Howard Rosenbaum [email protected] Electronic commerce, digital information, and the firm School of Library and Information Science Center for Social.

Howard Rosenbaum [email protected]

Electronic commerce, digital information, and

the firm

School of Library and Information Science Center for Social Informatics

Indiana University

Center for Digital Commerce Syracuse University

November 2000

http://www.slis.indiana.edu/hrosenba/www/Pres/asis00/

http://slis.lib.indiana.edu/hrosenba/www/Papers/asis99.html











Rosenbaum: Ecommerce, digital information and the firm

I. Introduction: the social context of ecommerce

II. The digital information environment of ecommerce

III. Information imperatives for the firm

IV. Conclusion: information and the conduct of ebusiness

http://www.slis.indiana.edu/hrosenba/www/Papers/asis00.html



What is ecommerce

The use of electronic networks to conduct business-to-business or business-to-consumer transactions

Using the net buyers and sellers find each other and conduct negotiations and transactions

They exchange of information, currency, and both digital and non-digital goods and services

Ordering, order fulfillment and delivery of goods and services take place, although the latter may occur offline


Internet Economy Indicators Annual Employee Figures by Layer and Total Internet Economy

1998 1999 Growth

Layer 1 - Infrastructure 527,037 778,602 48%

Layer 2 - Application 513,125 681,568 33%

Layer 3 - Intermediaries 290,856 340,673 17%

Layer 4 - Internet Commerce 577,937 726,735 26%

The Internet Economy 1,819,716 2,476,122 36% (after removing overlap)

http://www.internetindicators.com/key_findings_june_00.html


Internet Economy Indicators

Annual Revenue and Growth Summary by Layer and Total Internet Economy (millions)

1998 1999 Growth

Layer 1 - Infrastructure $117,143 $197,853 68%

Layer 2 - Application $71,615 $101,304 41%

Layer 3 - Intermediary $63,629 $96,809 52%

Layer 4 - Internet Commerce $99,813 $171,473 72%

The Internet Economy $322,530 $523,923 62% (after removing overlap)

http://www.internetindicators.com/key_findings_june_00.html


Ecommerce is expected to grow worldwide

Internet Economy companies generated almost one of every five dollars in revenue from the Internet

18.5% of the companies’ revenues were generated from the Web

17 million US households will be shopping online by the end of this year, with online retail sales expected to top USD 20.2 billion (Forrester Research)

56% of US companies will sell their products online this year, up from 24% in 1999. (NUA)

Small businesses who use the net have grown 46% faster than those that do not (American City Business Journals)


http://www.thestandard.com/powerpoint/101600met5_cou.ppt


http://www.thestandard.com/powerpoint/101600met5_cou.ppt








Ecommerce takes place in a digital IE

It is the social context within which ICTs are designed, implemented and used

It is the context within which digital information is created, accessed, valued, manipulated, stored, disseminated, and used

It affects the generation and flow of information through “any defined entity,” in this case the ecommerce firm and its web site(s)

It is the setting in which people engage in the social interactions that constitute ebusiness


The digital IE is the setting within which ecommerce takes place

Rules and resources constitute its basic structure are used together as people engage in social interaction

They enable and constrain the transactions and information exchanges that comprise ecommerce

As people draw upon the rules and resources of this IE to conduct business, they recreate and maintain the IE.

Information is an important resource in this environment, as are the rules that shape its acquisition and/or generation, manipulation, dissemination, and use


Ecommerce is an information intensive activity

A wide range of information is generated dynamically, continually, synchronously, and in great volumes

Much is created by the actions of web site visitors

The firm also produces a continual stream of digital information about its ecommerce activities

All of this information is important to capture and use.

The IE is dynamic and unstable and the rules and resources that constitute its structure are emerging

One subset includes procedures and policies being developed in practice to handle this information flow








There are at least three information imperatives for the firm:

Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through

the entire organization

The firm is responsible for the careful management of this information

Firms must be involved in a continual effort to build and maintain trust with and customers and partners


1. Managing the information flow

Ecommerce firms must learn to manage the flow of digital information into and out of the organization and

This info should be directed to the right person, at the right time and in the correct format

They must learn how to mine this dynamic information flow, aggregating and segmenting it so that it can be used and reused when and where it is needed

They should also be able to drill down into this information so that they can use “mass customization”

Each unit in the firm must have real time access to current information about customers, competitors, firm activities and trends


Information flow

Front end activities

Back end activities

Direct solitary interactions (browsing, making or abandoning purchases, filling out forms, accepting cookies, downloading, and searching the knowledge base)

Indirect interaction (server, browser, error, and other activity log files)

Social interactions (people interact with the firm and other customers through the web site, customer service and support)

Group action (adding and removing content and functionality, changing design and structural features)

“Customer facing information” (product and service descriptions, pricing information, warranty and service policies, return and complaint procedures, and privacy policies)


2. Being responsible users of the information

Firms must be the stewards of the information they, solicit, and receive from customers, partners, suppliers and others

They must take care of this information and let their customers and others know what they are doing with it

Firms must seek to “balance the competitive advantages provided by the use of this information with the privacy concerns that use of personal information might raise among” their customers

(Culnan and Armstrong 1999; 112)


Responsibility has a social component

There should be clear policies easily accessible throughout the firm’s web site explaining:

~How this information will be collected

~What it will be used for

~The rights that customers and other information providers have with respect to this information

There should be social practices within the firm organized around protecting customer information


Responsibility also has a technical component

Firms should investigate and become familiar with the range of privacy strategies that currently under discussion and evaluation by the ecommerce industry

Platform for Privacy Preferences (P3P): individuals control their own personal information on the web

Platform for Internet Content Selection (PICS): firms rate their own web pages and digital products

RSACi: another labeling scheme

INCORE: European self-labeling scheme


3. Building and maintaining trust

Firms should be involved in a constant effort to build and maintain trust

There is a “fundamental lack of faith between most businesses and consumers ...[who] simply do not trust most Web providers enough to engage in ‘relationship exchanges’ involving money and personal information”

(Hoffman, Novak, and Peralta, 1999; 80)

Trust influences the transition from browser to buyer and is the basis of relationships between customer and firm

Trust is essential to repeat business and the strength and public perception of the firm’s reputation


Trust-building typically depends on face-to-face interaction or other shared experiences

These are missing from the ecommerce experience

The web site is the point of social contact between the customer and the firm and most exchanges are stripped to text, images, forms, links, and clicks.

There are few social cues that the customer can garner from the presence of the other

There is little online on which to base trust in the firm

This is a limitation of the digital IE of ecommerce


To overcome this limitation, firms are developing means of building and maintaining relations of trust with customers

Technical strategies for trust-building include the use of encryption and secure electronic transactions

Social means of trust building are also important

Perfect security will not encourage a person to purchase from an online firm if he or she does not trust the person or firm at the other end

Web based customer service and support

Privacy audits (TRUSTe)








The social context of ecommerce (its digital IE) has an information-intensive character

Two constituent and useful elements of the IE are rules and resources

They influence the ways in which people in the IE work with information and ICTs

The subset of these rules considered here are called information imperatives

These affect the flow of digital information produced by the ecommerce activities of the firm and its customers, partners, and suppliers


One subset of these rules are composed of three information imperatives for ebusinesses:

~Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through the entire organization

The firm is responsible for the careful management of this information

Firms must be involved in a continual effort to build and maintain trust with and customers and partners

The next step involves the investigation of ebusinesses to examine the instantiations of these imperatives

Research on trust in ecommerce

Howard Rosenbaum [email protected] Electronic commerce, digital information, and the firm School of Library and Information Science Center for Social.

Documents

firm ecommerce

information imperatives

firm http

social context of ecommerce

information science

firm iv

growth layer

nondigital goods