critical success factors for b2b e-markets: a strategic fit perspective

Critical success factors for B2Be-markets: a strategic fit

perspectiveMichael Johnson

Aston Business School, Aston University, Birmingham, UK

Abstract

Purpose – The objective of this paper is to explore and determine a set of factors that are critical tothe success of business-to-business (B2B) e-markets in the aerospace and defence, healthcare, highereducation and local government industry sectors, in order to advance our current understanding ofwhat factors facilitate e-market adoption and success. The paper examines critical success factors(CSFs) for e-markets from a strategic fit perspective.Design/methodology/approach – The study adopted a semi-inductive qualitative approach basedon a review of the literature, followed by a pilot study and 58 indepth semi-structured interviewswith senior level executives in buyer, supplier, e-market and third-party organisations. Qualitative dataanalysis software, QSR N6, was used to code and analyse the interview data for citations thatcorresponded with the candidate e-market CSFs that had been identified either in the literature, pilotstudy or during the course of the interviews with respondents. The CSFs for e-markets were rankedby the frequency of respondents citing a particular CSF.Findings – The study found eight factors that are critical to e-market success and four factors (criticalmass, integration issues, value proposition, and leadership participation) were found to be conduciveto e-market success in all four industry sectors. Likewise, four factors (industry knowledge, revenuemodel, branding and reputation, and rich content) were found to be only conducive to e-market successin three of the four industry sectors.Practical implications – The paper can help academic researchers, managers, consultants,practitioners and other professionals better understand what factors are critical to the success ofe-markets and other online enterprises operating in the B2B marketspace.Originality/value – There have been numerous calls for more empirical research on the dynamics ofe-market adoption for more than a decade. To date, research on the CSFs for e-markets has beenlargely anecdotal and sporadic with a paucity of studies noting factors that are likely to be favourableto e-market success. This study addresses the call for more research on e-markets and impartsempirical evidence on factors that are perceived to be conducive to the success of e-markets.It contributes to the base of knowledge on e-markets by relating the concept of CSFs with the theoryof strategic fit as, to date, no known study has examined CSFs for e-markets from a strategicfit perspective. The study also presents the benefits capabilities-industry participants’ needs fitconceptual model as a precursor for theory building in future studies on B2B e-markets and informsstakeholders involved in developing e-markets or other online B2B ventures to better comprehend theconditions and determinants of success.

Keywords Critical success factors, Business-to-business marketing, Electronic commerce,B2B e-markets, E-market capabilities, Strategic fit, Dynamic capabilities, Buyers, Suppliers,Industry participants, Benefits, Needs, Qualitative research

Paper type Research paper

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0263-4503.htm

Received 1 June 2012Revised 17 October 20122 February 2013Accepted 21 February 2013

Marketing Intelligence & PlanningVol. 31 No. 6, 2013pp. 698-727r Emerald Group Publishing Limited0263-4503DOI 10.1108/MIP-10-2013-001

The author would like to thank all the interviewees and organisations who gave their timeselflessly to participate in the study, and the two anonymous reviewers for their constructive andhelpful comments on an earlier draft of the paper.

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1. IntroductionThe success of any business operating in a business-to-business (B2B) environment iscontingent on their ability to market their products and services effectively to buyers,suppliers and other third-party organisations. In addition to the receptivity of themarket, their sustainable future is also contingent on a number of factors (e.g. tangibleand intangible assets, competences, resources and capabilities) that they possess.Those factors must be aligned to, or fit with, market expectations and differentiatetheir offerings from those of their competitors. Observing that some companiesthrive in environments characterised by turbulence and uncertainty while othersexperience catastrophic failure suggests that successful companies possess andexploit a set of factors that are critical to their success in a given environment, wherebysuccess is determined by their superior long-term performance over competitors.Such factors, referred to as critical success factors (CSFs), have been studied in avariety of industrial and organisational contexts (Huotari and Wilson, 2001) over thepast five decades.

While several streams of research (e.g. Al-Mashari et al., 2006; Slevin and Pinto,1987; Teo and Ang, 1999) have identified CSFs in traditional bricks and mortarindustries, relatively few studies have examined CSFs for online service organisationssuch as B2B electronic markets (e-markets). Consequently, the dearth of empiricalresearch pertaining to CSFs for e-markets has resulted in numerous calls for moreempirical research on the subject. Fong et al. (1997) argue that there is a need to betterunderstand of the characteristics of e-markets and identify factors that underpin theirsuccess. Fairchild and Peterson (2003) note that there is still a fundamental needfor more empirical research that provides relevant insights and understanding ofe-markets. Joo and Kim (2004) suggest that research on identifying factors thatinfluence the proliferation of e-markets is a topic for further research. Likewise,Hadaya (2006) states that very few empirical studies have endeavoured to identify thefactors that induce firms to adhere to e-markets. More recently, Chong et al. (2010)suggest identifying the CSFs associated with the performance of e-markets as a topicfor further research to consider. Similarly, Standing et al. (2010) suggest identifyingthe factors that enable organisations to successfully participate in e-markets as a keyresearch question for future research to consider. E-markets constitute a significantpart of the digital economy and are proliferating into every sphere of economic activityin the developed world and are growing in use in developing countries. Thus, theirgrowing importance and impact on supply chain organisations in both industrialmarkets and the public sector, and their contributions to regional, national and globaleconomies denote that “further research on e-markets [is] required that elucidate thefactors that are conducive to their success” ( Johnson, 2011a, p. 114).

There has been a recent resurgence of research interests on e-markets (e.g. Baloccoet al., 2010; Chien et al., 2012; Chong et al., 2010; Johnson, 2012, 2014; Loukis et al., 2011;Matook, 2013; Saprikis, 2013; Wang et al., 2012) because they represent one of the mostpromising opportunities for improving supply chain efficiency, growth and profitabilityin interconnected and globalised markets, given that 90 per cent of all supply chaintransactions are B2B (Attaran and Attaran, 2007). Increasingly greater amounts ofB2B trade is being channelled through e-markets. In North America alone, it wasanticipated that more than 40 per cent of all B2B trade (amounting to more than US$2.9billion) would be channelled through e-markets by 2006 (Truong and Jitpaiboon, 2008).The global market for B2B applications and technologies was anticipated to reachUS$1.3 trillion by 2009 (Ratnasingam, 2007).

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CSFs forB2B e-markets

Rationale for the studyThere has been considerable interest in e-markets among practitioner audiences(Petersen et al., 2007) and academics (Li and Li, 2005; Saprikis, 2013; Truong andJitpaiboon, 2008). Notwithstanding, many of the key issues concerning e-markets havenot received the attention they deserve in the literature (Chien et al., 2012; Johnson,2012). Furthermore, the number of empirical studies that exist on e-markets is paltry(Truong and Jitpaiboon, 2008) and although over a decade of research has beenpublished on e-markets, Standing et al. (2010) note that many questions pertaining toe-markets still remain unanswered or need clarification. For example, empirical studieson success factors for e-markets are so few, that Li and Li (2005, p. 119) suggest that astudy to deduce such factors is “very necessary”.

The commercial environment has become increasingly more complicated(Nagati and Rebolledo, 2012) especially due to the advent of e-business and otherdigital technologies. Accordingly, e-markets operate in high velocity environmentscharacterised by significant turbulence and great uncertainty due to the emergent andrapidly changing nature of the B2B marketspace (Ganesh et al., 2004; Wang et al., 2012).This requires e-markets to continuously modify their business models to evolve withchanges in their environment. While a number of high profile e-markets have failed(Cuganesan and Lee, 2006; Day et al., 2003; Doyle and Melanson, 2001; Oliver, 2001;Truong and Jitpaiboon, 2008), many others have thrived and new e-markets continueto emerge globally, particularly in rapidly developing markets and economies. Forexample, Wang et al. (2012) suggest that although the number of e-markets in Chinaexceeded 4,500 in 2007, the potential market size for e-markets in China remainssubstantial given that a myriad of small and medium-sized enterprises (SMEs) areespecially keen to launch new products, establish their brands and grow their marketsthrough e-markets – which are key drivers of e-market proliferation in China.

The success and failure of e-markets serve to indicate that there is a requirement fora much better understanding of the CSFs pertaining to such systems (Vaidya et al.,2006). Identifying e-market CSFs can provides some important insights that can betterinform entrepreneurs launching new e-markets and managers in existing ones torecognise and focus on the key areas of their business where intervention is required(Francoise et al., 2009). For example, redefining their strategy, business model or valueproposition (Balocco et al., 2010), managing resources more effectively and developingdynamic capabilities that respond to the needs of buyers and suppliers in the industriesin which they operate, given that some e-markets find it difficult to attract and retainindustry participants (Chien et al., 2012) and because industry participants exploit thecompetition between e-markets by participating in those which furnish them withthe greatest value (Miller and Niu, 2012). Therefore, the aim of this empirical study is todetermine a set of CSFs for e-markets by answering the research question: What arethe CSFs for B2B e-markets?

This paper addresses the numerous calls for more empirical research on identifyingfactors that are perceived to be critical to the success of e-markets and explicates howthey are important. It contributes to the base of knowledge on e-markets by relatingthe concept of CSFs with the theory of strategic fit as, to date, no known study hasexamined CSFs for e-markets from a strategic fit perspective. The study also presentsthe e-market benefits capabilities – industry participants’ needs fit conceptual modelas a precursor for theory building in future studies on B2B e-markets and informsstakeholders involved in developing e-markets or other online B2B ventures to bettercomprehend the conditions and determinants of success.

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2. BackgroundCSFsCSFs were initially observed in the early 1960s by Daniel (1961) who noted that therewere typically between three and six factors that govern an organisation’s successwithin the majority of industry sectors. Rockart (1979) first defined the concept of CSFsin the management literature and suggested they were measurable constructs directlylinked to the attainment of organisational goals and the competitive performanceof firms, which may differ between managers in an organisation and between similarorganisations in the same industry. CSFs are contingent on the context in which theyare being examined and, therefore, several definitions exits. According to Rockart(1979), CSFs are “[y] the limited number of areas [of a business] in which results,if they are satisfactory, will ensure successful competitive performance for theorganisation. They are a few key areas where ‘things must go right’ for the business toflourish” (Rockart, 1979, p. 85). However, this definition does not make it explicitlyapparent that some CSFs relate to the external environment in which organisationsoperate. Moreover, the extant literature (e.g. Daniel, 1961; Rockart, 1979; Boynton andZmud, 1984; Slevin and Pinto, 1987; Peffers and Gengler, 1998) suggests that CSFsrelate to organisational information needs which have implications for organisationalplanning and control activities. It follows that an inference can be made that CSFsrelate to managerial decisions that affect an organisation’s current and futureoperations. Thus, for the context of this study, a definition of CSFs should also relate toan organisation’s future, as provided by Boynton and Zmud (1984) who define CSFs as“[y] issues vital to an organization’s current operating activities and to its futuresuccess” (Boynton and Zmud, 1984, p. 19).

E-markets and measures of their successE-markets, which are sometimes referred to as B2B exchanges, digital marketsor industrial e-markets, are service-based firms that operate in the online B2Bmarketspace within the private and public sectors. They are operated by eithera major buyer or supplier within a market, a multi-firm consortium or an independentthird-party (Strader and Shaw, 1997) to support the basic economic transactions ofdemand and supply and information exchange that facilitate market efficiency.Johnson (2011b) defines e-markets as “inter-organisational trading systems that seek tosmooth out supply chain inefficiencies by facilitating buyer-supplier informationexchange on products, services, prices and transactions in an integrated andsynchronous internet-based environment” ( Johnson, 2011b, p. 97).

The relative newness of e-markets makes it difficult to establish rigourous measuresof success (Ordanini et al., 2004). Johnson et al. (2001) suggest that e-market success isdetermined by the extent to which the business benefits they provide address thesupply chain needs of industry participants and the financial benefits the owners ofe-markets gain. E-market success can also be determined by their profitability (Li andLi, 2005), positive cash flow and high volume of transactions (Sehwail and Ingalls,2005). However, e-market success is ultimately defined by their longevity in themarketspace, i.e. their ability to out-perform competitors and competing mechanismsof market co-ordination and exchange. A number of studies on e-markets and otherB2B e-commerce systems infer a number of factors that are perceived to contribute tothe success of e-markets. These factors are summarised in Table I below. While suchfactors are considered to be important to e-market success, a comprehensive frameworkthat examines the factors that influence e-market success has not been developed to date

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nor do existing theoretical frameworks and models of adoption adequately explaine-market adoption in all contexts (Gengatharen and Standing, 2005). According toWang et al. (2012), a coherent theory of e-market performance (i.e. success) has not beendeveloped to date. This may stem from the notion that there is a lack of knowledge onhow the performance (i.e. success) of e-markets can be determined (Matook, 2013).Notwithstanding, the success of e-markets can be examined from a strategic fitperspective.

Strategic fitThe concept of strategic fit (alignment or co-alignment) has also been used to assessorganisational performance outcomes in different contexts for more than four decades(Venkatraman, 1989). While several definitions of strategic fit exist, Smaczny (2001)offers an interpretation which suggests that managers must collect and respond tomarket intelligence pertaining to the internal and external domains of theirorganisations in order to be successful. According to Smaczny (2001), strategic fitresults from “[y] the ability to make decisions concerning a company’s marketpositioning based on external and internal environmental conditions” (Smaczny, 2001,p. 799). A number of studies on strategic fit (e.g. Bensaou and Venkatraman, 1996;Venkatraman and Prescott, 1990; Venkatraman and Ramanujam, 1986) also argue thatthe fit of organisational variables with the internal and external environment is relatedto organisational performance. Miles and Snow (1994) maintain that organisationspossess a set of factors (i.e. resources and capabilities), which must have both aninternal fit within the organisation and an external fit with the external environment,that must be constantly aligned with the internal and external environments in order toremain in fit and achieve superior performance over competitors in the industriesin which they operate. Furthermore, fit is both a state and a process whereby, toachieve strategic fit, organisations must “[y] create, understand, develop, and sustaina distinctive competence in the production of high-value goods or services that themarket desires” (Miles and Snow, 1994, p. 186). In other words, organisations mustdevelop unique capabilities that provide exceptional benefits which address the needsand desires of their customers.

Several studies on enterprise systems (e.g. Al-Mashari et al., 2003; Croteau and Li,2003; Holland and Light, 1999; Hong and Kim, 2002; Lu et al., 2006; Soong et al., 2001;Umble et al., 2003) support the view that the success of such systems is contingent onhow well they fit with the needs of stakeholders, the provision of benefits that matchperceived needs or other organisational variables. While Bensaou and Venkatraman(1996) examined the performance of B2B relationships using the theory of strategic fit,to date, no known study has examined the performance outcomes (i.e. success) ofe-markets from a strategic fit perspective. In the context of B2B relationships, such asbetween a buyer and supplier, Bensaou and Venkatraman (1996) argue that achievinga close fit between the information processing needs of one firm with the informationprocessing capabilities of another was a strong determinant of performance.Extrapolating to the broader context of the B2B e-marketspace, it is analogousthat e-markets must possess capabilities that provide benefits that address thesupply chain needs of industry participants over and above competing means ofco-ordinating market exchange in order to be successful. Furthermore, an e-marketmust continually develop dynamic capabilities that respond to the changing needsof industry participants and do this better than its rivals in a given industry in orderto sustain its competitive advantage and long-term survival. There is no universal

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framework for categorising the benefits that can be derived from e-market participation( Johnson, 2011c). However, Shang and Seddon (2002) provide a useful framework forassessing the types of higher level benefits that buyers and suppliers can gain frome-market participation as noted in the extant literature (see Johnson, 2011a, b, c).

3. MethodologyResearch approachA semi-inductive qualitative means of enquiry, informed by the literature, was chosento answer the research question because CSFs are context-dependent and the researchwas exploratory. There is a strong tradition of using qualitative approaches based onthe use of case studies and/or semi-structured interviews in research pertaining toCSFs (e.g. Al-Mashari et al., 2006; Boynton and Zmud, 1984; Daniel, 1961; Fairchildet al., 2004; Hong and Kim, 2002; Rockart, 1979) and B2B e-commerce (e.g. Bakker et al.,2008; Lancastre and Lages, 2006; Petersen et al., 2007; Sehwail and Ingalls, 2005;Vaidya et al., 2006) given that these approaches offer contextual richness whichemphasises the importance of the social context (see Bonoma, 1985; Gummesson,2003). Furthermore, it has been argued that phenomenological approaches (e.g.descriptive and interpretive) are legitimate modes of enquiry in qualitative studiesseeking to understand how contextual factors impinge on organisations adoptinginformation systems (Galliers and Land, 1987), which is pertinent to this study giventhat it formed the basis of a larger research project on the organisational adoptiondynamics of e-markets in private and public sector environments.

Data collectionA research protocol, shown in Figure 1, was used to record the numerous stagesinvolved in the research process to improve the rigor, replicability and reliability of thestudy as advocated by Yin (1994). A review of the literature pertaining to e-markets,business and industrial marketing, and operations and supply chain managementrelating to e-markets, B2B e-commerce and e-procurement systems was conducted toidentify candidate CSFs for e-markets. A pilot study was conducted that involved14 in-depth interviews with e-market CEOs, managing directors, business developmentmanagers and independent industry consultants to provide conceptual clarificationfor a comprehensive set of candidate CSFs that corroborated or refuted any of thecandidate CSFs derived from the literature review, thereby operationalisingthe measures of construct validity (see Yin, 1994). Table I shows the candidate CSFsderived from a review of the literature and pilot study.

The main data collection phase involved the identification of potential e-marketsand key interview respondents that could participate in the research. A number ofe-market, buyer, supplier and third-party organisations were contacted by telephoneover an 18 months period between March 2002 and July 2003 to request theirparticipation in the study. A follow-up cover letter explaining the purpose of theresearch was also e-mailed to potential respondents. The cover letter offeredrespondents confidentiality and anonymity in order to engage their participation inthe research, encourage them to speak with candour about their experiences andto freely express their opinions. It also mitigates against any possible apprehensions ofparticipating in the research especially where discussions relate to sensitive issues(Oppenheim, 1992). Respondents agreed to participate in the project on the basis thatthey and their organisations would be anonymised. Therefore, pseudonyms are usedfor organisations in the study.

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The e-markets in this study, shown in Table II, exhibited a diverse range ofcharacteristics in terms of ownership, transaction mechanism, business model andsupply chain focus that were prominent in their respective industry sectors at the timeof data collection. Table III shows the breakdown of respondents who had agreedto participate in the research. They were selected for interview based on theirability to answer the interview questions given their job roles and the industryknowledge they possessed about the research context, as noted in the literature(see Leidecker and Bruno, 1984), and because such “industry insiders” represent whatEid et al. (2002, p. 111) identify as “an excellent source of CSFs”. The snowballsampling technique (see Oppenheim, 1992; Robson, 1993) was used to recruit furtherrespondents to participate in the study as the data collection process proceeded. Thedata in this paper relates to 54 (14 face-to-face and 40 telephone) in-depth interviewswith senior level executives in buyer, supplier, e-market and third-party organisationsin the aerospace and defence, healthcare, higher education and local governmentindustry sectors that occurred between April 2002 and August 2003. Open-ended

.

Figure 1.Research protocol

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questions were used to minimise researcher bias, enable interviewees to respond intheir own vernacular and to allow for a good conversational exchange that provides ahigh degree of understanding about the research question. Such interviews enable aresearcher to concentrate on “uncovering deeply held and shared themes” amongrespondents (Ringberg and Gupta, 2003, p. 610) in addition to observing anyidiosyncrasies that occur between interviews and any emergent themes that developduring the course of the data collection process or subsequent analysis of the data.

During the interviews respondents were asked what they considered to be theCSFs for their e-market (e-market companies), e-markets in which they participate(buyer and supplier organisations) or e-markets in their industry sector (third-partyorganisations). The approach of interviewing “industry insiders”, who are deeplyimmersed or directly involved in the research context, is consistent with those

Candidate CSF fore-markets Source to support candidate CSF for e-markets

Branding and reputation Hof and Hemelstein (1999), Calder (2000), Zott et al. (2000)Business model Pilot intervieweesCritical mass Sculley and Woods (1999), Sehwail and Ingalls (2005), Wise and

Morrison (2000)Deep integration Pilot intervieweesDeep pockets Pilot intervieweesDegree of industryfragmentation

Pilot interviewees

E-commerce standards Pilot intervieweesE-market managementteam

Pilot interviewees

Governance Bakos (1998), Zaheer et al. (1998), Agrawal et al. (2001)Industry knowledge Timmers (1999), Sculley and Woods (1999), Baumgartner et al. (2001)Industry standards Pilot intervieweesIndustry structure Bailey and Bakos (1997), Bakos (1998), Gulati et al. (2000)Leadership participation Sculley and Woods (1999), Ramsdell (2000), Dewan et al. (2000),

Markus et al. (2003)Market attractiveness Pilot intervieweesMarket readiness Pilot intervieweesNeutrality Sculley and Woods (1999), Timmers (1999), Cunningham (2000)Organisational strategy Evans and Wurster (1999), Porter (2001), Raisch (2001), Sawhney and

Parikh (2001), Sehwail and Ingalls (2005)Outsourcing Sculley and Woods (1999), Zott et al. (2000), Porter (2001)Partnerships Ramsdell (2000), Werbach (2000), Ratnasingam (2000), Agrawal et al.

(2001)Product characteristics Malone et al. (1987), Bailey and Bakos (1997), Bakos (1998)Revenue model Pilot intervieweesRich content Armstrong and Hagel (1995), Werbach (2000), Agrawal et al. (2001),

Raisch (2001)Scope for diversification De Figueiredo (2000)Transparency Sculley and Woods (1999), Timmers (1999), Cunningham (2000)Trust Bailey and Bakos (1997), Bakos (1998), Timmers (1999), Soh and

Markus (2002), Zaheer et al. (1998), Cunningham (2000), Zott et al.(2000)

Value proposition Dittrick (2000), Vaidya et al. (2006), Ramsdell (2000), Wise andMorrison (2000), Agrawal et al. (2001), Soh and Markus (2002)

Table I.Candidate CSFs

for e-markets

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advocated by Leidecker and Bruno (1984). The interviews relating to this paper lasted47 minutes, on average, and were tape-recorded where interviewees had granted priorpermission to do so. Recording the interviews, where permitted, preserved the veracityof their content. It also increases the validity and reliability of qualitative studies(Oppenheim, 1992). Detailed interview notes were taken to capture the content ofinterviews where an interviewee did not grant permission to record their interviewand also safeguarded against the tape recorder failing to capture the contents of theinterviews where permission had been granted to record the interviews. No noticeabledifference was observed between the face-to-face and telephone interviews in termsof establishing rapport with respondents because they were acutely aware that thepurpose of the interview was to engage them in research. The interviews weretranscribed verbatim and each respondent was presented with the opportunity toreview the transcript of their interview to ensure the veracity of their statements waspreserved.

Data analysisEach interview transcripts was loaded onto the QSR N6 because qualitative dataanalysis programmes can facilitate the analysis and interpretation of qualitativedata (Gummesson, 2003). The data was subsequently coded and analysed in a“systematic” manner, whereby the process of coding and analysis was the same foreach interview transcript. It is suggested (see Coffey and Atkinson, 1996; Miles and

Aerospace and defence Healthcare Higher education Local government Total

E-markets 1 2 2 2 7Buyers 3 7 5 9 24Suppliers 2 11 7 0 20Third-parties 0 0 2 1 3Total 6 20 16 12 54

Table III.A breakdownof interviews bysector and type ofinterview respondent

E-market EstablishedIndustry sector(s)served Ownership

Geographicscope

AeroDefence 2000 Aerospace and defence Buy-sideconsortium

International

Lab-Procure 2001 Higher education andlife sciences

Independent UK

Education Exchange 2002 Higher education Independent UKInternational MedicalExchange

2000 Healthcare Supply-sideconsortium

International

Public Sector Marketplace 2000 Healthcare and localgovernment

Independent UK

Local Authority Marketplace 2002 Local government Independent UKSouthern Council eXchangea 2001 Local government Independent UKNorthern Council eXchange 2002

Note: aSouthern Council eXchange and Northern Council eXchange are operated by the same parentorganisation

Table II.E-market profiles

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Huberman, 1994) that this approach increases the reliability and validity of qualitativestudies. Nodes corresponding to the candidate CSFs were created in N6 to categoriseand rank their importance based on the citation frequency relating to particular CSFs.Free nodes were also created within N6 to account for CSFs that emerged fromthe interviews with respondents or from analysing the data. Content analysis; i.e. the“systematic examination of a particular body of material [y] to identify patterns orthemes” (Gengatharen and Standing, 2005, p. 422); is the most widely utilised technique foranalysing text-based data (Silverman, 2000). It has been utilised in studies on e-marketsand related research on B2B e-commerce, supply chain management and enterpriseresource planning systems (see Cullen and Webster, 2007; Finney and Corbett, 2007;Johnson, 2012; Power, 2005) to extricate issues of relevance and ascribe meaning to thedata. The technique was used to analyse respondents’ interview responses for key words,threads and comments relating to each CSF whereby excerpts of text relating to each CSFwere coded against corresponding nodes. This approach is consistent with other studieson CSFs for B2B e-commerce systems (e.g. Sehwail and Ingalls, 2005; Vaidya et al., 2006)that use the frequency or percentage of citations relating to a given CSF to assess theirrelative importance. In other words, thematic content analysis was used to distil importantissues out of the data. A sample of interview data was test coded by another researchersufficiently acquainted with the research context to compare with the original coding toevaluate the inter-coder reliability between the two sets of coding to ensure the consistencyof the original coding, to increase the overall rigour and reliability of the coding, andthe integrity of subsequent findings and the conclusions of the study (see Miles andHuberman, 1994). The process also mitigates against any potential criticism relating toqualitative studies lacking the rigour often associated with quantitative studies. The CSFswere ranked according to the number of respondents citing a reference to each CSF. A CSFwas required to be cited by respondents in at least three of the four industry sectors toqualify to be ranked and included in the research findings. Respondents’ statements thatexpressed the importance of a given CSF were chosen as citations in the findings.

4. Research findingsThe top eight e-market CSFs reported by respondents are shown in Table IV. The topfour CSFs were found to be cited by respondents across all four industry sectors whilethe other four CSFs were only cited across three industry sectors.

A critical mass of actively trading participantsA critical mass of actively trading buyers and suppliers on e-markets is importantbecause they provide the cash flow derived from transaction revenues and other feesthat e-markets need to sustain its long-term survival. Achieving a critical mass ofe-market participants is linked with the revenue model an e-market utilises becauseindustry participants are unlikely to join e-markets charging excessive fees. On theother hand, e-markets have to charge fees that enable them to attract a large share ofthe marketspace in which they operate so that they can generate revenues to expandtheir operations:

The critical mass is a critical success factors [in terms of] how much the e-marketplace cangrow in terms of the number of hospitals joining and also the number of suppliers that theyhave on board. Although it [IME] is a not-for-profit organisation for equity members, they aregoing to need to bring revenue in and that will only come from non-equity members andhospitals. I guess they are going to have to make it [IME] available for a wider number oforganisations really (European Supply Chain Manager, supplier, healthcare industry sector).

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Critical mass also relates to the value proposition because buyers and suppliers adopte-markets to receive business benefits over and above the conventional means ofmarket co-ordination and exchange but at minimal cost:

Getting suppliers and buyers on board is an issue of critical mass which is driven by theability of the e-marketplaces to deliver [benefits] at low cost. The benefits you are looking tooffer are cost savings on things that have already been negotiated and agreed so you [i.e. thee-market] can’t introduce much more additional cost. It needs critical mass and the need to becost efficient (Education Sector Manager, third-party, higher education industry sector).

Deeply integrating buyers and suppliersMany of the supply chain benefits e-markets deliver to industry participants cannotbe delivered without achieving a deep level of integration between e-marketsand industry participants. Therefore, it is critically important that e-markets are ableto deeply integrate with a significant number of buyers’ and suppliers’ disparate back-office enterprise systems to deliver on their value proposition. Examples of suchbenefits include the provision of more management information, seamless error-freetransactions and auto-population of their finance systems. However, the degree to whichthe value proposition is deliverable to buyers and suppliers is contingent on the typeof enterprise or finance systems industry participants have in place and the level ofintegration that can be achieved with an e-market. In some low-tech industries buyers andsuppliers may be using antiquated finance systems that are not readily compatible withe-markets which may result in only some of the procurement or supply processes beingsupported. Partial integration will result in only partial benefits being delivered especiallywhere old finance systems are not using current industry standards for data exchange:

They [e-markets] need to be able to integrate with legacy systems. The standard upon whicheveryone is developing it is on the cXML, and there are several legacy systems that you willnever be able to integrate with cXML. You should put 90 per cent of your time intoimplementing the solution at a workable human level and make sure that the processes thatyou are going to be using the e-marketplace for are complementary to the ones that you havein existence (Post-Implementation e-Procurement Manager, large buyer, local governmentindustry sector).

Number of respondents who cite CSF by industrysector

RankE-marketCSFs

Total number ofrespondents

who cite CSFbAerospace

and defence HealthcareHigher

educationLocal

government

1 Critical mass 37 4 15 13 52 Deep integration 30 3 10 9 83 Value proposition 25 4 8 5 84 Leadership participation 23 3 8 8 45 Industry knowledge 21 4 10 – 76 Revenue model 20 3 6 11 –7 Branding and reputation 14 1 – 10 38 Rich content 8 – 3 3 2

n¼ 6 n¼ 20 n¼ 16 n¼ 12

Note: bn¼ 58 – based on the 58 interviews with 54 respondents

Table IV.Critical success factorsranked by frequencyof citation

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In some instances, industry participants have modernised their ICT infrastructure andreplaced their old legacy systems in order to fully integrate with e-markets and receivethe full benefits of participation. In other instances, organisations have introducedmiddle-ware applications to standardise the connection between their disparate andold enterprise or finance systems and e-markets. The level of integration betweene-markets and industry participants also affect the transaction fees e-markets receive.The more benefits e-markets can deliver to participants the more they can justify thefees they charge participants:

In order to get that level of transactions there are certain CSFs that are key. The wholeimplementation process is absolutely key [and] the ability to integrate with different ERPsystems is really key [because] at the end of the day you have to have people that are happyusing your system so that you can generate revenues from transaction charges, and if you’remaking money, the chances are you are going to stay around (E-market ImplementationConsultant, third-party, higher education industry sector).

The e-market value propositionThe value proposition is important because industry participants are primarilyinterested in the various organisational and supply chain benefits they will gain frome-market participation that are over and above competing offerings of competitors andalternative means of co-ordinating market exchange. The link between the businessbenefits e-markets offer industry participants and their ability to attract a critical massof participants is clear. An e-market must offer greater value to industry participantsthan its competitors in the marketspaces in which it operates in order to survive.Notwithstanding, two e-markets providing services to industry participants in thesame marketspace can co-exist by focusing on different niches within the supply chain.For example, in the healthcare industry sector, IME was perceived to focus on cateringto the needs of NHS Trusts with the provision of medical instruments and surgicalproducts from the large national and international suppliers who typically providedup to 80 per cent of what the buy-side community ordered. Public Sector Marketplace,on the other hand, was perceived to focus on providing the buy-side community witha diverse range of medical and non-medical products from national and regionalsuppliers:

It boils down to critical mass as they have to have enough buyer-supplier links. They willachieve this by giving good value to their customers and by easing that link between thebuyer and the supplier. They have to do this better than the competition. In the UK that isPublic Sector Marketplace [i.e. compared to IME]. [y] Globally, Public Sector Marketplace isprobably one of the better competitors in terms of the value they give to their clients (Financeand IS Manager, Supplier, healthcare industry sector).

However, the value proposition must be aligned to the cost of participating. In theaerospace and defence industry sector, AeroDefence had to revise the subscription andtransaction fees it charged suppliers because many of the smallest suppliers in theindustry could not afford to participate in the e-market. This initially affected the speedof which the e-market could recruit a critical mass of SMEs particularly as the benefitsfor SMEs were questionable:

Another critical success factor would have to be the value proposition that the exchangeoffers, and extricably linked to that is the whole cost model as well. I think that where a lot ofexchanges have gone wrong in the past is because they have not aligned the cost model with

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the value proposition. AeroDefence certainly got it fundamentally wrong at the start. Initiallythey were going for a “supplier pays” transaction-based charging model. [y] For smallsuppliers there is a questionable value proposition for them joining the e-marketplaceother than their buyers suggesting that it would be a very good idea if they joined thee-marketplace (E-commerce Sales Manager, large buyer, aerospace and defence industrysector).

The participation of industry leadersThe participation of large industrial buyers or suppliers on e-markets is importantbecause they can help e-markets gain credibility and market acceptance through brandassociation. Industry participants are attracted to e-markets that have their largesttrading partners on board. The participation of industry leaders can form a significantproportion of an e-market’s critical mass and, therefore, comprise part of the e-market’svalue proposition which serves to attract other industry participants:

You also need the big players on board and that comes with the critical mass. If you don’thave the big players then you won’t have a large market share. On the one hand, you need tohave diversified suppliers and, on the other hand, your ten big players will take about 70 to 80per cent of what hospitals order. So if you [an e-market] miss five of them out you will neverachieve critical mass, because big names have big money (Head of E-Commerce for Europe,Supplier, German healthcare industry sector).

In the aerospace and defence industry sector, the participation of five of the industry’slargest buyers gave AeroDefence instant credibility and a high likelihood of success,particularly given their full order books, the significant volume throughput theywould provide through the e-market and the transaction revenues that would beaccrued from it:

So coming back to the critical factor success question, the very fact that we have a very largepiece of the aerospace and defence prize [market share], we feel that immediately theexchange is more likely to succeed than any other, purely because of the number of bigplayers involved and the fact that our supply-base has a very significant overlap (E-commerceProcurement Manager, large buyer, aerospace and defence industry sector).

Industry knowledge within the e-market domainIn-depth knowledge of an industry is important for an e-market because it is the basison which the “supply chain needs” within the industry are identified, and the e-marketbusiness model, organisational strategy, technology strategy and value proposition areformulated to address those needs. Consortia e-markets, such as AeroDefence andIME, can capitalise on the substantial amount of domain-specific knowledge theypossess about issues that affect their supply chain:

Our industry knowledge of the medical supply chain and the human resources we employare the best people for the job. It means understanding the market and building a solution[an e-market platform] that fits customers’ needs, and understanding that both buyers andsuppliers are customers that need to have equal attention (European CommunicationsSpokesperson for IME, healthcare industry sector).

Independent e-markets are frequently created by individuals or organisations thatoften have in-depth knowledge of the industries in which they operate. For example,Public Sector Marketplace was created by a clinician within the NHS and sponsoredby prominent figureheads within the NHS who were on its Board of Directors, whoclearly had much understanding of the industry. In contrast, e-markets developed

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on a generic platform but “tweaked” for different industries may lack the industry-specific knowledge to be able to formulate a value proposition that closely meets thesupply chain needs of any particular industry. Lack of industry-specific knowledge canserve to alienate industry participants, particularly where an e-market has a directcompetitor with superior industry knowledge. According to an industry respondent,the company operating the Northern and Southern Council eXchanges lackedspecialist knowledge of procurement in local government compared to their rival, LocalAuthority Marketplace, which was developed by local government officers:

One of the main problems with the Northern Council eXchange is that their understanding ofthe local authority procurement arena is poor, and poor is being kind. I think it is only withthe Northern Council eXchange and the Southern Council eXchange. [y] They shouldconcentrate on getting the basics to an art before they move on. [In contrast] the LocalAuthority Marketplace is staffed by individuals who have been or are actively involved withthe local authorities and national health [service] type procurement scenario so they are awareof all the hopes and difficulties that local authorities are faced with (Director of Procurement,large buyer, local government industry sector).

Revenue modelThe revenue model that an e-market employs is important because it is a keydeterminant of an e-market’s ability to attract, establish and maintain a critical mass ofindustry participants based on the value proposition being offered, compared tocompetitor offerings and alternative modes of market co-ordination and exchange. It isthe means by which e-markets gain revenue to sustain their longevity as noted above:

From their [AeroDefence] point of view and from a payment point of view, they will needa critical mass of suppliers, as they charge fees from each of their suppliers for using it[the e-market]. For survival, inevitably it will matter (Direct Materials Procurement Manager,large buyer, aerospace and defence industry sector).

In the higher education industry sector Lab-Procure charged buyers joining andconsultancy fees to participate and charged suppliers transaction fees of between 3 and10 per cent depending on their position in the supply chain. In contrast, EducationExchange charged all suppliers a 1 per cent transaction fee and buyers were chargedconsultancy fees only, which helped buyers and suppliers to mitigate their perceptionof risk in adopting the e-market:

The fact that we are offering this [the e-market] free of charge, you simply can’t ignore that isa critical success factor. That fact is based on the perception of risk. The biggest fear amonginstitutions is laying out significant amounts of money on technology that may becomeredundant or would prove inappropriate for them. So that is a risk. If you are not asking for anymoney to sign them up then their risk is very minimal because even if we fell flat on our faceand the technology became redundant they will have lost very little. So I think that is a veryimportant factor (Managing Director of Education Exchange, higher education industry sector).

The branding and reputation of e-marketsBranding and reputation is important for e-markets to create credibility andestablish themselves within their industries. Education Exchange and Local AuthorityMarketplace were marketed as “the solution for the sector by the sector” in theirrespective industry sectors to create rapport with industry participants by conveyingthe notion that they could relate to their needs. Public Sector Marketplace changed itsoriginal name to expand its offering and reach beyond the healthcare market intothe local government domain because the company realised that its original brand

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name prevented it from operating outside the healthcare industry. In other words,a well-established brand name can become an obstacle to expanding or diversifyingan e-market offering:

We were originally called Healthcare-Buyer[1] [which was] set up to specifically look at theuse of e-commerce exchange services within the UK healthcare industry. We then spentsome months consulting with buyers and suppliers on their requirements. [y] It has been agradual process of expansion and in January 2002 we made a decision to expand the offeringto local government as well, and hence the name changed to Public Sector Marketplace (CEOof Public Sector Marketplace, healthcare industry sector).

In the higher education industry sector, Lab-Procure found it difficult to fully convey tothe buy-side community (higher education institutions) that it traded in non-scientificproducts after the e-market widened its scope and diversified its product offerings toinclude office equipment and other maintenance, repair and operations (MRO) typeproducts. The brand name of the e-market was very well established and wassynonymous with “laboratories” and “scientific products” in the minds of the highereducation community, which was a perception that subsequently became very difficultto change, especially given that the e-market decided not to rebrand itself:

With branding you need awareness because if people don’t know who you are they will nevercome to you. These are the things that need to be taken into account. I think that [the nameLab-Procure] was a major branding issue because it started off as Lab-Procure andLab-Procure is associated with science. What was interesting was that it was a very strongand recognisable brand. It had the highest prompted and unprompted brand name for aneutral public e-marketplace in the UK. It was something that they wanted to hang onto.It was interesting because the company did explore: “now that we are providing more thanjust life science products and consumables, what do we do with this brand name?” So in theircommunication they always promoted the idea that they did more than just life sciencesproducts. It was basically an issue that was never resolved (E-market ImplementationConsultant, third-party, higher education industry sector).

It follows that how an e-market chooses to brand, position and promote itself is astrong determinant of gaining a critical mass of participants because they will onlyattract industry participants that identify themselves with what the brand image andreputation conveys.

Rich contentRich content is important because suppliers want e-markets to provide their buyerswith information and other content that makes purchasing their products easier.Some suppliers want catalogue-based e-markets to match their web site functionalityin terms of the amount of rich content it provides to buyers as a way of diminishingthe effects of comparison shopping by differentiating their offering from those ofcompetitors:

Researchers may have a need for up-to-date technical information. It would be difficult for usto maintain data catalogues for [every] buyer. So from my point of view as a supplier, punch-out is more attractive. I think it better fulfils our needs to differentiate ourselves, and it makesodious comparisons based on price more difficult for the customer to do. I believe it [punchingout to their transactional website] provides more value-add for the customer because we putan immense amount of scientific and technical content on our website. So it’s good to givecustomers that at the time that they are looking for a new product or a new technique orwhatever (Director of Marketing, large supplier, higher education industry sector).

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Buyers also want e-markets to provide rich content, such as pictures of products inmany dimensions, so that procurement staff can gauge the aesthetics of what theyintend to purchase. They seek content tools that provide ease-of-use, facilitatespurchasing, semi-automates processes to save time, decrease their transactional errorrates and decrease their information asymmetry. Buyers also want the e-market toprovide them with content tools with good search facilities that supports theirpurchasing decisions. If an e-market does not facilitate the purchasing process, buyerstend to revert back to the traditional methods of purchasing goods and services offline,which does not reinforce contract compliance nor procurement best practice:

An e-marketplace needs to be easy to use, not that difficult to operate, and it has to be able tostore a lot of standard details like your billing address, your contact details, and yourpurchase card number which are very useful. It [Southern Council eXchange] is based aroundthe principle of “three-clicks-to-buy.” It is a linear purchasing process and we try to make itappear as similar to a manual process as possible in the fact that you go and find your goodsand there are pictures and descriptions in the catalogue. It has features like favouritepurchases where you can re-order things that you buy on a regular basis without keying in allthe details. This is very important when you populate a catalogues with 15,000 items. It has areasonably good search engine which is very important. The most frustration that you getwith users occurs when they can’t find what they want to buy, so the tendency is to pick upthe phone to contact the suppliers (Post Implementation e-Procurement Manager in the localindustry government sector).

5. DiscussionIt is interesting to note that the value proposition, the set of proposed benefits thatan e-market formulates to initially attract and subsequently retain a critical massof industry participants, was not considered to be the most primary CSF. This isespecially pertinent given that how e-markets are perceived to serve industryparticipants is considered to be crucial to their success (Xing et al., 2012). Furthermore,the provision of benefits can help e-markets generate a competitive advantage withinthe industries in which they operate (Ordanini and Pol, 2001). This is because theprovision of benefits is a key criterion affecting the decision of industry participants toadopt e-procurement systems (Yu, 2007) and the primary driver for organisationsto implement e-commerce systems (Cullen and Taylor, 2009). Nevertheless, a criticalmass of buyers and suppliers was found to be a key CSF in this study which concurswith other research on e-markets and B2B e-commerce (e.g. Balocco et al., 2010;Gengatharen and Standing, 2005; Lee and Lim, 2007). However, to sustain thelongevity of an e-market, such buyers and suppliers must also be “active participants”(Fong et al., 1997; Li and Li, 2005) who regularly conduct their transactions through thee-market to give it liquidity and transactional revenue (Sculley and Woods, 1999; Wiseand Morrison, 2000). Deep integration was also found to be important for e-markets,which aligns with the observations of Vaidya et al. (2006) who note that systemsintegration is positively associated with a high likelihood of engagement withe-procurement systems. Deep integration enables e-markets to deliver on their valueproposition and thus receive transaction fees, and industry participants to receive thefull benefits of e-market participation as noted in the literature (e.g. Lin and Lin, 2008;Lee et al., 2009). The value proposition must provide benefits that address the needs ofboth the buy-side and supply-side communities (Li and Li, 2005) but importantly suchbenefits should also entice SMEs to participate in e-markets, as a poorly articulated

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value offering is likely to lead to e-market failure (Wise and Morrison, 2000).This is particularly the case where industry participants cannot decode the benefits onoffer (Gengatharen and Standing, 2005). However, realisation of the value propositionis also contingent on industry participants effecting the necessary organisational andtechnical changes that facilitate receipt of those benefits ( Johnson, 2010b; Vaidya et al.,2006). Similarly, where e-markets are unable to realise the business benefits they offerindustry participants, such “unmet expectations” lead to high attrition rates amongparticipants (Tao et al., 2007). The value proposition also distinguishes an e-marketfrom its competitors (Porter, 2001). Therefore, the success of an e-market is contingenton its ability to offer and deliver greater value than competing e-markets and overand above competing modes of co-ordinating market exchange, but at a cost that isoptimally aligned and proportionate to the organisational size of participants. It wasnoted in the previous section that “big names have big money”. This concurs withthe observations of Ordanini (2006) who notes that e-markets receive three times thetransaction revenues from large organisations compared to SMEs. Large buyingorganisations make large volume purchases (Angeles and Nath, 2007) that oftentranslate into large transaction revenues for e-markets. Industry leaders often bring theirtrading partners with them when they join e-markets ( Johnson, 2011a) which expeditee-markets reaching a critical mass of participants. Therefore, the participation ofindustry leaders on an e-market is a strong determinant of e-market success as noted inthe literature (Li and Li, 2005).

The previous section highlights the notion that lack of in-depth knowledge aboutan industry can serve to alienate industry participants. This is because in-depthknowledge of an industry enables an e-market to articulate a value propositionthat aligns well with the needs of industry participants. It also gives e-marketsthe credibility needed to gain industry acceptance and can act as an entry barrier(Sculley and Woods, 1999). The revenue model is a strong determinant of whetherindustry participants accept or reject an e-market’s value proposition that addressestheir needs and, therefore, directly affects an e-market’s long-term economic viability,as the longevity of e-markets is contingent on their generating sufficient revenues fromfees (Fong et al., 1997). Ordanini (2006) observes that e-markets that earn most of theirrevenues from transaction fees are likely to grow (i.e. succeed) compared to those whoearn most of the revenues from subscriptions, advertising and non-e-market services.However, high e-market participation fees acts as a deterrent to e-market participationas noted by Johnson (2010a). Therefore, the revenue model should be aligned to thedifferent types of participants and how much trade they are anticipated to conductthrough the e-market as noted by Johnson (2011c).

How an e-market chooses to brand, position and promote itself is a strongdeterminant of attracting and retaining industry participants who accept the valueproposition and relate to what the e-market brand image and reputation conveys.Having a “very strong and recognisable brand name” usually serves to help firmsbecome established in their industry. However, it can also become its Achilles heelwhere an e-market subsequently decides to diversify its offering to a wider or newmarket, unless it quickly rebrands with a more neutral brand name as in the case ofPublic Sector Marketplace when it wanted to expand into the wider public sector.Other e-markets (e.g. Education Exchange and Local Authority Marketplace) promotedtheir brands and offerings based on the empathic message “the solution for the sectorby the sector” in order to “identify with” and build trust among industry participants.This is consistent with, and reinforces, the notion that customers first and foremost

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look for trusted brands when they deal online (Hof and Hemelstein, 1999). An e-marketmust provide rich content and content tools (Sculley and Woods, 1999) and othervalue-added services (Gengatharen and Standing, 2005; Li and Li, 2005) that informand facilitate the purchasing process. In other words, “ease of use” and “usefulness”are key attributes of an e-market that serve to attract and retain industry participants,which has been noted in the literature (see Chien et al., 2012; Johnson, 2011c).For example, the ease of use and usefulness of e-markets in streamlining andsemi-automating parts of the procurement process can offer time savings of between 25and 50 per cent that enable purchasing staff to engage in other value-added tasks( Johnson, 2011c).

The eight CSFs discussed above support the observations of Gengatharen andStanding (2005) who posit that it is a combination of characteristics of the e-marketparticipants, the firm operating the e-market, the underlying technology and theenvironment that determine the success of e-markets. The eight CSFs are associatedwith e-market goals and their competitive performance, as posited by Rockart (1979),because each CSF is aligned to the goal of attracting industry participants to grow thee-market and sustain its performance over competitor offerings and competing modesof co-ordinating market exchange. The CSFs appear to be interrelated suggesting thatit is the collective, synchronous and synergistic effect among them that createsand sustains an e-market’s longevity in the B2B marketspace. This lends support to thenotions of Li and Li (2005) who suggest that CSFs are interconnected, the observationsof Akkermans and van Helden (2002) who suggest that CSFs seem to reinforce oneanother, and the findings of Vaidya et al. (2006) who conclude that no single CSF isoverly dominant in the implementation of e-procurement systems. Although Li and Li(2005) note that CSFs for e-markets differ from one another based on industry, region,stage of development and other variables, this study found eight CSFs to be importantfor e-market success. Four CSFs were found to be universally cited across all foure-market industry sectors examined, which is consistent with Daniel’s (1961) premisethat in most industries there are between three and six critical factors that determinethe success of firms.

6. Research considerations and implicationsMethodological considerationsDifferent research approaches and their associated means of data collection andanalyses have limitations which represent trade-offs between alternatives (seeBonoma, 1985; Gummesson, 2003). A qualitative approach using a semi-inductivemeans of enquiry, informed by the literature, was chosen to yield an “information rich”empirical study (see McIvor and Humphreys, 2004) that identified and explicated a setof factors that are perceived to be conducive to e-market success according to “industryinsiders”. The semi-inductive approach reconciles the need for themes to emerge out ofthe data with the interviews being semi-structured and utilising open-ended questionsthat are informed by the literature. While it could also be argued that coding densities,i.e. the “ proportion of the interview that [is] coded against each theme” (Hall et al.,2003, p. 497), could have been used to evaluate the relative importance of the CSFs,using N6 to assess the relative importance of the CSFs based on their frequencyof citation is consistent with similar studies on B2B e-commerce technologies(e.g. Sehwail and Ingalls, 2005; Vaidya et al., 2006). Nevertheless, it could equally beargued that both methods of analyses have comparable merit in the gamut of dataanalysis techniques deployed in qualitative research. Moreover, neither approach

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inherently distinguishes between positive and negative comments relating to CSFs inthe assessment of their relative importance or any other constructs they are beingapplied to. It could also be argued that ranking the e-market CSFs that emerge out ofthe qualitative data may constitute a “quantitative” step in a study utilising aqualitative paradigm. However, it could equally be argued that presenting data in anorder of perceived relative importance helps to make sense of, and ascribe meaning to,the data by giving it structure. It also addresses a limitation and trade-off inherent insome qualitative approaches and does not detract from the notion that the research isprincipally a qualitative study.

Implications for practiceCSFs for e-markets differ in importance among disparate groups of stakeholdersbecause managers’ perceptions of what they consider to be important are influencedby their assumptions, perceptions and assessment of their organisational strengthsand weakness, and the opportunities and threats they are exposed to in the externalenvironment in which they operate. Furthermore, CSFs are temporal and thus theirassessment is also contingent on the stage of the industry life cycle at which thee-markets is situated. Consequently, new CSFs are likely to emerge as e-markets evolvealong the industry life cycle. Therefore, senior managers within e-markets will need toperiodically assess their internal and external environments on a continuous basis,and review and recalibrate their resources, capabilities and the associated CSFs alignedto those environments accordingly in order to sustain their strategic advantage overcompetitors as noted in the literature (e.g. Miles and Snow, 1994; Rockart, 1979; Slevinand Pinto, 1987). Conversely, failure to periodically examine CSFs increases theprobability of poor performance or catastrophic failure. Thus, this paper may also helpentrepreneurs setting up a new e-market and senior management teams in newe-markets to better understand how they can market and manage their service offeringto expedite their time to market and succeed in the B2B e-marketspace.

Implications for theoryThis study proposes that the theory of strategic fit and the conceptual modelin Figure 2 are primers with which future research can examine factors that areconsidered to be conducive to e-market success. The theory of strategic fit is animportant conceptual tool with which organisational performance can be examined(Galbraith and Nathanson, 1979; Venkatraman and Prescott, 1990). This is particularlythe case from a CSFs perspective given that a number of studies (e.g. Miles and Snow,1994; Rockart, 1979) suggest that effective management of CSFs directly relate toorganisational success, the provision of benefits for stakeholders (e.g. Al-Mashari et al.,2003; Croteau and Li, 2003; Holland and Light, 1999; Lu et al., 2006; Soong et al., 2001)or how well they meet the needs of stakeholders (e.g. Umble et al., 2003). It follows thatorganisations must focus their resources, capabilities and activities on achieving CSFsin order to be successful (Teo and Ang, 1999). In particular, they must focus ondeveloping, continuously managing and utilising market-oriented CSFs that willfurnish them with market intelligence relating to the changing needs of industryparticipants (Veen-Dirks and Wijn, 2002). The use of market intelligence should alsoenable them to anticipate future customer requirements in order to lead in the industrymarketspaces in which they operate. In the context of e-markets, their internalcapabilities and their ability to provide services that make use of market opportunitiesare key determinants of success (Wang et al., 2012). Stated differently, the success of

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e-markets is contingent on their internal resources, the capabilities that extend fromthose resources and the value-added services (i.e. benefits) those capabilities providethat respond to the needs of industry participants. Moreover, a turbulent and rapidlychanging marketspace requires e-markets to respond dynamically to the rapidlychanging needs of buyers and suppliers by acquiring resources that develop dynamiccapabilities that service those needs. In other words, e-markets must constantlymonitor whether their resources and capabilities (internal environment) are providingbenefits that “fit” with the changing needs of industry participants (externalenvironment) in order to maintain being in a state of strategic fit.

The success of an e-market is contingent on how it serves or is perceived to serveindustry participants (Xing et al., 2012) given that the provision of variousorganisational and supply chain benefits is a measure of B2B e-commerce success(Cullen and Taylor, 2009). A number of the CSFs identified in this study can be mappedto some of the benefits e-markets provide to buyers and suppliers as shown in Table V.Some studies (e.g. Johnson, 2011a, b, c) have categorised such benefits along fivedimensions developed by Shang and Seddon (2002) that relate to five correspondingdimensions of supply chain needs as shown in the e-market benefits capabilities –industry participants’ needs fit conceptual model in Figure 2. The conceptual modelcan be used as a means of assessing the performance or success of e-markets.Assumptions of the conceptual model include:

(1) Two types of e-market CSFs relate to their current operating activities andtheir future success:

. CSFs pertaining directly to e-market resources and capabilities to deliverbenefits that align with the supply chain needs of industry participants; and

. CSFs pertaining to the external e-market environment, i.e. industry-specificCSFs.

(2) The closer the fit between the benefits delivered by the e-market capabilitiesand the supply chain needs of industry participants the more successful theperformance outcomes will be for both the e-market and its members.

(3) The benefits that e-market members gain from participation and the revenuese-markets earn from transactions and other participation fees represent someof the key performance measures for e-markets.

7. Contributions and limitations of the studyContributionsThis study addresses the many calls in the extant literature for more empiricalresearch on elucidating the factors that are conducive to the success of e-markets(see Chong et al., 2010; Fairchild and Peterson, 2003; Fong et al., 1997; Hadaya, 2006;Johnson, 2011a; Joo and Kim, 2004; Li and Li, 2005; Standing et al., 2010). The researchdiffers from previous studies on CSFs for e-markets because it represents the combinedperspectives of respondents in e-market, buyer, supplier and third-party organisationsin four disparate industry sectors of the economy. The study answers the researchquestion by highlighting factors that are perceived to be critical to the success ofe-markets and how they are important. The paper makes a theoretical contribution tothe academic literature on e-markets by relating the concept of CSFs with the theory ofstrategic fit as, to date, no known study has examined CSFs for e-markets in the

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E-market CSF

Example ofneed(s) beingaddressed Examples of benefit(s) to e-market members

Critical mass Operational Increased liquidly of transactions within e-marketIncreased trading partners and economies of scale and/orscope

Deep integration OperationalManagerialICT

Deep integration of buyers and suppliersSeamless error-free transactionsLow cost trading platform for one-to-many or many-to-many communication channelReduction of paper and paper-related costsEnables auto-population of buyers’ and suppliers’ financesystems with transaction dataRealisation that the organisation needs new ITinfrastructure to reap the full benefits of participation

Valueproposition

All Consultancy services to cater to the needs of buyers orsuppliers (e.g. training in “best-value”/”best practice”procurement for buyers)Exposure to wider industry participants or wider marketsthrough inter-operability agreements with other e-marketsPunch-out to suppliers so that suppliers can manage thecustomer experienceAdditional value-added services such as escrow services,logistics, financing, tracking, mass customisation of someproducts in some industry sectors, inventory management,demand forecasting, order fulfilment, collaboration,workflowCan level the playing field for SMEs to compete with theirlarger competitors

Leadershipparticipation

Strategic Economies of scale for participants in vertical e-marketsEconomies of scope for participants in multi-verticale-markets

Industryknowledge

All Consultancy services that provide benefits that address thesupply chain needs of participants in the industry sector(s)the e-market operatesArticulate and provide benefits that meet the needs ofbuyers and suppliers

Revenue model OperationalStrategic

Can be a low cost mechanism for trading goods and services(especially for SMEs)Addresses the need for buyer or suppliers to engage ine-commerce (especially for SMEs) to gain a strategicadvantage or to remain competitive

Branding andreputation

Strategic Can raise the profile of participants (particular SMEs or lowprofile companies and organisations)

Rich content ManagerialOperationalStrategic

Semi-automation of processes to facilitate purchasingdecisionsDifferentiation of suppliers’ product offerings throughpunch-outIndustry information, charts and white papers, transactionhistories, rich product descriptions and catalogues, tools forcomparison shoppingAuction tools, RFQ and RFI tools, collaborationtools

Table V.Mapping e-market

CSFs to market needsand benefits

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context of strategic fit. It combines the two disparate theoretical constructs to developthe e-market benefits capabilities – industry participants’ needs fit conceptual modelwhich serves as a precursor for theory building in future studies on B2B e-markets.It also makes a practical contribution because it informs stakeholders involved indeveloping e-markets or other online B2B ventures to better comprehend the conditionsand determinants of success.

LimitationsWhile the concept of strategic fit is a useful tool with which the performance or successof organisations can be examined (Galbraith and Nathanson, 1979; Venkatramanand Prescott, 1990), no universal definition of strategic fit is applicable in all contexts(Venkatraman, 1989). Similarly, lack of consensus within the literature as to whatconstitutes a CSF (Veen-Dirks and Wijn, 2002; Vaidya et al., 2006) and no consensus ofapproach in determining CSFs among researchers (Bergeron and Begin, 1989) may becriticisms that could be levelled at studies on CSFs. However, given that differentsectors of the economy have different e-market adoption contexts ( Joo and Kim, 2004;Li and Li, 2005), there is an intuitive logic of asking key “industry insiders” to identifywhat factors they consider to be critical to the success of e-markets in theirenvironment. For that reason, the paper did not take into account the views of the 20non-adopters of e-markets who also participated in the wider scope of the researchproject. Nevertheless, the approach used in this study is consistent with approaches touncovering CSFs in other studies (see Leidecker and Bruno, 1984; Sehwail and Ingalls,2005; Vaidya et al., 2006) particularly where few empirical studies exist and inexploratory research using inductive or semi-inductive approaches. As Gummesson(2003) notes “[y] inductive research lets reality tell its story on its own terms and noton the terms of received theory and accepted concepts” (Gummesson, 2003, p. 448).Notwithstanding, criticism could also be raised that qualitative studies on CSFs maynot be readily generalisable outside their domain context and so make it difficult tocompare research findings. However, the purpose of the study was to advance currentknowledge and understanding of factors that are considered to be critical to the successof e-markets rather than to seek generalisations beyond the context of the study.Nonetheless, the findings and implications of this study are likely to be applicable toother B2B online service firms operating in industrial markets.

8. Conclusions and future researchConclusionsThis exploratory study substantiates a broad definition of CSFs as issues that areessential to an organisation’s current operating activities and its future success asposited by Boynton and Zmud (1984). The findings of the study represent a “snapshot”of e-market CSFs at a specific point in time when the e-markets were at a relativelyearly stage of development and, therefore, some CSFs will change with time ase-markets move along the growth curve for their industry. The research findings areinteresting because they appear to be counter-intuitive. For example, aggregating acritical mass of active e-market participants is contingent on the collective, synchronousand synergistic contribution of all the other seven CSFs. These findings are consistentwith other studies on CSFs that highlight what is considered to be critical for success intheir particular context and not necessarily the order or sequence of their importancegiven that some CSFs are temporal and contingent on the stage of development orindustry/product life cycle of the research phenomenon being examined.

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Future researchAlthough the study illuminates and expounds eight factors that are considered to beconducive to the success of B2B e-markets, there is still a requirement for moreempirical and longitudinal research on factors critical to the successful evolution andspread of B2B e-markets in a global context. This is especially the case as e-marketsmature, given their increasingly important impact on supply chains, markets andeconomies around the world. Therefore, it would be very useful for future research toexamine whether the CSFs for B2B e-markets identified in this research extend to othere-markets in other industry sectors from both qualitative and quantitativeperspectives. Similarly, it would also be useful for future research to examine theextent, if any, to which the CSFs for B2B e-markets are transferable to B2C e-markets.There is a distinct need for further research to explore performance measures for e-markets and on developing a more comprehensive conceptual model based on theconcept of strategic fit with which the success of e-markets can be examined. Moreover,examining the factors that facilitate the globalisation of e-markets is a key researchquestion for future research to consider. Likewise, examining the impact of culture(e.g. entrepreneurial, organisational and national), the organisational change issuesamong adopters and how the services marketing mix affects e-market adoption areavenues for further research on the organisational adoption dynamics of e-markets.

Note

1. Pseudonym for the original name of the company.

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Further reading

Somers, T.M. and Nelson, K. (2001), “The impact of critical success factors across the stagesof enterprise resource planning implementations”, Proceedings of the 34th HawaiiInternational Conference on System Sciences, Maui, Hawaii, 3-6 January.

About the author

Michael Johnson is a Sessional Lecturer in Marketing at Aston Business School. His researchinterests include e-business and the digital economy, services marketing and management,the organisational adoption dynamics of innovative technologies in service environments,organisational change, business excellence, entrepreneurship and enterprise. His research hasbeen published in Management Decision, Industrial Management & Data Systems, International

Journal of Services and Operations Management, International Journal of Business Innovation

and Research, International Journal of Services Technology and Management and the Journal of

Enterprise Information Management.

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

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