ECRA Co-Editors’ introduction for Volume 10, Issue 1, January–February 2011
This issue begins with two new articles drawn from the 2009 International Conference on Electronic Commerce. The special section theme for these papers is on “Service Innovation in E-Commerce,” and represents a new direction for research that ECRA is interested to support. The Guest Editors, Patrick Chau and Fu-Ren Lin, have written a separate introduction to the issues that this area offers for study, as well as an overview of the contents and contributions of each of the articles. So we will leave it to them to provide the key insights on this research.
The remainder of this issue includes Regular Research articles that span a number of other issues. Two deal with pricing, one in the context of resource allocation for peer-to-peer networks and the other related to the use of option contracts for online advertising. The middle articles span the issues of Web site effectiveness, offline electronic cash systems design, electronic barter exchange operation, and the analysis of firm performance related to knowledge evolution strategies that an organization uses. The final articles discuss other topics, including the analysis of switching behavior of consumers from traditional to online banking services, the role of social support and social capital in instant messaging system usage, trust as a factor in the organizational adoption of Internet-based interorganizational systems, and a multichannel recommender system approach in support of consumer search across the mobile channel and other channels, where there is sparse information about the consumer’s purchases.
The first article is “A Mechanism for Pricing and Resource Allocation in Peer-to-Peer Networks,” by Chetan Kuman, Kemal Altinkemer and Prabuddha De. A classic article in the IS research literature deals with the issue of how to price computer services in a network that queues job requests. Mendelson (1985) proposed the application of marginal value analysis from microeconomics to offer a solution to the problem of pricing. The proffered solution was to permit system users to pay what they thought the processing of their queued jobs was worth. The present study applies some of these ideas to the peer-to-peer network context, where there is an impetus for an economic solution to allocate resources for the sharing of network resources on the basis of decentralized choices. The authors propose a price that reflects the difference between the expected value of processed jobs and the expected delay costs for the network nodes. They note that “the optimal price for executing any job at a peer location is essentially equal to the marginal delay cost it imposes on all current jobs at that node. With this pricing scheme, no individual user has an incentive to over-utilize shared resources, thereby avoiding the ‘tragedy of the commons’ for the peer-to-peer network.”
The next article also deals with service pricing issues, albeit in a different context: online advertising. Yongma Moon and Changhyun Kwon co-authored “Online Advertisement Service Pricing and an Option Contract.” They explore the shortcomings of several popular means of pricing online advertisements, including the cost per impression and the cost per click. The second of these measures is known to be proportional to another popular measure, the click through rate. The difficulty with these measures is that they don’t convey enough information about the usage of specific online advertisements to take the uncertainty out of how much it will cost the advertiser to have the ads run in the targeted Web site. So the authors propose a novel solution that involves managing the risk of uncertainty on the part of the advertiser. This involves a hybrid pricing scheme in which the advertiser buys an option contract that permits it to pay the lesser value of the cost per impression or the cost per click.
The authors’ solution models the negotiation of an option contract between a risk-neutral advertiser and a risk-neutral Web site publisher in the context of a Nash bargaining game. The parties of the game have somewhat different purposes. The advertiser hopes to get the word out about its products via the Web-based advertisement to interested consumers. Meanwhile, the publisher of the Web site is interested to maximize the value of its online “real estate,” with the idea of making advertisements available to a large population of consumers that will value them. The authors are able to show that an option contract based on a hybrid pricing scheme is feasible for the setting to which it applies, and actually creates a greater likelihood for contract negotiations to be successful. This is because an option contract will be of interest to the advertiser and the publisher even when the click through rate is quite low. This further suggests that the use of an option contract will increase demand for the publisher’s Web-based advertising services. In addition to maximizing the publisher’s utility, an option contract will also minimize the regret that the advertiser feels if one of the click metrics is lower than expected.
Ines Lopez and Salvador Ruiz are the authors of the next article: “Explaining Website Effectiveness: The Hedonic–Utilitarian Dual Mediation Hypothesis.” Understanding the behavior of consumers and individual users in the online environment is a continuing challenge in e-commerce research. The authors’ main contribution is to show through an empirical study that it is necessary to have a feel for a user’s cognition and emotional responses to be able to understand or predict their online behavior. They test thehedonic–utilitarian dual mediation hypothesis, which emphasizes different attitudes that consumers have toward products. A utilitarian attitude views a product in terms of the functionality that a product offers to a consumer who uses it. In contrast, a hedonic attitude focuses on the sensations that a consumer derives by using the product. The author’s empirical research shows the efficacy of dual mediation in comparison to several other alternative models. The authors’ results suggest that marketers will do well to more carefully consider the dual effects of cognitive and emotional responses on the part of Web site users to make them more effective. The authors also argue that their findings will help Web-based marketers to be better able to segment consumers, to the extent they can identify the different types of consumers that the research describes. They encourage marketing managers to understand the extent to which the products they are offering via the Web tend to emphasize functionality value or hedonic value, and why slightly different presentation and communication approaches might make sense to support successful selling.
The next article discusses another important area for research in e-commerce involving support for monetary exchange online. The authors, Ziba Eslami and Mehdi Talebi, present research on “A New Untraceable Offline Electronic Cash System.” They discuss key considerations that must be taken into account to support the development of electronic cash exchange mechanisms. They include the detection of double spending, the provision of spender anonymity, and the characteristic of e-cash portability.Untraceable electronic cash schemes are desirable because they are in synch with related efforts that online sellers and buyers have been making to ensure that the protection of information privacy is a paramount concern. The authors propose a new mechanism that attaches an expiration date to digital coins so that a bank can effectively manage its databases and keep track of the processing of transactions. The authors’ approach involves the application of popular cryptographic techniques, including the blind signature and ElGamal signature scheme. The latter relies upon the difficulty associated with computing discrete logarithms, a form of logarithms that apply to algebraic structures called groups, which include fields and vector spaces that are analogous to ordinary logarithms. A beneficial feature of the authors’ solution is that it produces digital coins that can be sent through computer networks and stored at different locations, all the while conserving value for transaction-making wherever the coins are needed.
The next article by computer scientist Randy Kaplan is entitled “An Improved Algorithm for Multi-Way Trading for Exchange and Barter.” The author explores mechanism design for systems that support the simultaneous exchange of multiple items among several traders, each of whom is unable to effect a simple trade with one other person to obtain what the they would like to acquire. The focus is on barter exchange, not on monetary or financial exchange, and what the author calls multi-way trading, indicating the participation of more than two trading agents. The author specifies a barter exchange process that is innovative, and relies upon the actions of trading intermediaries who also have preferences for exchanging one item for another. The author’s primary innovation is to use a graph-theoretic approach to create a data structure that provides a means for conducting a search for a sequence of trades that will permit the barter of items that traders would like to exchange. Kaplan’s article prompts us to encourage ECRA readers to check out some of the current capabilities that are available on the Internet that are intended to support electronic bartering. Ones that we found to be especially interesting include SwapTree (www.swaptree.com), the PaperBack Swap (www.paperbackswap.com), and Care to Trade (www.caretotrade.com). Further exploration of the swap and barter exchange mechanism is warranted, especially empirical evaluations to determine the efficacy of online bartering, as well as case study evaluations that will support the development of a fuller understanding of what it takes to make this form of exchange in e-commerce the most effective it can be.
New research by T.P. Liang and Deng-Neng Chen, entitled “Knowledge Evolution Strategies and Organizational Performance: A Strategic Fit Analysis,” is the subject of the next article. The authors use strategic fit theory to evaluate how the knowledge management activities of an organization influence its performance. Strategic fit theory is a well-known perspective that emerged in the 1960s. It posits that there should be steps taken to achieve internal and external alignment in a firm’s strategy. Internally, choices about strategy need to be made that reflect an organization’s characteristics and capabilities, as well as its leadership style. Externally, other choices will need to be made to take into account the dynamism of the market environment, the degree of competition, and the speed of technological innovation. Knowledge management capabilities, as the authors note, are important for firms to succeed with e-business and their other profit-seeking activities.
Liang and Chen recognize that it will be necessary for an organization’s knowledge management capabilities also to evolve over time as the competitive landscape changes, to ensure their relevance is maintained. They focus on two knowledge evolution strategies for the firm. Knowledge mutation emphasizes internal knowledge sources of the firm. Knowledge crossover involves knowledge acquisition from outside the organization, including sources such as online communities and professional consultants. Using survey research methods, the authors find that each of these sources of knowledge evolution is linked to different aspects of firm performance, moderated by other factors, including industry and environment, organizational factors, and the density of knowledge in an area.
“Trust Factors Influencing the Adoption of Internet-Based Interorganizational Systems,” by Ivan K.W. Lai, Viny W.L. Tong and Donny C.F. Lai, deals with the issue of trust and technology adoption, a popular theme in electronic commerce research. The authors put forward a model for trust that involves the trust factors of usability, reliability and availability, audit and verification, interoperability, and security. There is a rich body of knowledge in the literature on interorganizational information systems, but the consideration the authors give to them on the Internet represents a new line of inquiry. This research involves a practitioner survey and a model-based empirical analysis. The authors draw a number of conclusions for practice from their research. For example, they report that interoperability is a key factor in the development of trust for the operation of Internet-based interorganizational information systems that support supply chain management functions. These systems also should include interactive functions that support informational exchanges and rapid responses among supply chain partners. Further, it is important to build interorganizational information systems involving the Internet that are resilient to hardware failures and malicious attacks from hackers, and to implement resilience level measures that can be monitored, as a basis for maintaining trust.
Duen-Ren Liu and Chuen-He Liou contributed the next article, “Mobile Commerce Product Recommendations Based on Hybrid Multiple Channel,” which focuses on the analysis of the sparsity problem in collaborative filtering recommender system-supported product search on the Internet. The authors observe that many consumers buy just a few products that can be tracked by recommender systems, so it is hard to establish much information to effectively support the new searcher that they initiate. The authors’ proposed approach to this problem involves a hybrid multichannel method that covers browsing from mobile devices. The recommendations that their system creates rely on the browsing behavior of existing mobile device users, as well as the consumption behavior of other “heavy” users in other channels that the recommender system can track. They analyzed consumer behavior and defined different market segments using the recency, frequency and monetary framework. The authors compare their proposed approach, the hybrid multichannel recommendation method, to three other existing methods. They report two main findings. Their approach performed better than the others, although it is more computationally-intensive. The improvements are due to the approach the authors have used to lessen the effects of sparsity by bringing in information about the purchases and preferences of consumers who use other channels to support product recommendations in the mobile channel.
Chieh-Peng Lin explores the dynamics of instant messaging in “Assessing the Mediating Role of Online Social Capital between Social Support and Instant Messaging Usage.” The author develops a series of mediation hypotheses that focus on the influence of online social support in establishing the basis for instant messaging usage through the direct and mediated effects of user commitment, support reciprocity, shared codes and language, shared narratives, centrality, and network ties. The author’s theoretical perspective is based on social capital theory. The methods involve a survey of instant message users in Taiwan, who were drawn from among several large companies that were the clients of the focal firm in the study. The author reports a number of results, based on the application of structural equation modeling methods. The predicted results did not obtain for all of the constructs they tested. These included reciprocity, shared narratives, and network ties, which they argue may be so generally applicable that their effects are hard to detect in the instant messaging setting. The critical mediators are commitment, shared codes and language, and centrality. Low instant messaging usage, they suggest, may come as a result of weak or insufficient social support. Finally, centrality is the single most important of the mediating social capital factors, which suggests that instant messaging had become a critical support element in the day-to-day lives of the study’s respondents.
The last article of this issue is entitled “From Marketplace to Marketspace: Investigating the Consumer Switch to Online Banking,” by Kuo-Wei Lee, Ming-Ten Tsai and Maria Corazon L. Lanting. The authors’ primary goal of this study is to explore factors that affect consumer attitudes and intentions to switch from traditional consumer banking services to online banking services. They view this problem as an instance of a more general one, which involves consumer choices regarding the extent to which physical and online markets are substitutable for one another. The authors leverage the technology acceptance model in the exploration of a number of different constructs, including usefulness and ease of use, offline trust and loyalty, and switching costs and attitudes toward switching consumer service channels. They also model interaction effects related to computer self-efficacy and perceptions of risk, on consumer attitudes toward switching. The authors conducted survey research with convenience sampling responses from retail banking service customers from a number of banks in southern Taiwan in 2008. The authors report a number of results. The technology acceptance model’s variables, ease of use and usability, adequately characterized consumer reactions to online banking in this study. They also find that switching to the online banking services of a given bank is viewed more favorably when the bank is recognized as engendering trust offline. However, consumer loyalty to a bank with traditional services will impede a switch to online banking services, as will perceptions of high switching costs.
We would like to take this opportunity to thank the special issue editors, Patrick Chau and Fu-Ren Lin, for their efforts to bring the service innovation and e-commerce articles to publication. ECRA also appreciates the continuing connection to the annual International Conference on Electronic Commerce. The next edition of that conference will be held in Liverpool, England in August 2011. We also thank the continuing efforts of the members of ECRA’s Editorial Board and the journal’s reviewers, who play important roles in the development of the Regular Research articles.
This year, with the publication of ECRA Volume 10, Issue 3 (May–June 2011), we will begin to publish two-page “research perspectives” articles in lieu of descriptive introductions to the contents of the Regular Research articles. The research perspectives articles will be invited from the co-editors of the journal and leading researchers in e-commerce and its related disciplines around the world. This will permit the journal to provide forward-looking viewpoints and insightful directions for research. We look forward to launching this shortly.
Information Systems and Management
Electronic Commerce Research and Applications
KAUFFMAN, Robert John; Chau, P.Y.K.; Payne, T.R.; and Westland, J.C..
ECRA Co-Editors’ introduction for Volume 10, Issue 1, January–February 2011. (2011). Electronic Commerce Research and Applications. 10, (1), 1-3. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/2827
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