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Investigation into the adoption of business-to-business electronic marketplaces by purchasing managers… Zhang, Yali 2004

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INVESTIGATION INTO THE ADOPTION OF BUSINESS-TO-BUSINESS ELECTRONIC M A R K E T P L A C E S B Y PURCHASING M A N A G E R S : A N INSTITUTIONAL PERSPECTIVE by Y A L I Z H A N G Master of Arts, Tsinghua University, 2000 A THESIS SUBMITTED IN PARTIAL F U L F I L L M E N T OF THE REQUIREMENTS FOR THE DEGREE OF M A S T E R OF SCIENCE IN BUSINESS ADMINISTRATION in THE F A C U L T Y OF G R A D U A T E STUDIES (Sauder School of Business; MIS Division) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH C O L U M B I A February 2004 © Yali Zhang, 2004 Library Authorization In presenting this thesis in partial fulfillment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. YALl ZHANG ,Q/TI/AEE+ Name of Author (please print) Date (dd/mm/yyyy) Title of Thesis: Ini/eS-tiJAfion infO tkt adoption Business, - to - Business Z/ectrOHit /Masterpkces bij Degree: Year: 2 0 0 4 Department of Squc/er Sckfiol of Bu6ine*\ ___ The University of British Columbia Vancouver, BC Canada A B S T R A C T By bringing dispersed buyers and sellers together through a business-to-business hub and allowing them to collaborate in real-time, business-to-business electronic marketplaces (B2B e-marketplaces) play an increasingly prominent role in fueling B2B e-commerce. Through the lens of institutional theory, this research investigates the critical factors motivating an organization's purchasing function in participating in B2B e-marketplaces. A cross-sectional mailed and online survey targeting high-level purchasing professionals were conducted to empirically test whether coercive, mimetic and normative pressures, as discussed in institutional theory, have a significant effect on an organization's legitimacy motive to participate in B2B e-marketplaces. The data collected were analyzed using PLS to assess measurement and structural model. Except for the "extent of adoption among suppliers", each of the institutional factors examined - perceived dominance of supplier adopters, extent of adoption among competitors, perceived success of competitor adopters and participation in industry trade or professional bodies - significantly influenced the legitimacy motive, which in turn influenced an organization's intent to adopt the use of B2B e-marketplaces. By providing strong support for institutional factors as predictors of B2B e-marketplace adoption, these findings substantiate the importance of institutional forces leading to electronic partnerships. Keywords: B2B e-marketplace, institutional influence, coercive pressure, mimetic pressure, normative pressure T A B L E O F C O N T E N T S ABSTRACT i i TABLE OF CONTENTS i i i LIST OF TABLES vi LIST OF FIGURES vii ACKNOWLEDGEMENTS viii 1. INTRODUCTION 1 1.1 OVERVIEW 1 1.2 BACKGROUND 1 1.3 RELEVANCE OF THIS RESEARCH 2 1.4 OUTLINE OF DISSERTATION 4 2. LITERATURE REVIEW 6 2.1 DEVELOPMENT OF ELECTRONIC MARKETPLACES 6 2.2 B2B ELECTRONIC MARKETPLACES 8 2.2.1 Defining B2B Electronic Marketplaces 8 2.2.2 Typologies and Models of B2B Electronic Marketplaces 9 2.2.3 Benefits and Risks of B2B Electronic Marketplaces 12 2.3 OVERVIEW OF CANADIAN B2B ELECTRONIC MARKETPLACES 13 2.4 PREVIOUS RESEARCH 15 3. THEORETICAL FRAMEWORK 24 3.1 OVERVIEW OF INSTITUTIONAL THEORY 24 - ii i -3.2 INSTITUTIONAL PERSPECTIVES ON B2B ELECTRONIC MARKETPLACE ADOPTION • 27 3.2.1 Coercive Pressure 28 3.2.2 Mimetic Process 30 3.2.3 Normative Pressure 32 3.2.4 Legitimacy Motive 34 3.2.5 Control Variables 35 3.3 RESEARCH FRAMEWORK 35 4. RESEARCH METHODOLOGY 37 4.1 CONSTRUCT OPERATIONALIZATION 37 4.2 SAMPLE AND DATA COLLECTION PRODECURE 40 4.3 DATA PREPARATION 46 4.4 TESTING THE MEASUREMENT AND STRUCTURAL MODELS 51 4.4.1 Measurement Model 53 4.4.2 Structural Model 58 5. DISCUSSION 63 5.1 DISCUSSION OF FINDINGS 63 5.2 RESEARCH IMPLICATIONS 66 5.3 LIMITATIONS AND FUTURE RESEARCH 66 REFERENCES 69 APPENDICES 75 APPENDIX 1: MEASUREMENT ITEMS FOR KEY RESEARCH VARIABLES.... 75 - iv -APPENDIX 2: SURVEY QUESTIONNAIRE FOR NON-ADOPTERS LIST OF TABLES Table 1 Benefits of B2B Electronic Marketplaces 13 Table 2 Summary of Empirical Studies on Technological Innovation Adoption Research 20 Table 3 Factors Influencing Technological Innovation Adoption 22 Table 4 Independent Variables and Hypothesis 36 Table 5 Pilot Study Response Rate 44 Table 6 Main Survey Response Rate 45 Table 7 Person Mean and Item/Construct Mean 48 Table 8 Profile of Non-adopters that Responded 49 Table 9 Descriptive Statistics of Survey Items : 54 Table 10 Assessment of Internal Consistency and Convergent Validity 55 Table 11 Correlation among Studied Variables 57 Table 12 Results of PLS Analysis: Path Coefficients and T-statistic for Full, Theoretical and Control Models 59 Table 13 Hypotheses Results 62 - vi -L I S T O F F I G U R E S Figure 1 Electronic Market Figure 2 Grewal et al.'s Research Framework Figure 3 Organizational Adoption of B2B E-Marketplaces by Purchasing Managers. Figure 4 Industry Types of Non-adopters that Responded Figure 5 Revenue Range of Non-adopters that Responded Figure 6 Firm Size of Non-adopters that Responded Figure 7 Structural Model Test Results - vii -A C K N O W L E D G E M E N T S This thesis bears the imprint of many people to whom I owe my gratitude for their help and support. First and foremost, I would like to extend sincere thanks to my supervisors Dr. Jai-Yeol Son and Professor Izak Benbasat for their constructive advice, incisive comments and relevant feedback. Without their assistance, guidance and patience, this thesis would not have been accomplished. I would also like to thank Ron Cenfetelli, Zhenhui Jiang and Weiquan Wang for their valuable time and advice in helping me with quantitative research methods. My sincere thanks also go to my fellow Msc. students, who supported my work. My research would not have gone so smoothly without their help. Finally, I wish to express my indebtedness to my family for their spiritual support and consistent encouragement. Especially, I would like to give heartfelt thanks to my father, Shijun Zhang, whose care and love will always encourage me to progress further. - viii -1. INTRODUCTION 1. INTRODUCTION 1.1 OVERVIEW This research systematically investigates the critical factors motivating an organization's participation in business-to-business electronic marketplaces (B2B e-marketplaces) for purchasing. It focuses on industry specific (a.k.a. vertical) and neutral (i.e. independent of a specific buyer or supplier) B2B e-marketplaces. It addresses the question, "What are the critical legitimacy-oriented motives that influence purchasers' intentions to participate in B2B electronic marketplaces?" A research framework derived from institutional theory is empirically tested with data collected from a large-scale, cross-sectional mail survey, combined with an online survey, targeting high-level purchasing professionals who are members of the Purchasing Manager Association of Canada (PMAC). 1.2 BACKGROUND Bringing dispersed buyers and sellers together through a business-to-business hub and allowing them to collaborate in real-time, electronic marketplaces make online transactions much more easy, efficient and effective. Over the last several years, B2B e-marketplaces have gone through unprecedented growth and have been springing up in almost every industry and niche imaginable, attacking outdated business practices and inefficient trading relationships. Despite the recent slowdown in the economy and the market shakeout that altered the landscape of B2B e-commerce, it is still likely to thrive. 1. INTRODUCTION According to research by the Gartner Group, e-marketplaces will capture 35%, or $2.7 trillion, of worldwide B2B e-commerce sales by 2004; and by 2005, more than 500,000 companies will be participating in e-marketplaces as buyers and/or sellers. Forrester Research was even more optimistic about the prospects of electronic marketplaces, forecasting that the transaction volume in e-marketplaces would grow to 53% of all B2B electronic commerce by 2004, up from 13% of all B2B online trade in 2000. Despite the growing popularity of B2B e-marketplaces and the increasingly prominent role they play in fueling the growth of B2B e-commerce, little consideration is devoted to understanding why some firms readily adopt B2B e-marketplaces, whereas others are either unwilling or unable to do so. This information is the key to understanding the development of B2B e-marketplaces. Based on insights gained from institutional theory, this study focuses on the question of why firms on the purchasing side differ in their timing of participation in vertical and neutral B2B e-marketplaces by investigating their critical participation motives. 1.3 RELEVANCE OF THIS RESEARCH This study identifies factors that influence buyers' decisions to participate in B2B e-marketplaces, and contributes to a more comprehensive understanding of the process of organizational adoption of B2B electronic marketplaces. 1. I N T R O D U C T I O N The results of this research w i l l be mostly beneficial to B 2 B electronic market makers by helping them identify new viable industry market niches and enticing more firms to adopt these marketplaces. It is immediately clear that the greater the number of entities joining the B 2 B e-marketplace, the greater the benefits from lowered transaction costs, automated supply chain enhancements, improved product demand/supply forecast systems, and other factors. More participants also mean more profits for the market maker. Knowledge on the factors influencing firms' adoption of B 2 B e-marketplaces may also be of use to managers of B 2 B technology vendor firms, helping them formulate marketing strategies. Companies that sell B 2 B technologies have experienced hardship in the ailing economy. A r i b a Technologies and Commerce One, two early leaders in B 2 B software, have seen their fortunes shrink sharply over the previous two years. Though this research may not help those B 2 B technology vendors regain their vitality in fundamental ways, it could help them design effective and efficient marketing strategies or adjust previously used strategies. The findings could be used by survey participants as a benchmark to compare their firms' adoption of B 2 B e-marketplaces and other B 2 B e-commerce technologies with that of other firms in their own or other industries across Canada. The research results w i l l also be very valuable for the Purchasing Manager Association of Canada ( P M A C ) , our research partner, helping it plan and develop its own programs to further promote and expand the utilization of B 2 B e-marketplaces in Canada. 1. INTRODUCTION This study also has theoretical significance. It constitutes the first attempt to systematically study organizational adoption of the B2B e-marketplace from an institutional perspective. The study advances understanding of institutional theory, and extends its applicability to a new IT-enabled governance structure. Finally, the research contributes to the study of B2B e-marketplaces. Given the sparse literature on organizational adoption of B2B e-marketplaces, this investigation can stimulate thinking and provoke additional research in the area. 1.4 OUTLINE OF DISSERTATION This dissertation is composed of five chapters. The first chapter briefly introduces how the topic was chosen, the research questions and the significance of the research. The second chapter reviews relevant literatures on B2B electronic marketplaces and touches upon previous research on related topics to provide knowledge on how to conduct research on B2B e-marketplaces. Chapter 3 narrows the research of B2B e-marketplaces to an institutional perspective, develops hypotheses from institutional theory, and proposes a research framework based on the literature review and theoretical foundations. The fourth chapter is the key part of the dissertation, in which research methodology is detailed. Key issues covered in this section include survey constructs and item development, sampling, data collection and data processing procedures, measurement and structural model testing using the Partial Least Squares (PLS) method. The key findings 1 . INTRODUCTION and implications of the research are presented in the last chapter. The final chapter points out the research limitations and proposes valuable topics for future research. 2. LITERATURE REVIEW 2. LITERATURE REVIEW 2.1 DEVELOPMENT OF ELECTRONIC MARKETPLACES The concept of "electronic markets" (Malone et al. 1987) arose long before the emergence of B2B electronic marketplaces. Based on previous research on markets and hierarchies, Malone et al. (1987) investigated how these market structures were affected by the advance of information technology and proposed the concepts of "electronic markets" and "electronic hierarchies". Electronic markets are described as outsourcing activities where the flow of materials is coordinated by supply and demand forces and external transactions between different firms through electronic networks. Electronic hierarchies are distinguished from electronic markets by the number of suppliers and the mechanism governing the transaction. Since buyers in electronic markets are governed by market forces instead of the managerial decision to choose between more than one suppliers, it is argued that electronic markets have lower production costs yet higher coordination costs. The development of these two mechanisms is believed to not only make markets and hierarchies more efficient, but also "lead to an overall shift toward proportionately more market coordination" (Malone et al. 1987: 484). Based on studies of the exchange relationship between buyers and sellers, Choudhury (1997) extended the two-dimensional interorganizational information system (IOIS) proposed by Malone et al. into a three-dimensional typology: electronic monopolies, electronic dyads and multilateral IOISs. Electronic monopolies capture a one-to-one 2. LITERATURE REVIEW product(s) source relationships between a buyer and a seller with the aim of seeking efficiency or gaining market share. An electronic dyad is defined as a bilateral relationship between a buyer/seller and a selected number of sellers/buyers. The many-to-many exchange relationship is represented by multilateral IOISs, which serve as intermediaries between firms and their trading partners. While electronic monopolies and electronic dyads can be deemed as further distinctions of electronic hierarchies, the concept of multilateral IOISs is similar to electronic markets. To summarize, the basic objective of electronic markets is to bring many one-to-one or one-to-many business connections together on one Internet-based platform. Figure 1 Electronic Market Supplier Supplier Supplier Suppl IOI cM.irkolpl.ice Buyer Buyer Buyer , Buyer ;.f^Buyefr ....-•Buyer-Source: Franzke & Buschmann, 2000 2. LITERATURE REVIEW 2.2 B2B ELECTRONIC MARKETPLACES The business-to-business electronic marketplaces, which this research concentrates on, are applications of electronic markets or multilateral IOISs in the business-to-business sector with highly developed information technologies. There are a variety of ways to define B2B e-marketplaces. 2.2.1 Defining B2B Electronic Marketplaces Furlonger and Landry (2001) define a B2B e-marketplace as an enterprise that brings buyers and sellers in an industry, geographic region or affinity group together for the purpose of commerce. While providing content, value-added services and, at times, commerce transaction capabilities, this market intermediary, according to Furlonger and Landry, is quickly evolving into a highly competitive market that includes a variety of players with previously disparate business models, including software, portals, distributors, application service providers, and business service providers. Raczkowski (2001) defines B2B e-marketplaces as follows: B2B marketplaces are Web sites that broker buyer-seller interactions for select vertical industries, business processes or groups. At their most effective, these emarketplaces match buyers and sellers, reduce transaction costs, enhance sales 2. LITERATURE REVIEW and distribution, deliver value added services and streamline trading relationships. (Racztcowski 2001, p. 3) The B2B e-marketplace is also imaginatively known as the Butterfly Market or Butterfly Hub (http://www.communityb2bxonj/library/fundamentalsxfin). One wing of the butterfly is made up of buyers, and the other wing of sellers; the body, where the wings meet, makes up the hub/market. The fatter the butterfly, the more flexible choices buyers/sellers have. Regardless of how B2B e-marketplaces are defined, the following are their key characteristics: 1. Business-to-Business section 2. Many-to-Many relationship 3. Internet-based trading platform 4. Brokering related goods and/or services 2.2.2 Typologies and Models of B2B Electronic Marketplaces Many helpful descriptive and analytical schemas have been developed to analyze and distinguish the various available B2B e-marketplaces. A basic distinction (Palencia 2002) is to organize B2B e-marketplaces horizontally, vertically or diagonally. Horizontal B2B e-marketplaces run across several or many industries, usually providing a common 2. LITERATURE REVIEW service, such as financial services, benefits management, and MRO (maintenance, repair and operating) equipment procurement process management. Popular examples are the Ariba Network and Commerce One's MarketSite.net. Vertical B2B e-marketplaces serve the distinct needs of a specific industry, such as agriculture or chemicals, with the aim of providing all of the services needed by that industry. Popular examples are VerticalNet, Chemconnect and Covisint. Since there are no hard-and-fast rules, some horizontal B2B marketplaces are observed to possess vertical features, and vertical markets are, in some cases, found to operate with horizontal characteristics. These mixed types are referred to as diagonal B2B e-marketplaces. Phillips and Meeker (2000) divide B2B exchanges into four types, based on who runs the marketplace. Built by a few big buyers, buyer-managed e-marketplaces provide a place for small, fragmented sellers to sell their goods, benefiting buyers with quick and easy price-comparison shopping. Supplier-managed e-marketplaces are built by one or a few big suppliers for the purpose of aggregating small and separated buyers, while maintaining suppliers' power. Distributor/market makers are middlemen who create a neutral exchange and perform transactions through a bid/ask system. Finally, content aggregators, which gather web content (and/or sometimes applications) from different online sources for reuse or resale, build and maintain multi-vendor, electronic catalogues. ScreamingMedia and iSyndicate are among the increasing number of companies offering aggregated content for resale - 1 0 -2. LITERATURE REVIEW McKinsey has identified five general types of B2B e-marketplace, each offering unique advantages (Raczkowski 2001): Project/Specification Managers: Specializing in design and planning support, these marketplaces provide the tools needed to plan and manage complex projects and processes. Applications of this type of e-marketplace range from simple activities, such as designing marketing brochures, to more complex tasks like optimizing a transportation network between a consumer product manufacturer and its retailers. McKinsey estimates the project management segment represents 25% of the total of e-marketplaces surveyed. Supply Consolidators: Identifying the base of suppliers for a particular product and providing companies the ability to identify and, in some cases, qualify suppliers, these marketplaces contribute to a low cost and easy way to access a fragmented base of suppliers that are either difficult to reach or too numerous for companies to contact efficiently. Representing about 15% of the total of e-marketplaces examined by McKinsey, these marketplaces help industries provide in-depth product information and sophisticated search tools to find the best options for the buyer. Liquidity Creators: Creating liquid, dynamic markets for commodity products that are low in volume, non-standard or difficult to find, these marketplaces provide suppliers with a ready market for their products and give buyers a steady source of supply. McKinsey estimated that this segment accounts for 20% of the B2B e-marketplaces. Aggregators: Like group purchase sites, aggregators combine demand and use the combined market power to negotiate lower prices for buyers across industries. Accounting for 10% of the total of investigated e-marketplaces, these sites do not offer advice or help buyers determine what product to buy. 2. LITERATURE REVIEW Transaction Facilitators: Focusing on reducing the complex, paper-based process of transactions between buyers and sellers, these marketplaces aim to help reduce transaction costs and eliminate disputes caused by errors. Transaction facilitators represent 30% of the total of markets, the largest group of marketplaces surveyed by McKinsey. 2.2.3 Benefits and Risks of B2B Electronic Marketplaces There is a great deal of hype about how B2B e-marketplaces will reduce transaction costs and create business opportunities. Based on a search of current periodicals, journals and online resources, Table 1 summarizes the benefits of B2B e-marketplaces from the perspectives of buyers, sellers and market makers. In addition to the benefits listed in Table 1, participants of B2B e-marketplaces should also be aware of the risks associated with using B2B e-marketplaces. Beyond the normal business and financial risks encountered in any buy/sell transaction, the B2B e-marketplace risks come in the forms of determining the authenticity of the other party to the transaction, other Internet security and privacy concerns, legal jurisdictional risks, and all other risks commonly associated with using the Internet (Sommers). However, it is believed that, in most cases, the benefits of using B2B e-marketplaces will outweigh the risks. - 12-2. LITERATURE REVIEW Table 1 Benefits of B2B Electronic Marketplaces Buyer Benefits Seller Benefits M a r k e t M a k e r s Benefits • Lower procurement costs • Reduced transaction costs • Access to more information • Lower search costs • Increased collaboration and new customers • Reduced searching time • Reduced cycle time • Improved or additional • Reduced development time • Enhanced fulfillment processes service to customers • Reduced transaction costs • Reduced inventory holding • Better leverage current • Integrated global suppliers • Reduced industry volatility content and customers • Instant order tracking • Exposure to a global market • Protection of current • Strengthening of relationship with • Improved market transparency intermediary role or commercial partners • Lower overall costs creation of new role in • Utilizing outsourced expertise • Improved customer service chain • Eliminating ongoing software • Improved relationship with • New and ongoing revenue upgrades & maintenance costs commercial partners opportunities • Improved market transparency • Easy access to qualified customers 2.3 OVERVIEW OF CANADIAN B2B ELECTRONIC MARKETPLACES Despite headlines forecasting the perishing of dot-coms and the cooling of overheated information technology markets, information technology is still driving much of the wealth creation in Canada and worldwide. According to the report of the Canadian E-Business Opportunities Roundtable (March 2002) - a private-sector-led, public-sector-supported initiative to accelerate Canada's leadership in the Internet economy - Canada's Internet economy has continued to grow in the past two years and shows promising signs of future prosperity due to the ever-growing top ranking Internet users/hosts, the robust -13 -2. LITERATURE REVIEW venture investment climate, the favorable tax and regulation environment, and the rising awareness of Canada's global e-business brand. According to a report by International Data Corp. (IDC), Canada conducted US$26.4 billion of e-commerce in 2001 - an increase of 69% from the 2000 figure of US$15.6 billion. By 2005, 18% or $272 billion, of all B2B trade in Canada will be transacted online, according to the report "Canada's B2B Future" released by Forrester Research in January 2001. On a provincial basis, Ontario and Quebec are predicted to be online trading leaders, whose sales, according to the report, will account for 71%, or $129 billion of the total. British Columbia and Alberta will account for an additional 21% of the total, leaving only about 8% generated by the remaining six provinces and three territories. Sectors in which significant e-commerce penetration and growth are expected are: computing and electronics (40%); automobiles (29%); utilities, shipping and warehousing (25% each); paper and office products (24%); and petrochemicals (20%). Forrester also highlighted the maintenance, repair, and operations (MRO) supply chains as a growth sector. James Sharp, a Toronto-based analyst for Forrester, said, "Although only 16 percent of Canadian companies have a clear B2B strategy, they will increasingly recognize the benefits of the Net and come to depend on it to plan, source, distribute, and sell products over the next five years. (Enos 2001)" Regarding electronic marketplaces as a key element in an economy's transition to B2B e-commerce, Forrester Research predicted that 51% of Canada's B2B online sales would be transacted thorough e-marketplaces by - 1 4 -2. LITERATURE REVIEW 2005. However, due to first-mover advantage, market size, NAFTA, a lower Canadian dollar and the historical importance of the US, much of the online business is still predicted to flow through US e-marketplaces. 2.4 PREVIOUS RESEARCH This section reviews the literature that directly, or indirectly, relates to the adoption of B2B electronic marketplaces, and situates it as a foundation for the planning of this research. There is a limited number of studies with empirically validated frameworks that investigate organizational participation in B2B electronic marketplaces (Choudhury et al. 1998; Grewal et al. 2001). Using a study of one electronic market - an inventory locator service (ILS) in the aircraft parts industry - Choudhury, et al. (1998) tested and refined existing theories on the adoption and impacts of electronic markets. As the result of eight in-depth interviews with people in the aircraft industry and ILS, and the analysis of survey data from 30 airlines around the world, they demonstrated that low levels of asset specificity (Asset specificity of a product refers to the extent to which a product used by a firm cannot be easily used by other firms due to site, physical asset, human asset or time constraints.) and low complexity in product description proved insufficient to motivate buyers to adopt electronic markets. Frequency of purchase, market variability, product value and scope of the electronic market were also identified as key factors affecting buyers' adoption of electronic markets. Through the lens of transaction efficiency, this - 1 5 -2. LITERATURE REVIEW research advances our understanding of electronic markets. However, the study of a single electronic market raises the question of external validity and undermines the applicability of the results to a broader population of electronic markets beyond ILS. Grewal et al. (2001) proposed that the nature of organizational participation in B2B electronic markets depended on their motivation and ability. Relying on transaction cost economics and institutional theory, they conceptualized motivational factors in terms of economic efficiency and institutional legitimacy. Study of ability was theorized from the influence of organizational learning and: information technology capabilities. Using organization-level survey data from jewelry traders, who conducted business in a market-driven electronic market, they found that both motivation and ability were important in determining the nature of participation; however, the level of influence of motivation and ability varied with the nature of participation. Compared with the research of Choudhury et al.'s (1998), Grewal et al.'s (2001) research framework (see Figure 2) is more comprehensive and theoretically solid. However, since Grewal et al.'s study is confined to the characteristics and scope of Polygon, a specific market-driven electronic market for jewelry and related products, it is hard to know whether the results are replicable in different contexts. Though institutional theory is used in the study, it is represented only one construct - legitimacy motive. - 1 6 -2. LITERATURE REVIEW Figure 2 Grewal et al. 's Research Framework Environmental Dynamism Ability Learning • Age-based • Effort-based JT capability Motivation Efficiency motive Legitimacy motive Nature of Organizational Participation in Electronic Markets • Exploration state • Expert State • Passive State Source: Grewal et al. 2001 Though not directly related to the focus on participation in B2B electronic marketplaces, previous research models related to the adoption of other types of technological innovations were also reviewed prior to the conduct of this research. To investigate EDI adoption in small firms, Iacovou et al. (1995) conducted seven case studies based mainly on face-to-face structured interviews of high-level managers in seven small companies. They found that external pressure, especially from trading partners, was the major stimulus for small companies' adoption of EDI. Their result also -17 -2. LITERATURE REVIEW indicated that high organizational readiness and an awareness of the benefits were necessary for the adoption of integrated and high impact EDI system Using institutional theory as the lens through which to study factors enabling the adoption of financial EDI, Teo et al. (2003) posited, and tested with empirical survey data, that mimetic, coercive and normative pressures existing in an institutional environment had a significant influence on organizational predisposition toward an information technology-based interorganizational linkage. For the purpose of exploring the key determinants of radical technology adoption, Srinivasan et al. (2002) identified the construct "technological opportunism", a sense-and-response capability of firms with respect to new technologies. They incorporated technological opportunism into the research framework together with institutional pressure on the firm to adopt the technology, complementary assets that help the firm generate value from new technologies, perceived usefulness of the technology, size of the firm and type of industry. The entire model was tested in a B2B e-business adoption context. In his effort to investigate firms' strategic choices regarding interorganizational information systems (IOS), Choudhury (1997) found that demand uncertainty and market variability (two sets of transaction characteristics), the strategic significance of the IOS, and the size and bargaining power of the firm could significantly influence a firm's motivation to develop an IOS. 2. 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LITERATURE REVIEW Table 3 Factors Influencing Technological Innovation Adoption Factor G r o u p Independent Var iab le Transaction Cost Theory • Perceived Benefits (Iacovou et al. 1995) (Awareness of direct/indirect benefits) • Complementary Asset (Srinivasan et al. 2002) • Efficiency Motive (Grewal et al. 2001) • Demand Uncertainty (Choudhury 1997) • Market Variability (Choudhury 1997) • Asset Specificity (Choudhury et al. 1998) • Complexity of Product Description (Choudhury et al. 1998) • Frequency of Purchase (Choudhury et al. 1998) • Market Variability (Choudhury et al. 1998) • Product Value (Choudhury et al. 1998) Institutional Theory • External Pressure (Iacovou et al. 1995) (Competitive pressure, imposition by partners) • Mimetic Pressures (Teo et al. 2003) • Coercive Pressures (Teo et al. 2003) • Normative Pressures (Teo et al. 2003) • Institutional Pressures (Srinivasan et al. 2002) • Legitimacy Motive (Grewal et al. 2001) Capability • Organizational Readiness (Iacovou et al. 1995) (Financial/technological resources) • Ability (Grewal et al. 2001) • Learning (Age-based, effort-based) • IT capability Other • Size and Bargaining Power of Firms (Choudhury 1997) • Technological Opportunism .(Srinivasan et al. 2002) • Environmental Dynamism (Grewal et al. 2001) • Strategic Significance of IOS (Choudhury 1997) • Scope of the Electronic Market (Choudhury et al. 1998) The empirical literature on technological innovation adoption shows that transaction cost theory and institutional theory have been the two key areas of investigation (See Table 3). Though both theories are within the field of organizational studies, they approach organizational phenomena from different perspectives. Transaction cost theory focuses -22-2. LITERATURE REVIEW on economic efficiency, while institutional theory emphasizes social and political legitimacy. In the context of the electronic marketplace, transaction cost has been examined in depth in Choudhury et al.'s (1998) paper. Grewal et al. (2001) also studied the efficiency motive. Though the importance of institutional theory has been acknowledged in Grewal et al.'s (2001) paper, it was only investigated as a single construct with three items. To our knowledge, no systematic research has investigated a B2B e-marketplace adoption from an institutional perspective. Since all organizations exist in an institutional environment, the influence and pressure from trading partners and social forces should not be overlooked. To advance our understanding of these aspects, this research will use the sole lens of institutional theory and conduct a systematic examination of B2B e-marketplace adoption from the purchasing side. Since organization size (Choudhury 1997), financial capability (Iacovou et al. 1995), and IT capability (Grewal et al. 2001) have demonstrated relevance to technological innovations in prior research, we will use them as control variables in this research to avoid biasing effect on the other examined variables. In addition, the potential biasing effect exerted by EDI usage on adoption of B2B e-marketplaces was also considered by incorporating EDI usage into our control variables. -23 -3. THEORETICAL FRAMEWORK 3. T H E O R E T I C A L F R A M E W O R K The conceptual model for this study is derived from institutional theory developed by DiMaggio and Powell (1983). This theory provides a lens through which to view organizational behavior from the perspective of institutional legitimacy. More specifically, the mechanisms of coercive pressure resulting from resource dependence, mimetic pressure caused by reaction to ambiguity, and normative pressure associated with professionalization, are filtered out as legitimacy angles from which to understand the adoption of B2B e-marketplaces. 3.1 OVERVIEW OF INSTITUTIONAL THEORY One of the earliest and most influential versions of institutional theory in organizations can be traced back to the middle of the 20th century with Philip Selznick and his students' work. Since then, institutional theory has received increasing attention and has been enriched from different perspectives. After an extensive study of influential theoretical research and empirical work, Scott (1987) generalized four versions of institutional theory. The first version of institutional theory, represented by Selznick and his students, views institutionalization as an adaptive process in a historical perspective, and defines institutionalization as a process of "instilling values, supplying intrinsic worth to a structure or process" (Scott 1987: 494). -24-3. THEORETICAL FRAMEWORK With a sociological underpinning, the second version of institutional theory, indebted to Berger, Luckmann, Zucker, Meyer and Rowan, defines institutionalization as a process of creating reality. Although it retains the historical approach, this version emphasizes the "social process by which individuals come to accept a shared definition of social reality" (Scott 1987: 495). The third version of institutional theory may be the most prevalent and influential. Dated from Meyer and Rowan's (1977) argument that the existence of "rational myth", or shared belief systems, is also a crucial cause of organizational structure change, this version of institutional theory emphasizes that "institutionalized belief systems constitute a distinctive class of elements that can account for the existence and/or the elaboration of organizational structure" (Scott 1987: 497). By emphasizing diversified social belief systems, this new notion of intuitional theory redefines the organizational environment by introducing institutional elements and diversifying the institutional sources. Moreover, contributors to this version of institutional theory challenged the emphasis on institutionalization as "a distinctive process" and began to theorize about the "variety of processes" causing conformity of organizational structure. Of these various processes of institutionalization, the best-known classification is proposed by DiMaggio and Powell (1983). They argued that homogeneity in organizational structures, or institutional isomorphism, occurred through three different processes: coercive, mimetic and normative. -25 -3. THEORETICAL FRAMEWORK Embracing the conception of institution with diversified social belief systems, the fourth version of institutional theory links institutions with a traditional sociological view. It emphasizes diversity of cognitive and normative social institutions and the consistency of human behavior persisting in all societies with different forms and contents. Though there are common themes existing in the four versions of institutional theory reviewed by Scott (1987), each version analyzes organizational structure with different foci and from different angles. While claiming to be an institutional analysis of the critical factors motivating organizations' adoption of the B2B e-marketplace, this paper adopts the point of view of third version of institutional theory. By incorporating institutional elements into organizational environment and diversifying institutional sources, the third version explains organizational structure change in a more comprehensive and convincing way. Specifically, we use the coercive, mimetic and normative processes developed by DiMaggio and Powell (1983) to analyze what we call the organizational "legitimacy motive" in the process of adopting the B2B e-marketplace. This theoretical framework draws our attention not only to organizational change among competing firms, but also to the influence of other relevant actors at the level of organizational field. DiMaggio and Powell's concepts of the three processes are well defined and their 12 hypotheses include an array of useful predictors of isomorphic change. -26-3. THEORETICAL FRAMEWORK 3.2 INSTITUTIONAL PERSPECTIVES ON B2B ELECTRONIC MARKETPLACE ADOPTION According to the third version of institutional theory, organizations operat in institutional environments subject to social, political and legal rules, norms and requirements (Roberts and Greenwood 1997). Violating these institutional rules and requirements may call into question an organization's legitimacy, affect its ability to secure resources and social support, and undermine its survival capabilities (DiMaggio and Powell 1983). Therefore, theorists of this version posit that firms are under pressure to conform to these norms to aid in the competition for resources and to gain social support, political power, institutional legitimacy, economic fitness and even for survival (DiMaggio and Powell 1983). DiMaggio and Powell (1983) argued that accompanying the growth of organizational fields, firms within were becoming increasingly similar. They captured this homogenization with the concept of isomorphism. There are two types of isomorphism: competitive and institutional. According to DiMaggio and Powell, competitive isomorphism, with its emphasis on market competition, niche change and fitness measures, only explains part of the organizational change. It has to be supplemented by an institutional view of isomorphism to represent the full picture of the modern world of organizations. DiMaggio and Powell (1983) identified three distinct kinds of institutional isomorphism through which institutional pressure exerted influences: coercive, mimetic and normative. -27-3. THEORETICAL FRAMEWORK In a general sense, coercive and normative pressures normally operate through what are called "interconnected relations", and mimetic pressures act through "structural equivalence relations" (DiMaggio and Powell 1983). These two kinds of environmental relationships, according to Burt (1987), exert pressure on organizations to become isomorphic. Interconnectedness is characterized by the existence of transaction linkages connecting organizations to another. Structurally equivalent organizations occupy similar positions in the interorganizational network and have identical relations with all other organizations. For example, the relationship between Wal-Mart and its suppliers can be characterized as an interconnected relationship; and Motorola and Nokia can be interpreted as structurally equivalent due to the similar, positions they occupy in the communication industry, and the identically parallel relations they could establish with other organizations. 3.2.1 Coercive Pressure Defined as the results of formal and/or informal external pressures exerted on organizations by forces upon which they depend economically, politically or technologically, coercive pressure takes the form of force, persuasion or invitation (DiMaggio and Powell 1983). While organizations have a greater ability to resist the demands of organizations upon which they do not rely (Pfeffer and Salancikl978), a position of resource dependence makes it hard for dependent actors not to comply with the demand of the dominant organizations controlling scarce and important resources (DiMaggio and Powell 1983). Under pressure, resource dependent organizations will -28-3. THEORETICAL FRAMEWORK undergo more isomorphic changes in structures, techniques and behaviors to accommodate dominant organizations' needs or interests. In the long run, organizations characterized by an institutionalized dependency exhibit similar structural features (Teo et al. 2003). Previous empirical research has suggested that coercive pressures on organizations may come from a variety of sources, including government regulation (Meyer et al. 1981; Tolbert and Zucker 1983), parent corporations (Coser et al. 1982; Teo et al. 2003), and resource dominant organizations (Palmer et al. 1993; Teo et al. 2003). In the specific context of the study of B2B e-marketplace adoption from the purchasing side, our focus of attention is on coercive pressure from dominant suppliers. DiMaggio and Powell (1983) noted that the specific supplier chosen by an organization for particular parts or services would develop expertise in performance of the task and appropriate knowledge about the exchange relationship. Such expertise would give suppliers considerable advantages in the subsequent competition with other suppliers. In cases in which few alternative resources are readily available for the demanded products/services, or in which great effort is required to locate the substitutions, legitimacy will be more subject to the whims of resource suppliers (DiMaggio and Powell 1983). In the context of B2B e-marketplace adoption, dominant suppliers that have adopted B2B e-marketplaces will impose coercive pressure on dependent buyers to follow suit, so as to increase their own benefits of adoption by reducing transaction costs, increasing collaboration, decreasing cycle time and reducing inventory holding. -29-3. THEORETICAL FRAMEWORK HI: The greater the dependence of an organization on a supplier that operates in a B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. 3.2.2 Mimetic Process Due to the uncertainty of technologies, goals and environments, organizations will be encouraged to model themselves after similar organizations in their field that are perceived to be more legitimate or successful (DiMaggio and Powell 1983). In this sense, mimetic isomorphism could be defined simply as the result of a modeling process responding to uncertainty. While the modeled organizations may be unaware of the modeling, or may be very reluctant to be copied, they are simply chosen as a convenient source of practice by the borrowing organizations directly or indirectly through employee turnover, consulting firms, etc. Mimetic behavior could considerably benefit the borrowing organizations, providing viable solutions with minimized search and experiment costs, reduced risks and greater legitimacy in the wider social structure (Cyert and March 1963; Levitt and March 1988; Lieberman and Montgomery 1988; DiMaggio and Powell 1983). Following Teo et al.'s (2003) institutional study of financial EDI adoption, we focus on two types of mimetic pressure in our research: extent of adoption among competitors and perceived success of competitor adopters. Structurally equivalent competitors in the same industry provide similar products/services, share similar goals, have similar suppliers and - 3 0 -3. THEORETICAL FRAMEWORK customers, and even experience similar constraints. Therefore, imitation among competitors is easier and less risky. In situations in which a particular behavior has been practiced among a considerable number of competitors in an industry, such behavior will be perceived as a legitimate norm (March 1981). Organizations that fail to comply with the norm will be perceived as less innovative or responsive, undermining their legitimacy and decreasing their competitiveness. To enhance their legitimacy, secure critical resources and remain competitive, organizations are under pressure to engage in particular behaviors common to most of their competitors. Something similar happens in the adoption of the B2B e-marketplace among competitors. When B2B e-marketplaces are participated in by a wide variety of competitors, the practice will become more legitimate, which will stimulate adoption by more organizations. H2: The wider the extent of B2B e-marketplace adoption among an organization's competitors, the stronger is the legitimacy to adopt the B2B e-marketplace. Extent of adoption is not the only source of mimetic pressure; the perceived success of a certain behavior has also been proven to be a strong stimulator of imitation (Teo et al. 2003; Haunschild and Miner 1997; Roger 1995). In addition to enhancing organizational legitimacy and survival characteristics (DiMaggio and Powell 1983), mimicry of successful practice could also benefit organizations with unexpected "second-mover advantages" (Lieberman and Montgomery 1988), such as accrued external referent of prestige (Perrow 1961). Accordingly, we hypothesize that perceptions of the success of -31 -3. THEORETICAL FRAMEWORK competitors that have adopted the B2B e-marketplace are positively related to an organization's legitimacy motive to participate in the B2B e-marketplace. H3: The greater the success achieved by an organization's competitors that have adopted the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. 3.2.3 Normative Pressure Normative pressures stem primarily from professionalization, which DiMaggio and Powell (1983) interpreted as the collective efforts made by people in an occupation to define their work and establish legitimation for their occupational autonomy. DiMaggio and Powell (1983) identified.two aspects of professionalization as sources of normative isomorphism: university or professional training and professional and trade associations. It was believed that through these two key vehicles similar worldviews were formulated and normative rules were developed and diffused. We accept the influence of university or professional training on decision makers' propensities towards the B2B e-marketplace. However, testing the influence of university or professional training will raise the problem of respondent-recall, which will complicate the research by correlating today's variable with yesterday's education. To avoid such complications, we only use the professional and trade association variable to account for the normative pressure exerted on organizations to adopt the B2B e-marketplace. We assume that the attitude toward the B2B e-marketplace assumed by participating professional or trade associations is closely - 3 2 -3. THEORETICAL FRAMEWORK related to an organization's adoption intention. A positive attitude toward B2B e-marketplace adoption enhances the legitimacy of this practice and exerts normative pressure on all participants to promulgate the practice. H4: The more active attitude taken by the participating trade and professional associations to promote participation in the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Normative isomorphism results not only from the two aspects of the professionalization process identified by DiMaggio and Powell. Perrow (1986) pointed out that it also involved social pressures from members of other organizations, which implied at least some degree of external coercion. This view is upheld by Teo et al.'s (2003) empirical study of financial EDI. After reviewing literatures on the adoption of new forms, strategies and technologies, Teo et al. (2003) argued that direct communication with trading partners that had adopted the innovation could help potential adopters resolve ambiguity surrounding the value of the innovation, thereby increasing adoption intent. Furthermore, as the perceived extent of adoption of the innovation increased, the innovation would be increasingly deemed as normatively appropriate for the organization. This argument, however, was not supported by their empirical research. Nevertheless, we want to incorporate this construct into our research for two reasons. First, we consider the construct to be theoretically valid. Second, within the scope of our B2B e-marketplace adoption study from the purchasing side, we predict that the construct will affect organizations' legitimacy motive to adopt the B2B e-marketplace. . - 3 3 -3. THEORETICAL FRAMEWORK H5: The wider the extent of B2B e-marketplace adoption among suppliers, the stronger is the legitimacy to adopt the B2B e-marketplace. 3.2.4 Legitimacy Motive All organizations exist in an institutional environment that defines and delimits norms, values and social beliefs (Scott 1987). Therefore, in addition to competing for resources and customers due to the need for efficiency, organizations also compete for political power, institutional legitimacy, and social as well as economic fitness to fulfill legitimacy needs (DiMaggio and Powell 1983). An institutional perspective emphasizes the importance of legitimacy, which can be defined as the appropriateness of an organization's actions within a system of norms, values and beliefs, in given institutional environment, with respect to the good of organizational survival. In this study, we link the above three institutional isomorphisms with legitimacy, and use the concept of legitimacy motive to understand organizations' B2B adoption intentions from an institutional perspective. Therefore, H6: The stronger the legitimacy motive perceived by an organization related to the adoption of the B2B e-marketplace, the more likely it will adopt the B2B e-marketplace. - 3 4 -3. THEORETICAL FRAMEWORK 3.2.5 Control Variables In addition to the constructs depicted in our research model in Figure 2, other contextual factors also have the potential to influence organizations' intentions to adopt the B2B e-marketplace. As discussed in Chapter two, we will use organization size (Choudhury 1997), financial capability (Iacovou et al. 1995), IT capability (Grewal et al. 2001), and EDI usage as control variables to facilitate the research. 3.3 RESEARCH FRAMEWORK Figure 2 depicts the overall research framework. Figure 3 Organizational Adoption of B2B E-Marketplaces by Purchasing Managers Coercive Pressures - Perceived dominance of supplier adopters - Mimetic Pressures - Extent of adoption among competitors - Perceived success of competitor adopters - Normative Pressures - Participation in industry, trade or professional bodies - Extent of adoption among suppliers Legitimacy •M Motive Control Variables - Organizational size - Financial capability - IT capability - EDI usage - 3 5 -3. THEORETICAL F R A M E W O R K For the sake of clarity, we summarize the independent variables and the related hypotheses in the following table: Table 4 Independent Variables and Hypothesis Independent Var iables Hypotheses Category Operat ing Constructs Coercive Pressures: Result of formal and/or informal external pressures exerted on organizations by forces upon which they depend economically, politically or technologically. Perceived dominance of supplier adopters HI: The greater the dependence of an organization on a supplier that operates in a B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Mimetic Pressures: Organizations' responses to uncertainty making them change over time to become more similar to other organizations in their environment which they perceive to be more legitimate and successful. Extent of adoption among competitors H2: The wider the extent of B2B e-marketplace adoption among an organizations competitors, the stronger is the legitimacy to adopt the B2B e-marketplace. Perceived success of competitor adopters H3: The greater the success achieved by an organization's competitors that have adopted the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Normative Pressures: Pressure exerted on members of professional networks by professional and trade associations to conform to promulgated normative values and rules. Participation in industry trade or professional bodies H4: The more active attitude taken by the participating trade and professional associations to promote participation in the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Extent of adoption among suppliers HS: The wider the extent of B2B e-marketplace adoption among suppliers, the stronger is the legitimacy to adopt the B2B e-marketplace. Legitimacy Motive: (This is also a mediating variable) Motives for an organization to act within system of norms, values and beliefs. Legitimacy motive H6: The stronger the legitimacy motive perceived by an organization related to the adoption of the B2B e-marketplace, the more likely it will adopt the B2B e-marketplace. - 3 6 -4. RESEARCH METHODOLOGY 4. R E S E A R C H M E T H O D O L O G Y Using the Partial Least Square (PLS) technique, we tested the hypotheses with data collected from a survey questionnaire administrated via a combination of regular mail survey and online survey to 466 members of the Purchasing Manager Association of Canada (PMAC) during October 2003 to January 2004. 4.1 CONSTRUCT OPERATIONALIZATION Our items were generated primarily from prior studies of IT innovation adoption (Teo et al. 2003; Grewal et al. 2001) that contained the domain of the constructs to be used in our research. Since development of these items (Teo et al. 2003) strictly followed Moore and Benbasat's (1991) three-stage process recommendation (item creation, scale development and instrument testing), and all items were proven to be reliable and valid, we adapted them for this study with slight modifications. We then presented the instruments to experienced MIS researchers for their opinions and suggestions. Based on their input, we further refined the wording of these instruments. Except when indicated otherwise, most items were measured based on a seven-point Likert scale ranging from (1) "strongly disagree" to (7) "strongly agree". To prevent arbitrary guesses, we also incorporated the "don't know" category in our scale, following Teo et al.'s (2003) suggestion. - 3 7 -4. RESEARCH METHODOLOGY Coercive Pressure. Operationalized by the reflective construct of perceived dominance of supplier adopters (SupDm), coercive pressures were measured by four items that asked about the dependence on supplier adopters, the substitution possibility of alternative suppliers, the necessity of maintaining good relationships and concentration in the suppliers' industry (Teo et al. 2003). Mimetic Pressures. The mimetic pressures were operationalized by two reflective constructs: extent of adoption among competitors (ComEx) and perceived success of competitor adopters (ComSu). The extent of adoption among competitors was measured by estimating the extent of B2B e-marketplace adoption among competitors in the present and in the near future. We also designed a specific item to measure the extent of participation among key competitors because we argue that the behavior of primary competitors plays a much more prominent role in shaping an organization's adoption decision. The construct "perceived success of competitor adopters" was measured using three questions that captured the extent of benefits obtained by competitor adopters, and the favorable perception of the competitor adopters among other members in their industry and their suppliers (Teo et al. 2003). Normative Pressures. Normative pressures can arise from a variety of sources, such as extent of adoption among suppliers, extent of adoption among customers, and participation in industry, business and trade associations (Teo et al. 2003). However, since the focus of our research on B2B e-marketplace adoption is from the purchasing side, we did not take the customer perspective into consideration. Therefore, we only -38-4. RESEARCH METHODOLOGY retained the reflective constructs of participation in industry, trade and professional bodies (Assn), and extent of adoption among suppliers (SupEx), for the normative pressures. Participation in industry, trade and professional bodies was measured by asking about the pressures placed by industry sources on each specific firm to participate in B2B e-marketplaces, and whether the participating associations promote the adoption of B2B e-marketplaces (Teo et al. 2003). Similar to the way we measure the extent of adoption among competitors to gauge mimetic pressures, the construct "extent of adoption among suppliers" was captured by three items: extent of supplier adoption at present and in the near future, and the extent of key suppliers' present participation (Teo et al. 2003). Legitimacy Motive. Drawing on Grewal et al. (2001), we operationalized legitimacy motive (Leg) as a reflective construct. The construct was measured by four items, asking whether participation in a B2B e-marketplace could provide legitimacy to the organization, be considered desirable by others in the industry, cause the organization to be portrayed as a high-tech firm, and cause the organization to be regarded as a firm with advanced management practices. Adoption Intent. As a reflective construct, adoption intention (Int) was operationalized as the likelihood of an organization's participation in a B2B e-marketplace. Three items were used in order to measure the construct: intention to participate in a B2B e-mareketplace, likelihood of taking steps to participate in a B2B e-marketplace in the future, and estimation of timeline to participate in a B2B e-marketplace. These three -39-4. RESEARCH METHODOLOGY questions incorporated actions (intent to participate, likely to take some steps to participate), target (B2B e-marketplace), and timeline (from six months to more than 24 months, and no plan), which are deemed "essential elements of intention and behavior" (Teo et al. 2003:10). Estimation of timeline was measured by asking the respondents to indicate if their firm will participate in a B2B e-marketplace in less than six months, six to 12 months, 12 to 18 months, 18 to 24 months, more than 24 months, or if the firm has no plan to participate in a B2B e-marketplace. Control Variables. Organizational size was measured by asking respondents to indicate the total number of employees their firms employ. Financial capability was measured by last financial year's approximate annual sales or revenue in CAD using a nine-point scale: less than $1 million; $1-5 million; $5-10 million; $10-50 million; $50-200 million; $200-500 million; $500-lbillion; $1-5 billion; $ more than 5 billion (). IT capability was measured using four items to determine whether the company had strong IT planning capabilities, skilled IT staff, the knowledge necessary for deploying IT applications, and was experienced in deploying IT applications (Grewal et al. 2001). EDI usage was measured by asking respondents to point out whether or not their firms had used EDI, and if no, whether they intended to use EDI in the future. 4.2 SAMPLE AND DATA COLLECTION PRODECURE Confined by our research scope to investigating the B2B e-marketplace adoption intent from the purchasing side, we defined our sampling frame as people with business vision -40-4. RESEARCH METHODOLOGY about the future development of their organization and in a decision making position with respect to their organization's purchasing function. As the national, not-for-profit association and training agency for procurement and supply chain professionals in Canada, the Purchasing Manager Association of Canada (PMAC) has a database consisting of purchasing managers, purchasing directors, purchasing supervisors and other senior personnel in the purchasing department who meet our sampling criteria across all sectors of the Canadian economy. We established a research partnership with the PMAC to access their database and ensure the quality and quantity of our sample. Our unit of analysis is individual for-profit organizations within Canada that have the potential to participate in industry specific and neutral B2B e-marketplaces. Therefore, after we obtained PMAC's member list containing 5856 English members and 805 French members, we developed a sequential sampling procedure: 1. Screen out all French members (since our questionnaires are designed in English). 2. Screen out people without a valid address (e.g. no zip code) or with addresses outside of Canada. 3. Screen out people not in relevant positions (e.g. accountant, clerk). 4. If one company had several offices in different regions, at least one, but no more than two people with relevant positions were selected from each regional office. If several members were available in one office, one or two people with the most relevant position and highest rank were selected. -41 -4. RESEARCH METHODOLOGY 5. Screen out public organizations (e.g. government, educational institutions) and some types of service firms (e.g. financial, consulting/accounting service firms, property management firms). After the first four procedures were carried out, we had a contact list with 3200 members. Then, every 16th contact was selected from the list to generate a 200-member list for our pilot study, and the remaining 3000 members were left as the sample for our main survey. Next, we applied procedure 5 to the pilot and main survey contact lists. Our final pilot contact list contains 148 PMAC members, and our main survey list has 2984 members. To ensure the response rate, we conducted research and found that the use of clear and succinct questionnaires, personalized invitation letters, incentives and reminder letters, and post cards were the best methods of improving response rate. We applied all of them in our survey: our questionnaire could be finished within 10-15 minutes; we personalized every invitation/reminder letter; we promised a lucky draw for one of four cash prizes of $500 each and a report describing the study findings as incentives for participants in the study; we sent reminder letters for both the pilot and main surveys; and we used post cards for our main survey. Another significant step we took to increase the response rate was to combine the mail survey with an identical online survey. Each of the mail packages we sent to pilot and main survey contacts contained four different kinds of documents: -42-4. RESEARCH METHODOLOGY 1. Invitation letter / reminder letter, stating the study objective, online survey link, incentives and confidentiality statement. 2. General instruction sheet, defining basic concepts in the questionnaire (B2B e-marketplace, participation, "the firm" referred to in the questionnaire); and giving instruction on how to choose the appropriate version of the questionnaire. 3. A copy of the questionnaires. Since we could not predict the adoption status of the survey participants, one adopter and one non-adopter questionnaires were included in each mail package. 4. A prepaid reply envelope. Our online survey was designed with a general instruction page and links to two versions of the online questionnaire (adopter and non-adopter). Why online survey was adopted in addition to mail survey was to provide response flexibility, and solicit more responses from purchasing managers who are curious or used to web carrier. After two rounds of mailing (invitation package and reminder package) to 148 people for our pilot study, we received 32 non-adopter responses (eight online ones and 24 mail responses), and five adopter responses (one online and four mail). Excluding nine returned packages with invalid addresses, we had a response rate of 26.62% for the pilot study (see Table 5). Though the response rate was satisfactory, we found that only eight non-adopter responses could be used as a result of the improper design of question 16 in -43 -4. RESEARCH METHODOLOGY section A of the non-adopter questionnaire®. Based on the feedback from our pilot study and the problems we detected ourselves, we further refined our questionnaire for the main survey®. Table 5 Pilot Study Response Rate Pilot Study Responses Non-adopter Online Non-adopter Mail Total Non-adopter Responses Adopter Online Adopter Mail Total Adopter Responses Responses in Tota l Mail in Total Total Mail Sent out Returned Mail Remained Mail in Tota l • Response Rate With a sample of 2984 PMAC members, our main survey was carried out in three stages: invitation package, reminder package and post cards. From all the packages we sent out, we received 625 responses and 121 returned packages (The mails were returned due to incorrect mailing addresses or unavailability of the addressed persons.), and a total response rate of 21.80%. Among the 625 responses, 540 (120 online and 420 mail ® The original question 16 in pilot study is: Are you aware of any B2B e-Marketplace established in your industry? [ ] Yes; [ ] No If answered "Yes", please proceed to the following questions If answered "No", please stop completing the questionnaire here, and return the questionnaire in the stamped, pre-addressed envelop. ® Please refer to Appendix 2 for revised question 16 in Section A of the main survey^  8 24 3 2 1 4 5 3 7 148 9 1 3 9 2 6 . 6 2 % -44-4. RESEARCH METHODOLOGY responses) were from non-adopters, and 85 (18 online and 67 mail) were from adopters (see Table 6). Table 6 Main Survey Response Rate Main Survey Responses Non-adopter Online 120 Non-adopter Mail 420 Total Non-adopter Responses 540 Adopter Online 18 Adopter Mail 67 Total Adopter Responses 85 Responses in Tota l 625 Mail in Tota l Total Mail Sent out 2984 Returned Mail 121 Remained Mail in Tota l 2863 Response Rate 2 1 . 8 3 % The response rate is encouraging considering that we targeted managers and people holding senior positions in purchasing departments. From all the responses we received, we only retained non-adopter responses to test the causal model of how institutional factors affect organizational adoption of B2B e-marketplaces. Excluding adopter responses from data analysis was also for the consideration of avoiding the complication of "respondent recall" and "correlating today's variable with yesterday's innovativeness" (Teo et al. 2003). -45 -4. RESEARCH METHODOLOGY 4.3 DATA PREPARATION Combining the eight usable non-adopter responses in the pilot study with the 540 online and mail non-adopter responses in our main survey, we worked out an initial non-adopter response database. To ensure that the data to be analyzed fell within our sampling frame, we further checked all 548 responses to exclude responses from public organizations or service firms. For the responses coming from the same regional offices, only the response by the person with the highest position on purchasing side was kept for further analysis. After these two procedures, we eliminated 49 responses. There was missing data in the responses. Missing data is defined as information either missed by the respondents for various reasons or provided in "Don't Know" form. Though data missing is a common problem occurring in almost in most empirical research (Cool 2000), inappropriate treatment of such data within a study can be detrimental to any subsequent data analysis, interpretations and conclusions (Brockmeier et al. 1998). Therefore, our next task was finding the most justifiable method for handling missing data. While there are many missing data treatment options available for use, they basically fall into two classes of procedures: deletion procedures and deterministic imputation procedures (Brockmeier, et al. 1998). Utilizing only cases with complete data, the deletion procedures, represented by listwise deletion and pairwise deletion, are often criticized for reduction in sample size, which leads to reduced precision in generalization -46-4. RESEARCH METHODOLOGY and reduced power of statistical significance testing (Cool 2000). The deterministic imputations procedures, which employing a statistical procedure to estimate missing values based on valid values of other variables and/or cases in the sample (Hair et al. 1998), are mostly recommended for the retention of statistical power in subsequent analyses (Cool 2000; Roth et al. 1999). In our research, we acknowledge the advantage of imputation procedures, but it is hard to justify their use when percentage of missing data on a single response is too high. Though Cool (2000) mentions that people who do not provide data on a substantial number of items should be omitted from further analysis, he did not define "substantial number" clearly. In Brockmeier et al.'s (1998) empirical comparison of deletion and imputation techniques, the maximum percentage of missing values studied was 60%. We conservatively set 50% data missing in overall dependent variables and independent variables as the acceptable threshold, and eliminated 33 responses. For the rest of the 466 responses, we applied imputation procedures. There are a variety of deterministic data imputation options available, varying from the direct substitution of values (e.g. case or mean substitution) to an estimation process based on the relationship among variables (e.g. cold/hot deck imputations, regression imputation). We chose the mean substitution option, because this method not only retained sample size and statistical power (Cool 2000), but was also very easy to implement and provided all cases with complete information (Hair et al. 1998). As one of the more widely used methods (Hair et al. 1998), mean substitution is practiced with two different approaches: mean substitution across individuals (person mean) and -47-4. RESEARCH METHODOLOGY mean substitution across items and within an individual (item mean) (Roth et al. 1999). Table 7 is an illustration of the difference between person mean and item mean: Table 7 Person Mean and Item/Construct Mean ID Leg_l Leg_2 Leg_3 Leg 4 Item/Construct Mean 1 3 4 5 5 4 2 1 2 2 2 2 3 4 4 4 4 4 4 3 6 3 5 4 5 4 3 4 4 4 6 7 7 1 1 7 1 5 3 5 5 5 8 5 2 6 6 5 9 5 6 5 5 5 10 6 5 6 6 6_ Person Mean : 4 4 4 4 We adopted both mean substitution methods in our missing data imputation procedure. However, since we applied mean substitution across items within one construct, we defined it as "construct mean". The sequence was to apply the construct mean to overall data first, and then person mean. The last procedure was to log-transform the firm size variable, because of its departure from normal distribution. The data set (n = 466) was then ready for further analysis. Table 8, Figure 4, Figure 5 and Figure 6 provide information about the sources of data collected. - 4 8 -4. RESEARCH METHODOLOGY Table 8 Profile of Non-adopters that Responded Frequency Demographics Category (n=466) Percent 1 Automotive 41 8.8% 2 Agriculture 10 2 .1% Industry 3 Clothing/Apparel 8 1.7% 4 Chemicals 14 3.0% 5 Consumer Products 20 4 .3% 6 Electronics 13 2.8% 8 Food and Beverage 27 5.8% 9 Forest Product 26 5.6% 10 Hospitality 2 0.4% 11 Information Tech. 13 2.8% 12 Industrial Products 45 9.7% 13 Minerals/Metals 31 6.7% 14 Oil and Gas 37 7.9% 15 Paper Products 10 2 .1% 16 Pharmac./Medical/Bio-Tech 21 4 .5% 17 Printing/Publishing 4 0.9% 18 Retail 7 1.5% 19 Transportation 13 2.8% 20 Wholesale 12 2.6% 21 Construction 20 4 .3% 22 Utility 25 5.4% 23 Not specified 4 0.9% 24 Others 63 13.5% 1 Less than $1 million 6 1.3% 2 $1-5 million 21 4 .5% 3 $5-10 million 29 6.2% 4 $10-50 million 114 24.5% Revenue 27.7% 5 $50-200 million 129 6 $200-500 million 49 10.5% 7 $500million-l billion 33 7.1% 8 $1-5 billion 35 7.5% 9 More than $5 billion 13 2.8% 10 Not specified 37 7.9% 1 < = 100 114 24.5% N u m b e r of 2 101-500 187 40.1% Employees 3 501-1000 57 12.2% 4 1001-5000 77 16.5% 5 5001-10000 8 1.7% 6 >=10000 17 3.6% 7 Not specified 6 1.3% - 4 9 -4. RESEARCH M E T H O D O L O G Y Figure 4 Industry Types of Non-adopters that Responded o CT o ro O Others Not specified Utility Construction Wholesale Transportation Retail Printing/Publishing Pharmac./Medical/Bio-Tech Paper Products Oil and Gas Minerals/Metals Industrial Products Information Tech. Hospitality Forest Product Food and Beverage Electronics Consumer Products Chemicals Clothing/Apparel Agriculture Automotive Industry Types F r e q u e n c y (n=466) Figure 5 Revenue Range of Non-adopters that Responded o Cl o Not specified More than $5 billion $1-5 billion $500million-1 billion $200-500 million $50-200 million $10-50 million $5-10 million $1-5 million Less than $1 million R e v e n u e Range 40 60 80 100 Frequency(n=466) 140 -50-4. RESEARCH METHODOLOGY Figure 6 Firm Size of Non-adopters that Responded Number of Employees o Not specified >=10000 £ 5001-10000 g> 1001-5000 § 501-1000 101-500 <=100 0 50 100 150 200 Frequency (n=466) 4.4 TESTING THE MEASUREMENT AND STRUCTURAL MODELS We chose the Partial Least Squares (PLS) method to test our research model. Originating in 1966 and with its basic design completed in 1977 (Chin 1998), PLS has been extended in various ways and is recognized as one of the best known approaches to Structural Equation Modeling (SEM). PLS has several strengths that make it appropriate for this study. First, as an SEM approach, PLS can be used to simultaneously assess the reliability and validity of the measures of theoretical constructs and estimate the relationships among these constructs. PLS's core conception is an iterative combination of principal components analysis relating measures to constructs, and path analysis permitting the construction of a system of constructs (Barclay et al. 1995). -51 -4. RESEARCH METHODOLOGY Second, the exploratory and casual-predictive nature of our study makes PLS the most suitable analysis approach. The arguments in the literature generally show that PLS has superior predictive ability (Teo et al. 2003; Wixom et al. 2003; Chatterjee et al. 2002; Barclay et al. 1995; Chin 1998). Seeking to maximize the variance explained in constructs and/or variables, PLS is "closer to the data, more explorative and more data analytic" (Barclay et al. 1995:302). Third, combining the full spectral coverage of classical least square with partial composition regression of multiple linear regression, PLS performs single step decomposition and regression. Therefore, with PLS, it is unnecessary for us to aggregate the measures to form construct scores in a priori fashion. All the decompositions and regressions are finished in a single step. Fourth, PLS allows for testing of models in which only reflective indicators are used, as in our case. We modeled all of our constructs as reflective because that our constructs are deemed to exist before they are measured, and are applied for explanation of the observed variances and covariances (Teo et al. 2003). In PLS, loadings can be used to inspect the correlation between the measures and the constructs. High loading implies a strong relationship in terms of more shared variance between the construct and its measures (Barclay et al. 1995). Although PLS allows the estimation of measurement and structural parameters together, the research model is analyzed and interpreted in two sequential stages. The reliability and validity of the measurement model are evaluated prior to the assessment of the structural model regarding the relationships among constructs (Barclay et al. 1995). - 5 2 -4. RESEARCH METHODOLOGY PLS Graph version 3.0 (Chin 2001) was used for the analysis. A bootstrapping procedure generating 100 random samples of 466 cases per sample was used to determine the significance of the path coefficients within the structural model. Our decision to use a bootstrapping procedure, rather than jackknifing, was a choice between computational time and efficiency (Chin 1998). Though taking more time for standard error estimation, the bootstrap analysis is also believed to be more efficient than the jackknife analysis (Efron and Tibshirani 1993). 4.4.1 Measurement Model The research model consists of seven constructs, all of which were defined as reflective. Legitimacy motive and adoption intent were operationalized as endogenous constructs. The rest were exogenous constructs predicting or causing an endogenous construct. In PLS, the measurement model is evaluated by examining the individual item reliability, internal consistency and discriminant validity. The loading, or simple correlation, of each measure with its corresponding constructs is used to assess the individual item reliability. A threshold loading of .707 or more is usually accepted as a rule of thumb (Barclay et al. 1995). As shown in Table 9, all survey items except two exceed the recommended value of .707, implying that each item has good explanatory power, with more shared variance between the constructs and its measures than error variance. Though the other two items (SupDm_2 & Int_3) do not reach the .707 level of acceptable reliability, they are all over .5, the significance recommended by Fornell (1982). -53 -4. RESEARCH METHODOLOGY Table 9 Descriptive Statistics of Survey Items Independent Var iab les & Survey I tems M e a n Std . Dev. Loading T-statist ic Perceived d o m i n a n c e of suppl ier adopters ( S u p D m ) REFLECTIVE S u p D m _ l 4.73 1.52 0.81* 16.69 S u p D m _ 2 4.65 1.61 0.53** 3.79 S u p D m _ 3 5.85 1.14 0.83* 16.28 S u p D m _ 4 5.04 1.45 0.80* 14.13 Extent of adopt ion a m o n g compet i tors ( C o m E x ) REFLECTIVE C o m E x 1 2.83 1.27 0.94* 102.48 C o m E x 2 3.24 1.35 0.91* 62.72 C o m E x 3 2.97 1.30 0.95* 105.94 Perceived success o f compet i tor adopters ( C o m S u ) REFLECTIVE C o m S u 1 3.08 1.16 0.95* 68.32 C o m S u 2 3.09 1.18 0.96* 134.85 C o m S u 3 3.17 1.23 0.94* 72.67 Participation in industry , trade or professional bodies (Assn) REFLECTIVE Assn 1 2.43 1.42 0.91* 61.93 Assn 2 3.15 1.67 0.83* 25.80 Extent of adopt ion a m o n g suppl iers (SupEx) REFLECTIVE S u p E x _ l 3.27 1.55 0.85* 16.74 S u p E x _ 2 3.80 1.40 0.89* 47.23 S u p E x _ 3 3.15 1.38 0.89* 45.69 Legit imacy Mot ive (Leg) REFLECTIVE. L e g _ l 3.43 1.63 0.87* 65.22 Leg_2 3.95 1.64 0.92* 97.88 Leg_3 4.09 1.69 0.90* 65.34 Leg_4 4.53 1.66 0.89* 74.21 Dependent Var iab le & Survey I tems M e a n Std . Dev. Load ing T-statist ic Adopt ion Intent (Int) RELECTIVE Int 1 4.06 1.63 0.93* 101.62 Int 2 4.32 1.68 0.95* 121.51 Int 3 2.60 1.36 0.66** 15.56 Please see Appendix for item name abbreviation Indicates that the item is significant at loading >= .707 level Indicates that the item is significant at loading >=.5 level -54-4. RESEARCH METHODOLOGY In PLS, the internal consistency is assessed by composite reliability, with an acceptable value of .8 or above (Nunnally 1978), and Cronbach's alpha, with an acceptable value of .7 or above (Nunnally 1978). Composite reliability and Cronbach's alpha value of all the constructs in our research model (see Table 10) exceed the suggested .8 and .7 criteria, indicating acceptable measures. Table 10 Assessment of Internal Consistency and Discriminant Validity Constructs N u m b e r of I tems Composite Reliability A l p h a Average Var iance Extracted ( A V E ) Perceived dominance of supplier adopters (SupDm) 4 0.834* 0.772** 0.562*** Extent of adoption among competitors (ComEx) 3 0.952* 0.924** 0.869*** Perceived success of competitor adopters (ComSu) 3 0.965* 0.945** 0.902*** Participation in industry, trade or professional bodies (Assn) 2 0.864* 0.687** 0.761*** Extent of adoption among suppliers (SupEx) 3 0.906* 0.843** 0.764*** Legitimacy Motive (Leg) 4 0.942* 0.917** 0.801*** Adoption Intent(Int) 3 0.891* 0.821** 0.736*** Indicate that the item is significant at Composite Reliability >= .8 level ** Indicate that the item is significant at Alpha >= .7 level *** Indicate that the item is significant at AVE >= .5 level Discriminant validity is used to evaluate "the extent to which a given construct is different from other constructs" (Barclay et al. 1995:297). Discriminant validity is considered to be adequate when a construct shares more variance with its measures than it shares with other constructs in a model. Average Variance Extracted (i.e. the average variance shared between a construct and its measures) is suggested for assessing the -55 -4. RESEARCH METHODOLOGY discriminant validity (Fornell and Larcker 1981). It is recommended that AVE should be greater than .50, suggesting 50% or more variance of the indicator should be accounted for. Further, AVE should be greater than the variance shared between the construct and other constructs in the model (Barclay et al. 1995). Table 11 shows the correlation matrix for the constructs. The diagonal of this matrix is the square root of the AVE. For adequate discriminant validity, these diagonal values should exceed the inter-construct correlations. The results in Table 10 and Table 11 indicate that the discriminant validity for all the constructs we studied is more than acceptable. Overall, investigation into our measurement model showed that we had reliable and valid measures of constructs, enabling us to carry out the next stage structural model analysis to test our hypotheses. -56-N to « 73 I be § « •a E (A E Q a 3 UJ a 3 3 (/) E o u E o u QJ Xi .2 (0 > ro ro at o <£ Q V D o ^ • O 00 in oo o o o C N rx vO VO rx o r o m oo d r N c n c r i r N r o o i - l r o CTl L D O i—1 rx o fN IS 00 d O <N IN '-i d ° o O L D L O m r s l r o c n CT> r o r o o O d d d d d r s j cn r N o <T r s l T - H o o q d d d d d 00 d O r x in 2 d ° IS T H C O CO V D ro 5 "I °. d ° ° r o i - i 00 LO r s i i n m r N o C O r s l 00 iH r o r o q q q d d d d d d d r s i r o vo r s i LO r x i—i V D r s i cn iH r s i r s i r o r o q q o d d d d d d d r x V D V D r o vo o co vo V D V D in i—i r o r o r o i - i l - H o d d d d d d d UJ w x E E o u O 3 E UJ a c a a | W c •- • - I— _J W 10 U. M 4. RESEARCH M E T H O D O L O G Y 4.4.2 Structural Model Using a bootstrapping procedure with 100 resamples, the test of our structural model was performed by examining the significance of the path coefficients, which indicate the strengths of the relationships between the dependent and independent variables, and the R 2 value, which represents the amount of variance explained by the independent variables. As a measure of the predictive power of a model, the value of R 2 should be interpreted in the same manner as the R 2 obtained from a multiple regression analysis. The path coefficients should be significant and directionally consistent with expectations. Table 12 depicts the results of the data analysis and the descriptive statistics. In order to assess the true impact of the theoretical variables and rule out alternative explanations, we followed Fichman and Kemerer's (1997) practice by estimating and comparing three models: (1) the full model, including both the theoretical and control model constructs; (2) the theoretical model, including the constructs derived from institutional theory; and (3) the control model, including our three control constructs. By comparing the R 2 value for adoption intent in the full model and the control model, we found that the full model explained a substantive incremental variance of 13.5% (19.1% - 5.6%). Including control variables on the top of independent variables, by contrast, only explains an additional 3.7% (19.1%) - 15.4%o) of the variance, as shown by a comparison of the full and theoretical models. These results indicate that our theoretical model is substantive enough to explain a large proportion of the variance in organizational intent to adopt a B 2 B e-marketplace. -58-4. RESEARCH METHODOLOGY Table 12 Results of PLS Analysis: Path Coefficients and T-statistic for Full, Theoretical and Control Models Constructs Path Coefficients (T-statist ic) Full Model Theoret ica l Mode l Contro l Mode l Leg Int Leg Int Leg Int Perceived dominance of supplier adopters (SupDm) 0.110 (2.913*) 0.110 (2.565*) Extent of adoption among competitors (ComEx) 0.105 (2.169*) 0.105 (2.244*) Perceived success of competitor adopters (ComSu) 0.261 (5.139*) 0.261 (5.588*) Participation in industry, trade or professional bodies (Assn) 0.210 (4.648*) 0.210 (4.991*) Extent of adoption among suppliers (SupEx) 0.058 (1.087) 0.058 (1.075) Legitimacy motive (Leg) 0.370 (8.863*) 0.392 (8.388*) Size (Size) 0.057 (0.989) 0.062 (0.940) Financial capability (Fin) 0.008 (0.148) 0.002 (0.031) IT capability (IT) 0.087 (1.973*) 0.108 (2.161*) EDI Usage (EDI) 0.130 (3.150*) 0.168 (3.889*) Variance explained in adoption intention (R-square) 28% 19.1% 28% 15.4% 5.6% T-statistic values are given in parentheses. * Indicates that the item is significant at the P < .05 level - 5 9 -4. RESEARCH METHODOLOGY Figure 7 Structural Model Test Results Perceived dominance of supplier adopters Extent of adoption among competitors * Indicates that the item is significant at the P < .05 level Table 12 and Figure 7 list the path coefficients, corresponding T-statistic and R2 of the constructs in our theoretical models. As hypothesized, perceived dominance of supplier adopters, extent of adoption among competitors, perceived success of competitor adopters and participation in industry, trade or professional bodies are all positively related to legitimacy motive with both positive path coefficients and a significant T-statistic at P < .05 level. Combined with extent of adoption among suppliers, they explain 28% of legitimacy motive's variance. Therefore, hypotheses 1, 2, 3 and 4 are all supported. Legitimacy motive, with a path coefficient of 0.392 and T-statistic of 8.388, significantly influences adoption intent, and explains 15.4%) of the dependent construct's -60-4. RESEARCH METHODOLOGY variance. Hypothesis 6 is also supported. Overall, "perceived success of competitor adopters" (derived from mimetic pressure) and "participation in industry, trade or professional bodies" (derived from normative pressure) stimulate the strongest legitimacy motive for an organization to adopt the B2B e-marketplace. Legitimacy motive, in turn, also shown a significant effect on organizational adoption of the B2B e-marketplace, The only hypothesis not supported is H5. Though it has a positive path coefficient (0.058), the relationship between the extent of adoption among suppliers and legitimacy motive is not statistically significant. See Table 13 for a summary for the hypotheses test results. With control variables, the full model has the same explanatory power as the theoretical model. Among the control variables, only IT capability (T-statistic = 2.161) and EDI usage (T-statistic = 3.889) are significant. -61 -4. RESEARCH METHODOLOGY Table 13 Hypotheses Results Hypotheses Results H I The greater the dependence of an organization on a supplier that operates in a B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Supported H2 The wider the extent of B2B e-marketplace adoption among an organization's competitors, the stronger is the legitimacy to adopt the B2B e-marketplace. Supported H3 The greater the success achieved by an organization's competitors that have adopted the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Supported H4 The more active attitude taken by the participating trade and professional associations to promote participation in the B2B e-marketplace, the stronger is the legitimacy to adopt the B2B e-marketplace. Supported H5 The wider the extent of B2B e-marketplace adoption among suppliers, the stronger is the legitimacy to adopt the B2B e-marketplace. Not Supported H6 The stronger the legitimacy motive perceived by an organization related to the adoption of the B2B e-marketplace, the more likely it will adopt the B2B e-marketplace. Supported -62-5. DISCUSSION 5. DISCUSSION 5.1 DISCUSSION OF FINDINGS Using the lens of institutional theory, this research studied the critical legitimacy factors affecting an organization's purchasing function in adoption of B2B e-marketplaces using a large-scale cross-sectional survey of the members of the Purchasing Manager Association of Canada. Consistent with the institutional theory, our findings suggest an organization's predisposition towards the B2B e-marketplace is greatly influenced by the motive of acquiring legitimacy in the institutional environment in which they operate. With the exception of the construct of extent of adoption among suppliers, all four other constructs derived from coercive pressure, mimetic pressure and normative pressure were empirically shown to be well suited to facilitating an understanding of the organizational legitimacy motive to adopt a B2B e-marketplace. Although we used the same theoretical lens, our study of B2B e-marketplace adoption for firms in Canada exhibited different results from Teo et al.'s research of organizational predisposition towards financial EDI (FEDI) in Singapore. In our research, the most salient constructs shaping organizations' legitimacy motive to adopt the B2B e-marketplace come from mimetic pressures. Specifically, "perceived success of competitor adopters" demonstrated the strongest correlation with organizations' predisposition towards B2B e-marketplaces; "extent of adoption among competitors" also displayed a significant positive relation with legitimacy motive. However, in Teo et al.'s -63 -5. DISCUSSION (2003) research, normative pressures have the strongest influence on a firm's intention to adopt FEDI. Since both sets of research focus on new structured IOS, the difference may result from different research contexts. As Teo et al. (2003) argued, operating in a collectivistic and paternalistic culture, Singaporean firms were more inclined to endorse practices espoused by government-sponsored and/or collective associations. Therefore, when FEDI was promoted by the government and leading institutions as a way to speed up the economy and improve productivity, firms were under great normative pressure to adopt. However, in Canada, the economy operates in a different way. Though there are some regulations and controls (mainly in the public sector), Canada is mostly a free market economy. The behavior of most organizations, especially the for-profit organizations we focused on, is governed by market forces (e.g. demand/supply, competition between buyers/sellers) rather than by government. The competition in a free market is much fiercer. In order to survive or maintain a competitive status, firms are under greater pressure to copy successful practices, or to follow widely acknowledged practices, in response to uncertainty. This could explain why mimetic pressures, more specifically perceived success of competitor adopters and extent of adoption among competitors, are the most prominent institutional factors contributing to firms' adoption of B2B e-marketplaces in the unique research context of Canada. The second most salient construct that influences firms' legitimacy motive to adopt a B2B e-marketplace is participation in industry, trade and professional bodies (derived from normative pressures). All organizations are embedded in social networks (Granovetter 1985). Our findings support this view by showing that when a large degree -64-5. DISCUSSION of pressure is placed on firms to participate in the B2B e-marketplace by industry sources, or when the associations in which firms are actively engaged promote participation in the B2B e-marketplace, the adoption behavior will be deemed as a social norm to which firms must conform for social legitimacy. To a great extent, our findings are also in line with DiMaggio and Powell's (1983) institutional view that the greater the participation of organizational managers in trade and professional associations, the more likely the organizations will be, or are likely to become, like other organizations in their field. Consistent with other research that substantiates the relevance of coercive isomorphism in technological innovation adoption studies, perceived dominance of supplier adopters, which is developed from coercive pressure, is the third most powerful institutional factor exerting influence on organizations' legitimacy motive to adopt the B2B e-marketplace. Our findings imply that when organizations can not easily switch to other suppliers, or when alternative suppliers are not readily available, they will rely heavily on the present suppliers for many of their purchases, which naturally give legitimacy to the control of the resource suppliers. Finally, the construct extent of adoption among suppliers we adapted from Teo et al. (2003) was not found to be significant, though measures of the construct were all valid and reliable as tested by our measurement model. Our results, combined with Teo et al.'s result, seems to convey the message that although theoretically relevant, the construct -65-5. DISCUSSION "extent of adoption among suppliers" does not influence technological innovation adoption intent. 5.2 RESEARCH IMPLICATIONS This study constitutes the first systematic empirical research of organizational adoption of B 2 B e-marketplaces by purchasing managers from an institutional perspective. Results disclose how different types of social pressures can influence firms' movement towards new IT-enabled governance structures and substantiate the importance of institutional forces in organizational change toward structural homogenization. Since this research was conducted through a large-scale cross-sectional survey, the results might be generalizable to a wide variety of industries not included in our research. Comparison of our research with Teo et al.'s research also unveils an interesting finding namely, that although all organizations operate in an institutional environment, different economic and cultural contexts may place different institutional factors in dominant positions in terms of shaping organizations' decisions to change. 5.3 LIMITATIONS AND FUTURE RESEARCH This research furthered the understanding of B 2 B e-marketplace adoption intentions. However, confined by our research scope, we focused only on industry specific and neutral B 2 B e-marketplaces, and our sample was also limited to purchasing professionals. Therefore, when interpreting our results, care should be taken to consider these -66-5. DISCUSSION limitations. At the same time, it might be interesting to see if our results are applicable to other types of B2B e-marketplaces, and what the results would be if we investigated the B2B e-marketplace adoption intent from the selling side. We investigated B2B e-marketplace adoption from the point of view of institutional theory. In addition to the institutional environment, theorists in transaction cost economy argue that firms also operate in a competitive environment. Though both theories are within the field of organizational studies, they approach organizational phenomena from different perspectives. While institutional theory focuses on an "oversocialized" (Granovetter 1985: 346) account of transaction efficiency, transaction cost theory provides an "undersocialized" (Granovetter 1985: 346) perspective on organizational legitimation processes. If future researchers could integrate these two theories, they may be able to gain a more comprehensive understanding of the potential factors that motivate organizations' adoption of B2B marketplaces. Since the study of B2B e-marketplace adoption intent was confined to firms in Canada, it might be interesting for other researchers to replicate this study in a non-Canadian context and to examine the applicability of institutional theory under different political, economic and cultural environments, such as China. Lastly, our research studied only the pre-adoption stage related to B2B e-marketplaces in Canada. People should be very careful when generalizing the results to situation that are different from ours. Another potential topic for future researchers is to focus on the post--67-5. DISCUSSION adoption stage by investigating how institutional pressures will affect B2B e-marketplace adopters' levels of adoption. - 6 8 -REFERENCES R E F E R E N C E S 4 Barclay, D., Higgins, C. and Thompson, R. "The Partial Least Squares Approach to Casual Modeling, Personal Computing Adoption and Use as an Illustration," Technology Studies (2:2), 1995, pp. 285-309. Brockmeier, L. L., Kromrey, J. 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"Uses and Consequences of Electronic Markets: An Empirical Investigation in the Aircraft Parts Industry," MIS Quarterly (22:4), 1998, pp. 471-507. - 6 9 -REFERENCES Cool, A. L. "A Review of Methods for Dealing with Missing Data," presented at the annual meeting of the Southwest Educational Research Association, Dallas, TX, Jaunary 28, 2000. Coser, L., Kadushin, C , and Powell, W. W. Books: The Culture and Commerce of Book Publishing, Basic Books, New York, 1982. Cyert, R. M., and March, J. G. A Behavioral Theory of the Firm, Prentice-Hall, Inc., Englewood Cliffs, NJ, 1963. DiMaggio, P., and Powell, W. "The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields," American Sociological Review (48:2), 1983, pp. 147-160. Efron, B., and Tibshirani, R. J. An Introduction to the Bootstrap, Chapman & Hall, New York, 1993. -Fichman, R. G., and Kemerer, C. F. "The Assimilation of Software Process Innovations: An Organizational Learning Perspective," Management Science (43:10), 1997, pp. 1345-1363. Fornell, C. (eds.)v4 Second Generation of Multivariate Analysis, Methods: Volume 1. Praeger Publishers, New York, 1982. Fornell, C , and Larcker, D. F. "Structural Equation Models with Unobservable Variables and Measurement Errors,"' Journal of Marketing Research (18:1), 1981, pp. 39-50. Furlonger, D., and Landry, S. "B2B Marketplaces: A Definition of Terms," Gartner Research Note (M-12-7920), March 26, 2001. Granovetter, Mark. "Economic Action and Social Structure: the Problem of Embeddedness," American Journal of Sociology (91:3), 1985, pp. 481-510. - 7 0 -REFERENCES Grewl, R., Corner, J., and Mehta, R. "An Investigation into the Antecedents of Organizational Participation in Business-to-Business Electronic Markets," Journal of Marketing (65), 2001, pp. 17-33. Hair, J. F., Anderson, R. E., Tatham, R. L., and Black, W. C. Multivariate Data Analysis (5th ed.), Prentice-Hall Int. Inc., 1998. Haunschild, P. R., and Miner, A. S. "Modes of Interorganizational Imitation: The Effects of Outcome Salience and Uncertainty," Administrative Science Quarterly (42:3), 1997, pp. 472-500. Iacovou, C. L., Benbasat, I. and Dexter, A. S. "Electronic Data Interchange and Small Organizations: Adoption and Impact of Technology," MIS Quarterly (19:4), 1995, pp. 465-485. Levitt, B., and March, J. G. "Organizational Learning," in Annual Review of Sociology, Volume 14, W. R. Scott and J. Blake (eds.), Annual Reviews, Palo Alto, CA, 1988, pp. 319-340. Lieberman, M., and Montgomery, D. "First-Mover Advantages," Strategic Management Journal (9:1), 1988, pp. 41-58. Malone, T. W., Yates, J. and Benjamin, R. I. "Electronic Markets and Electronic Hierarchies," Communications of the ACM'(30:6), 1987, pp. 484-497. March, J.G. "Decisions in Organizations and Theories of Choice," in Van de Ven, A. and Joyce, W. F. (eds.), Perspectives on Organization Design and Behavior, Wiley and Sons , New York, 1981, pp. 205-244. Meyer, J. W., and Rowan, B. "Institutional Organizations: Formal Structures as Myth and Ceremony," American Journal of Sociology (83:2), 1977, pp. 340-363. -71 -REFERENCES Moore, G. C , and Benbasat, I. "Development of an Instrument to Measure the Perceptions of Adopting an Information Technology Innovation," Information Systems Research (2:3), 1991, pp. 192-222. Nunnally, J. C. Psychometric Theory, McGraw-Hill Book Company, New York, 1978. Palmer, D. A., Jennings, P. D., and Zhou, X. G. "Late Adoption of the Multidivisional Form by Large U.S. Corporations: Institutional, Political, and Economic Accounts," Administrative Science Quarterly (38:1), 1993, pp. 100-131. Perrow, C. Complex Organizations: A Critical Essay (3rd ed.), Random House, New York, 1986. Pfeffer, J., and Salancik, G. External Control of Organizations: A Resource Dependence Perspective, Harper and Row, New York, 1978. Phillips, C , and Meeker, M. The B2B Internet Report - Collaborative Commerce, Morgan Stanley Dean Witter, New York, 2000. Roberts, P. W., and Greenwood, R. "Integrating Transaction Cost and Institutional Theories: Toward a Constrained-Efficiency Framework for Understanding Organizational Design Adoption," Academy of Management Review (22:2), 1997, pp. 364-373. Rogers, E. M. Diffusion of Innovations (4th ed.), Free Press, New York, 1995. Roth, P. L., Switzer III, F. S. and Switzer, D. M. "Missing Data in Multiple Item Scales: A Monte Carlo Analysis of Missing Data Techniques", Organizational Research Methods (2:3), 1999, pp. 211-232. Scott, W. R. "The Adolescence of Institutional Theory," Administrative Science Quarterly (32:4), 1987, pp. 493-511. - 72 -REFERENCES Srinivasan, R., Lilien, G. L. and Rangaswamy, A. "Technological Opportunism and Radical Technology Adoption: an Application to E-Business," Journal of Marketing (66), 2002, pp. 47-60. Teo, H. H., Wei, K. K. and Benbasat, I. "Predicting Intention to Adopt Interorganizational Linkages: An Institutional Perspective," MIS Quarterly (27:1), 2003, pp. 1-31. Tolbert, P. S., and Zucker, L. G. "Institutional Sources of Change in the Formal Structure of Organizations: The Diffusion of Civil Service Reform, 1880-1935," Administrative Science Quarterly, (28:1), 1983, pp. 22-39. Wixom, B. H., and Watson, H. J. "An Empirical Investigation of the Factors Affecting Data Warehousing Success," MIS Quarterly (25:1), 2001, pp. 17-41. Internet Resources: Canadian E-Business Opportunities Roundtable (2002), Fast Forward 3.0: Maintaining the Momentum. Toronto: Prepared by the Boston Consulting Group(2002), March. • Retrieved January 13, 2003 from the World Wide Web http: //www. ebusinessroundtable. ca/ documents/ff3 .pdf Enos, L. (2001). Canada Poised for B2B Boom. Retrieved January 13, 2003 from the World Wide Web http://www.ecommercetimes.com/perl/story/6624.html Franzke, E.& Buschmann, 0.(2000). The Future of B2B Marketplaces. Retrieved January 6, 2003 from the World Wide Web: http://www.competence-site.de/emarktplaetze.nsf/4835177Cl 13F127DC12569E50039A505/$File/the%20futu re%20of%20b2b%20marketplaces_bain.pdf -73 -REFERENCES IBM White Paper (2000). E-marketplaces: Taking Business-to-Business e-commerce to the next level. Retrieved January 9, 2003 from the World Wide Web: http://www-3. ibm. com/software/info/websphere/docs/emp_white .pdf Palencia, R. G. (2002) B2B Electronic Marketplaces: Competition Issues in The E-distribution Channel. Retrieved January 9, 2003 from the World Wide Web: http://wvvw.ag-intemet.corn/bullet_iln_two_two/iberforo_article.htm Raczkowski, C. (2001) "B2B Marketplaces: The Long Road to Success," WorldCom, Retrieved October 9, 2002 from the World Wide Web: http://www.worldcom.com/global/resources/whitepapers/pdf/WorldCom_White_Pap er_On_B2B_Marketplaces.pdf Sommers, D. (2004) B2B E-marketplaces - Opportunities, Risks, and Limitations. Retrieved February 8, 2004 from the World Wide Web: http://www.comptia.org/research/whitepapers/summaries/b2bmarketplaceswhitepaper .pdf -74-APPENDICES A P P E N D I C E S Appendix 1: Measurement Items for Key Research Variables Legitimacy Motive (Leg) Adapted from Grewal et al. (2001) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) We believe that our participation in a B2B e-Marketplace ... will provide legitimacy to our firm (Leg_l). will be considered desirable by others in our industry (Leg_2). will portray us as a high-tech firm (Leg_3). will portray us as a firm with advanced management practices (Leg_4). Perceived dominance of supplier adopters (SupDm) Adapted from Teo et al. (2003) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) With regard to suppliers currently participating in B2B e-Marketplaces, ... our firm's well-being depends on the suppliers' resources (SupDm_l). our firm cannot easily switch away from the suppliers(SupDm_2). our firm must maintain good relationships with the suppliers(SupDm_3). the suppliers are the core suppliers in a concentrated industry(SupDm_4). Extent of adoption among competitor (ComEx) Adapted from Teo et al. (2003) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) Many of our competitors are currently participating in B2B e-Marketplaces (ComEx_l). Many of our competitors will be participating in B2B e-Marketplaces in the near future (ComEx_2). Our key competitors are currently participating in B2B e-Marketplaces (ComEx_3). Perceived success of competitor adopters (ComSu) Adapted from Teo et al. (2003) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) Our competitors that participate in B2B e-Marketplaces are benefiting greatly (ComSu_l). Our competitors that participate in B2B e-Marketplaces are perceived favorably by others in our industry (ComSu_2). Our competitors that participate in B2B e-Marketplaces are perceived favorably by their suppliers (ComSu_3). Participation in industry trade or professional bodies (Assn) Adapted from Teo et al. (2003) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) Large pressure is placed on our firm to participate in B2B e-Marketplaces by industry sources (e.g., industry or trade Associations) (Assn_l). -75-APPENDICES We actively participate in industry, trade, or professional associations that promote participation in e-B2B Marketplaces (Assn_2). Extent of adoption among suppliers (SupEx) Adapted from Teo et al. (2003) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) Many of our suppliers are currently participating in B2B e-Marketplaces (SupEx_l). Many of our suppliers will be participating in B2B e-Marketplaces in the near future (SupEx_2). Our key suppliers are currently participating in B2B e-Marketplaces (SupEx_3). Adoption Intent (Int) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) We intend to participate in a B2B e-Marketplace (Int_l). It is likely that our firm will take some steps to participate in a B2B e-Marketplace in the future (Int_2). How soon do you think that your firm will participate in a B2B e-Marketplace (Int_3)? [] No plan to participate in a B2B e-Marketplace; [] More than 24 months; [] 18 to 24 months; [] 12 to 18 months; [] 6 to 12 months; [] Less than 6 months Firm Size (Size) Adapted from Choudhury (1997) How many people does your firm currently employ? approximately Financial Capability (Fin) Adapted from Iacovou, et al. (1995) What was the approximate annual sales or revenue in the last financial year (in CAD)? [] Less than $1 million; [] $1-5 million; [] $5-10 million; [] $10-50 million; [] $50-200 million; [] $200-500 million; [] $500-lbillion; [] $1-5 billion; [] More than $5 billion IT Capability (IT) Adapted from Grewal et al. (2001) (1- Strongly Disagree; 7 - Strongly Disagree; 0 - Don't Know) Our firm has strong IT planning capabilities (IT_1). Our firm has skilled IT staff (IT_2). Our firm has the knowledge necessary for deploying IT applications (IT_3). Our firm is experienced in deploying IT applications (IT_4). EDI Usage (EDI) Uses EDI over the Internet. [] No, and we do not intend to... [] No, but we intend to... [] Yes [] Don't know -76-APPENDICES Appendix 2: Survey Questionnaire for Non-adopters S t u d y o n B 2 B E l e c t r o n i c M a r k e t p l a c e s Q u e s t i o n n a i r e V e r s i o n B (for C u r r e n t N o n - P a r t i c i p a n t s ) Purchasing Management Association of Canada TM U B C Purchasing Management Assoc. of Canada 2 Carlton St., Suite 1414 Toronto, Ontario M5B 1J3 Sauder School of Business The University of British Columbia Vancouver, B .C . V6T 1Z2 © copyright 2003 -77-APPENDICES S E C T I O N A 1. Wha t is your current job title? 2. How m a n y peop le d o e s your firm currently e m p l o y ? approximate ly 3. Wha t w a s the approximate annual s a l e s or revenue in the last f inancial year (in C A D ) ? [ ] Less than $1 million [ ] $50-200 million [ ] More than $5 billion [ ] $1-5 million [ ] $200-500 million [ ] $5-10 million [ ] $500-1 billion [ ] $10-50 million [ ] $1-5 billion 4. P l e a s e speci fy what industry your firm is in: [ ] Automotive [ ] Consumer Products [ ] Forest Products [ ] Minerals/ Metals [ ] Printing/Publishing Others (Please specify) [ ] Agriculture [ ] Electronics [ ] Hospitality [ ] Oil and Gas [ ] Retail ] Clothing/Apparel ] Financial Services ] Information Tech. ] Paper Products ] Transportation ] Chemicals ] Food & Beverage ] Industrial Products ] Pharmac./Medical/Bio-Tech ] Wholesale 5. If you would you like to receive a s u m m a r y report of study f indings a n d enroll in the draw for one of four pr izes of $500 e a c h , p lease provide us with the following information: Emai l a d d r e s s : C o m p a n y N a m e : ; Posta l C o d e : Please answer the following questions (Questions 6 - 11) as it relates to your firm. No, and we do not intend to... No, but we intend to ... Yes Don't Know 6. U s e s e-mai ls to c o m m u n i c a t e with our suppl iers. 7. H a s an Enterpr ise R e s o u r c e Planning ( E R P ) s y s t e m . 8. H a s a c c e s s to electronic cata logs of major suppl iers. 9. U s e s Electronic Data Interchange (EDI). 10. U s e s EDI over the Internet. 11. H a s electronic procurement s y s t e m s . Please answer the following questions (Questions 12 ~ 15) pertaining to IT capabilities of your firm. Strongly Disagree Strongly Agree Don't Know 12. O u r firm has strong IT planning capabil i t ies. 1 2 3 4 5 6 7 0 13. O u r firm has skilled IT staff. 1 2 3 4 5 6 7 0 14. O u r firm has the knowledge n e c e s s a r y for deploying IT appl icat ions. 1 2 3 4 5 6 7 0 15. O u r firm is exper ienced in deploying IT appl icat ions. 1 2 3 4 5 6 7 0 -78-APPENDICES / For the remainder of the questionnaire, please note that B 2 B e-Marketplace refers to industry-specific marketplaces where multiple buyers and sellers are brought together to conduct trading activities on-line. Some examples of B2B e-Marketplace include: a. iLumber.com provides an online platform for the softwood lumber community. Mills, remanufacturers, distributors, brokers, wholesalers and retailers trade lumber products and building materials through iLumber.com. b. ILSmart.com provides an online aviation marketplace where airlines, repair stations, manufacturers, O E M s , distributors and anyone buy or sell parts for any type of aircraft, including commercial jets, military aircraft, helicopters, propeller and turbine driven airplanes. c. The Broker Forum (www.brokerforum.com) provides an online trading center for brokers and distributors in the electronic components industry. 16. Are you aware of any B2B e-Marketplace established in your industry? [ ] Yes; [ ] No If answered "Yes", please give the name and/or Website of a B2B e-Marketplace that you are currently aware of: Name: Website: http:// The following three questions (Questions 17 ~ 19) ask the likelihood of your firm's participation in a B2B e-Marketplace. Strongly Disagree 17. We intend to participate in a B2B e-Marketplace. 1 2 18. It is likely that our firm will take some steps to participate in a B2B e-Marketplace in the future. 1 2 19. How soon do you think that your firm will participate in a B2B e-Marketplace? [ ] Less than 6 months [ ] 6 to 12 months [ ] 12 to 18 months [ ] 18 to 24 months [ ] More than 24 months [ ] No plan to participate in a B2B e-Marketplace Strongly Don't Agree Know 3 4 5 6 7 0 3 4 5 6 7 0 -79-APPENDICES S E C T I O N B Please indicate your agreement or disagreement with the following statements by circling the appropriate numbers. We believe that our participation in a B2B Strongly Strongly Don't e-Marketplace ... Disagree Agree Know 1. will provide legitimacy to our firm. 1 2 3 4 5 6 7 0 2. will be considered desirable by others in our industry. 1 2 3 4 5 6 7 0 3. will portray us as a high-tech firm. 4. will portray us as a firm with advanced management practices. 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 0 Strongly Strongly Don't Disagree Agree Know 5. Many of our competitors are currently participating in 1 2 3 4 5 6 7 0 B2B e-Marketplaces. 6. Many of our competitors will be participating in B2B 1 e-Marketplaces in the near future. 7. Our key competitors are currently participating in B2B 1 2 e-Marketplaces. 3 4 5 6 7 0 3 4 5 6 7 0 Strongly Strongly Don't Disagree Agree Know 8. Our competitors that participate in B2B e-Marketplaces 1 2 3 4 5 6 7 0 are benefiting greatly. 9. Our competitors that participate in B2B e-Marketplaces 1 2 3 4 5 6 7 0 are perceived favorably by others in our industry. 10. Our competitors that participate in B2B e-Marketplaces are perceived favorably by their suppliers. 1 2 3 4 5 6 7 0 11. Many of our suppliers are currently participating in B2B e-Marketplaces. 12. Many of our suppliers will be participating in B2B e-Marketplaces in the near future. 13. Our key suppliers are currently participating in B2B e-Marketplaces. 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 0 With regard to suppliers currently participating st„ng|y s t r o n g l y Don,t in B2B e-Marketplaces, . . . Disagree Agree Know 14. our firm's well-being depends on the suppliers' resources. 15. our firm cannot easily switch away from the suppliers. 1 2 3 4 5 6 7 0 16. our firm must maintain good relationships with the 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 0 -80-APPENDICES suppliers. 17. the suppliers are the core suppliers in a concentrated 1 2 3 4 5 6 7 0 industry. Strongly Strongly Don't Disagree Agree Know 18. Large pressure is placed on our firm to participate in 1 2 3 4 5 6 7 0 B2B e-Marketplaces by industry sources (e.g., industry or trade associations). 19. We actively participate in industry, trade, or 1 2 3 4 5 6 7 0 professional associations that promote participation in e-B2B Marketplaces. 20. What are the two obstacles inhibiting the adoption of a B2B e-Marketplace in your firm? 1) . 2) . : T H A N K Y O U F O R Y O U R PARTICIPATION IN THIS S U R V E Y ! Please return the questionnaire in the stamped, pre-addressed envelope. -81 -

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