Howard Rosenbaum [email protected]
Electronic commerce, digital information, and
the firm
School of Library and Information Science Center for Social Informatics
Indiana University
Center for Digital Commerce Syracuse University
November 2000
http://www.slis.indiana.edu/hrosenba/www/Pres/asis00/
Rosenbaum: Ecommerce, digital information and the firm
I. Introduction: the social context of ecommerce
II. The digital information environment of ecommerce
III. Information imperatives for the firm
IV. Conclusion: information and the conduct of ebusiness
http://www.slis.indiana.edu/hrosenba/www/Papers/asis00.html
Rosenbaum: Ecommerce, digital information and the firm
I. Introduction: the social context of ecommerce
What is ecommerce
The use of electronic networks to conduct business-to-business or business-to-consumer transactions
Using the net buyers and sellers find each other and conduct negotiations and transactions
They exchange of information, currency, and both digital and non-digital goods and services
Ordering, order fulfillment and delivery of goods and services take place, although the latter may occur offline
Rosenbaum: Ecommerce, digital information and the firm
Internet Economy Indicators Annual Employee Figures by Layer and Total Internet Economy
1998 1999 Growth
Layer 1 - Infrastructure 527,037 778,602 48%
Layer 2 - Application 513,125 681,568 33%
Layer 3 - Intermediaries 290,856 340,673 17%
Layer 4 - Internet Commerce 577,937 726,735 26%
The Internet Economy 1,819,716 2,476,122 36% (after removing overlap)
http://www.internetindicators.com/key_findings_june_00.html
Rosenbaum: Ecommerce, digital information and the firm
Internet Economy Indicators
Annual Revenue and Growth Summary by Layer and Total Internet Economy (millions)
1998 1999 Growth
Layer 1 - Infrastructure $117,143 $197,853 68%
Layer 2 - Application $71,615 $101,304 41%
Layer 3 - Intermediary $63,629 $96,809 52%
Layer 4 - Internet Commerce $99,813 $171,473 72%
The Internet Economy $322,530 $523,923 62% (after removing overlap)
http://www.internetindicators.com/key_findings_june_00.html
Rosenbaum: Ecommerce, digital information and the firm
Ecommerce is expected to grow worldwide
Internet Economy companies generated almost one of every five dollars in revenue from the Internet
18.5% of the companies’ revenues were generated from the Web
17 million US households will be shopping online by the end of this year, with online retail sales expected to top USD 20.2 billion (Forrester Research)
56% of US companies will sell their products online this year, up from 24% in 1999. (NUA)
Small businesses who use the net have grown 46% faster than those that do not (American City Business Journals)
Rosenbaum: Ecommerce, digital information and the firm
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Rosenbaum: Ecommerce, digital information and the firm
http://www.thestandard.com/powerpoint/101600met5_cou.ppt
Rosenbaum: Ecommerce, digital information and the firm
I. Introduction: the social context of ecommerce
II. The digital information environment of ecommerce
III. Information imperatives for the firm
IV. Conclusion: information and the conduct of ebusiness
Rosenbaum: Ecommerce, digital information and the firm
II. The digital information environment of ecommerce
Ecommerce takes place in a digital IE
It is the social context within which ICTs are designed, implemented and used
It is the context within which digital information is created, accessed, valued, manipulated, stored, disseminated, and used
It affects the generation and flow of information through “any defined entity,” in this case the ecommerce firm and its web site(s)
It is the setting in which people engage in the social interactions that constitute ebusiness
Rosenbaum: Ecommerce, digital information and the firm
The digital IE is the setting within which ecommerce takes place
Rules and resources constitute its basic structure are used together as people engage in social interaction
They enable and constrain the transactions and information exchanges that comprise ecommerce
As people draw upon the rules and resources of this IE to conduct business, they recreate and maintain the IE.
Information is an important resource in this environment, as are the rules that shape its acquisition and/or generation, manipulation, dissemination, and use
Rosenbaum: Ecommerce, digital information and the firm
Ecommerce is an information intensive activity
A wide range of information is generated dynamically, continually, synchronously, and in great volumes
Much is created by the actions of web site visitors
The firm also produces a continual stream of digital information about its ecommerce activities
All of this information is important to capture and use.
The IE is dynamic and unstable and the rules and resources that constitute its structure are emerging
One subset includes procedures and policies being developed in practice to handle this information flow
Rosenbaum: Ecommerce, digital information and the firm
I. Introduction: the social context of ecommerce
II. The digital information environment of ecommerce
III. Information imperatives for the firm
IV. Conclusion: information and the conduct of ebusiness
Rosenbaum: Ecommerce, digital information and the firm
III. Information imperatives for the firm
There are at least three information imperatives for the firm:
Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through
the entire organization
The firm is responsible for the careful management of this information
Firms must be involved in a continual effort to build and maintain trust with and customers and partners
Rosenbaum: Ecommerce, digital information and the firm
1. Managing the information flow
Ecommerce firms must learn to manage the flow of digital information into and out of the organization and
This info should be directed to the right person, at the right time and in the correct format
They must learn how to mine this dynamic information flow, aggregating and segmenting it so that it can be used and reused when and where it is needed
They should also be able to drill down into this information so that they can use “mass customization”
Each unit in the firm must have real time access to current information about customers, competitors, firm activities and trends
Rosenbaum: Ecommerce, digital information and the firm
Information flow
Front end activities
Back end activities
Direct solitary interactions (browsing, making or abandoning purchases, filling out forms, accepting cookies, downloading, and searching the knowledge base)
Indirect interaction (server, browser, error, and other activity log files)
Social interactions (people interact with the firm and other customers through the web site, customer service and support)
Group action (adding and removing content and functionality, changing design and structural features)
“Customer facing information” (product and service descriptions, pricing information, warranty and service policies, return and complaint procedures, and privacy policies)
Rosenbaum: Ecommerce, digital information and the firm
2. Being responsible users of the information
Firms must be the stewards of the information they, solicit, and receive from customers, partners, suppliers and others
They must take care of this information and let their customers and others know what they are doing with it
Firms must seek to “balance the competitive advantages provided by the use of this information with the privacy concerns that use of personal information might raise among” their customers
(Culnan and Armstrong 1999; 112)
Rosenbaum: Ecommerce, digital information and the firm
Responsibility has a social component
There should be clear policies easily accessible throughout the firm’s web site explaining:
~How this information will be collected
~What it will be used for
~The rights that customers and other information providers have with respect to this information
There should be social practices within the firm organized around protecting customer information
Rosenbaum: Ecommerce, digital information and the firm
Responsibility also has a technical component
Firms should investigate and become familiar with the range of privacy strategies that currently under discussion and evaluation by the ecommerce industry
Platform for Privacy Preferences (P3P): individuals control their own personal information on the web
Platform for Internet Content Selection (PICS): firms rate their own web pages and digital products
RSACi: another labeling scheme
INCORE: European self-labeling scheme
Rosenbaum: Ecommerce, digital information and the firm
3. Building and maintaining trust
Firms should be involved in a constant effort to build and maintain trust
There is a “fundamental lack of faith between most businesses and consumers ...[who] simply do not trust most Web providers enough to engage in ‘relationship exchanges’ involving money and personal information”
(Hoffman, Novak, and Peralta, 1999; 80)
Trust influences the transition from browser to buyer and is the basis of relationships between customer and firm
Trust is essential to repeat business and the strength and public perception of the firm’s reputation
Rosenbaum: Ecommerce, digital information and the firm
Trust-building typically depends on face-to-face interaction or other shared experiences
These are missing from the ecommerce experience
The web site is the point of social contact between the customer and the firm and most exchanges are stripped to text, images, forms, links, and clicks.
There are few social cues that the customer can garner from the presence of the other
There is little online on which to base trust in the firm
This is a limitation of the digital IE of ecommerce
Rosenbaum: Ecommerce, digital information and the firm
To overcome this limitation, firms are developing means of building and maintaining relations of trust with customers
Technical strategies for trust-building include the use of encryption and secure electronic transactions
Social means of trust building are also important
Perfect security will not encourage a person to purchase from an online firm if he or she does not trust the person or firm at the other end
Web based customer service and support
Privacy audits (TRUSTe)
Rosenbaum: Ecommerce, digital information and the firm
I. Introduction: the social context of ecommerce
II. The digital information environment of ecommerce
III. Information imperatives for the firm
IV. Conclusion: information and the conduct of ebusiness
Rosenbaum: Ecommerce, digital information and the firm
IV. Conclusion: information and the conduct of ebusiness
The social context of ecommerce (its digital IE) has an information-intensive character
Two constituent and useful elements of the IE are rules and resources
They influence the ways in which people in the IE work with information and ICTs
The subset of these rules considered here are called information imperatives
These affect the flow of digital information produced by the ecommerce activities of the firm and its customers, partners, and suppliers
Rosenbaum: Ecommerce, digital information and the firm
One subset of these rules are composed of three information imperatives for ebusinesses:
~Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through the entire organization
The firm is responsible for the careful management of this information
Firms must be involved in a continual effort to build and maintain trust with and customers and partners
The next step involves the investigation of ebusinesses to examine the instantiations of these imperatives
Research on trust in ecommerce
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