The Impact of E-Commerce on Organizational Performance: The Role of Absorptive Capacity

Topics: Validity, Strategic management, Management Pages: 25 (3461 words) Published: December 16, 2013
The Impact of E-Commerce on Organizational
Performance: The Role of Absorptive Capacity
and Integrative Capability
Qing Hu1, Jianzheng Yang2, and Lifan Yang3

Iowa State University, Ames, Iowa, USA
Shanghai University for Science and Technology, Shanghai, China
East China University of Political Science and Law, Shanghai, China

Abstract. This study examines how e-commerce creates value for firms from the perspective of dynamic capability theory. A theoretical model is proposed and tested using structural equation modeling techniques based on survey data collected from firms that have been using e-commerce in their operations for an average of 4 years and have more than 25% of sales or procurement via ecommerce channels. We find that top management participation is a key contributor to the development of a firm’s potential and realized absorptive capacities. These two forms of absorptive capacity in turn contribute to the firm’s integrative capability, theorized as a form of dynamic capability, which then impacts the firm performance indicators. Different contributions of the two absorptive capacities are delineated, so are the effects of top management on the absorptive capacities. Theoretical and practical contributions of these findings are discussed.

Keywords: E-Commerce, Absorptive Capacity, Integration, Firm Performance.



Research literature on e-commerce has been diverse in theory, methodology, focus, and findings [23]. Studies that focus on the question of how e-commerce impacts firm performance offered recommendations and prescriptions based on different theoretical and practical perspectives. For example, Saeed et al. [17] examined the impact of e-commerce on firm performance from the perspective of customer psychology and web site features, while Zhu and Kreamer [27][28] focused on how a firm’s e-commerce capabilities and IT infrastructure work together to create positive impact on firm performance. Other studies focused their attentions on process integrations with external business partners in B2B environment [13][15]. In this study, we attempt to provide an integrated view of how e-commerce capabilities impact firm performance without differentiating B2C and B2B operations. We argue that in the current business environment it is rare that a firm M.J. Shaw, D. Zhang, and W.T. Yue (Eds.): WEB 2011, LNBIP 108, pp. 261–273, 2012. © Springer-Verlag Berlin Heidelberg 2012


Q. Hu, J. Yang, and L. Yang

only focuses on either B2C or B2B side of e-commerce. Sustainable competitive advantage is more likely to be acquired if a firm fully integrates its B2B and B2C strategies and operations into comprehensive e-commerce strategy and operations that permeate strategic planning, internal and external business processes, supply chain, and customer service operations, i.e., the entire value chain of the firm. Therefore, the core research questions of this study are: 1) where can firms develop their e-commerce capabilities? and 2) how do these capabilities impact the firms’ performance? To address these questions, we draw on the dynamic capability theory as advanced by Teece et al. [21] and Eisenhardt and Martin [6] and posit that a firm’s integrative capability is the core source of its competitiveness in the global e-market. We further argue that this integrative capability is driven by top management participation in e-commerce activities and initiatives, and derived from the firm’s potential and realized absorptive capacities. In the sections that follow, we develop this theoretical thesis and test the hypotheses with survey data collected from 145 firms that have e-commerce as a substantial part of their business operations.


Theoretical Development

The dynamic capabilities theory [6][12] addresses the criticisms of the widely used resource based view (RBV) [2][16][[24] in the strategic management...
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