B2B E-Marketplaces - Interconnection Effects, Strategic Positioning, and Performance

Electronic markets theory leads to the prediction that the interconnection effects of information technology will lower coordination costs in market transactions, prompting a move from hierarchical to market arrangements. This prediction was apparently validated by the proliferation of B2B e-marketplaces in the mid-1990s. But the subsequent abrupt consolidation of public, independent e-marketplaces raises questions about what it takes for e-marketplaces to succeed. Experience with actual e-marketplaces suggests that electronic interconnection effects alone may not explain e-marketplace success. The strategic management literature provides a complementary view, emphasizing the fit between an e-marketplace\u27s value proposition, its product-market focus, and its value activities. The purpose of this paper, therefore, is to explore the degree to which the strategic positioning perspective contributes to the explanation of e-marketplace success. We analyzed a pair of e-marketplaces sharing the same competitive space, one successful and the other less so. We found that the number and types of interconnection benefits alone did not make a good explanation of e-marketplace success. However, the additional concepts provided by strategic positioning theory - particularly the holistic fit between benefits types offered (value proposition), product-market focus, and value activities - do appear to explain well the observed differences in e-marketplace performance. Future research should extend our exploratory investigation of e-marketplace success