Innovative Perspectives: Value Creation and Electronic Procurement

This research addresses the very important question of the impact of web-based electronic procurement systems on corporate governance, as related to organizational purchasing and value creation. Unlike traditional marketplaces where the sale and purchase of products takes place at specific locations, the electronic marketplace is mainly designed to use the Internet infrastructure to exchange information and create virtual communities in space (Hagel and Armstrong 1997), where transactions between buyer and seller take place.But a lack of theoretical investigation and empirical evidence suggests uncertainty as to whether the Internet and electronic technology based transactions represents a 'new economy' unbounded by traditional economic principles (Arthur 1994; Porter 2001). For reasons of competitive advantage and intellectual property ownership, there remains a 'paucity of studies' investigating value creation mechanisms in the electronic commerce sector (Park, Mezias and Song 2004 p8). This paper suggests a value creation mechanism in the form of an electronic procurement data base model. This generic model was developed for a multinational organization and successfully tested with two other multinational organizations. The capturing of this ephemeral data and creating value from it is the focus of this paper