Factors influencing suppliers\u27 participation in private electronic markets

The advent of the Internet technology created a new market called “B2B (business to business).” The B2B market is quickly growing into a major market, and is expected to account for 88 percent of online sales in 2006. Despite their popularity and potential for extensive growth, many B2B EMs are struggling to survive because they failed to attract enough participants. Therefore, this study is intended to identify factors which influence suppliers\u27 participation in EM. Among various EM models, this study focuses on Private Electronic Market (PEM) since it is currently the fastest-growing type of B2B EM, and is expected to be a major B2B EM. Based on previous studies on EDI adoption, this study compared the key factors for EDI and PEM adoption since this study assumes that there are many common aspects between EDI adoption and PEM adoption. However, this study also examines their differences. The survey method is employed to collect data from suppliers of a major IT firm which was recently ranked as one of the Top Five IT Firms in the world by the Business Week. The results of data analysis show that the expected number of suppliers, expected subsidy from the buyer, and the congruence between current source of suppliers\u27 core competency and expected order-winning criteria as the factors to be focused to attract more suppliers into PEM. The result of this study implies that many suppliers do not recognize the potential benefits that PEM could offer, and they do not believe that their off-line relationships with a buyer could be transferred to the on-line. This result suggests that buyers have to convince their suppliers that PEM is not a just price-based marketplace like a spot exchanging market where many suppliers have to slash their prices, but instead a marketplace where mutual benefits can be achieved based on existing trust relationships between a buyer and limited number of qualified suppliers