Journal of Purchasing & Supply Mana

oner

*,

ryang

d for

rche

ctors

racte

he

ark

ganiz

taking, and order fulllment/distribution of products,

marketplace), this study explores the issues related toelectronic marketplace (e-Marketplace, hereafter).

fundamentally from the traditional procurement pro-

efcient organizational purchasing.The objective of this research is to identify the factors

ARTICLE IN PRESSthat inuence corporate e-Marketplace adoption froman IT innovation perspective.This paper is organized as follows. The next section

reviews the existing literature on e-Marketplace and thetheoretical framework of the research. The research

*Corresponding author. Tel.: +82-2-958-3666, fax: +82-2-958-

3604.

E-mail addresses: ybjoo@kgsm.kaist.ac.kr (Y.-B. Joo),

domino2@unitel.co.kr (Y.-G. Kim).1478-4092/$ - se

doi:10.1016/j.puservices, or information (Kalakota and Whinston, 1997),the involved companies can be studied from both thebuyers and sellers points of view. From the purchasingcompanys point of view, B2B electronic commercefacilitates procurement innovations to result in reducedpurchase price, reduced cycle time, and improved suppliersourcing (Turban et al., 2000). Of the two primary formsof B2B electronic commerce (interorganizational systemsbased on electronic data interchange (EDI), electronic

cess, from an organizational perspective, adopting ane-Marketplace requires an elaborate innovation decisionprocess by which an innovation is communicatedthrough certain channels, over time, among the mem-bers of the target organization (Rogers, 1983).e-Marketplace initiative can also be perceived as abusiness integration innovation, which, when success-fully implemented, can be instrumental in developingand managing qualied suppliers for effective and1. Introduction

The Internet can provide the most economical business-to-business (B2B) electronic commerce platform forlinking companies without additional network implemen-tation. B2B electronic commerce can contribute to lowerpurchase costs, reduced inventory, enhanced efciency oflogistics, as well as to increased sales and lower marketingcosts (Baron et al., 2000). Since supply chain managementencompasses the coordination of order generation, order

So far, prior research (Gupta, 1997) on B2Be-Marketplace has focused on analyzing its operatingbenets, not addressing the factors that may impact thecorporate purchasing departments decision to sourceelectronically. Field applications and technical aspectsof e-Marketplaces have been discussed at signicantlength; but limited empirical research has been con-ducted to understand the factors related to thee-Marketplace adoption.Since procurement through an e-Marketplace differsDeterminants of corporate adoptitheory p

Young-Beum Joo

Graduate School of Management, KAIST, 207-43 Cheong

Received 9 September 2002; received in revise

Abstract

Despite the growing interest and attention from IT resea

e-Marketplaces has been limited. This study identies the fa

perspective. Innovation, environment, and organization cha

e-Marketplace based on a survey of 39 manufacturing rms. T

have positive relationships with organizational adoption of e-M

relative advantages did not have a signicant impact on the or

r 2004 Elsevier Ltd. All rights reserved.

Keywords: B2B EC; e-Marketplace; Innovation theorye front matter r 2004 Elsevier Ltd. All rights reserved.

rsup.2004.01.001gement 10 (2004) 89101

of e-Marketplace: an innovationspective

Young-Gul Kim

ri-Dong, Dongdaemoon-Gu, Seoul 130-012, South Korea

m 6 January 2004; accepted 27 January 2004

rs and practitioners, empirical research on the adoption of

inuencing e-Marketplace adoption from an IT innovation

ristics were tested as determinants of the adoption of an

ndings indicate that external pressure and organizational size

etplaces. Contrary to the prior innovation research, however,

ational adoption of an e-Marketplace.

model and hypotheses are proposed in section three.Section four reports on the data collection method,sample characteristics, and reliability and validity of theinstruments. Section ve provides analysis of the resultsand discussions on the research ndings. In section six,we conclude with the implications and limitations of theresearch.

2. Developing a framework

2.1. B2B, e-market, and e-Marketplace

The Internet and electronic commerce especially havemuch to offer in the way of increasing the efcienciesand competitive advantage of procurement (Carter et al.,2000). B2B electronic commerce is a fundamental shiftin the manner by which rms are interacting with buyersand suppliers (Senn, 2000). Senn explores two formsof B2B: (1) interorganizational information systems

rely on managerial decisions to coordinate the ows(Archer and Yuan, 2000). Choudhury (1997) suggests athird form of IOIS. He denes the following categories:(1) Electronic Dyads: bilateral IOISs where EDI linksare common examples; (2) Multilateral IOISs: such aselectronic markets; and (3) Electronic Monopolies:IOISs that support a sole source relationship for aproduct or set of products usually by the buyers choice.In addition, he characterized the electronic market as amultilateral IOIS to distinguish it from the bilateralIOISs, such as EDI links, where a rm establishesindividual electronic links with each of a select set oftrading partners.In this study, e-Marketplace refers to an electronic

market in cyberspace with a price-making mechanismsuch as catalog aggregators, auction, reverse auction, orexchange. The terms marketplace, electronic mar-ket, e-Market, and e-Marketplace all refer tothe same concept. e-Marketplaces can be categorizedinto three types; i.e. sell side e-Marketplace, buy side

ARTICLE IN PRESS

rd pa

SearcPurcha

Auctio

atalogatalogatalogatalog

PurchasingSoftware

f e-my sidel sideparty

om R

Y.-B. Joo, Y.-G. Kim / Journal of Purchasing & Supply Management 10 (2004) 8910190ERP/DBMS

CatalogCatalogCatalogCatalog Type o

Bu Sel 3rd

* Adapted fr(IOIS): a long-established, but rapidly evolving part ofbusiness processes in many rms. These forms of IOISare commonly referred to as EDI systems; and (2)electronic markets: a vehicle for expanding the base ofbuyers and sellers. The public, global Internet, and itsprinciple application, the World Wide Web, provide ahighly visible platform for electronic markets.Malone et al. (1987), based on Williamson (1975)s

work, suggest two forms of IOIS for coordinating theow of goods and services in the marketplace, marketsand hierarchies. Markets coordinate the ow throughsupply and demand forces, while hierarchies (with pre-determined customers and suppliers, such as manufac-turing assembly plants and their component suppliers)

3Buy Side

Company ACompany ACompany ACompany APurchasing

Software

ERP/DBMS

CCCCCatalogCatalogCatalogCatalog

Company MCompany MCompany MCompany M

InternetInternetInternetInternetFig. 1. e-Marketplace framework. Ae-Marketplace, and 3rd party e-Marketplace (Giuniperoand Sawchuk, 2000). Fig. 1 shows an integratedframework of the three types of e-Marketplaces,depicting how the various technologies described areinterrelated and used by companies to conduct procure-ment (Rajkumar, 2001).

2.2. e-Marketplace related research

Previous research emphasizes the effect of newtechnologies on organizational processes (Heide andWeiss, 1995) but does not discuss the inuences ofelectronic markets, and the extant case-based researchfocusing in electronic markets limits itself to the

rty

h/se

n

Sell Side

Company BCompany BCompany BCompany B

E-commerce Server

ERP/DBMS

CatalogCatalogCatalogCatalog

Company NCompany NCompany NCompany N

ERP/DBMS

CatalogCatalogCatalogCatalog

E-commerceServer

InternetInternetInternetInternet

arketplace

ajkumar (2001)

dapted from Rajkumar (2001).

motivation (like relative advantage in innovation

ARTICLE IN PRESSsing &characteristics of the market maker, the rm thatmanages and administer the market (e.g., Bakos andBrynjolfsson, 1993). More recently, several studiesexamined the roles, specic implementation issues, andadoption of e-Marketplace to be discussed below.

2.2.1. Roles of e-Marketplace

Bakos (1998) argued that internet-based electronicmarketplaces leverage information technology to per-form functions of market which consist of matchingbuyers and sellers, facilitation of transactions, andinstitutional infrastructure, with increased effectivenessand reduced transaction costs, resulting in moreefcient, friction-free markets. Bailey and Bakos(1997) suggested evidence of emerging roles for electro-nic intermediaries, including aggregating, matchingsuppliers and customers, providing trust, and providinginter-organizational market information from an ex-ploratory study of 13 intermediary cases in electronicmarkets. Choudhury et al. (1998) argued that anelectronic market is an inter-organizational informationsystems through which multiple buyers and sellersinteract to accomplish one or more of the followingmarket-making activities: (1) identifying potential trad-ing partner, (2) selecting a specic partner, and (3)executing the transaction. In addition, they empiricallyvalidated their arguments in the context of oneelectronic market: Inventory Locator Service in theaircraft parts industry.

2.2.2. Issues of e-Marketplace

Croom (2000) examined the impact of the web-basedprocurement system on MRO purchasing by conductinga Delphi study. He pointed out that the adoption ofweb-based procurement systems would have an impacton the nature of the governance structures for themanagement of purchased MRO items. However, hisresearch has been exploratory, intended to identify keyconcerns and opportunities for e-Marketplace ratherthan examine the relationship between dominant vari-ables in the adoption of e-Marketplace. Rajkumar(2001) suggests the technical and business issues inimplementing the internet-based procurement systems.In his study, he divided the internet-based purchasingsoftware technology into four types such as e-procure-ment (purchasing software), e-catalog, e-auction, ande-Marketplace. Archer and Yuan (2000) argue that sincethe core of e-commerce is information and communica-tions, support for managing customer relationships isavailable to those who know how to use it. Theyillustrate how internet-based technology can be used toencourage and facilitate customer-business relationshipsthrough a business procurement life cycle. Baron et al.(2000) identied the benets of e-catalogs and their usein the web-based B2B procurement/purchasing system.

Y.-B. Joo, Y.-G. Kim / Journal of PurchaThey also identied a variety of problems in adoptingtheory) and ability (like slack resource or IT sophistica-tion) are important in determining the nature ofparticipation in the electronic market. However, theyinvestigated only one type of electronic market in asingle industry, therefore their results may have limitedgeneralizability. Deeter-Schmelz et al. (2001) investi-gated the impact of supplier support on buyersadoption of the Internet for corporate-related purchas-ing activities. According to the study, suppliers play acritical role in the buyers adoption of B2B onlinepurchasing. Min and Galle (1999) identied strategicvariables that inuence the adoption of cyber-purchas-ing. Their major nding is that the buying rm withlarge purchase volume is a heavy user of EC and is likelyto force its suppliers into the EC network. e-Market-place related research is summarized in Table 1.

3. Research model and hypotheses

While many variables have been identied as im-portant in inuencing the innovation adoption decision,researchers (Rogers, 1983; Tornatzky and Klein, 1982)indicated that the ndings of the prior studies were notconsistent, except for a few empirically supportedvariables. Additionally although researchers often strivetoward developing a comprehensive research model,incorporating all potentially important variables, this isoften not possible. Therefore, we focused our researchon a parsimonious model, including technological,environmental, and organizational contexts that hadpreviously shown strong empirical support and weredeemed relevant in the e-Marketplace adoption context.The model proposes the technological context of ane-Marketplace, the external environment, and organiza-tional characteristics as determinants of the e-Market-e-catalogs such as culture clash, supplier reluctance,system incompatibility, processing bottlenecks, securityholes, hidden costs, and so forth. Barratt and Rosdahl(2002) demonstrated that there are numerous enablingand inhibiting factors that determine the type ofe-Marketplace, its structure in terms of ownership,centricity, often reecting the current state of theindustry that the e-Marketplace operates in. Theyintroduced as the main inhibitors to progress such ascapital, a challenge in the integration between thee-Marketplace and the buyers network, and differenttax laws among nations.

2.2.3. Adoption of e-Marketplace

Grewal et al. (2001) investigated determinants oforganizational participation in B2B electronic marketsby survey research from a third-party electronic marketfor jewelry, Polygon. The results indicated that both

Supply Management 10 (2004) 89101 91place adoption. The technological context involves

ARTICLE IN PRESS

gges

iers a

and

organ

s and

ransa

rastru

ntial

c pa

ansac

f MR

rketp

etplac

rcha

t-bas

-cata

sing &Table 1

e-Marketplace related research

Category Authors Major nding/su

Roles of

e-Marketplace

Bailey and Bakos (1997) Aggregating

Matching suppl

Providing trust,

Providing inter-

Bakos (1998) Matching buyer

Facilitation of t

Institutional inf

Choudhury et al. (1998) Identifying pote

Selecting a speci

Executing the tr

Issues of

e-Marketplace

Croom (2000) E-Marketplace o

efciency gains.

Impact of e-Ma

Delphi study

Rajkumar (2001) Type of e-Mark

procurement (pu

Archer and Yuan (2000) Usage of interne

Baron et al. (2000) The benets of e

(WBPS)

Y.-B. Joo, Y.-G. Kim / Journal of Purcha92relative advantages. Attributes of the environmentalcontext are external pressure and buying power.Attributes of the organizational context include slackresources and size.Different industries may have different contexts on

the adoption of a new technology such as e-Market-place. To eliminate the potential interfering effects of theindustry differences, this study only examines themanufacturing industry where procurement is generallyconsidered as a major function (Fig. 2).

3.1. Technological context

3.1.1. Relative advantage

Relative advantage refers to the degree to which a newtechnology is perceived as being better than the currentmethod (Rogers and Shoemaker, 1971). The most basicconsiderations in new technology adoption are costs totransition to new technology and advantages (orbenets) materialization from the new technologyintroduction; the greater advantage is perceived com-pared to the current method, the more probable an

Barratt and Rosdahl

(2002)

The major inhibitors

Adoption of

e-Marketplace

Grewal et al. (2001) Both motivation and

e-markets.

306 from Polygon su

Deeter-Schmelz et al.

(2001)

Suppliers play a critic

232 purchasing profe

Min and Galle (1999) The buying rm with

suppliers into the EC

Empirical study of 65izational market information

sellers

ctions

cture

trading partner

rtner

tion

O may be a so-called killer application on the basis of potential

lace for MRO purchasing

e

sing software), e-catalog, auctions, and marketplaces

ed technology through a business procurement life cycle

logs and their use in Web-based B2B procurement /purchasing systemstions

nd customers

Supply Management 10 (2004) 89101organization will adopt the new technology. Thisperception, in the context of e-Marketplace adoption,can be operationalized as a relative advantage factor.Relative advantage is not the same as awareness. Whileawareness is mainly concerned with the reception ofinformation about e-Marketplaces, relative advantagecaptures the extent of agreement with the claimedbenets relative to the adopters local conditions. Whileawareness is a precondition of forming a belief, it is thelatter that drives an adoption decision. Thus we maysuggest the following hypothesis.

H1. Relative advantage will be positively related toe-Marketplace adoption.

3.2. Environmental context

3.2.1. External pressure

External pressure refers to inuences from theorganizational environment. The two main sources ofexternal pressure to e-Marketplace adoption are (1)competitive pressure, and (2) imposition by others,

and enablers of e-Marketplace

ability are important in determining the nature of participation in B2B

bscribers, jewelry trader conducting EC

al role in the adoption of this new innovation.

ssional

large purchase volume is a heavy user of EC and is likely to force its

network.

6 US purchasing organizations.

ARTICLE IN PRESS

advant

ical C

ketplaption

e-Ma

sing &including organizations such as parent company,industry associations, and governmental units (Hartand Saunders, 1998). Competitive pressure refers to thelevel of e-Marketplace capability of the rms industryand, most importantly, capability of its competitors.Kimberly and Evanisko (1981) have found positiveassociations between competition and innovationadoption. As more competitors become e-Market-place-capable, rms are more inclined to adopt an e-Marketplace in order to maintain their own competitiveposition.Imposition from others is expected to be a critical

factor for e-Marketplace adoption by rms; as weakerparts in relationships with organizations such asgovernmental units or parent companies, which evaluate

Control Variable : Industry type- Focus on Manufacturing

Buying power

External pressure

e-MarAdo

Fig. 2. A model forRelative

Technolog

Environmental Context

Y.-B. Joo, Y.-G. Kim / Journal of Purchacompany achievements annually, companies are extre-mely susceptible to impositions by their stronger parts(Hart and Saunders, 1998). Such impositions areespecially prevalent in the case of e-Marketplace becauseof its role as a hub of business transactions.Thus it is hypothesized that companies facing a higher

level of external pressure are more likely to adopt thee-Marketplace. Therefore,

H2. External pressure will be positively related toe-Marketplace adoption.

3.2.2. Buying power

Buying power refers to the degree to which a buyingrms inuence is perceived in the market. Suppliers aretypically dependent upon customers that provide themwith a large proportion of their sales revenue. Power isthe rms capacity to inuence change in another rmthat is dependent on the resources of that rm(Cartwright, 1965). In general, the greater the percen-tage of revenue from a particular customer, or the largerthe supplier pool from which a customer can select aproduct or service, the greater is the suppliers depen-dency on the customer. In these situations, a buying rm(customer) may exert power over the dependent supplierto follow a particular course of action it dictates (Hartand Saunders, 1998). According to the literature on EDIadoption, use of coercive power to inuence a rm touse EDI has been employed by a number of largecompanies where supplier reselection was a viablepossibility (Mukhopadhyay et al., 1995). Since informa-tion and communication links via electronic commercerequire bilateral commitment, it is necessary for bothtrading partners to participate in electronic commercetrading. A rm with buying power is more likely toexpect its trading partners to participate in e-Market-

rketplaces adoption.age

Slack resources

Size

Organizational Context

ontext

ce

Supply Management 10 (2004) 89101 93place, because perception of buying power is animportant determinant of decisions for terms andconditions of business. Based on these viewpoints, thefollowing hypothesis is proposed:

H3. Buying power in a market will be positively relatedto e-Marketplace adoption.

3.3. Organizational context

3.3.1. Slack resources

Slack resources refer to the degree to which a pool ofresources is perceived to be in excess. A nancialmeasure of slack is typically used, such as changes inan organizations budget and sources of nance orchanges in expenditures for the organizations mainactivity. Miller and Friesens (1982) measure includesboth nancial and human resource slack. In general,greater absolute income and surplus would boostcommitment to the investment of resources requiredfor the innovation implementation and accompanied

(Damanpour, 1991). Hence:

Operational denitions of the study instruments areshown in Appendix A. For each variable, a multiple-item scale was developed where each item was measuredbased on a 7 Likert scale from strongly disagree tostrongly agree, except for the measure for organiza-tional size.Where possible, constructs that have already been

developed, and validated by other researchers wereadopted. If the constructs had not been operationalizedpreviously, they were developed from the relevant

ARTICLE IN PRESSsing &H5. Size of organization will be positively related toe-Marketplace adoption.

4. Research method

4.1. Data collection

Data collection was carried out in the form of a eldsurvey. The survey was performed between Septemberand October, 2001. Pilot testing was done by adminis-tering the questionnaire to two senior procurementprofessionals working for manufacturing rms andacademicians with experience in this area. Feedbackfrom the pilot testing was used in rening theH4. Slack resources will be positively related toe-Marketplace adoption.

3.3.2. Size

Resource availabilities and relative insulation to riskwhich come from market power and a diversiedportfolio of investment opportunities should induce largerrms in a competitive market to be more likely (or lesshesitant) to engage in innovation activities (Schumpeter,1950). As Schumpeter indicated, size is frequently thoughtto be the most important factor in technology innovationbecause large rms are seemingly better endowed withresources than smaller rms. In addition, it would appearreasonable to suppose that large organizations have morepotential to adopt an e-Marketplace than smallerorganizations simply because of their larger scale ofprocurement volume and operations. Also, since highcosts may be incurred in implementing an efcient andeffective e-Marketplace, a large rm is in a better positionto engage in an e-Marketplace than a small rm. Bakos(1991) indicated that the cost and expertise required tobuild and manage electronic market systems might favorbig rms, since smaller rms might individually lack theresources for a system large enough to achieve theeconomies of scale necessary to establish EC informationlinks. Thus, we expect that;organizational change. As Kwon and Zmud (1987) haveasserted, successful innovation, occurs when sufcientorganizational resources (sufcient developer and usertime, sufcient funding, sufcient technical skills, etc.)are directed, rst toward motivation, then towardsustaining the implementation effort.It is expected that slack resources are positively

related to organizational innovation because they allowan organization to purchase innovation objects, absorbfailure, bear the costs of instituting innovations, andexplore new ideas in advance of an actual need

Y.-B. Joo, Y.-G. Kim / Journal of Purcha94questionnaire.Sample targets were selected with systematic sam-pling. In systematic sampling, every kth sampling unit ofthe population is selected after the rst sampling unit isselected at random from the total sampling units(Frankfort-Nachmias and Nachmias, 1996). 89 rmswere selected from the 390 manufacturing rms listed onthe Korea Stock Exchange.Out of the 89 questionnaires mailed, 42 responses

were received representing a response rate of 47.19%.Since three responses were unusable, thirty-nine caseswere analyzed for this study.The respondents and non-respondents were compared

with regard to rm size. Results of t-tests show there areno signicant differences between non-respondents andrespondents at the a 0:05 signicance level in Table 2.

4.2. Sample characteristics

We summarize the respondent characteristics inTable 3 in terms of number of employees, volume ofprocurement, procurement type, and type of e-Market-place used. Among the 39 organizations, 23 (59%) ofthem had below 1000 employees. Annual procurementvolume of most of the sample rms (82%) ranged from$1 million to below $1 billion. Seventeen rms adoptede-Marketplaces. Almost all the adopters have usedtraditional methods and EDI for procurement at thesame time. For the questions allowing multiple answers,respondents indicated that they have procured throughthe categories of buy-side, sell-side, and 3rd partymarketplaces almost equally. In Table 4, a prole ofthe respondents by position is shown.

4.3. Operationalization of variables

Table 2

t-test results for non-response bias

Type Mean of rm sizea t-value P-valueb

Non-respondent (N 50) 6.17 1.37 0.17Respondents (N 39) 6.59

aFirm size: ln of number of employees.bP-value of 2-tail t-test.

Supply Management 10 (2004) 89101literature and validated through pilot testing.

ARTICLE IN PRESSsing &Table 3

Prole of the respondent companies

Range Frequency Percent (%)

Y.-B. Joo, Y.-G. Kim / Journal of PurchaThe dependent variable, e-Marketplace adoption wasdetermined by a binary measure: adopters or non-adopters. Organizations were classied as adopters ifthey decided to adopt e-Marketplaces; or have beenprocuring through e-Marketplaces.

(1) Profile by number of employees

Less than 100 2 5.1

100 to below 250 7 17.9

250 to below 500 7 17.9

500 to below 750 6 15.4

750 to below 1000 1 2.6

1000 to below 5000 12 30.77

Above 5000 4 10.3

Unanswered 0 0

Total 39 100

(2) Profile by volume of procurement

Less than $1 million 2 5.1

$1 million to below $10 million 5 12.8

$10 million to below $50 million 7 17.9

$50 million to below $100 million 11 28.2

$100 million to below $500 million 6 15.4

$500 million to below $1 billion 3 7.7

$1 billion and above 4 10.2

Unanswered 1 2.6

Total 39 100

(3) Profile by procurement type

T 19 48.7

T+e 7 17.9

T+EDI 3 7.7

T+e+EDI 7 17.9

e+EDI 2 5.1

E 1 2.6

EDI 0 0

Unanswered 0 0

Total 39 100

(4) Profile by type of e-Marketplace used

Buy-side e-Marketplace 12 38.7

Sell-side e-Marketplace 9 29

3rd party e-Marketplace 10 32.2

Total 31 100

T: Traditional method, e : e-Marketplace.

e-Marketplace adopter : 17, non-adopter : 22.

Multiple choices by 17 adopters.

Table 4

Prole of the respondents by position

Position Frequency Percent (%)

Staff 9 23

Manager 12 30.7

2nd line manger 9 23

Director 6 15.3

Executive 3 7.7

Unanswered 0 0

Total 39 100Organizational size was measured using the number ofemployees. Because the size distribution of the sample washighly skewed, we adopted a logarithmic transformationto reduce the variance (Kimberly and Evanisko, 1981).

4.4. Validity and reliability of measurement instrument

4.4.1. Content validity

Content validity denes how representative andcomprehensive the items were in representing thehypothesis. This is assessed by examining the processthat was used in generating the scale items (Straub,1989). In this research, denitions of relative advantage,external pressure, and slack resources were developedbased on the review of innovation theory and research ininformation systems. Six items were selected for relativeadvantage, four items for external pressure, and fouritems for slack resources. For developing scales forbuying power, we used the power-political theory andPorters research (Porter and Millar, 1985).

4.4.2. Construct validity and reliability

In this study, we follow Straubs (1989) processes ofvalidating instruments to test construct validity in termsof convergent and discriminant validity. For testingconvergent validity, we evaluated the item-to-totalcorrelation that is the correlation of each item to thesum of the remaining items. All items item-to-totalcorrelation score was larger than 0.4.The discriminant validity of each construct was assessed

by principal component factor analysis with VARIMAXrotation. As shown in Appendix C, the conrmatoryfactor analysis for four independent variables yields fourdistinct factors: relative advantage, external pressure,buying power, and slack resources. Factor loadings forall variables were greater than 0.44 with no cross-constructloadings, indicating acceptable discriminant validity.Together, the four observed factors accounted for 74.8%of the total variance. To validate the appropriateness ofthe factor analysis, we applied several measures to theentire correlation matrix. Here, Bartletts test of sphericity(p 0:000) indicates the statistical probability that thecorrelation matrix has signicant correlations among atleast some of the variables, and the KaiserMeyerOlkinmeasure of sampling adequacy (0.638) showed acceptablesampling adequacy (Hair Jr. et al., 1998).The Cronbach Alpha coefcient was used to assess

reliability of the measures (Straub, 1989). As shown inAppendix C, reliability coefcients were acceptable forall constructs, ranging from 0.847 for relative advantageto 0.948 for slack resources.

4.4.3. Simple correlation analysis for all measured

variables

A correlation analysis between all variables in the

Supply Management 10 (2004) 89101 95proposed model is shown in Table 5. First, Table 5

shows simple correlations between adoption and affect-ing variables for this study. The important concern inTable 5 is the multi-collinearity that may exist amongthe independent variables (Cohen and Cohen, 1983).The correlations among independent variables rangefrom 0.043 to 0.345 in Table 5. We calculated the valueof Tolerance. Because it is more than 0.1 for allvariables with regression analysis, we believe that multi-collinearity is not a serious problem for the proposedmodel.

5. Results and discussion

5.1. Results

We used the multivariate discriminant analysis as thedata analytic technique. For the purpose of comparativeanalysis, the group-wise means for all the variables havealso been computed. Results of the discriminant analysisare shown in Table 6.Step-wise variable selection, with the selection criteria

of minimizing Wilks Lambda and a tolerance level of

0.001, was used to generate the discriminant function.The value of Wilks lambda, the Chi-square value, andthe level of signicance are shown in Table 6. It issignicant at po0:1:The standardized discriminant coefcients and dis-

criminant loadings for the variables are given in Table 6.While there are no rigid rules about the validity ofdiscriminant loadings, the general guidelines are thatvalues above 0.3 are satisfactory and acceptable (Pre-mkumar and Ramamurthy, 1995).Two variables: external pressure and size were found

to have discriminant loadings above the cut-off value.These variables also had high discriminant coefcients,thereby indicating that they are important discrimina-tors by both criteria. Mean, standard deviation, andunivariate F-statistics (in Table 6), testing for equality ofgroup means for the variables in the adopter andnon-adopter groups are also given in Tables 6 and 7for better understanding of the discriminant analysisresults.

ARTICLE IN PRESS

Table 5

Correlation analysis

Variable 1 2 3 4 5 6

1. ADV

2. PRE 0.0433. PWR 0.345 0.1314. SLK 0.067 0.243 0.151

Deg

5

Disc

0.0.

0.0.

0.

Non

18 (

5 (2

Y.-B. Joo, Y.-G. Kim / Journal of Purchasing & Supply Management 10 (2004) 8910196Relative advantage 0.083

External pressure 0.706

Buying power 0.143Slack resources 0.262Size 0.707

Total

Classification accuracy

Non-adopter 22

Adopter 17

Overall accuracy

Chance accuracy5. SIZE 0.070 0.254 0.126 0.3056. ADP 0.012 0.404 0.096 0.062 0.377

po0:05:

Table 6

Results of discriminant analysis

Wilks lambda Chi-square

0.737 10.555

Discriminant coefcientAnother important test is to examine the ability ofthese functions for accurate classication. The classica-tion results are also shown in Table 6. While the overallclassicatory ability is reasonably high (76.9%), it has tobe compared with classicatory ability of a chancemodel to establish its superiority. Chance accuracy isdetermined by the formula: p2 1 p2; where p is theproportion of the sample in the rst group. In our case,p was 0.564, and therefore the accuracy of the chancemodel was 50.8%, which was much lower than ourdiscriminant models (76.9%).Table 7 shows the results of the hypotheses tests. As

indicated in Table 7, two hypotheses (H2 and H5) weresupported.

rees of freedom Signicance

0.061

riminant loading Group mean (SD)

Non-adopter Adopter

026 5.41 (0.95) 5.43 (0.87)

738 2.05 (1.17) 3.17 (1.42)

161 4.23 (1.27) 4.00 (1.11)

104 4.48 (1.80) 4.68 (1.38)

681 5.92 (1.41) 7.16 (1.71)

-adopter Adopter

81.8%) 4 (18.2%)

9.4%) 12 (70.6%)

76.9%

50.8%

ARTICLE IN PRESSsing &5.2. Discussion of the results

The goal of this study was to extend understanding ofe-Marketplace adoption in manufacturing rms byidentifying factors that distinguish adopter rms fromnon-adopter rms. To measure the facilitators ofe-Marketplace adoption, we introduced ve variables,relative advantage, external pressure, buying power,slack resources, and size. External pressure and size werefound to be the facilitators of e-Marketplace adoption,while relative advantage, buying power, and slackresources were found to be insignicant. In the followingsection, we discuss the result on each of the ve factorsin more detail.

5.2.1. Relative advantage

In our study, relative advantage was not found to besignicant in distinguishing adopter rms from non-adopter rms. One explanation for the insignicance ofrelative advantage in manufacturing rms might be theequally high awareness of e-Marketplace benets byboth the adopter rms and non-adopter rms (cf. Seethe group mean values: non-adopter=5.41, adop-ter=5.43) due to drastic proliferation of the Internetand promotional efforts by the B2B related rms andorganizations.That is, non-adoption may not be due to lack of

perceived relative advantage, but due to perceivedbarriers such as security risk, resistance to change, andlack of implementation experience.

5.2.2. External pressure

External pressure was found to have signicantly

Table 7

Results of hypothesis tests

Hypotheses Independent variables F-Statistic Results

H1 Relative advantage 0.006 Reject

H2 External pressure 7.218 SupportH3 Buying power 0.341 Reject

H4 Slack resources 0.143 Reject

H5 Size 6.131 Support

po0:1; po0:05; po0:01:

Y.-B. Joo, Y.-G. Kim / Journal of Purchahigh values in discriminant coefcients and discriminantloadings. Examination of the mean value ofthe variables in the two groups reveals that adoptersof e-Marketplace seem to have had signicant pressurefrom external sources to adopt e-Marketplaces com-pared to non-adopters. External pressure can there-fore be considered as important facilitators to differ-entiate adopters from non-adopters from the buyerperspective.In our study, external pressure consists of three

subconstructs in the literature: competitive pressure,enacted trading partner power, and industry (includinggovernment) pressure. Among them, competitive pres-sure seems to be the key in determining the overall levelof external pressure to adopt e-Marketplaces becauserms are more inclined to adopt e-Marketplaces in orderto maintain their own competitive position, as morecompetitors become e-Marketplace-capable.Furthermore, external pressure espoused by govern-

ment, government-related, and/or collective associationsmay act more strongly when the focus is on a specicapplication, such as electronic bidding for transparenttrades, rather than on the more dispersed range ofapplications sampled in this study.

5.2.3. Buying power

Contrary to our expectations, buying power wasfound to have an insignicant relationship with theadoption of e-Marketplace. We may interpret thatbuying power involves two aspects. First, it encouragesbuying rms to adopt e-Marketplaces because theyhave a strong belief in trading partners participatingin the same e-Marketplaces. Secondly, it may discouragebuying rms from adopting e-Marketplaces becauseit breeds complacency and hinders a generation ofmotivation to innovation. That is, the result seemsto reect the mixed effects of the buying power:both increasing and decreasing adoption of e-Market-places.Another reason might be because, in manufacturing

rms, most of the procured products are raw materials,not MRO. For such rms, private networks (e.g. EDI)are often implemented with the most important existingtrading partners. In fact, on the upstream side, a typicalgoal for such applications as EDI has been to reduce thetotal number of suppliers and enhance the quality andefciency of the overall procurement function (Croom,2000). For a strategic product, they may not want toshift from hierarchical to market relationships withsuppliers.

5.2.4. Slack resources

Slack resources were found to have an insignicantrelationship with the adoption of e-Marketplaces. Thequestion about slack resources in this research wasabout the extra resources including nancial capability,human resources and information technology supportcapability. Both groups answered that they have aslightly high level of slack resources.One possible explanation for the lack of difference

between adopters and non-adopters is that the intro-duction of e-Marketplace does not require as muchnancial and technological investment or human re-sources from the buying rms as adoption of manyother ITs (e.g. ERP, EDI, etc.) would require. Anotherreason could be an inverse U-shaped relationshipbetween slack and innovation in organizations (Nohria

Supply Management 10 (2004) 89101 97and Gulati, 1996). They argued that too little slack is

with the adoption of e-Marketplace. This result is

ARTICLE IN PRESSsing &consistent with prior ndings in the literature. Forexample, many studies (Rogers, 1983; Min and Galle,1999) have examined the factors leading to organiza-tional innovativeness, which include, among others,organizational size. Organizational size is also a possibleexplanation for the greater rate of EDI adoption amongvery large rms (Chwelos et al., 2001), as organizationsize has consistently been recognized as a driver oforganizational innovation (Damanpour, 1991). Largerorganizations tend to adopt IT easily due to greatereconomies of scale. For instance, they are betterpositioned to reap greater procurement cost savingsfrom e-Marketplace due to its high volume of procure-ment than the small rms.

6. Summary and conclusion

6.1. Summary

This study, based on prior research in innovationadoption, has identied ve variables under three broadcategories (technological, environmental, and organiza-tional contexts) and evaluated their inuence on themanufacturing rms decision to adopt e-Marketplaces.A survey instrument was developed to measure thesevariables and data were collected from 39 organizationsusing a mail survey. Discriminant analysis was used toidentify the determinants for e-Marketplace adoption.We conclude that, in case of manufacturing rms,external pressure and rm size seem to be the importantdeterminants of the decision to adopt an e-Marketplace.Firms that perceive more external pressure and rms thatare large in size are more likely to adopt e-Marketplaces.This study has also provided evidence that innovationdetrimental to innovation because it discourages anykind of experimentation whose success is uncertain.Equally, too much slack is detrimental to innovationbecause it breeds complacency and a lack of disciplinethat makes it possible that more bad projects will bepursued than good. If it is assumed that both too muchand too little slack may be detrimental to innovation,the proper amount of slack would need to be determinedin the future studies.Finally, Singh (1986) stated that absorbed slack which

corresponds to excess costs in organizations is related torisk taking and unabsorbed slack which corresponds toexcess, uncommitted liquid resources is not. Accordingto Singh, the relationship between innovation and slackwould depend on the type of slack measured, and thetwo types of slack would need to be separated.

5.2.5. Size

Firm size was found to have a signicant relationship

Y.-B. Joo, Y.-G. Kim / Journal of Purcha98theories can be successfully applied to the study ofcorporate adoption of e-Marketplaces, particularly inthe context of the manufacturing industry.

6.2. Implications for future research

We developed and tested a simple model thatcategorized factors affecting e-Marketplace adoption.Strengths of this model may be its parsimony andderivation of most factors (except buying power) fromprevious conceptual and empirical research. Althoughour exploratory investigation of the model has providedpreliminary ndings on the adoption of e-Marketplace,further research is needed to enhance our understandingof this subject. Future research can proceed in severaldirections. Since we have empirically validated themodel in the context of the buyer side, future studiescan examine the adoption of e-Marketplace from thesellers side. Future studies can also target the industries,other than manufacturing.Another topic of interest would be to examine the

phases of adoption/diffusion, and identify the factorsand their inuence on the diffusion of e-Marketplaces.As with any research model, there is a danger that otherimportant factors may have been ignored. It will beworth studying models including additional variablessuch as obstacles, adopting rms capabilities, etc.

6.3. Implications for management

From a managerial standpoint, the ndings of thisstudy suggest that organizations tend to be affectedmore by their environmental condition than by thepotential benets from adoption. As long as organi-zations do not think that they are under pressure fromexternal source to adopt a new procurement innovation,they would rather maintain their current method. Thusif successful adoption of e-Marketplace is believed toprovide an organization with competitive advantagesand exibility in procurement to cope with the dynamicbusiness environment, procurement managers shouldscan its external environment continually and commu-nicate the external pressure for e-Marketplace adoptionto their top management.Secondly, since organizational size was found to be a

signicant factor of e-Marketplace adoption, e-Market-place providers such as SAP, Ariba, Commerce One,etc. might be motivated to customize their e-Market-place solutions, targeting relatively large rms.Lastly, contrary to our belief that rms with slack

resource would be more likely to adopt e-Marketplaces,this study found no evidence for such belief. Thus,procurement managers need to realize that other rmsare investing in the e-Marketplace not in an experi-mental way when slack resources are available but in astrategic way to utilize the e-Marketplace to produce

Supply Management 10 (2004) 89101such organizational slack.

6.4. Limitations

The study has several limitations that need to berecognized.First, the cross-sectional nature of the study limits

our ability to imply causality in the relationshipsamong the variables. Thus, the results of the surveymay have been affected by the fact that perception oftechnology changes as the organization uses thetechnology.Second, since the sample population for this study

was restricted to manufacturing rms, the results canonly be generalized for the manufacturing rms.

Third, the small sample size limits the power of ourstatistical analysis. A large-scale eld survey could be usedto collect data that can validate the model on a largerscale and provide greater generalizability of the results.Fourth, this research used the key informant method

for data collection. Acknowledging its limitations,future research on this topic should attempt to obtainmultiple sources within the organizations.Finally, this study used a survey sample limited to

Korean organizations. Between countries, maturity of acertain technology and the decision process for adoptinga technology can be different. These differences mayaffect the assumptions in this research.

ARTICLE IN PRESS

Table 8

Variables Operational denition Related literature Indicators

Relative advantage The degree to which an e-Marketplace is

perceived as being better than current

method

Rogers, 1983; Iacovou et al. (1995) 6 items 7 point Likert

scale

External pressure The extent of pressure exerted by the

competitive environment and the

imposition by trading partners, parent

company, or regulations

Chwelos et al. (2001); Iacovou et al. (1995);

Premkumar and Ramamurthy (1995)

6 items 7 point Likert

scale

Buying power The degree to which buying rms

inuence is perceived in the market

Porter and Millar (1985); Rogers and

Shoemaker (1971);

4 items 7 point Likert

scale

Slack resources The degree to which the pool of resources

is perceived in excess

Iacovou et al. (1995); Damanpour (1991) 4 items 7 point Likert

scale

Size The size of the organization Damanpour (1991) 1 item

Appendix A

Operational denition of key constructs (Table 8).

agree

ent

rocu

ace

lace

rtner

artne

nd/or

Appendix B

Measurements of instrument of key constructs (Table 9).

Y.-B. Joo, Y.-G. Kim / Journal of Purchasing & Supply Management 10 (2004) 89101 99Table 9

Construct Items (anchors: strongly disagree/ strongly

Relative advantage 1. To improve ability to nd new suppliers

2. To shorten cycle times

3. To reduce price of procured products

4. To cut costs in operations

5. To improve the transparency of procurem

6. To improve the overall performance of p

External pressure 1. Important competitors using e-Marketpl

2. Majority of competitors using e-Marketp

3. Recommended by important business pa

4. Recommended by majority of business p

5. Recommended by industry association a6. Recommended by government and/or governm) Cronbach alpha

0.8473

processes

rement processes

0.9253

s

rs

a parent companyent-related

ARTICLE IN PRESS

on of

with

price

ove

ut pr

adop

agree

sing &Buying power For the product which has the largest porti

1. we have an advantage in the relationship

2. we take the initiative in negotiations for

3. we are well considered by the supplier ab

4. the supplier will follow our decisions abo

Slack resources Our rmy1. has sufcient nancial resource slack for

Table 9 (continued)

Construct Items (anchors: strongly disagree/ strongly

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Appendix C

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Construct Item label Eigen value Factor

loading

It

co

Relative advantage ADV1 4.602 0.444 0

ADV2 0.567 0

ADV3 0.708 0

ADV4 0.856 0

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ADV6 0.895 0

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PRE6 0.837 0

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PWR4 0.854 0

Slack resources SLK1 3.154 0.884 0

SLK2 0.921 0

SLK3 0.937 0

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or adoption and operation of e-Marketplaces

tion and operation of e-Marketplaces

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em to total

rrelation

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Variance

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Determinants of corporate adoption of e-Marketplace: an innovation theory perspectiveIntroductionDeveloping a frameworkB2B, e-market, and e-Marketplacee-Marketplace related researchRoles of e-MarketplaceIssues of e-MarketplaceAdoption of e-Marketplace

Research model and hypothesesTechnological contextRelative advantage

Environmental contextExternal pressureBuying power

Organizational contextSlack resourcesSize

Research methodData collectionSample characteristicsOperationalization of variablesValidity and reliability of measurement instrumentContent validityConstruct validity and reliabilitySimple correlation analysis for all measured variables

Results and discussionResultsDiscussion of the resultsRelative advantageExternal pressureBuying powerSlack resourcesSize

Summary and conclusionSummaryImplications for future researchImplications for managementLimitations

References