service providers, to exploit IT by
linking sellers and buyers [4]. The Internet allows business processes
to be consistent with the growing demand for increased speed and
efciency at lower cost. The e-marketplace can be regarded as an
organizational platform that allows participants to exchange
information about prices and offerings. Based on the concept of
an e-hub, Albrecht et al. stated that the B2B e-marketplace can be
seen as a space where buyers can nd new products and services and
sellers can identify new market opportunities and seek out new
customers, thereby lowering transaction costs for both. The role of
the e-marketplace is in matching buyers and sellers.
Some factors affecting e-marketplace participation are:
(1) Efciency due to cost and time savings [3]. It has been suggested
that the e-marketplaces may give suppliers access to higher
levels of decision-making authority in buying organizations.
(2) Legitimacy because organizations must justify their actions and
perform according to societal norms and institutional expectation. Generally these relate to perceived repercussions due to
non-participation. Other reasons include the desire to appear
technologically developed by mimicking the behavior of other
rms. Non-participation can also result in isolation and the
ultimate loss of trade opportunities with business partners.
(3) IT capabilities are needed; rms require a good infrastructure in
order to obtain benet from marketplace participation. Building
sustainable competitive advantage while enhancing the rms emarket participation is not easy or cheap [9]. However, lack of
participation may result in a rm becoming isolated.
2.3. Trust
Quigley, Tesluk, Locke, and Bartol [10] dened trust as a belief
that rm makes an effort to fulll commitments, is honest, and
does not seek to take unfair advantage of opportunities. Richard,
Thirkell, and Huff [14] pointed out that trust has been conceptualized as a willingness to rely on exchange partners in whom one has
condence of their reliability and integrity. Son et al. indicated that
the reliability and integrity of a trustworthy partner are frequently
associated with competency, helpfulness, benevolence, fairness,
responsibility, consistency, and honesty. Trust not only facilitates
loyalty through reducing perception of risk, but also through
enhancing customer perceived value in a relationship built
through frequent, positive two-way communication.
Trust has a moderating effect on process and behavior [6]. It
facilitates business transactions between two parties in an
impersonal economic environment in which the parties lack prior
experience on mutual condence. B2B e-marketplace providers
must also establish trust; they will fail if participants do not trust
them. McKnight and Chervany proposed four components of trust
in the B2B relationship: competency, benevolence, integrity, and
264
265
Table 1
Denition of research constructs and measuring variables.
Construct
Denition
Variables
e-Procurement adoption
e-Marketplace participation
Firms play a part in a platform that allows business buyers and suppliers to
meet, trade, exchange information and collaborate electronically.
Trust
Firm performance
266
Items
Factor
loading
Composite
reliability
Variance
extracted
Cost
Cos1
Cos2
Cos3
0.74
0.79
0.71
0.96
0.97
PC1
PC2
PC3
0.70
0.66
0.46
0.82
Eff1
Eff2
Eff3
Eff4
Eff5
0.78
0.86
0.75
0.70
0.78
0.95
Leg1
Leg2
Leg3
Leg4
Leg5
Leg6
0.46
0.59
0.63
0.77
0.66
0.60
0.91
ITC1
ITC2
ITC3
ITC4
0.46
0.68
0.58
0.60
0.85
Abi1
Abi2
Abi3
0.76
0.79
0.81
0.83
Friendliness
Fri1
Fri2
Fri3
0.91
0.84
0.88
0.93
0.86
Safety
Safe1
Safe2
Safe3
0.87
0.81
0.81
0.91
0.83
Predictability
Pred1
Pred2
Pred3
0.78
0.81
0.83
0.86
0.81
Efciency
Effy1
Effy2
Effy3
Effy4
Effy5
Effy6
0.77
0.77
0.83
0.86
0.64
0.56
0.94
0.74
Sales performance
SP1
SP2
SP3
SP4
SP5
0.90
0.91
0.70
0.67
0.60
0.94
0.95
Customer satisfaction
CS1
CS2
CS3
0.81
0.77
0.77
0.92
0.78
Relationship
development
RD1
RD2
0.93
0.92
0.96
0.93
Overall
Ove1
Ove2
Ove3
Ove4
0.76
0.79
0.92
0.96
0.96
0.97
Process conformance
Efciency
Legitimacy
IT capability
Ability
0.61
0.95
267
Table 3
Discriminant analysis.
e-Procurement adoption
Item
Process conformance
Cost
31**
e-Marketplace participation
Item
Legitimacy
IT capability
Efciency
270**
153**
Legitimacy
Trust
Item
Friendliness
Safety
Predictability
Ability
121**
684**
75**
Friendliness
86
722**
89**
Firm performance
Item
Efciency
Sales
performance
Customer
satisfaction
43**
110**
70**
0.91
Sales performance
Customer Satisfaction
Relationship development
123**
Safety
**
**
130
65**
57**
Note: Discriminant coefcients are F-value: Dx21,0.05 > 3.8; **p < 0.01.
0.58
Table 4
Fit indices before and after modication of the full model.
Fit index
0.79
Criterion
Before modication
After modication
<3.0
>0.9
<0.08
>0.90
>0.80
>0.90
>0.90
<0.08
125
2.1
0.97
0.1
0.85
0.77
0.95
0.97
0.05
78
1.4
0.99
0.06
0.90
0.84
0.97
0.99
0.042
x
x2/df
CFI
RMSEA
GFI
AGFI
NFI
NNFI
SRMR
(0.9), AGFI (0.84), and RMSEA (0.059). The modied model and the
standardized coefcient of each relation are shown in Fig. 3. The t of
the model was improved by adding efciency to e-procurement
adoption and e-marketing participation. Efciency was shown by
the lower cost (including the opportunity cost of time) in performing
various parts of the purchasing task. e-Commerce would probably
enhance the effectiveness of these tasks.
The t-values of the relation between each dimension (before
and after modication) are shown in Table 5. These show that the
Table 5
t-Values of relation between each dimension before and after modication.
tion, showed that the x2/df ratio was 2.0, which was lower than the
recommended level of 3. Due to the sensitivity of chi-square to
sample size, more indices were therefore used for assessing the
model t. As a result, all indices reached the recommended value
except that for GFI (0.85), AGFI (0.77), and RMSEA (0.099). The full
model of the SEM results is shown in Fig. 2 with the standardized
coefcient of each relation.
In order to provide a better t, some modications were made,
and the result of the modied model was shown in Table 4. It shows
that all indices of the model t were improved, especially the GFI
t-Values
(before)
t-Values
(after)
8.6***
9.5***
6.7***
15.49***
16.12***
13.83***
5.34***
5.46***
9.1**
4.1**
3.1**
6.6**
15.4**
15.5**
14.2**
4.1**
3.10***
9.90***
11.3***
11.0***
13.5***
13.9***
5.6**
3.60**
11**
11.6**
12.5**
12.3**
12.9**
Note: () the parameter by others are set to 1, thus, no t-value; t > 1.96; **p < 0.01,
***
p < 0.001.
268
Table 6
Summary results for hypotheses testing.
Hypotheses
Results
H1: There is a positive relation between e-procurement adoption and e-marketplace participation.
H2: Trust in the e-marketplace has a moderating effect on e-procurement adoption and e-marketplace participation.
H3: e-Marketplace participation has a positive inuence on a rms performance.
Supported
Supported
Supported
partners effectively. Firms who do not participate in the emarketplace may become less competitive. Of course, IT ability is
a prerequisite for participating. However, e-marketplace providers
should ensure that there is no opportunistic behavior in the
marketplace in order to retain their marketplace.
To conclude, a trustworthy e-marketplace requires effective eprocurement. Firms can enhance sales performance, increase
customer satisfaction and develop tight relationships with their
business partners by offering convenient, faster, and accurate
services.
6.3. Research limitations
Some respondents suggested that the issues addressed in our
study should be conducted in specic industries because
Appendix A. Questionnaire
Measurement items for each construct/variable
e-Procurement adoption
Cost
Cos1 e-procurement helps to reduce the time spent on procurement activities.
Cos2 e-procurement helps to reduce the labor needed on procurement activities.
Cos3 e-procurement helps to reduce the cost related to procurement activities.
Process
PC1
PC2
PC3
269
conformance
e-procurement makes formats of all sheets unied.
e-procurement helps to reduce the possibility of mistakes.
e-procurement makes it more convenient to acquire information.
e-Marketplace participation
Efciency
Eff1 We thought it would increase our efciency.
Eff2 We believed that it would reduce the cost associated with transacting business with our exchange partners.
Eff3 We expected it to reduce our time spent on running our business.
Eff4 We thought it would reduce the labor associated with transacting business with our exchange partners.
Eff5 We thought it would streamline our operations.
Legitimacy
Leg1 It portrays us as a high-tech organization.
Leg2 Leading companies in the business at this time are doing so.
Leg3 In this industry, companies that are not ready for e-marketplaces will be inferior.
Leg4 If companies dont participate in e-marketplaces they will be considered as lagging behind technologically.
Leg5 Participating in e-marketplaces and being considered as a pioneer in this industry is important to our company.
Leg6 In this industry, lots of companies are willing to participate in e-marketplaces.
IT capability
ITC1 Good IT planning ability is important for a rm to participate in e-marketplaces.
ITC2 Our rm has strong technical staff to assist with e-marketplace participation.
ITC3 Our employees have an understanding of the possible benets of IT applications.
ITC4 Our rm has adequate knowledge about IT.
Trust [15]
Ability
Abi1 Participating in the e-marketplace has helped us establish many relevant businesses.
Abi2 Participating in the e-marketplace has helped to rapidly accomplish agency services.
Abi3 in the e-marketplace has greatly improved overall performance.
Friendliness
Fri1 The e-marketplace proactively offers the information related to our business.
Fri2 The e-marketplace proactively answers FAQ (Frequently Asked Questions).
Fri3 The e-marketplace promptly responds to proposed questions.
Safety
Safe1 The e-market is honest.
Safe2 The e-market is reliable.
Safe3 The e-market is dependable.
Predictability
Pred1 The product specication from the e-marketplace lives up to our expectation.
Pred2 The quality of products or services from the e-marketplace lives up to our expectation.
Pred3 The price of products from the e-marketplace lives up to our expectation.
Firm performance
Efciency
Effy1 After participating in an e-marketplace, the costs of production have been reduced.
Effy2 After , the costs of transaction have been reduced.
Effy3 After , the costs of general management activities have been reduced.
Effy4 After , the costs of coordinating with suppliers, customers and business partners have been reduced.
270
Appendix A (Continued )
Effy5 After , the costs of marketing the product have been reduced.
Effy6 After , the costs of acquiring new customers have been reduced.
Sales performance
SP1 participating in an e-marketplace, the market share of our products has increased.
SP2 After , the sales volume of our products has increased.
SP3 After , the price of our products has become more exible.
SP4 After, the number of new customers that we are able to acquire has increased.
SP5 After participating in an e-marketplace, the number of existing customers that we are able to retain has increased.
Customer satisfaction
CS1 After participating in an e-marketplace, our customers are more satised with us overall.
CS2 After , our customers encourage other companies to do business with us.
CS3 After , our customers are more loyal to us than before.
Relationship development
RD1 After participating in an e-marketplace, our company has been able to strengthen its existing business relationships with partners and suppliers.
RD2 After , the relationships between our company and its suppliers and business partners are likely to last longer.
Overall
Ove1
Ove2
Ove3
Ove4
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Hsin Hsin Chang is a Professor at the Department of
Business Administration and Institute of International
Business, National Cheng Kung University, Taiwan. She
holds a MBA from University of Wales and a PhD in IT &
Management from School of Management, University of
Bradford, UK. Her research interests are in related to ebusiness (ERP, SCM, CRM), TQM, technology management, collaborative commerce, and global logistics. She
has published in such journals as Information & Management, Information Systems Journal, Technovation, Computers in Human Behavior, International Journal of Computers
Human Studies, Online Information Review, TQM & Business
Excellence, International Journal of CIM, etc.
Kit Hong Wong is a PhD student in the Department of
Business Administration at National Cheng Kung
University, Taiwan. His research interests include
business-to-business e-marketplace, SCM, e-commerce. His research has been published in 2009
proceeding of International Conference of Academy of
International Business.