Intermediation in electronic commerce

This research consists of three studies that analyze the business value of electronic commerce (EC) intermediaries at the market, organization and business process level. Through multiple levels of analysis and multiple research methods, these studies offer a comprehensive picture of intermediation in electronic commerce. The first study investigates the benefits of electronic commerce by using an analytical model of market structure that considers direct markets, intermediated markets, as well as hybrid (direct and intermediated) markets. The results point out the impacts of EC technology improvements on total welfare, prices and market participation. The model points out that disintermediation may never take place in electronic commerce, as the competition between the direct market and the intermediary offers the most value to buyers and suppliers. The second study proposes a model for identifying the business value organizations can obtain from using electronic intermediaries and the limits to value of such intermediaries. The framework is tested with case study data from three 1999 implementations of Internet-based corporate travel reservation systems. The results show that not all the value flows for electronic commerce intermediaries for corporate travel can be transformed into potential value, which in turn is not completely converted into realized value due to significant valuation and conversion barriers. The third study builds a theoretical model for comparing the benefits of traditional and electronic intermediaries at the business process level in a business-to-business (B2B) procurement setting. The model test is based on advanced econometric methods applied to a very large data set containing about 18,000 corporate travel reservations for airline tickets conducted at a large U.S. company during 1999. The results show that the value of the electronic intermediaries, measured as price reduction, is contingent on transaction characteristics and buyer choices that occur at the process level. Taken together, these three studies can help enrich our current understanding of electronic commerce and intermediation, and formulate improved theories and boundary conditions regarding disintermediation, reintermediation, price reduction and competition in electronic commerce.