A Cross-sectional Study
Efthymios Constantinides
School of Management and Governance, University of Twente,PO Box 217, 7500 AE, Enschede, The Netherlands
Keywords: e-Commerce, online business, stages model, innovation adoption, E-Commerce strategy, organizational
Abstract: Electronic Commerce (EC) is increasingly perceived as a mainstream element of the marketing strategy.
With more firms trying to extract value from the virtualized and global marketplace of the 21
century it is
essential that managers effectively address the problems related to the organizational adoption and internal
implementation of EC. The paper evaluates the aptitude of the stages model, one of the well-known
approaches describing the adoption of EC, in accurately mapping and explaining this complex process.
Based on a study of ten commercial firms the study concludes that in the majority of cases the stages model
does not adequately describe the EC adoption process. The model suffers from a fundamental flaw, namely
overlooks the irregular pattern of the EC assimilation in the internal organizational processes who are
shaped by EC with different intensity, in different ways and at different times rather than in a linear way the
stages model suggests.
The paper proposes a more flexible approach recognizing the complexity of this process and providing a
more accurate and representative picture of the EC adoption by commercial firms.
The Internet is widely considered as the most
important technological and commercial innovation
of the 90’s and all indicators point to it as the
technology likely to shape the marketing practice of
the future years. The Internet entered the
commercial field as a technological novelty and after
a heavily hyped period that ended in the 2000 with a
high tech melt-down has become today the basis of
what is commonly known as E-Commerce, a
standard feature of the mainstream commercial
landscape (García-Dastugue and Lambert, 2003;
Barwise and Farely, 2005; Brodie, 2006).
Responding to the growing commercial
importance of the online marketplace millions of
traditional businesses already embraced E-
Commerce as part of their corporate, business and
functional strate
gy (Krell and Gale, 2005). The wide
acceptance of E-Commerce by consumers and
businesses as a major commercial channel indicates
that firms failing to create an attractive and
customer-centric web presence deprive themselves
from the opportunity to add new revenue streams to
their business, improve customer relationships and
improve their profitability by obtaining synergies
between their physical and online operations (Amit
and Zott, 2001; Mustaffa and Beaumont, 2002,
Lumpkin et al., 2002).
The adoption process of E-Commerce by
commercial organizations has been treated in the
literature along two broad lines:
1. As a contingency issue: this approach has been
discussed among others by Thong (1999), Wang
(2000), Truong and Subba Rao ( 2002) and Teo and
Pian (2003). The contingency model proposed by
Truong and Subba Rao ( 2002) identifies three
categories of factors affecting the adoption process
(Organizational, Technological and Environmental)
that combined lead to different degrees and forms of
E-Commerce adoption. More recently Krell and
Constantinides E. (2007).
In Proceedings of the Third International Conference on Web Information Systems and Technologies - Society, e-Business and e-Government /
e-Learning, pages 191-195
DOI: 10.5220/0001261601910195
Gale (2005) proposed a process model addressing
different contingencies involved in the migration of
traditional organizations to E-Business.
2. As a stages process describing the adoption
of the Internet as a journey through different levels
of organizational adoption, a process particularly
popular by business consultants in the late 90’s. El
Sawy et al. (1999) proposed a six-level framework
of enterprise transformation on its way to E-
Commerce with emphasis on the organizational
aspects influencing this process. Earl (2000)
discussed a six-stages process with more emphasis
on strategic issues. Furth and Jensen (2000) from the
Roland Berger Strategy Consultants proposed the e-
Transformation 3-wave model. The consulting firm
PricewaterhouseCoopers developed a 4 stages
model, similar to NerveWire’s model described by
Gossain S., Kenworthy R., (2000). More recently
Subba Rao et al (2003) discussed a four stages
model that more or less summarizes the past
experience on this issue. According to their concept
E-commerce can be introduced by organizations in
different degrees of intensity leading to four broad
categories or adoption stages. In each of these stages
companies have different strategic objectives and
aspirations, expressed in varying degrees of
managerial commitment and resource allocation.
In a nutshell the stages model of Subba Rao et al.
(2003) describes four distinctive phases of E-
Commerce adoption:
a. Presence: is the simplest form of e-commerce
adoption. Organizations in this stage employ static
informational sites playing the role of a virtual
brochure. The online activity is very little or not at
all integrated in the internal organization.
b. Portal: in this stage online interaction with
customers is possible. Interactive elements of this
stage include ordering facilities, active product
feedback, customer feed-back in the form of quality
surveys, information on inventory data and search
c. Transactions integration (TI). In this stage the
company web site allows for financial transactions
like ordering and payments online. Other forms of
interaction like sharing of information by means of
virtual communities and electronic auctioning are
common in this stage.
d. Enterprises integration (EI) refers to complete
integration of business processes to the extent that
the online business becomes an integral part of the
existing physical, traditional organizational body.
This level of integration requires a high degree of
collaboration between organic parts of the firm and
integration with other parties forming the
organization’s value chain.
An implicit assumption of the stages models is
that in different stages of E-Commerce adoption the
effects on internal processes are uniform and
consistent. It has however been argued that the
influence of E-Commerce on internal organizational
processes can be non-linear and complicated (Barnes
et al. 2002). Earl (2000) basing his analysis of a six-
step stages model argues that the introduction of the
Internet in organizations is an evolutionary process
placing different emphasis on different processes in
each stage while Krell and Gale (2005) conclude
that the migration to E-Business is in fact a complex
organizational challenge.
In line with the view that E-Commerce
implementation can have different effects on the
organizational operations Constantinides, (2002)
identifies two distinctive groups of organizational
processes where E-Commerce must be embedded:
- Front Office processes i.e. processes related to
marketing strategy
- Back Office processes i.e. the processes related to
the organic structure.
This distinction is used as basis for a more
detailed and deeper look on the organizational
effects of E-Commerce in different stages. The front
and back office processes plotted against the four
stages model of Subba Rao et al. (2003) are
illustrated in Table 1.
Having defined the main stages of E-Commerce
adoption and the two clusters of organizational
processes likely to be affected (Front Office, Back
Office), the next step is to examine whether the
processes belonging to each of the two clusters are
affected in a similar manner during the different
stages of the E-Commerce adoption process.
The hypothesis of the study is that internal
organizational processes are not necessarily affected
in a linear manner in the different stages of the
adoption process as the stages model suggests.
Accepting the hypothesis would indicate that
commercial firms introduce E-Commerce in many
different ways rather than in stages and with
different degrees of urgency per organizational
The study was conducted by means of a survey on
the practices followed by ten USA commercial firms
based in Boston, San Francisco and Los Angeles in
integrating EC as part of their commercial model.
The companies were randomly selected and belong
WEBIST 2007 - International Conference on Web Information Systems and Technologies
Table 1: The four stages of E-Commerce adoption against
the front and back office elements.
Presence Portal Transaction Integration
very diverse industry branches. The study is based
on structured interviews with top executives (CEO’s
and CIO’s) as to the company’s approach to EC.
The purpose of the interviews was to identify the
effects of E-Commerce on a number of Front Office
and Back Office processes and determine whether
these processes are affected in similar degrees per
stage, as the strict application of the stages model
The organizational processes that were evaluated
in the survey were drawn from the classic Value
Chain model of M. Porter (1985). The Porter
framework distinguishes two categories of internal
business processes, the secondary or supporting
activities and the primary ones
The supporting activities are expanding along the
whole organizational body: Firm Infrastructure,
Human Resource Management, Technology
Development and Procurement. The primary
activities (Inbound logistics, Operations, Outbound
logistics, Marketing sales and service) are
represented as a series of blocks in the lower part of
the model.
The large numbers of the processes in the Porter
model (nine) presented a major complexity:
analyzing the effects of E-Commerce in all these
processes would make the study very complicated
and extensive. In this respect it was decided to focus
on the most important and representative processes
per cluster: one secondary activity (Procurement)
and three primary ones (Inbound
Logistics, Operations, and Marketing/sales).
For reasons of additional efficiency the processes
of procurement and inbound logistics were merged
into a single category since from the practitioners’
point of view these two activities are closely related.
In order to obtain comparable answers a number
of standardized generic EC functionalities or generic
activities were identified as descriptors of the
business model per stage; they range from simple
informational functionality in the presence stage to
integrative functions in the integration stage. (Table
2). The interviewed managers were asked to identify
to what extend the Internet was supporting these
functions within the organizational processes in
question (Inbound Logistics/Procurement,
Operations, Marketing/Sales).
An indicative example in the
logistics/procurement function: a company using the
internet in order to inform suppliers about its
intention in buying a certain product but not
allowing for online tenders would qualify as being in
the “Presence” stage. If customers were allowed to
react on line by submitting an offer then the
qualification for this function would be “Portal” and
if the web site would allow an online auction or
online ordering and online settlement the
qualification would be “Transaction”. In case the
ordering, invoicing and physical delivery processes
were fully automated then the process in question
would find itself in the “Integration” stage.
The hypothetical scores on the table indicate
differences between the 3 processes as well as
between the Back Office processes themselves. The
results in this example (Back Office Integration: 3,
Front Office Integration: 1) highlight a discrepancy
between the Front and Back office EC adoption in
each functional cluster; the company finds itself in
the transaction stage with regard to Back Office
processes but in the Presence stage with regard to
Front Office activities.
The results of the individual tables are summarized
in Table 3 and illustrated in Graphic1.
Table 2: The classification framework of the organization effects of E-Commerce.
Knowledge management
Matrix 1: Example of evaluation table; hypothetical example demonstration the scores.
Operations 4
BACK OFFICE (2+4) / 2 = 3
Marketing and Sales 1
The outcome of the study indicates a wide diversity
of approaches in integrating EC into business
processes. A general remark one could place is that
the appearance
of the “Presence” stage in a number of the cases
examined indicates that after more than 15 years of
commercial Internet there are still firms apparently
unaware of the full potential of this technology,
therefore missing the opportunity of expanding and
reaching new markets, reducing costs and
streamlining their operations.
Next to this general remark the conclusions of
the study can be summarized as follows:
- From the ten firms examined in only two of them
(G and J) the adoption of E-Commerce has affected
both marketing processes (front-office) and non-
marketing processes (back-office) in a linear and
balanced way. Based on the scores we could
establish that in terms of the stages model of Subba
Rao et al (2003) firm G is finding itself in the Portal
stage while firm J in the Integration stage.
- Eight of the ten examined firms cannot be
classified according to the 4-stages model as to the
level of adoption of EC. This because of
discrepancies between the level of EC integration
into different organizational processes
- The ten firms examined seem to place different
emphasis on the role of E-Commerce as a corporate
strategy tool. Five firms (C,D,E,F and I) have placed
more emphasis on the Internet as a marketing tool
while for three (A, B, H) the Internet has impacted
mostly on their back-office processes.
It must be noticed here that the scope of the
study was limited to the level of integration of EC in
internal processes therefore the reasons for the
differences between processes within the same firm
or the differences between firms cannot be explained
by the information collected.
The above findings indicate that the influence of
E-Commerce on the various corporate processes can
vary in different stages of the adoption process. The
hypothesis is therefore accepted: the simple 4-stages
model of Subba Rao et al. (2003) is not sufficient to
describe the stages of E-Commerce adoption since it
overlooks the differences in the adoption pace by the
individual organizational processes. It seems that the
emphasis placed on transforming internal processes
during the introduction of E-Commerce can be
different per process and organizations can function
in the online environment even if their internal the
processes are in different levels of “virtualization”.
Considering the above defining the EC adoption
process as a combination of stages and clusters
(back-office, front-office) reveals much more
accurately the adoption level of EC than the simple
stages model does. The improved approach results in
eight different combinations that from the strategic
point of view provide a much better and
comprehensive picture of the situation. Such a
detailed analysis would help managers to identify
and correct discrepancies in their general E-
Commerce strategy or distinguish organizational
processes and areas of weak E-Commerce
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Graphic 1: Effects of E-Commerce in Back Office and Front Office Processes in ten case studies.
Table 3: E-Commerce stage per Front and back office activities.
Company A B C D E F G H I J
Back Office
3 4 3,5 3 2 2 2 3,5 2 4
Front Office
1 3 4 4 4 3 2 2 3 4
Back Office Front Office