A contingency perspective on Internet adoption and competitive advantage
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A contingency perspective on Internet adoption and competitive advantage Thompson SH Teo1 and Yujun Pian1 1
Department of Decision Sciences, School of Business, National University of Singapore, Singapore Correspondence: Thompson SH Teo, Department of Decision Sciences, School of Business, National University of Singapore, 1 Business Link, Singapore 117592. Fax: +65 6779 2621; E-mail: [email protected]
Abstract Firms adopt the Internet for different purposes, ranging from simple Internet presence to using the Internet to transform business operations. This paper examines the contingency factors that affect levels of Internet adoption and their impact on competitive advantage. A questionnaire was used to gather data for this study; 159 usable responses were obtained from a sample of 566 firms in Singapore. Results indicate that most firms are still exploring the business use of the Internet. A proactive business technology strategy was found to be positively associated with the level of Internet adoption. Technology compatibility and top management support were found to have no significant relationships with the level of Internet adoption. Further, the level of Internet adoption had a significant positive relationship with competitive advantage. These results provide a better understanding of the contingency factors affecting the level of Internet adoption, as well as providing some evidence of the positive impact of Internet adoption on competitive advantage. European Journal of Information Systems (2003) 12, 78–92. doi:10.1057/ palgrave.ejis.3000448 Keywords: Internet; Web; adoption; contingency; competitive advantage
Introduction
Received: September 2001 Revised: February 2002 Accepted: September 2002
The success of airline reservation systems in the 1980s in the United States has triggered an extensive examination of the impact of information technologies (IT) on markets and business transactions. Previous research focused on how IT can be used to transform industry and business structures, as well as to sustain firms’ competitiveness (Malone et al., 1987; Porter & Millar, 1996; Fruling & Digman, 2000). In recent years, research has increasingly examined the impact of the Internet. Research has shown that the most useful effects of the Internet for small businesses are for information-gathering and time-savings rather than for advertising and sales (Poon & Swatman, 1999). Although business activities seek to generate revenues, research shows that financial & economic measures alone do not adequately capture the value of electronic commerce investment (Tiwana & Ramesh, 1999). Future expectations pertaining to positive impacts of the Internet on competitive advantage often serve as key motivations for the adoption of the Internet in firms. For example, research has shown that firms have used the Internet to enhance their competitive advantage in areas such as marketing and information distribution, research and development, sales and product distribution, and customer and product support services (Mathieu, 19
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