Building and sustaining the sources of competitive advantage in e-commerce capabilities

Research Paper 1 was intended to provide a literature review on the development of the Internet and emergence of e-Commerce models. Three key competitive theories: (1) Organisation industrial theory (I/O), (2) economic efficiency theory, and (3) resource-based view theory were used to examine the nature of competition in the electronic markets. The proponents of the first two competitive theories argued that the forces of external competitive factors will tend to pressure firms to compete in price, and this will result in perfect competition. Under the perfect competition scenario, firms without cost or differentiation advantage will either achieve competitive parity or competitive disadvantage. On the other hand, the resource-based view theory of competitive advantage postulates that cost or differentiation advantage can only be derived from the valuable, rare, inimitable, and non-substitutable resources and capabilities of a firm. However, even though the application of the RBV model is theoretically sound, empirical research is necessary to prove that if factors of e-Commerce capabilities are significantly correlated to firm-level performance. This conclusion has led to an effort to conduct an empirical study in the second phase of research. Similarly, the discussion of various views on competitive disadvantage of e-Commerce barriers and their effect on firm-level performance resulted in another query that was subsequently investigated and reported in the final paper.; Research Paper 2 explored whether e-Commerce capabilities can confer durable advantage by conducting an empirical study. An e-Commerce capability instrument ICT-SB was developed and firms involved in e-Commerce activities were invited to participate by using a web survey method. Primary data were collected from 250 firms and results indicated that e-Commerce capabilities had statistically significant contributions to firm-level performance.; The study offered some important implications for both scholars and managers. For strategy scholars, the positive results of e-Commerce capabilities and firm-level performance were consistent with the untested theory of RBV model as discussed in Research Paper 1. For managers, the results suggested that e-Commerce firms would not be able to gain advantage by simply investing in the latest software and hardware as those can be easily acquired or imitated across the markets. Similarly, simply outsourcing the website to others without added value would only lead to competitive parity, not competitive advantage. Instead, managers should develop and acquire hard-to-copy e-Commerce capabilities to achieve durable advantage in their websites. The results also suggested that there is no short cut in building the superior e-Commerce capabilities because durable advantage could only be built over years through accumulation of expertise in skills and technologies.; Research paper 3 aimed to investigate the correlation between e-Commerce barriers and firm-level performance. Using the regression methods to analyse the responses to the e-Commerce barrier instrument, BIG, from the same 250 e-Commerce firms, the results indicated that e-Commerce barriers had significant negative influence on firm-level performance. Furthermore, the findings also suggested that simply developing e-Commerce capabilities will not be sufficient to achieve sustainable competitive advantage as the forces of e-Commerce barriers and weaknesses can easily erode these capabilities. Instead, firms should at the same time develop a secondary strength of capability to overcome the forces of competitive disadvantage.; Finally, the empirical results concurred with the theoretical models of competitive disadvantage developed by RBV scholars (West III and DeCastro, 2001; Powell, 2001; Arend, 2003) in that the presence of durable disadvantages would disable all the direct advantages of a firm.