Economic and Social Analysis of the Adoption of B2B Electronic Markets

International Journal of Electronic Commerce / Spring 2005, Vol. 9, No. 3, pp. 49–72.Copyright © 2005 M.E. Sharpe, Inc. All rights reserved.

1086-4415/2005 $9.50 + 0.00.

Economic and Social Analysis of the Adoption ofB2B Electronic Marketplaces: A Case Study in theAustralian Beef Industry

Caroline Driedonks, Shirley Gregor, Arjen Wassenaar, andEric van Heck

ABSTRACT: The factors that affect the adoption of B2B electronic marketplaces as inno-vations are investigated through a case study of AuctionsPlus, an electronic marketplacein the Australian beef industry. Two theories help to explain the relatively slow adoptionof this system. Kambil and van Heck’s model of exchange processes offers a primarilyeconomic view at the level of key stakeholder groups. Rogers’s diffusion theory gives amore social view, at the level of the individual stakeholder. Key stakeholder groups do notappear to be substantially worse off with AuctionsPlus from an economic exchange pro-cess standpoint. Consideration of the social and political dimensions of electronic market-places adds further insight. Loss of social capital, the nature of communication channels,time taken to reach critical mass, and the power of one group originally not recognized asa key player (the stock and station agent intermediaries) all appear to be important influ-ences. Based on these factors, testable propositions are developed and discussed, pro-ducing a set of critical issues for the design of electronic B2B markets.

KEY WORDS AND PHRASES: : : : : Adoption of innovations, AuctionsPlus, B2B marketplaces,electronic markets.

The research presented in this paper focuses on the adoption of business-to-business (B2B) electronic marketplaces, and more specifically, on the factorsthat lead to the success of an electronic marketplace in opposition to existingexchange mechanisms. The study was motivated by questions concerning therelatively low rate of use of an electronic marketplace in the Australian beefindustry and is discussed in detail by Driedonks [9].

There are several exchange methods in this industry. The major ones arethe traditional saleyard auction and the over-the-hooks method. AuctionsPlus,an electronic marketplace, is an alternative to these traditional methods. Adop-tion of AuctionsPlus, however, has not been as widespread as originally en-visaged, even after a relatively long period. The case of AuctionsPlus offersan opportunity to gain insights into the reasons for the success or otherwise ofB2B marketplaces.

The question that gave rise to the research presented in this paper waswhether the adoption of B2B electronic marketplaces could be explained pri-marily in terms of the relative advantage offered by the innovation (an eco-nomic explanation) or whether other factors, such as perceptions of the

The authors thank Rolf Wigand, Yao-Hua Tan, and the two anonymous review-ers for the International Journal of Electronic Commerce for their comments andsuggestions on earlier versions of this manuscript.

50 DRIEDONKS ET AL.

innovation, play an important role (a social explanation). Thus, the aim of thepaper is to investigate the economic and social factors that affect the rate ofadoption of B2B electronic marketplaces as innovations.

A B2B electronic marketplace is defined as an Internet-based institution us-ing market mechanisms to mediate transactions between businesses [17]. Aninnovation is an idea, practice, or object that is perceived as new by an indi-vidual or other unit of adoption [27]. The rate of adoption is the relative speedwith which an innovation is adopted by members of a social system, which isgenerally measured as the number of individuals who adopt a new idea in aspecified period, such as each year [27]. In this paper, adoption means the rangeof behaviors from the decision to use an innovation to full and regular use ofit, and rejection means the decision not to use the innovation at all.

The research considers both economic and social explanations for individualand group use of B2B electronic marketplaces, which are perceived as a newway of trading (an innovation). The study is significant and reflects the con-siderable research interest in e-commerce adoption, and especially in elec-tronic markets adoption. A notable contribution in the electronic marketsstream of research is the study by Kambil and van Heck [15]. These authorscalled for further empirical investigation of the framework they proposed.The present study responds to their suggestion by applying their frameworkin the context of a different industry and supplementing their framework withan analysis that includes social processes. Therefore, the research in the presentstudy is a single-case test of the Kambil and van Heck model supplementedwith elements of Rogers’s adoption model.

Theoretical Background

There are many different definitions of markets in the literature. Koppius clas-sifies market theories by distinguishing them along two separate dimensions:(1) whether a market is viewed as a state or a process, and (2) whether marketsare viewed as economic allocation mechanisms or as social structures [19].Concerning the latter distinction, many definitions of markets focus on theirrole as an allocation mechanism rather than a social mechanism. Wigand, Pi-cot, and Reichwald, for example, define a market as “an economic location onwhich the supply and demand for goods meet, enabling exchange processes”[31]. Kambil and van Heck also focus on the economic allocation aspect ofmarkets [15]. Koppius notes that the social aspect of markets is often underex-posed. He views markets as “social institutions that facilitate exchange bymeans of competition. The primary goal of a market is to solve the problems ofresource allocation (who gets what) and price determination (at which price)”[19, p. 1]. Charles Smith shows the complex social processes in auctions:

Auctions do many things: They resolve ambiguities and uncertainties;they establish the value, identity, and ownership of items; they enter-tain; they shape social relationships; and they reallocate vast sums ofmoney. They also tell us a great deal about economic life and social be-havior. It is in this latter capacity, as a paradigm of human behavior, thatthey have had their greatest impact not only on how we think about the

INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE 51

determinants of economic value and behavior but rational behavior ingeneral [28, p. 162].

Research on electronic markets can be divided into four streams of research,adding to Koppius’s classification [19]. The first stream analyzes electronicmarkets in comparison to other electronic coordination mechanisms. It focuseson how information technology (IT) influences the choice of a coordinationmechanism. The work of Malone, Yates, and Benjamin with regard to elec-tronic markets versus electronic hierarchies is the starting point for this typeof research [23]; see, for example, [8, 14]. The second stream analyzes elec-tronic markets in comparison to nonelectronic markets. It focuses on the dif-ferences between the market processes in electronic markets and traditionalmarkets—for instance, the reduced price hypothesis [2, 21].

The third stream of research looks at electronic markets from an institu-tional point of view, sometimes studied in isolation, sometimes studied incomparison to other electronic markets. This type of research can focus on theroles and business functions (the business models) in electronic markets [6],or on how electronic markets differ from each other (e.g., [17]), or on howthese differences can explain the success or failure of a new institution (e.g.,[15]). The evolution of electronic marketplaces as institutions has also beenstudied. Giaglis, Klein, and O’Keefe developed a contingency model for therole of intermediaries in electronic marketplaces [11]. The dynamics of inter-mediation and reintermediation depend on contingency factors like marketstructure, products, and services as well as relationships between market par-ticipants. Of particular interest to the current study is their view thatreintermediation is likely in markets like the beef auctions, where there is scopefor redistribution of price-discovery mechanisms, high distribution of goods,economies of scale, an important role for expertise, nonopportunistic transac-tions (established relationships), and strict government regulation. That is,traditional intermediaries are in a relatively strong position to find opportu-nities to better defend their market position and find new ways in which on-line and off-line activities support each other. Disintermediation andcybermediation are less likely.

A fourth stream of research investigates factors that drive or hinder adop-tion of market systems. An example is the paper by Lee and Clark, who iden-tified three types of adoption barriers that prevent successful electronic marketsystems: lack of an adequate electronic product description, thinness of themarket (lack of critical mass), and resistance to change (inertia of old ways ofdoing business) [22]. Similarly, Fong, Fowler, and Swatman identified someof the success and failure factors of electronic markets, and Reimers identifiedthe preconditions for electronic markets [10, 25]. Damsgaard’s analysis of theHong Kong air cargo industry showed how key industry stakeholders canblock a new market [7].

Finally, there are also analyses of the recent boom and bust of electronicmarkets in different industries, where failures include SurplusBin (auto partsand electronics), Chemdex (life sciences), Promedix (medical products),RedLadder.com (construction), Industrialvortex (industrial products),BizBuyer (office supplies), and Pradium (agricultural commodities), but there

52 DRIEDONKS ET AL.

are also successes, such as eBay (second-hand consumer products),Chemconnect (chemical products), and the Tele Flower Auction (flowers) [15].

The present study offers an integrative perspective on work from the thirdand fourth streams of research with regard to electronic markets. Two existingtheories are drawn upon to explain the adoption of B2B electronic market-places as an innovation. These theories were chosen because they offer comple-mentary perspectives in two respects: (1) an economic view versus a moresocial view of adoption behavior, and (2) analysis at the group level versusanalysis at the individual level of adoption behavior.

The first theory is Kambil and van Heck’s process-stakeholder framework[15]. This generalizable model of exchange processes, in which five basic-tradeprocesses and five trade-context processes are distinguished, forms a basis fora process-stakeholder framework. Basic-trade processes include the processesrequired in all transactions of goods and services: search, valuation, logistics,payment and settlements, and authentication. Trade-context processes facili-tate and enable or reduce the costs of or “frictions” in the basic processes:communication and computing, product representation, legitimating, influ-ence, and dispute resolution.

Kambil and van Heck used their generalizable model of exchange processesto build a process-stakeholder analysis framework with the aim of comparingtraditional markets and IT-enabled markets in the same market. This catego-rization allows systematic identification of processes affected by a specificadministrative or technological innovation and enables systematic examina-tion and representation of the impacts of IT across interdependent processesand stakeholder groups in an electronic market.

Kambil and van Heck applied this process-stakeholder framework to ana-lyze a number of information technology initiatives in the Dutch flower mar-kets using cross-case analysis and studying success and failure in theintroduction of new IT-based trading mechanisms in these markets. One ofthe testable propositions formulated as an outcome of this study is as follows:

Market organizations are the meeting point for multiple stakeholders:buyers, sellers, and intermediaries with conflicting incentives. Givenexisting or market alternatives, no new IT-based initiative is likely tosucceed if any key stakeholder is worse off after the IT-enabled innova-tion. [15, p. 16]

In other words, Kambil and van Heck emphasize that the relative economicadvantage of an IT-enabled innovation plays an important role in its adoption.

The second theory used here is Rogers’s diffusion of innovations theory[27]. Rogers states:

The innovation decision process consists of the series of actions andchoices over time through which an individual (or organization) evalu-ates a new idea and decides whether or not to incorporate the innova-tion into ongoing practice. [27, p. 161]

This innovation behavior follows from the uncertainty that is inherently in-volved in deciding about a new alternative relative to those already in exist-ence. The perceived newness of an innovation, and the uncertainty associatedwith its newness, is a distinctive aspect of innovation decision making.


Rogers distinguishes five steps and stages in the innovation decision pro-cess. The first step, knowledge, occurs when an individual is exposed to aninnovation’s existence and gains some understanding of how it functions. Atthe following stage, persuasion, the individual forms a favorable or unfavor-able attitude toward the innovation. Next, during the decision stage, the indi-vidual engages in activities that lead to a choice to adopt or reject the innovation.The implementation stage occurs when the individual puts the innovation intouse. Finally, at the confirmation stage, the individual seeks reinforcement of aninnovation decision already made, or reverses a previous decision to adopt orreject the innovation if exposed to conflicting messages about it.

Rogers argued that the rate of adoption of an innovation is determined bythe innovation’s perceived attributes (relative advantage, compatibility, com-plexity, trialability, and observability), the type of innovation-decision (op-tional, collective, authority), communication channels (mass media orinterpersonal), the nature of the social system, and the extent of the promo-tional efforts by change agents.

The choice of these two complementary perspectives (the economic viewvs. a more social view) is not new in research that aims to explain the adop-tion and use of information technology. For example, social informatics is thebody of research that examines the designs, uses, and consequences of infor-mation technologies in ways that take into account their interaction with in-stitutional and cultural contexts [18]. Research in this stream encompasses anarray of relevant factors, including social, cultural-organizational, and othercontextual components. Processes and practices need to be studied “for howthey are actually carried out” [18, p. 270]. From this perspective, informationsystems and their success or failure are related to or explained by Granovetter’snotion of “social embeddedness” [12]. Kumar, van Dissel, and Bielli devel-oped a “third rationality” of information systems, based on a case study of thefailure of an interorganizational system in Prato, Italy [20]. Their study didnot focus on politics and conflict as the primary mode of interaction, as insocial informatics, but instead saw collaboration and cooperation as the keyto understanding interaction processes.

The present study continues this thrust toward complementary social andeconomic perspectives, and it is one of the few examples of research that takesinto account both economic and social/contextual aspects with regard to elec-tronic markets.

Research Model and Methodology

The research model shown in Figure 1 was developed in order to investigatethe economic and social factors affecting the rate of adoption of B2B elec-tronic marketplaces. The model integrates elements of both of the theoriesdiscussed above. The theories complement each other in that one focuses onthe innovation’s net benefit at the level of key stakeholder groups, and theother focuses on the perceptions of individual potential users. Together thesetheories offer an explanation for the adoption and success of B2B electronicmarketplaces.

54 DRIEDONKS ET AL.

The research model explains behavior at two levels:

• Level 1: Net benefits for key stakeholder groups. At this level, Kambil andvan Heck’s economic-political process-stakeholder theory showshow relative advantage within basic-trade and trade-context pro-cesses for key stakeholder groups when using the IT-enabled innova-tion (a B2B electronic marketplace) influence adoption and use.

• Level 2: Perception of individual potential users. At this level, Rogers’ssocial-political diffusion of innovations theory gives an understand-ing of how the actions and perceptions of individuals and organiza-tions interact in a social process over time to influence the uptake of aB2B electronic marketplace.

Analysis at these two levels is expected to contribute to an explanation of aB2B electronic marketplace’s rate of adoption and therefore, in part, its suc-cess. This research model was used as an initial guide for the case study.

The type of research question asked can be seen as a “why question.” Ex-ploring “what factors affect the rate of adoption of B2B electronic market-places as innovations” can be translated into “why potential users decide touse or not use B2B electronic marketplaces.” A case study strategy was indi-cated to explore the answers to this question [32]. Data were gathered frominterviews, direct observation of auctions (both electronic and saleyard), Websites, reports, and other archival sources. Interviewees were given the oppor-tunity to check and amend the transcripts of their interviews. The data wereanalyzed using the guidelines suggested by Miles and Huberman for qualita-tive data analysis [24]. Interview transcripts were analyzed for themes andpatterns that concerned the primary research question, using the researchmodel as a framework.

Figure 1. Initial Research Model


Analysis occurred at two levels. At Level 1, the net benefits of competingexchange mechanisms for key stakeholder groups were analyzed in terms ofthe Kambil and van Heck framework [15]. Twelve people were interviewed,including two saleyard managers, three industry experts, five cattle produc-ers who used AuctionsPlus, and two AuctionsPlus managers.

At Level 2, the perceptions of the innovation and the innovation process byindividuals and organizations were analyzed. Seventeen people were inter-viewed, including five cattle producers who had adopted AuctionsPlus, fivecattle producers who had rejected AuctionsPlus, one meat processor who hadadopted AuctionsPlus and one meat processor who had rejected AuctionsPlus,and five industry experts.

Case Study: AuctionsPlus

AuctionsPlus is a computer-based auction system that combines the advan-tages of the major traditional exchange methods [1]. The Australian Meat andLivestock Cooperation (AMLC) launched this system under the name of Com-puter Aided Livestock Marketing (CALM) in 1987. CALM claimed to:

provide a system for buying and selling cattle, sheep, lambs and pigs,on the basis of an objective description, while the stock remains on theproperty or feedlot. Buyers can bid from anywhere in Australia. CALMcombines the advantages of auction selling with the efficiency of sale bydescription. [5]

In 1995 the major stock-agent companies, WesFarmers, Elders Landmark,and Roberts, together took over CALM for a nominal amount, centralized theorganization, and changed its name to AuctionsPlus.

It is remarkable that this marketplace has never really burgeoned in termsof adoption. The number of registrations has increased over the years, but thenumber of users is still not much higher than in 1988, shortly after the systemwas launched. Registrations went from none to approximately 26,000 in theyears 1987 to 1991, but then increased only gradually to about 34,000 between1991 and 2002 [9]. CALM suffered losses during the whole of the period 1987–1995, with the greatest loss, in 1989/1990, being more than A$3 million (cur-rently US$2.29 million) (figures from AMLC reported in [9]). The cattleproducers and meat processors who are potential users have tended to con-tinue with the major traditional methods for trading cattle—saleyard auctionsand over-the-hooks (see Figure 2). Research on the system in its CALM formincludes papers by Clarke and Jenkins, Fong, Fowler, and Swatman, and Leeand Clark [5, 10, 22]. It seemed time to carry out a further investigation of thissystem.

Traditional saleyard auctions are still the most common method of sellingcattle in Australia, accounting for 48 percent of the sales in 1999–2000 [26].Much of the livestock is sold on behalf of the cattle producers by agents work-ing for a commission. Producers pay a yard fee, industry and governmentlevies, and freight costs. The traditional strengths of saleyards are that buyerscan view the animals they are purchasing, and the pricing is usually verycompetitive, with “lots” of animals being sold to the highest bidder. The sale

56 DRIEDONKS ET AL.

price may be on a per-head or live-weight basis. There are negatives associ-ated with saleyards, though. Animals can be stressed during and after trans-port, and this may affect meat quality. Saleyards can be quality-assuranceaccredited with the National Saleyard Quality Assurance scheme (NSQA).This quality assurance, aimed at improving animal welfare and reducing thestresses that might affect meat quality, takes into account many factors, in-cluding livestock reception procedures, and yard construction.

The second most common method of exchange is over-the-hooks market-ing, with 26 percent of sales in 1999–2000 [26]. This method involves directselling from the cattle producer to a meat processor. Payment is based on theHot Standard Carcase Weight (HSCW) after slaughtering and various othermeasurements, such as fat percentage, plus the value of the skin or hide. Over-the-hooks marketing is market specific and ensures that producers are paidfor exactly what they produce. Producers choose which market specificationsthey will meet and negotiate a price. The actual price paid depends on whetherspecifications are met after slaughter in terms of weight, fat scores, skin qual-ity, and so on. The system emphasizes guidelines regarding transport (load-ing, unloading, time, and cleanliness), handling, lairage, watering, feed, andstress, and ensures constructive communication and feedback.

The penetration of AuctionsPlus is difficult to ascertain precisely. Figureson its usage are not available publicly or directly from the company. Industryexperts estimated that about 40–70 people joined in a sale every month. Al-

Figure 2. Australia’s Beef Supply Chain

CATTLE

PRODUCERS

SALEYARD OVER-THE-HOOKS AUCTIONSPLUS

MEAT PROCESSORS

DOMESTIC

WHOLESALER RETAILER

CONSUMER

EXPORT

OTHER METHODS

EXCHANGE METHODS

‘Prime cattle’

‘Store cattle’ AGENTS


though the aim of CALM was to cover 20–30 percent of available turnover,the actual maximum achieved was closer to 7–8 percent [9].

AuctionsPlus was still operating as of mid-2004, and auction activity couldbe observed on its Web site [1]. Meanwhile, a new form of auction has beenintroduced. An on-line “interface auction” interfaces with a physical auctioncontrolled by an auctioneer. A handheld wireless device transmits the on-siteprices to the remotely connected bidders. The remote bidders enter bids ontheir own computers and transmit them to the person on site with the wire-less device, who raises the bid with the auctioneer. It remains to be seen howthis new development will influence the level of usage of AuctionsPlus.

Case Study Findings

An overview of the findings is presented for both levels of analysis.

Level 1: Net Benefits for Key Stakeholder Groups

The Level 1 comparison of AuctionsPlus with saleyard exchange in Table 1presents in summary Kambil and van Heck’s process-stakeholder framework[15]. The framework depicts 10 processes involved in a marketplace exchange.Analysis of the costs and benefits related to each process in different market-places allows for systematic comparison of the advantages and disadvan-tages accruing to different stakeholders. This analysis has a primarily economicfocus.

Table 1 shows that selling cattle producers have overall positive net benefitsfrom the AuctionsPlus system compared with the traditional saleyard auc-tion. The ability to keep cattle on property until sale and possibly to set a re-serve price improves their negotiating position considerably. Selling cattleproducers do not need to freight cattle into the saleyard, which lowers costsdepending on the distance to the nearest saleyard. In return, assessment has tobe arranged and paid by the selling party. These costs generally turn out lowerthan freight costs and saleyard fees together. The assessment of cattle givescattle producers feedback on their production. Additionally, the AuctionsPlussystem potentially gives access to a greater number of buyers all over Austra-lia, and because there is more competition, higher prices can be generatedthrough this auction system. The realization of these advantages, however,depends on the number of buyers participating in the on-line auctions.

Buyers also benefit from using the AuctionsPlus system. Buying cattlethrough the system is less time-consuming and less expensive than going tothe saleyard. In return, buyers pay freight costs and have Internet learningand connection costs. The AuctionsPlus system gives access to a wider rangeof sellers and their cattle all over Australia. More competition among buyers,however, may cause higher prices. A major benefit is that cattle are less stressedand bruised, and the chance of diseases being passed on to the cattle in sale-yard holding pens is lower. Purchasers buy based on detailed descriptionsinstead of seeing the cattle. This method provides more objective, uniform

58 DRIEDONKS ET AL.Ex

cha

nge

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cess

esCa

ttle

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duc

ers

Auc

tio

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lus

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t p

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h Be

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: Pot

entia

l acc

ess

to m

ore

buye

rs.

Bene

fit: E

ffici

ent c

attle

and

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tion

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fit: S

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are

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ced.

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data

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ial a

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alua

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ighe

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mor

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ess

time-

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ost:

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her p

rices

but

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ter q

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mA

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smen

t tak

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me.

and

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is p

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us is

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need

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Net

Ben

efit

Posit

ive:

Impr

oved

neg

otia

ting

posit

ion

Posit

ive:

Low

cos

t, fa

ir pr

ice-

disc

over

yN

eutra

l–pos

itive

: Rem

ote

buyi

ng, g

reat

er

and

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ket i

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ht, n

o fre

ight

cos

ts.

mec

hani

sm.

freig

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, bet

ter-q

ualit

y ca

ttle.

Tab

le 1

. Pro

cess

-Sta

keh

old

er I

mp

act

s o

f A

ucti

ons

Plu

s Co

mp

are

d w

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rd E

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information, but may yield less information than can be obtained by an expe-rienced buyer who sights the cattle. On balance, the outcome for buyers isneutral–positive net benefits.

Table 2 compares AuctionsPlus with the over-the-hooks method.AuctionsPlus is more similar to over-the-hooks than to saleyard exchange.With both AuctionsPlus and over-the-hooks, the sale is arranged while theanimals are still on property and are not physically sighted by the buyer.

The comparison shows that cattle producers have overall net positive ben-efit from the AuctionsPlus system compared with using the over-the-hooksmethod, mainly because the system generates access to more meat processorsall over Australia and there is competition among them. Otherwise, the pro-ducers are restricted to processors that can be contacted by phone to negotiatea sale. When using AuctionsPlus, the sellers do not pay freight but do pay theAuctionsPlus listing fees and assessment.

Prices are based on an assessment before the animal is sold. Such assess-ments are less accurate than the quality grid used by meat processors to as-sess an animal’s yield after slaughter. This pricing method may or may not bean advantage.

The meat processors’ overall net benefit from AuctionsPlus is neutral. Meatprocessors benefit from the AuctionsPlus system in having another purchas-ing method connecting them with producers all over Australia. Because meatprocessors are suppliers to retailers in a demand-driven chain, the opportu-nity to plan supply in advance is of great importance. Another advantage isthat meat processors get a full description of the offered cattle before the sale.This gives them the possibility of bidding on the cattle that they consider mostappropriate.

Usage of AuctionsPlus, however, costs meat processors a considerableamount: They pay Internet connection fees and may have learning costs. Theprices paid may rise because of competition. The processors also pay trans-port costs. In neither case do the meat processors see the cattle before theybuy, and the quality of the cattle may change after the assessment. However,with over-the-hooks, the processors pay on the standard of the animal afterslaughtering, which gives them the most benefit of any valuation method.

One may conclude from the process-stakeholder (economic) analysis thatnone of the key stakeholder groups (cattle producers and processors) definedin this research is worse off using AuctionsPlus as compared with traditionalcattle exchange methods.

Level 2: Perception of Individual Potential Users

Table 3 shows issues relating to the use of AuctionsPlus at Level 2 that wereidentified in the analysis of the adoption and usage behavior of individualcompanies using Rogers’s diffusion theory to guide analysis. These issuesemerged from qualitative analysis of interviews with industry participants.The factors that could lead to adoption and rejection were identified for eachissue. These issues are both economic and social. They have been groupedaccording to the perspective from which they arose.

60 DRIEDONKS ET AL.

Exch

ang

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sses

Catt

le p

rod

ucer

sA

ucti

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Plu

s M

eat

pro

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ors

1. S

earc

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nefit

: Pot

entia

l acc

ess

to m

ore

buye

rs.

Bene

fit: E

ffici

ent c

attle

and

auc

tion

Bene

fit: S

earc

h co

sts

are

redu

ced.

Cos

t: Lis

ting

cost

abo

ut $

4 pe

r hea

d.da

taba

se.

Pote

ntia

l acc

ess t

o m

ore

selle

rs.

2. V

alua

tion

Bene

fit: H

ighe

r pric

es d

ue to

mor

e bu

yers

Pric

e di

scov

ery

thro

ugh

auct

ion

rath

er th

anC

ost:

Hig

her p

rices

. Pric

e ba

sed

on a

sses

sed

and

bette

r neg

otia

ting

posit

ion.

inde

pend

ent n

egot

iatio

ns.

valu

e, n

ot a

ctua

l val

ue o

f car

cass

.

3. L

ogist

ics

Bene

fit: N

o tra

nspo

rtatio

n co

sts.

No

chan

ge.

Cos

t: Tr

ansp

orta

tion

cost

s.

4. P

aym

ents

and

set

tlem

ents

No

chan

ge.

Man

aged

by

Auc

tions

Plus

.N

o ch

ange

.

5. A

uthe

ntic

atio

nM

anag

ed b

y A

uctio

nsPl

us.

Man

aged

by

Auc

tions

Plus

.M

anag

ed b

y A

uctio

nsPl

us.

6. C

omm

unic

atio

n an

d co

mpu

ting

Bene

fit: F

ewer

pho

ne c

alls.

Bene

fit: F

ewer

pho

ne c

alls.

Cos

t: In

tern

et-e

nabl

ed c

omm

unic

atio

n.D

efin

e an

d se

t up

new

auc

tion

syste

m.

Cos

t: In

tern

et-e

nabl

ed c

omm

unic

atio

n.

7. P

rodu

ct r

epre

sent

atio

nC

ost:

Paym

ent t

o tra

ined

ass

esso

rs.

Stan

dard

ized

gra

ding

sys

tem

.St

anda

rdiz

ed g

radi

ng s

yste

m o

f liv

e an

imal

,A

sses

smen

t tak

es ti

me.

not c

arca

ss m

easu

rem

ents

.

8. L

egiti

mat

ion

Prod

ucer

s un

derg

o as

sess

men

t ent

ry.

Auc

tions

Plus

is p

rimar

y au

thor

ity.

No

long

er p

roce

ssor

driv

en.

9. In

fluen

cePr

oduc

ers

have

littl

e in

fluen

ce o

n m

arke

tA

uctio

nsPl

us d

efin

es r

ules

.Pr

oces

sors

hav

e lit

tle in

fluen

ce o

n m

arke

tru

les.

rule

s.

10. D

isput

e re

solu

tion

Thro

ugh

inte

rmed

iary

.A

uctio

nsPl

us is

inte

rmed

iary

.Th

roug

h in

term

edia

ry.

Arb

itrat

ion

pane

l pro

vide

d if

need

ed.

Net

Ben

efit

Posit

ive:

Impr

oved

mar

ket i

nsig

ht, a

cces

sPo

sitiv

e: L

ow c

ost,

fair

pric

e di

scov

ery

Neu

tral-p

ositi

ve: A

cces

s to

mor

e su

pplie

rs,

to m

ore

buye

rs.

mec

hani

sm.

grea

ter f

reig

ht c

osts

, pay

men

t not

on

carc

ass

yiel

d.

Tab

le 2

. Pro

cess

-Sta

keh

old

er I

mp

act

s o

f A

ucti

ons

Plu

s Co

mp

are

d w

ith

Ove

r-th

e-H

oo

ks

Exch

ang

e.


Ass

oci

ate

d i

nflu

ence

fa

cto

rs

Per

spec

tive

Issu

eA

do

pti

on

fact

ors

Rej

ecti

on

fact

ors

Cha

ract

erist

ics

of c

attle

pro

duce

rsG

eogr

aphy

Long

dist

ance

to n

eare

st s

aley

ard/

abat

toir

Shor

t dist

ance

to n

eare

st s

aley

ard/

abat

toir

Back

grou

ndIn

volv

emen

t in

indu

stry

pol

itics

/CA

LM—

Inte

rnet

ado

ptio

nLa

ter

Inte

rnet

ado

ptio

nEa

rlier

Inte

rnet

ado

ptio

n

Initi

al k

now

ledg

e ab

out A

uctio

nsPl

usC

omm

unic

atio

n ch

anne

lsPe

rson

al c

omm

unic

atio

nM

ass

com

mun

icat

ion

by m

edia

of c

attle

pro

duce

rsus

ed to

gai

n kn

owle

dge

Initi

al o

pini

on

—In

itial

pos

itive

opi

nion

Trus

tD

id n

ot in

fluen

ceD

id n

ot in

fluen

ce

Perc

eptio

ns o

f Auc

tions

Plus

hel

dH

eter

ogen

eous

per

cept

ions

All

fact

ors

influ

ence

d ad

optio

n an

d re

ject

ion

All

fact

ors

influ

ence

d ad

optio

n an

d re

ject

ion

by c

attle

pro

duce

rsof

cos

ts, n

egot

iatin

gpo

sitio

n, c

ompe

titio

n

Perc

eptio

ns o

f Auc

tions

Plus

hel

dH

eter

ogen

eous

per

cept

ions

Influ

ence

d ad

optio

n an

d re

ject

ion

Influ

ence

d ad

optio

n an

d re

ject

ion

by m

eat p

roce

ssor

sof

effi

cien

cy

Expe

rts’

insig

hts

on A

uctio

nsPl

usSo

cial

sys

tem

—So

cial

net

wor

k fo

und

in tr

aditi

onal

sal

eyar

dre

ject

ion

Crit

ical

mas

s—

Not

eno

ugh

user

s St

ock

agen

ts—

Disc

oura

ging

Tab

le 3

. Iss

ues

and

Ad

op

tio

n/R

ejec

tio

n Fa

cto

rs f

or

Auc

tio

nsP

lus

at

Ind

ivid

ual E

nter

pri

se L

evel

.

62 DRIEDONKS ET AL.

Several issues arise from the perspective of the distinguishing characteristicsof the cattle producers. The producer’s location and the distance to the nearestsaleyard or abattoir played a role in the adoption decision process. The greaterthe distance, the more the cattle producer was inclined to adopt AuctionsPlus.These factors explain why AuctionsPlus has more users in the northern andremote parts of Australia, where distances to saleyards are greater than in themore closely settled southeastern regions. Cattle producers who were person-ally involved in industry politics, or who are or were involved in CALM, forinstance as an assessor, were more inclined to adopt the AuctionsPlus system.Although it seems logical that IT innovativeness would stimulate adoption ofAuctionsPlus, a negative relationship was observed between IT innovativenessand adoption of the AuctionsPlus system. Cattle producers who usedAuctionsPlus started using the Internet much later than those who did not. Itis difficult to explain this finding. Perhaps the early adopters of the Internetare located in areas with better telecommunications (less remote areas) andthus are also the enterprises that are closer to traditional market exchanges.An alternative explanation is that the early adopters of both the Internet andAuctionsPlus became disillusioned early on with the failure of the electronicmarketplace to grow quickly.

Several other issues arise from the perspective of the initial knowledge of thecattle producers. Adoption was stimulated when initial knowledge was gainedthrough personal communication about the system. Cattle producers who wereinvolved in political activities, for instance, were more aware of the systemand its uses and were more open to the system. Cattle producers who wereinformed about the system by mass media were more inclined to reject it. It isremarkable that many rejecters who initially had a positive opinion ofAuctionsPlus subsequently rejected the system. Because all the respondentssaid that they had trusted the AuctionsPlus system from the start, there wasapparently no relationship between trusting the system and adopting or re-jecting it. In summary, many cattle producers initially were positive aboutAuctionsPlus, and the ones who were informed about the AuctionsPlus sys-tem by personal connections were inclined to adopt it.

Several other issues arise from the perspective of cattle producers’ percep-tions of AuctionsPlus. The results concerning the perceptions of potential usersshowed that the potential users group is heterogeneous in many ways. Per-ceptions differed among potential users. Factors that directly stimulated someto accept the AuctionsPlus system stimulated others to reject it. Costs, negoti-ating position, and competition were factors that had both negative and posi-tive influence on adoption. Some cattle producers perceived the system as tooexpensive to use and stated that there were not enough buyers in the systemand thus there was a lack of competition. On the other hand, adopters wereinitially stimulated to adopt because they perceived lower transaction costsand were attracted by gaining access to more buyers all over Australia, whichwould increase competition and generate higher prices.

The main issue from the perspective of meat processors was efficiency, whichhad both negative and positive aspects. One meat processor rejected becauseusing the system was perceived as too time-consuming, whereas another meatprocessor who adopted perceived the system as an efficient supply method.


Interviews with industry experts showed that they identified several issuesaffecting adoption. The experts included the president of the stock and stationagents association, the CEO of the saleyard operators association, two formerCALM employees, and a government representative. All of the experts hadmany years of industry experience and an overview of the different stake-holders involved. The attributes they cited give a good basis for deep insightinto the relevant issues. The experts identified the nature of the social systemin the Australian cattle industry as a strong influence on rejection of the sys-tem. Many cattle producers do not feel any need to change their ways of doingbusiness. In addition, many producers lead a fairly isolated existence in re-mote locations, with social opportunities restricted by geography and verylong working hours. The traditional saleyard auctions, however, contribute totheir social life by providing an opportunity to meet and socialize with peers.

The experts believed that usage of AuctionsPlus was just below or “on theedge” of critical mass, a figure that varies among different auctions. This ob-servation is significant, because the system has been running for about 16years. The lack (or perception of a lack) of critical mass no doubt influencesadoption of the system. One expert commented that it is “a chicken and egg”problem—most people do not want to use CALM until enough people use it.More than one interviewee commented on the promotion efforts during thestart-up of CALM: “The promotional effort when CALM was launched wasenormous. It was almost too much because producers’ expectations about thesystem became too high.”

The experts had an interesting view on the influence of stock agents on theadoption of AuctionsPlus. Agents are intermediaries who facilitate sales of cattlethrough saleyards, earning a commission on the number of cattle sold and theprice they reach. The agents advise the producers about the readiness of theircattle for sale and the price they are likely to fetch, and they may assist withrounding up the animals and arranging transport to the market. This tradi-tional role gives agents considerable influence over the producers. They oftenprovide a very important social and commercial link between the relativelyisolated cattle producer, his industry group, and the outside world. The ex-perts believed that the agents were discouraging usage of the AuctionsPlussystem. In their view, even the company that owns AuctionsPlus, which em-ploys many stock agents, was not strongly stimulating adoption of AuctionsPlus.

The following statement by an industry expert is illustrative:

When I attended a sale in Inverell it was made quite clear by agents thatthey saw major problems with authentication of stock description andalso the ability to purchase stock to adequately allow for economicaltransport [with AuctionsPlus]. Obviously, buying one small pen doesnot make sense if being transported as the only occupant of a semi-trailer!

In addition, it was quite obvious to me that the agents were activelywhite-anting [undermining] the technology to anyone with the time tolisten. This was despite several pens of cattle being purchased online forgoing market rates.

Note that the stock agents were not identified as key stakeholders in theanalysis carried out at Level 1. Obviously, the agents are worse off economi-cally if cattle are sold through AuctionsPlus because they lose commissions.

64 DRIEDONKS ET AL.

As an industry segment, the stock agents are not regarded as key stakehold-ers because they are intermediaries rather than players with a large economicinvestment and thus explicit power in the industry. Nevertheless, for socialand historical reasons, the stock agents may have more power and influencethan is immediately apparent.

An attempt has been made to explain the low rate of adoption ofAuctionsPlus on two levels. In the economic context of Level 1, no key stake-holder groups are significantly worse off because of using AuctionsPlus, butdespite this the rate of adoption has been rather low. Placing the stakeholdergroups in a social context on Level 2 contributes much to an explanation ofthe relatively low take-up rate.

Lessons Learned

The relevant factors explaining the adoption of AuctionsPlus will now be ana-lyzed and discussed. They will then be generalized to give testable propositions.

Conclusions Regarding the Case Study

One may conclude from the AuctionsPlus process-stakeholder analysis thateconomic factors do not fully explain the rate of adoption. Although the netbenefits for the key stakeholder groups are positive for sellers and neutral forbuyers, most individual potential users have decided not to adopt theAuctionsPlus system. Relative advantage at the level of the stakeholder groupdoes not mean relative advantage for each individual potential user. The cattleproducers group in the AuctionsPlus case is heterogeneous—for instance, aproducer’s background plays an important role in relative advantage and es-pecially how it is perceived. The social viewpoint at the individual level helpsto explain why the innovation has not succeeded in terms of adoption.

The first explanation of the low rate of adoption of AuctionsPlus is thenature of the cattle producers’ social system and its characteristic communi-cation channels. The cattle producers tend to stick to their traditional ways oftrading. Since an important part of their social life depends on the traditionalsaleyard auctions, they are not well disposed toward an innovation that takesaway a big part of their social network. AuctionsPlus has been more success-ful in the northern parts of Australia, where saleyards are less accessible andover-the-hooks is a more common mode of sale. AuctionsPlus is more compa-rable to the over-the-hooks method, because neither involves social groupinteraction.

The second explanation is the kind of innovation decision to be made andpower distribution in the industry. As shown in the AuctionsPlus case, Kambiland van Heck’s process-stakeholder framework does not suit situations inwhich the adoption decision is optional. Their analysis focuses on an innova-tion decision that is collectively made by an authority and then implemented.Power distribution among stakeholders can have a major impact on aninnovation’s rate of adoption. Most stock agents (nonowners) did not encour-


age adoption of the system. Rogers does not mention the possibility of “nega-tive change agents.”

The third explanation is the lack of critical mass. In the AuctionsPlus case,a critical mass of adopters has not been reached—at least not fast enough. Nonetwork effects took place when the system was first launched. Adoption didnot accelerate, and this led to a chicken-and-egg problem—no potential userwould adopt until enough others had adopted. The early adopters, many ofwhom were involved in CALM or in industry politics, failed to function asopinion leaders. Kambil and van Heck note the need to achieve critical massquickly, because otherwise the early adopters who expected to benefit fromthe addition of other participants are likely to abandon the market [15]. Theraising of expectations through extensive promotion early on may have addedto this disillusionment effect.

Propositions

The conclusions from the case study make it possible to identify the factorsthat influence the (un)successful use of IT in markets. This analysis is used todevelop a series of observations with regard to how IT enables new marketinstitutions and investigates factors that drive or hinder adoption. These ob-servations are stated as propositions, and the supporting analysis and discus-sion are given below.

Proposition 1: Electronic markets that destroy existing social capital andsocial information among stakeholders will be less readily adopted by thesestakeholders.

The nature of a social system plays an important role in the adoption of B2Belectronic marketplaces. Electronic commerce is often marketed as makingbusiness location irrelevant. Change agents launching B2B electronic market-places should recognize, however, that social networks are of great impor-tance in many industries. Social involvement is often a way to transacteffectively. The social aspect of traditional ways of trading is not (easily) ex-changeable with IT-enabled innovations that claim to offer more efficiency.This argument is supported by recently published literature. Steinfield ar-gues that the success of local business clusters depends on the exploitation of“social capital—proximity affords interaction opportunities, common languageand culture enhance shared understanding, relationships facilitate knowledgesharing yielding innovation, and trust arising from relationships lubricatescommerce and reduces transaction costs” [29, p. 8]. Steinfield further statesthat most B2B electronic marketplaces are “relatively opaque to—or evenworse, attempt to substitute for—social information” and claims this is a rea-son why local business clusters do not widely adopt B2B electronic market-places. Wellman and Bakos also argue for this social network view [2, 30].

However, it may be difficult to identify the social aspects of markets. In theAuctionsPlus case, the traditional saleyard auctions contribute to the sociallife of the cattle producers, providing an opportunity to meet and socialize

66 DRIEDONKS ET AL.

with peers. Designers of electronic markets, using such methods as focus groupdiscussions that include the main stakeholders, have to find out which impor-tant social information is shared and how crucial it is for the stakeholders in-volved. Two options are possible. The first is that the specified social informationcannot be easily codified and automated. In that case, the electronic markethas to facilitate basic exchange processes, such as search and payment. Theother basic processes, such as pricing and logistics, will be done in the tradi-tional way with social interaction. The second option is that the specified so-cial information can be codified and automated, and a full electronic marketcovering all basic exchange processes can be designed and implemented.

Proposition 2: Knowledge exchange of positive experiences among earlyadopters, opinion leaders, and potential users will facilitate adoption of B2Belectronic markets.

Communication channels are of great importance in the adoption of B2B elec-tronic marketplaces, as recognized in Rogers’s diffusion theory [27]. The con-nection between early adopters who “should” function as opinion leadersand potential users is an interesting phenomenon linked to social networksthat can be further investigated. Granovetter argued for the importance of“weak ties” in linking sparsely knit communities and providing people witha wider range of information [12]. With regard to IT, the social informaticsschool of research views the relationships among different stakeholders ascomplex, negotiated, and multivalent, and holds that knowledge and exper-tise are inherently tacit and implicit [18, p. 220].

In the AuctionsPlus case, the early adopters failed to function as opinionleaders. Further, judging by interviewee reports, the stock and station agentintermediaries are acting as negative change agents who “white-ant” (under-mine) the new system. The agents had more influence than first expected inthis study. This finding is congruent with the contingency model of Giaglis,Klein, and O’Keefe, who see that in a context like this one, where the interme-diaries have specialized knowledge and alternative methods of price discov-ery are possible, the chances for pure cybermediation (the electronic auction)are less promising [11]. Their work suggests that market mechanisms that al-low some form of reintermediation and more reward for the stock agents wouldhave more chance of success [11].

In addition, user groups could be formed to facilitate knowledge exchangebetween early and later adopters. User groups are a mix of early and lateradopters or even nonadopters who share knowledge about the pros and consof an electronic market design. The user group discussions serve as the basisfor (re)designing the electronic market. Each phase of the adoption cycle hasto be carefully managed in order to exchange knowledge among the differentbuyers and sellers and to come up with the right system.

Proposition 3: Industries that have no leading or forcing stakeholders havemore difficulty in adopting and implementing open B2B electronic markets.

An industry’s context and the power relations among stakeholders can con-siderably influence adoption of B2B electronic marketplaces. For example, the


case where one stakeholder has a monopolistic position is different from thecase where an industry is competitive. Stakeholders that have a leading orforcing role in an industry can sometimes affect the innovation decisions ofother stakeholders. These factors have all been identified in electronic datainterchange (EDI) research (e.g., [4, 13]). Environmental factors, such as eco-nomic, socio-cultural, and competitive forces, can also, to a great extent, affecttake-up of innovative initiatives in industries.

The AuctionsPlus case clearly demonstrates that the system’s owners didnot have a leading and forcing role. They could not force users to switch to theelectronic markets, thereby allowing different levels of social information be-tween on-line and off-line sellers and buyers. Compare these results, for ex-ample, with the adoption of the Tele Flower Auction in the flower industry[15]. The Tele Flower Auction, which trades African flowers, forced all buyersto switch to the electronic market: no electronic link, then no African flowers!Tele Flower eliminated the information differences between on-line and off-line buyers because now all buyers had to be on-line. As the Tele Flower Auc-tion case shows, the uniqueness of the products traded can provide the ownerswith considerable market power and therefore can create a forcing role in theadoption of the electronic markets. In general, managers and designers of elec-tronic markets have to identify the unique and sustainable value proposition—in terms of products, services, or processes—that the electronic market willprovide, and this can create an enforcing power for the adoption of the elec-tronic market by sellers and buyers.

Proposition 4: To succeed, electronic markets must quickly achieve criticalmass and liquidity.

Finally, a critical mass of marketplace participants has to be reached quicklyenough to accelerate adoption. The value of a B2B electronic marketplace is afunction of the number of users, also referred to as network externalities. Ifvalue is not created quickly enough, the marketplace risks being consideredunsuccessful and not worth participating in. This factor is also critical in theadoption of electronic markets in general. Kambil and van Heck found, in adecade-long study of nearly 100 successful and failed electronic markets inthe United States, Europe, and Asia, that electronic markets can only succeedif they achieve critical mass and liquidity [15]. Kambil and van Heck sug-gested that two basic strategies are available to reach critical mass: subsidizeearly users and increase the cost of older transaction options.

The current study gives some further insights into the problem of obtain-ing critical mass. Timing may be a key element. The early CALM system waspre-Internet, relying for communications on a Telecom X.25 packet-switchingnetwork linked to a central computer. This system was not easy to use, andconnection from regional areas of Australia could be extremely difficult. Thus,the system was introduced at a time when many potential users were not ableto gain access easily, and in consequence perhaps it is not surprising that criti-cal mass was not obtained quickly.

Unanticipated events can also play a role in adoption. A key factor in thesuccess of an electronic market is the existence of a standardized language to

68 DRIEDONKS ET AL.

describe the product [22]. The AMLC addressed this issue by developing theAUS-MEAT language in 1985 for use with CALM. Elements of this languagewere adopted by the meat processors for use in their payment methods forover-the-hooks sales. In addition, a market intelligence service evolved, nowknown as the National Livestock Reporting Service, which provides informa-tion each week in newspapers and on the radio about the prices for livestockaround Australia in all markets. This service, too, makes use of elements ofthe standardized description language developed for CALM. Thus, othermechanisms for price information developed at the expense of CALM. Theconclusion to be drawn is that if the timing for the introduction of a new mar-ket structure is not right and a critical mass is not obtained quickly, not only isthere likely to be disillusionment, but also other, alternative market mecha-nisms may have time to improve their relative positions.

Conclusions, Limitations, andImplications

This paper addresses the question of what economic and social factors affectthe rate of adoption of B2B electronic marketplaces as innovations. It makesthree important contributions to the literature on electronic markets. First,factors that combine economic and social exploratory theories are identified.These theories differ mainly in respect to whether they explain the rate ofadoption as based on relative advantage at the level of the stakeholder groupor on perceptions at the individual (enterprise) level. Second, a single-casetest of the proposed framework is analyzed and executed through theAuctionsPlus case in the Australian beef industry. Third, based on the resultsof the case study, generalizable propositions are derived that address the na-ture of the social system, the use of communication channels, the industrycontext, and the rapid attainment of critical mass.

The results of the study indicate that a combination of the Kambil and VanHeck model and the Rogers model will help managers, designers, and poten-tial users to analyze and design electronic markets. Under complex condi-tions—such as a range of different stakeholder groups, strong socialinformation exchange, limited knowledge exchange between early adopters,opinion leaders, and potential users, and a lack of leading or forcing stake-holders—the two models help to identify the critical issues in the design of anelectronic market. Neither of these theoretical models is optimal by itself, butthey complement each other. There is need for knowledge and understandingof both the economic exchange advantages that an electronic marketplace canoffer and the social and communication processes required for it to be adoptedand used. This view is generally congruent with the approaches recommendedby Dai and Kauffman and by Lee and Clark [6, 22]. However, the case studysuggests that the Kambil and van Heck model may be more applicable whendecisions are made at higher, collective levels, rather than as in this case, wherethey are made at a lower level by individual stakeholders with varying per-ceptions of value propositions.


Limitations

The research presented in this paper has some limitations. The initial depic-tion of the Australian beef industry context was lacking in its representationof stock agents, who turned out to play an important role in the exchangemechanisms discussed. An investigation of their role in these exchange mecha-nisms and their influence on cattle producers would be a useful contribution.The discussion in this paper suggested that stock agents may function as nega-tive change agents. This is an interesting finding that could be studied in fur-ther research.

Facts on AuctionsPlus adoption and its distribution over Australia were,unfortunately, difficult to obtain, due to commercial sensitivity. It would beinteresting if this information could be gathered in order to confirm the rela-tion between characteristics of cattle producers and adoption of AuctionsPlus.

The conclusions drawn from the remainder of the conducted research arethought to be valid because several data-collection methods were used to in-vestigate the factors that affect the rate of adoption of B2B electronic market-places. The absence of quantitative analysis on the economic level is a weakness.The process-stakeholder framework, as developed by Kambil and van Heck,is a suitable method for investigating relative advantage issues but does notprovide enough guidance for measuring net benefits [15].

Implications for Managers

The paper provides new insights for companies that would like to adopt elec-tronic markets (whether as seller, buyer, or market maker). The proposed frame-work can be used to systematically analyze the relevant factors with regard tothe relative advantage within basic-trade and trade-context processes, the netbenefits for key stakeholder groups, the perceptions of electronic market in-novations by individual potential users, and the potential users’ characteris-tics. Based on the results of the electronic auction case, managers can identifycritical factors with regard to the social context, the communication channelsbetween early and potential adopters, the role of leading or forcing stake-holders in their industry, and finally, the role of critical mass and liquidity.These new insights should help managers to better design electronic marketsfor the benefit of sellers and buyers.

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4. Chwelos, P.; Benbasat, I.; and Dexter, A.S. Research report: Empiricaltest of an EDI adoption model, Information Systems Research, 12, 3 (2001),304–321.

5. Clarke, R., and Jenkins, M. The strategic intent of on-line trading sys-tems. Journal of Strategic Information Systems, 2, 1 (1993), 57–76.

6. Dai, Q., and Kauffman, R.J. Business models for Internet-based B2Belectronic markets. International Journal of Electronic Commerce, 6, 4 (summer2002), 41–72.

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CAROLINE DRIEDONKS ([email protected]) completed her M.Sc.at the Faculty of Industrial Engineering and Management of the University of Twentein 2003. For her research thesis she traveled to Australia, where she undertook a studyof electronic marketplaces and other exchange mechanisms in the beef industry. Whileat the University of Twente, she was on the boards of several student associations andwas also a partner in a consultancy company. In 2001 she did an internship for HeinekenExport in Amsterdam, where she developed a knowledge system for globalization ofhuman resource management. She is now the business manager of the Escher Mu-seum, The Hague.

SHIRLEY GREGOR ([email protected]) is professor of information systemsat the Australian National University, Canberra, where she heads the National Centrefor Information Systems Research and is head of the School of Business and Informa-tion Management. Her research interests include the adoption and effective use ofinformation technology, knowledge-based systems, and the theoretical foundations ofinformation systems research. She worked in the computing industry in Australia andthe United Kingdom before beginning an academic career and has published in MISQuarterly, International Journal of Human–Computer Studies, European Journal of Informa-tion Systems, and Information Technology & People. Professor Gregor was inaugural presi-dent of the Australasian Association of Information Systems and is vice-president ofthe Australian Council of Professors and Heads of Information Systems.

ARJEN WASSENAAR ([email protected]) is an associate professor of ISmanagement in the Faculty of Technology and Management at the University ofTwente, where he teaches in the master’s program for business administration andcomputer science students. He spent many years as an IT consultant before beginning

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his academic carrier and developed and taught IS management courses for compa-nies and institutions, including the Dutch Open University. Dr. Wassenaar’s exten-sive research and consulting activities include IS management, IT-based innovationmanagement, virtual network organizations, and electronic business management.He has published in MIS Quarterly and many other IS journals.

ERIC VAN HECK ([email protected]) is a professor of business administration atErasmus University’s Rotterdam School of Management, where he teaches in the in-ternational M.B.A. program and the Global eManagement (GeM) program. His re-search concentrates on the design of electronic markets and the design of businessmodularization. In his research he helps companies to develop innovative electronicauctions. He is a member of the Erasmus Research Institute of Management. Beforejoining Erasmus University, he was a research fellow at Tilburg University, an assis-tant professor at Wageningen University, and a visiting scholar at New York Univer-sity, and he has worked for Cap Gemini. Dr. van Heck has published in CaliforniaManagement Review, Communications of the ACM, Harvard Business Review, InformationSystems Research, and WirtschaftsInformatik and has written or edited 12 books. Hereceived his M.Sc. and Ph.D. from Wageningen University.

Economic and Social Analysis of the Adoption of B2B Electronic Markets

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