Kevin Zhu and Kenneth L. Kraemer Information Systems Research (2002) Gun- woong Lee

1. E-Commerce Metrics for Net-Enhanced Organizations: Assessing the Value of e-Commerce to Firm Performance in the Manufacturing Sector Kevin Zhu and Kenneth L. Kraemer Information Systems Research (2002) Gun-woong Lee

2. Overview • Research Motivation and Questions • The absence of the relevance metrics for measuring e-commerce capability • IT Productivity in the Internet domain • How are these e-commerce metrics related to the business performance of a firm? • E-commerce metrics and IT Infrastructure • Substitute vs. complement • What kind of relationship exists between Internet systems and pre-Interne IT Infrastructure? • EC effects in High IT-intensity vs. Low IT sectors • DELL & CISCO vs. Ford • What are the deference in the effects of EC and IT between Traditional and Technology firms? • Theoretical background • A Resource-based theory • Complementarity • E-commerce capabilities + IT infrastructure = greater efficiencies and lower costs! • Methodology • Secondary data on 260 manufacturing companies + survey • Are the proposed key features of SOL and the underlying paradigms applicable in practice?

3. IT-productivity Research • Comparisons

4. Research Framework • H1: Main effects of IT or EC vs. Interaction Effect • H2-4: Interaction effect and firm performance • Cost reduction, Profitability, Supply Chain Management • H5: High IT-intensity firms vs. Low-Intensity firm

5. Key Findings • Significant relationship between EC capabilities & Firm Performance • Cost Reduction: Higher EC – Lower Cost / Higher IT – Higher Cost • Supply Chain Efficiency: Higher EC – Higher INVX / Insignificant IT • Profitability: No Significant effects • Interaction Effects Between IT and EC • Cost Reduction • High-tech firms: Negative (cost reduction) • Traditional firms: Positive • immature IT infrastructure: Learning & adjustment costs • Supply Chain Efficiency (Inventory turnover) • High-tech firms: Positive (enhanced supply chain efficiency) • Traditional firms: Weaker Positive

6. Complementary of EC and IT • Higher Levels EC capability tend to make IT infrastructure more valuable!

7. Strengthens • Research Motivation • Extension of the IT-productivity research stream into the Internet domain • Solid Validation of the Instruments • Validation Guideline for IS Positivist Research [Boudreau et al., 2001] • Conduct a pretest? YES • Provide a instrument validation section? YES • Use previously validated instruments? YES • Undertake formal validation? YES

8. Validation Guideline for IS Positivist Research [Boudreau et al., 2001]

9. Weaknesses and Extensions • Interpretation • Marginal effect of EC capabilities and IT intensity on firm Performance • Complementarity of EC and IC in COGS • Complementarity of EC and IC in INVX

10. Weaknesses and Extensions • Methodology • The use of the cross-sectional data • Does not capture the lag effect • Sample selection bias • Classification of hi-tech and traditional manufacturing companies • Model • Causal relationship between EC capability and IT Infrastructure • IT intensity <-> EC capabilities • Two control variables • Firm size and Industry Concentration