Research Questions

Within the scope of the research problem of this thesis: “How, in a holistic view, can the business performance of a B2B e-marketplace be analyzed?, and the result of the pilot study, four research questions were developed.

Research Question 1

As discussed in Chapter Two, and also illustrated by the pilot study, B2B e-marketplaces are not homogeneous organizations that can be described in one single business model. Instead, they might differ fundamentally with respect to, for example, ownership structure, direction of trade, and type of products offered on the e-marketplace. This indicates that B2B e-marketplaces’ foundations (i.e., strategic position), from which challenges are met, vary (Bruun et al., 2002).

Hence, it is essential to map out major differences with respect to e-marketplaces’

strategic positions in order to be able to describe business strategies used by these firms.

Reviewed literature shows that basic differences, for example, in ownership structure or direction of trade, have been used by various researchers (e.g., Kaplan

& Sawhney, 2000; Lennstrand et al., 2001; Rayport & Jaworski, 2001; Skjott-Larsen et al., 2003) as a basis for classifying e-marketplaces. However, these different classifications are typically made from various specific viewpoints (e.g., ownership structure or direction of trade) that overlap to some extent.

Consequently, these classifications have been criticized for not fully recognizing all the various business models which have emerged or considering the possibility that operators of B2B e-marketplaces might well combine several categories (Stockdale & Standing, 2002; Rayport & Jaworski, 2002).

Bearing in mind the lack of a commonly agreed taxonomy of B2B e-marketplaces, and the continuously changing business environment in which these companies operate, we find limited value in using previously discussed

classifications of B2B e-marketplaces as the starting point for describing their business performance. As an alternative to those classifications, Bruun et al.

(2002) have developed a framework of e-marketplace strategy from a more holistic viewpoint. Their framework explains how e-marketplaces, in order to achieve success, must create a strong strategic position and meet the challenge of building liquidity and capturing value. The term “strategic position” refers to the elements (i.e., focus, governance, functionality, technology, and partnership) that make up the foundation for success when setting up an e-marketplace.

Since the framework developed by Bruun et al. (2002) is comprehensive, detailed, and provides an overall perspective on e-marketplace strategy, the part of their framework that deals with the foundation, (i.e., strategic position) will be used as a theoretical base for this thesis. The composition of the strategic position will be identified and described with an aim to identify and analyze possible differences with respect to business performance. Based on this discussion, the first research question is formulated as:

How can the strategic position of B2B e-marketplaces be characterized?

Research Question 2

The aforementioned development within the field of B2B e-marketplaces raises many questions about the factors contributing to their success (Gebauer & Shaw, 2002), and stresses the importance of understanding what those factors entail.

However, literature concerning B2B e-marketplaces, as well as analysis of the pilot study, indicates that factors important for success vary, depending, for instance, on whether the e-marketplaces focus on vertical trading within a specific industry, or instead focus on providing the same function (e.g., procurement) across different industries. For example, several authors (e.g., Andrew et al., 2000; Dou & Chou, 2002; Kearney, 2000; Raisch, 2001; Skinner, 2000; Turban et al., 2002) point to domain expertise as a critical success factor. For vertical e-marketplaces, this involves having deep knowledge of a particular industry; in the case of horizontals, domain expertise implies that they have to be experts on specific processes and also be able to standardize them (Dou & Chou, 2002).

Based on the fact that critical factors for success and/or failure vary due, for instance, to the e-marketplace’s direction of trade, our assumption is that the strategic position sets the boundaries for the elements which constitute critical success or failure factors. Research conducted in the B2B e-marketplace area suggests various factors that are crucial for the success of e-marketplaces, as well

as different factors that might lead to failure. However, the literature review reveals that critical success and failure factors are mainly discussed conceptually, whereas empirical studies dealing with these issues are lacking (Fairchild et al., 2004). Thus, the second research question is formulated as:

What are the major factors that determine the success and/or failure of B2B e-marketplaces?

Research Question 3

As discussed in Chapter Two, creating an e-marketplace is associated with considerable challenges (Dai & Kauffman, 2002a; Rayport & Jaworski, 2002).

Research within the field of B2B e-marketplaces points out that finding an appropriate business model (e.g., Bruun et al., 2002), achieving critical mass of participants in order to create liquidity (e.g., Dou & Chou, 2002; Kaplan &

Sawhney, 2000), and creating and capturing value (e.g., Bruun et al., 2002) are major challenges. In addition, the pilot study indicates that the challenges change over time.

With respect to research, there are, however, very few empirical studies focusing on identification of B2B e-marketplace challenges and determination of their importance as perceived by B2B e-marketplace operators. Thus, the third research question is formulated as:

What are the major challenges that B2B e-marketplaces encounter?

Research Question 4

Business models are inevitably linked to business strategy (Seddon & Lewis, 2003), and play a central role in firm performance (Afuah & Tucci, 2001). Since the business model is at the core of a company’s e-commerce business strategy process (Rayport & Jaworski, 2002), in order to meet major challenges and become successful, B2B e-marketplace operators need to develop appropriate business models. Thus, to gain a better understanding of the B2B e-marketplace phenomenon, it is vital to focus on emerged business models in this area.

However, there is no commonly accepted definition of the business model concept

(Osterwalder & Pigneur, 2004), and the question of what constitutes a successful business model has no clear-cut answer (Vassilopoulu et al., 2003; Pateli &

Pouloudi, 2003). Instead, research on business models could, as pointed out in Chapter Two, be divided into two major streams: one that focuses on explicit models, and another that concerns definitions and analysis of business model components (Pateli & Giaglis, 2004).

Most recent research concerning business models has found it more useful to emphasize the components of business models rather than deal with business model definitions (Pateli & Giaglis, 2004). The prevailing confusion concerning business models and the rapid emergence of various business models within e-business, which typically are more complex than those of traditional business (Osterwalder & Pigneur, 2004), indicate that discussing explicit business models in order to understand the B2B e-marketplace phenomenon, is not particularly constructive. Thus, in line with recent research, we will highlight business model components in this thesis rather than focus on different types of business models.

Literature review reveals an apparent lack of empirical as well as conceptual research on business model components in the specific context of B2B e-marketplaces. Although there are a few empirical studies on business model components within the broader area of B2B e-business (e.g., Amit & Zott, 2001;

Chesbrough & Rosenbloom, 2002), most literature on business model components is conceptual (e.g., Alt & Zimmerman, 2001; Pateli & Giaglis, 2004; Petrovic et al., 2001). Research on business model components does not, however, present any commonly agreed upon set of components, although most frameworks cover the two central components of value proposition and revenue (e.g., Afuah &

Tucci, 2001; Chesbrough & Rosenbloom, 2002; Linder & Cantrell, 2000; Petrovic et al., 2001). Instead, researchers have developed a number of frameworks covering different sets of business model components.

In this thesis, we will use Pateli and Giaglis’s (2004) framework for analyzing e-business models as a theoretical foundation, since this is the most recent framework dealing with business model components that we have identified in the literature review. In addition, the framework developed by Pateli and Giaglis (2004) is comprehensive, since it is synthesized from recent and prevalent literature on business model components, and therefore covers business model components proposed by others (e.g., Amit & Zott, 2001; Afuah & Tucci, 2001;

Alt & Zimmermann, 2001; Chesbrough & Rosenbloom, 2002; Hamel, 2000;

Linder & Cantrell, 2000; Osterwalder & Pigneur, 2002; Petrovic et al., 2001;

Weill & Vitale, 2001).

The core components of business models discussed by Pateli and Giaglis (2004) involve mission, target market, value proposition, resources, key activities, cost and revenue model, and value chain/net. However, Pateli and Giaglis (p. 308) also indicate the existence of underlying components that “set the contextual framework in which the business model is implemented” (e.g., market structure, regulation regime and technology maturity).

The apparent link between business model and business strategy, the lack of research on business model components in the area of B2B e-marketplaces, the limited empirical research on business model components in the area of e-business, and the prevailing uncertainty concerning what constitutes a successful business model, provide the basis for the fourth research question:

What is the critical impact of the components of business models on the success and/or failure of B2B e-marketplaces?