A resource-based view of electronic commerce

Youlong Zhuang
a,
*
, Albert L. Lederer
b
a
University of Missouri-Columbia, Columbia, MO 65211-6100, USA
b
University of Kentucky, Lexington, KY 40506-0034, USA
Received 19 April 2004; received in revised form 10 January 2005; accepted 25 June 2005
Available online 15 August 2005
Abstract
A management theory known as the resource-based view of the rm states that resources foster organizational success. Our
study of e-commerce retailers applied this theory to examine the effects of human, business, and e-commerce technology
resources on rm competitiveness. An e-mail and Web-based survey used 458 responses from site managers. Business and
e-commerce technology resources, as well as the individual business resource of process redesign, were found to predict
e-commerce performance, whereas human resources did not. E-commerce performance, in turn, predicted rm performance.
These ndings partially support the resource-based view and coincide with differences between physical and e-commerce
retailing.
# 2005 Elsevier B.V. All rights reserved.
Keywords: Electronic commerce; Competitive advantage; Resource-based view
1. Introduction
Few organizations today debate whether to
participate in e-commerce. Instead, they are con-
cerned about how and how much to do so. To decide,
managers need to identify the resources that make
e-commerce successful. By understanding and then
strengthening these resources, they can improve
performance in their organizations.
Researchers are also interested in resources that
make e-commerce successful. A management theory,
a resource-based view of the rm, states that resources
foster organizational success [3]. It provides an
organized way to study and understand the resources
by categorizing, comparing, and contrasting them.
The theory has not been used much in e-commerce
literature.
The purpose of our research was to use a resource-
based view to answer managements question: what
resources make e-commerce successful?
2. The resource-based view of the rm
The theory assumes that a rms performance is
founded on its capabilities, i.e., its resources, and its
www.elsevier.com/locate/dsw
Information & Management 43 (2006) 251261
* Corresponding author. Tel.: +1 573 882 6283;
fax: +1 573 884 6857.
E-mail address: zhuangy@missouri.edu (Y. Zhuang).
0378-7206/$ see front matter # 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.im.2005.06.006
competitors difculty in imitating them. Resources
must be valuable, heterogeneous, and immobile [46].
That is, they must provide benets (reduced costs or
increased revenue), be owned exclusively by the rm,
and be costly or impossible to imitate. An individual
resource can be a source of competitive advantage
only if it meets all three criteria.
A conventional retailing study, the foundation study
for this examined business, human, and IT resources
[52]. Accordingto the resource-based view, the rst two
complement ITand would lead to retailer performance,
whereas IT alone would not. This is because business
and human resources can be valuable, heterogeneous,
and immobile but IT resources can be imitated [16].
Our study focused on electronic retailing, one
of the three major types of e-commerce [14].
E-commerce is here dened as any formof economic
activity conducted via electronic connections [63].
We wished to identify the resources that make e-tailing
successful. Our work augmented past research (e.g.
[11,19,34,51,58,65]) by examining the relationship
between resources and e-commerce performance and
thus rm performance.
3. Research variables: resources and
performance
3.1. Resources in a resource-based view
Resources are the basic unit of analysis here;
however, our study did not consider all resources of the
rm but focused on e-commerce technology resources
and howthey work with their complementary resources
to enhance e-commerce and thus rm performance.
3.2. Resources
Resources cannot be evaluated in isolation [17]; one
may not be valuable but a set of them might. Thus,
one resource produces greater returns when used in
conjunctionwithothers [7]. This mayexplainwhyrms
might use the same e-commerce technologies with
different results. In fact, a synergistic combination of
IT resources with other organizational resources has
been shown to enhance rm performance [9].
The independent variables selected for our research
represented resources for participating in e-com-
merce. We adapted the research model as well as the
complementary human and business resources from a
study of conventional retailing (the foundation study)
by Powell and Dent-Micallef [52] which used three
resources IT, human, and business resources to
predict IT performance and rm performance. We
assumed that human and business resources are
immobile whereas IT is not. Our study substituted
e-commerce resources for IT resources.
3.3. E-commerce technology resources
Table 1 shows the list of seven e-commerce
technology resources and the survey items used to
represent each in our study.
3.4. Complementary human resources
The human resources we used were those four used
by Powell and Dent-Micallef; one was slightly
modied by adding a new item so that each contained
three items (for better validity). Table 2 shows the
resources, their items adjusted for our study, and
relevant references.
3.5. Complementary business resources
The business resources and items we used were
adjusted from Powell and Dent-Micallefs study based
on differences between IT in general and e-commerce
as a specic IT application. Two resources (customer
relationships and IT-business relationships) especially
important to e-commerce were added. One resource
was renamed. Four items were added so that each
resource had three of them. Table 3 shows the
resources, items and references.
3.6. E-commerce performance and rm
performance
The two performance variables used were analogous
to Powell and Dent-Micallefs IT performance and
overall company performance with minor adjustments
to t e-commerce. The e-commerce performance
survey items in Table 4 directly represent effects
attributable to e-commerce, while the rmperformance
items in Table 5 represent the synergistic organizational
outcomes after e-commerce implementation.
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 252
Similar subjective performance measures have
been widely used in organizational research [41].
Such measures are valued because specic rm
accounting conventions do not affect their compar-
ability and nancial information is often unavailable
to the researcher. However, prot through the
e-commerce site, when provided, was used in our
study as a performance measure.
4. Hypotheses
According to the resource-based view, any uni-
versally available resource (imitable or mobile) would
not provide competitive advantage to a rm. Most
observers agree that e-commerce technology, is a
commodity universally available to all [56]. We thus
expect e-commerce technology resources to result in e-
commerce applications that have not increased pro-
ductivity, sales, andprotability, and have not improved
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 253
Table 2
Complementary human resources
Open organization [52,69]
In the home ofce, our people are open and trusting
with one another
We have very little formal bureaucracy in our company
Our people would say this is a loose, informal place to work
Open communication [52,69]
Written and oral communications are very open in our
home ofce
Our people communicate widely, not just with their own
departments
Communications are very open between our home ofce
and our stores
CEO commitment [1,30,39,49,52]
Our top executives have clearly indicated their commitment
to e-commerce
Our top executives have championed e-commerce within the
company
Our top executives have shown that e-commerce is important
to the company
a
Flexibility [5,52]
In general, our people accept change readily
Our people have openly embraced e-commerce
We have had very few problems tting e-commerce with
our company culture
a
New item added to foundation study items.
Table 1
E-commerce technology resources
Interactivity [21,60]
Our e-commerce site responds quickly to e-mail queries
Our e-commerce site lets customers easily summon a
human to answer questions
Our e-commerce site readily accepts orders worldwide
Publishing applications [21,33,68]
Our e-commerce site publishes clear answers to frequently
asked questions
Our e-commerce site publishes important company policies
(i.e., on credit, privacy, or payment terms)
Our e-commerce site publishes useful general company
information (e.g., company history, background,
phone number, and physical location)
Community applications [33,57,61]
Our e-commerce site makes extensive use of bulletin boards
for customer interaction
Our e-commerce site makes extensive use of audio
conferencing for customer interaction
Our e-commerce site makes extensive use of chat rooms
for customer interaction
Catalog applications [33,37,40,57,67]
Our e-commerce site allows customers to compare multiple
products easily
Our e-commerce site allows customers to search the
catalog contents easily
Our e-commerce site returns answers to catalog searches
that t customer proles well
Transaction applications [33,38,40]
Our e-commerce site allows customers to complete
their orders online easily
Our e-commerce site allows customers to complete
their orders online securely
Our e-commerce site provides up to date order tracking
for our customers
Network performance [20,21,45]
Our e-commerce site generally loads quickly
Our e-commerce site loads quickly during sudden,
large volume surges
Our e-commerce site infrequently crashes
User interface [4,21,43,59]
Our e-commerce site provides rich product descriptions
using graphics
Our e-commerce site is easy to navigate
Our e-commerce site provides links to direct customers
easily to related items
competitive position and overall performance. Hence,
H1 is:
H1. E-commerce technology resources do not predict
e-commerce performance.
Clearly, for any technology to be successful, people
play an important role. In contrast to e-commerce tec-
hnology resources, complementary human resources
tend to be valuable, heterogeneous, and immobile,
providing competitive advantage [66].
Studies have strongly supported the relationship of
human resources with IT performance [49,24,10]. For
example, openness in communication and organiza-
tion can be powerful sources of that advantage [55,22].
CEO commitment is believed to differentiate success-
ful from unsuccessful e-commerce [53]. Organiza-
tional exibility is even deemed necessary to enhance
performance when new ITapplications are introduced
[5]. Hence, H2 is:
H2. Human resources complementary to e-commerce
create advantages that predict e-commerce perfor-
mance.
Business resources are a potential source of
competitive advantage. Partner, customer, and IT
business relationships are important business
resources that take time to build and can contribute
to e-commerce performance [26].
Moreover, because e-commerce changes the way
business is conducted, retailers need to adjust their
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 254
Table 3
Complementary business resources
Partner relationships [15,28,52]
We have very open, trusting relationships with our suppliers
We have very open, trusting relationships with our
shipping rms
a
We have very open, trusting relationships with the
nancial institutions
a
Customer relationships [42,48]
We communicate with customers on a personalized basis
to build long-term relationships
a
We tailor our products and/or services to suit customers
specic needs
a
We collect maximum amount of customer data without
intruding into their privacy
a
ITbusiness relationships [40]
Our IT and business managers have a mutual understanding
of each others e-commerce responsibilities
a
Our IT and business personnel share the responsibilities
of the online store
a
Our IT and business executives share a vision for how
e-commerce will support the business
a
Process redesign [5,13,36,52]
We redesigned our inventory management process to
t our e-commerce
We redesigned our marketing and sales process to t
our e-commerce
Improving company processes is a key part of our
use of e-commerce
Benchmarking [8,29,62,52]
We actively research the best e-commerce practices of
other retailers
We actively research the best Web practices of other
Web sites
a
We regularly search the Web for new features of other
Web stores
a
E-commerce planning [2,18,27,30,32,52]
We have a long-term strategic plan for e-commerce
We have clearly identied our e-commerce project priorities
Our e-commerce planning is integrated with the overall
business plan
a
New items added to foundation study items.
Table 4
E-commerce performance measures
E-commerce applications have dramatically increased
our productivity
E-commerce applications have improved our competitive
position
E-commerce applications have dramatically increased our sales
E-commerce applications have dramatically increased
our protability
E-commerce applications have improved our overall
performance
Table 5
Firm performance measures
Since we built our e-commerce site, our nancial
performance has been outstanding
Since we built our e-commerce site, our nancial
performance has exceeded our competitors
Since we built our e-commerce site, our sales growth has
been outstanding
Since we built our e-commerce site, we have been more
protable than our competitors
Since we built our e-commerce site, our sales growth
has exceeded our competitors
internal business processes and concomitant business
resources to compete. Such resources are thus critical
and must be changeable. Process redesign enables the
organizationto change its processes. However, business
resources can be difcult to copy. Thus, a company
needs to change its business resources when it wants to
imitate a competitors IT applications. However, this
change can incur costs that exceed benets.
Business resources are thus valuable, difcult to
copy, and heterogeneous. Hence, H3 is:
H3. Business resources complementary to e-com-
merce create advantages that predict e-commerce
performance.
E-commerce affects an organizations performance
through its added distribution channel, new marketing
communication medium, and enhanced operational
efciency [31]. E-commerce applications can auto-
mate customer service operations to cut the costs of
sales, increase revenue, and gather high quality
customer data to improve support and enhance selling
opportunities [35]. They also facilitate the exchange of
real-time and interactive information with business
partners and stakeholders to create value for an
organization [25]. We would thus expect that after
implementation of e-commerce, a rms nancial
performance, protability, and sales growth would
improve. Hence, H4 is:
H4. E-commerce performance predicts rm perfor-
mance.
5. Methodology
5.1. Sample selection
Our research focused on the retail industry, which
has been an early participant in e-commerce with
potential benets expected from its use. Due to the
Internets popularity and increased consumer con-
dence, business-to-consumer [B2C] e-commerce
retailing has become more attractive and popular
[23]. Moreover, retailers often use IT to improve
customer service, reduce costs, and compete more
effectively [47]. Wal-Mart and Tesco have created
substantial competitive advantage via e-commerce
[28]. Because we have the foundation study we could
compare Internet and conventional approaches, a
potentially valuable analysis [12]. Though many dot
coms failed, business-to-consumer retail sales have
continued to grow [6,44].
Our subjects were managers of the organizations
e-commerce unit. Two major retailer portals were
selected, because they were popular, well-respected,
and represented many retailers and a wide variety of
products [64]. The rst, http://www.mysimon.com,
had over 2000 retailers at the time of data collection.
The other, http://stores.yahoo.com, had over 5000.
Many sites appeared on both so duplicates were
eliminated. E-mail addresses were collected fromeach
site.
5.2. Implementation of the survey
To improve data reliability and validity, the
questionnaires were evaluated rigorously by pilot
testing prior to administration (and also, of course,
prior to the rigorous statistical tests for reliability
and validity described below that were performed on
the data eventually collected). Five local retailers
with e-commerce sites were selected to represent
various sizes and products. These pilot subjects
completed the survey and provided face-to-face
comments. They discussed the benets and features
of their sites, and their oral comments corrobora-
ted their survey answers. The survey was revised
after each of the rst four pilot tests to make it
clearer and easier to complete. The fth resulted in
no changes.
A short message was then e-mailed to the primary
subjects, the managers responsible for their organiza-
tions e-commerce sites at the 4088 companies on the
two e-commerce retail portals. The message included
a link to the survey Web site.
The questionnaire asked themto give the address of
their e-commerce site. It also contained items for
stating e-commerce and overall company performance
and then items for e-commerce technology, comple-
mentary human, and complementary business
resources. Subjects responded on 1 (strongly disagree)
to 5 (strongly agree) scales. Finally, the instrument
asked demographic questions.
After respondents completed the survey and
submitted it online, they received a request that a
second subject in their organization complete a 3-min
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 255
survey. The second survey contained the e-commerce
and rm performance items, demographics questions,
and a request for the e-commerce site address to link to
the primary instrument.
5.3. The research sample
Of the 852 total responses, 379 e-mailed reasons
they could not complete the survey (e.g., rm policy,
site too new, too busy), and 473 completed it. Fifteen
of the 473 were dropped. The overall response rate
was thus 21%, but was only 11% when counting only
usable surveys. Of 458 nished surveys, 58
secondary subjects also provided useable data for
a rate of 13%.
The average rm size in the sample was 408
employees, with a median of 10. About 8.7 employees
with a median of 3 worked on the rms site. Online
store prots averaged US$ 250,000 with a median of
US$ 16,000 for the 197 rms who provided them. The
average number of daily accesses to the sites was
2300. The average percent of transactions through it
was 10%. About 38% of customers were return
customers. Table 6 shows the product lines of the
participants.
The primary subjects averaged 5.3 years of
employment for their company and 2.3 years in
e-commerce. The secondary subjects averaged 4.7
years with their company and 2.3 in e-commerce.
Table 7 shows their job titles and Table 8 shows their
education levels.
6. Analysis
6.1. Common method variance and non-response
bias
Common method variance is a problem associated
with the empirical demonstration of a relationship
between similar measures. Because different sources
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 256
Table 7
Subjects job titles
Job title Primary
subjects (%)
Secondary
subjects (%)
CEO or owner 43 22
Web master or IT manager 16 17
Marketing, sales, customer service 19 19
Other managerial
(VP, COO, CFO or GM)
16 31
Another or not given 6 11
Table 8
Subjects education level
Education level Primary
subjects (%)
Secondary
subjects (%)
Postgraduate degree 16 4
Some postgraduate school 12 5
Four-year college graduate 37 20
Some college 21 2
Two-year college graduate 6 44
High school diploma 4 13
Some school 0 11
Others (including not reported) 4 2
Table 6
Product lines
Product lines Percentage
Apparel and accessories: mens shoes, watches, fragrance, etc. 16
Sports and recreation: golf clubs, skateboards, tennis, etc. 10
Computers and software: handhelds, notebooks, software, etc. 10
Toys and collectibles: action gures, dolls, games, etc. 9
Gourmet and groceries: coffee, seafood, tea, wine, etc. 8
Flowers and gifts: ne gifts, owers, gift baskets, etc. 8
Books, music and movies: books, movie memorabilia, CDs, etc. 7
Consumer electronics: digital cameras, DVD players, etc. 5
Automotive: maintenance supplies, motorcycles, parts and accessories, etc. 4
Hobby and leisure: cigars, telescopes, guitars, etc. 4
Family, health and beauty: cosmetics, nursery, vitamins, etc. 4
Home and garden: cookware, furniture, linens, etc. 3
Ofce supplies: toner, pens, labels, paper, etc. 3
Others (including not reported) 9
for some measures can either control or test the effect
of the respondents tendency to be consistent, three
separation of measurement approaches as well as a
post hoc approach were used [50]. None of the tests
detected any problem with the data. A time-trend
extrapolation test examined non-response bias [2] but
also failed to detect a problem.
6.2. Conrmatory factor analysis
Conrmatory factor analysis was rst applied to the
independent variables. EQS was used to determine
whether e-commerce technology, complementary
human, and complementary business resources were
indeed three distinct constructs. EQS provides a robust
statistic that compensates for potential non-normality.
The pair-wise chi-square difference tests and con-
dence interval tests provided evidence that the three
resources were different.
Next, second-order conrmatory factor analysis
was used to determine if all factors within each
resource belonged together. Each of the three
resources was assessed for goodness of t, convergent
validity, and discriminant validity.
For e-commerce technology resources, the valida-
tion resulted in the dropping of one item, our
e-commerce site provides up to date order tracking
for our customers, and one factor, community
applications. For complementary human resources,
two highly correlated factors (open organization and
open communications) were combined into one, and
one item (communications are very open between
our home ofce and our stores) was dropped. For
complementary business resources, no changes were
necessary. Further analysis supported the convergent
and discriminant validity of the resources as well as
the reliability of e-commerce performance and overall
rm performance.
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 257
Fig. 1. The structural equation model:
*
p < 0.05,
**
p < 0.01,
***
p < 0.001.
6.3. Hypothesis testing
The measurement model included 5 underlying
constructs and 25 observed measures. The constructs
were: e-commerce technology resources, complemen-
tary human resources, complementary business
resources, e-commerce performance, and rm perfor-
mance. Fifteen of the observed measures were the
factor means of each resource. The other 10 were the
individual items for the two performance measures.
Structural equation modeling with EQS was used to
test the relationship of the three measures of resources
to e-commerce performance and of e-commerce to
rm performance. The results in Fig. 1 show that both
e-commerce technology resources and complemen-
tary business resources predicted e-commerce perfor-
mance, while complementary human resources did
not. Further, e-commerce performance predicted rm
performance.
To understand the ndings, another EQS run was
performed to test the impact of the 15 resources
individually on e-commerce performance. It showed
that only process redesign was a statistically
signicant predictor ( p < 0.001). No other individual
resource was signicant at p < 0.05.
Two more analyses supported the relationship
between e-commerce and rm performance (H4).
First, a correlation of the 58 secondary subjects rm
performance items with their matched primary
subjects e-commerce performance items was 0.35
( p < 0.05). Second, a correlation of prot per
employee (as rm performance) for the 166 subjects
having such data with e-commerce performance was
0.20 ( p < 0.01).
7. Discussion of the hypotheses
H1: According to the resource-based view, H1
should be accepted. E-commerce technology resources
presumably can be imitated and thus would not provide
sustainable competitive advantage. Instead, they
explained e-commerce performance ( p < 0.05); per-
haps it depends on resources to provide a temporary
advantage. E-commerce is relativelynewandrms may
not have had time toimitate each other. 1-Click, a newly
patentedease-of-use feature for repeat customers, could
provide temporary benets [54]. Its patent may delay
other e-commerce retailers, but they should soon nd a
similar available technology.
In any case, the nding of e-commerce technology
support for e-commerce performance resembles the
foundation study. In it, IT resources explained IT
performance ( p < 0.05).
H2: According to the resource-based view, H2
should be supported. However, we failed to show that
it did. In contrast, Powell and Dent-Micallefs ndings
did support it ( p < 0.01). Human resources differ-
ences in virtual and physical retailing may explain this
disparity.
Physical retailing requires more salesperson contact
to demonstrate products, explain product features, and
answer specic and general questions; the interpersonal
skills of the salespersonare deemedcritical tothe sale of
the product. Thus, human resources in the virtual world
do not provide as much value.
Finally, if one held fast to the belief that human
resources are valuable, heterogeneous, and immobile
regardless of whether in the virtual or physical worlds,
then our research indicated that not all such resources
cause competitive advantage. In a sense, one might
conclude that the nding for H2 challenged the
resource-based view.
H3: According to the resource-based view, this
research should support H3. It did so. Complementary
business resources signicantly explained e-com-
merce performance. This coincides with the view
that business resources are valuable, heterogeneous,
and immobile. It further conrms the relative value of
organizational resources.
H4: Support for H4 provides an answer to the
important, question: does e-commerce affect rm
performance? The afrmative answer supports expec-
tations that e-commerce can affect an organizations
performance through its added distribution channel,
new marketing medium, enhanced operational ef-
ciency, automated customer service operations,
improved customer data gathering, and real-time
and interactive exchange of information.
8. Conclusion: implications for managers
E-commerce technology and business resources
predict e-commerce performance. By implication,
managers should cultivate those resources in their
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 258
rms and identify those that they consider their
strengths and weaknesses. In effect, the constructs and
items of our model provide checklists for managers.
Managers should give high priority to process
redesign and should be careful not to over- or
underemphasize any other ways of enhancing perfor-
mance. Likewise, the lack of signicance for any
e-commerce technology resources suggests that no
one of them plays a particularly important role and
thus managers should be careful not to over- or
underemphasize any.
Surprisingly, human resources failed to predict
e-commerce performance. So probably managers
should disregard open organization/communications,
CEO commitment, and exibility in their efforts to
improve e-commerce performance. However, this may
be a premature conclusion. Perhaps managers should
closely examine the role of the resources in their
organization in an attempt to nd their shortcomings
and hence their value.
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Youlong Zhuang is an assistant professor of information systems at
theUniversityof Missouri, Columbia. He receivedhis Ph.D. indecision
sciences and information systems fromthe Gatton College of Business
and Economics at the University of Kentucky. His research has
appeared in Decision Support Systems, International Journal of Elec-
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 260
tronic Commerce, Electronic Commerce Research, Journal of Electro-
nic Commerce Research, and The DATABASE for Advances in Infor-
mation Systems. His major research area is electronic commerce.
Albert L. Lederer is a professor of management information
systems at the University of Kentucky. He holds a Ph.D. in industrial
and systems engineering from the Ohio State University, an M.S. in
computer and information Sciences from Ohio State, and a B.A. in
psychology from the University of Cincinnati. His research has
appeared in Information and Management, MIS Quarterly, Journal
of Management Information Systems, and elsewhere. His major
research area is information systems planning.
Y. Zhuang, A.L. Lederer / Information & Management 43 (2006) 251261 261