《电子商务 E-business》阅读文献：Value creation in e-business

Strategic Management Journal smat.Mgm.J.22:493-520(2001) DO:10.1002/smj.187 VALUE CREATION IN E-BUSINESS RAPHAEL AMITI* and CHRISTOPH ZoTT he Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 2INSEAD, Fontainebleau Cedex, france e explore the theoretical foundations of value in e-business by examining how 59 American and European e-businesses that have become publicly traded corporations create value. We observe that in e-business new can be created by the ways in which ansactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the ources of value creation. The model suggests that the value creation potential of e-businesses inges on four interdependent dimensions, namely: efficiency, complementarities, lock-in, and overy. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e-business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e-business. A business model depicts the design of transaction content, structure, propose that a firm's business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright o 2001 John Wiley Sons, Ltd INTRODUCTION likely that over 93 percent of U.S. firms will have some fraction of their business trade conduc As we enter the twenty-first century, business ted over the Internet. Although U.S. firms are conducted over the Internet(which we refer to considered world leaders in e-business, the rapid ase-business'), with its dynamic, rapidly grow- growth of the number of businesses that use the ing, and highly competitive characteristics, prom- Internet is a global phenomenon. Over the period ises new avenues for the creation of wealth. of 1999 to 2001, Europe is expected to bridge Established firms are creating new online busi- the e-business gap with the United States by nesses, while new ventures are exploiting the experiencing triple-digit growth in this area. By opportunities the Internet provides. In 1999, the end of 2000, European firms'e-retail revenues goods sold over the Internet by U.S. firms were are estimated to be worth $8.5 billion, increasing estimated to be $109 billion and by the end of to an estimated $19.2 billion by 2001, as com- 2000 should reach $251 billion. By 2002, it is pared to North Americas figures of $40.5 billion Key words: value creation; e-business; business mode Correspondence to: R. Amit, The Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104- 6370,U.SA Source: Forrester Research Report, ' eMarketplaces Boost Source: Forrester Research B2B Trade, February 2000 Copyright o 2001 John Wiley Sons, Ltd

Strategic Management Journal Strat. Mgmt. J., 22: 493–520 (2001) DOI: 10.1002/smj.187 VALUE CREATION IN E-BUSINESS RAPHAEL AMIT1 * and CHRISTOPH ZOTT2 1 The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, U.S.A. 2 INSEAD, Fontainebleau Cedex, France We explore the theoretical foundations of value creation in e-business by examining how 59 American and European e-businesses that have recently become publicly traded corporations create value. We observe that in e-business new value can be created by the ways in which transactions are enabled. Grounded in the rich data obtained from case study analyses and in the received theory in entrepreneurship and strategic management, we develop a model of the sources of value creation. The model suggests that the value creation potential of e-businesses hinges on four interdependent dimensions, namely: efficiency, complementarities, lock-in, and novelty. Our findings suggest that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e-business. Rather, an integration of the received theoretical perspectives on value creation is needed. To enable such an integration, we offer the business model construct as a unit of analysis for future research on value creation in e-business. A business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. We propose that a firm’s business model is an important locus of innovation and a crucial source of value creation for the firm and its suppliers, partners, and customers. Copyright  2001 John Wiley & Sons, Ltd. INTRODUCTION As we enter the twenty-first century, business conducted over the Internet (which we refer to as ‘e-business’), with its dynamic, rapidly grow￾ing, and highly competitive characteristics, prom￾ises new avenues for the creation of wealth. Established firms are creating new online busi￾nesses, while new ventures are exploiting the opportunities the Internet provides. In 1999, goods sold over the Internet by U.S. firms were estimated to be $109 billion and by the end of 2000 should reach $251 billion.1 By 2002, it is Key words: value creation; e-business; business model *Correspondence to: R. Amit, The Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104- 6370, U.S.A. 1 Source: Forrester Research. Copyright  2001 John Wiley & Sons, Ltd. likely that over 93 percent of U.S. firms will have some fraction of their business trade conduc￾ted over the Internet.2 Although U.S. firms are considered world leaders in e-business, the rapid growth of the number of businesses that use the Internet is a global phenomenon. Over the period of 1999 to 2001, Europe is expected to bridge the e-business gap with the United States by experiencing triple-digit growth in this area. By the end of 2000, European firms’ e-retail revenues are estimated to be worth $8.5 billion, increasing to an estimated $19.2 billion by 2001, as com￾pared to North America’s figures of $40.5 billion (for 2000) which are expected to increase to 2 Source: Forrester Research Report, ‘eMarketplaces Boost B2B Trade,’ February 2000

494 R. Amit and C. Zott S67.6 billion(for 2001). The increase in the the context of the emergence of virtual markets number of e-business transactions at major web In the data and methods section that follows the sites(60,000 per day in 1999 compared to 29,000 theory section, we describe the grounded theory per day in 1998) highlights the extraordinary development methodology (Glaser and Strauss growth and transformation of this new global 1967) that we used to determine which of the business landscape sources of value suggested by the literature are E-business has the potential of generating germane to e-businesses. The terms ' source of tremendous new wealth, mostly through entrepre- value creation'andvalue driver'(which are used neurial start-ups and corporate ventures. It is also interchangeably in this paper) refer to any factor transforming the rules of competition for estab- that enhances the total value created by an e lished businesses in unprecedented ways. One business. This value, in turn, is the sum of all would thus expect e-business to have attracted values that can be appropriated by the participants the attention of scholars in the fields of in e-business transactions(Brandenburger and entrepreneurship and strategic management. Stuart, 1996). The data and methods section is Indeed, the advent of e-business presents a strong followed by a presentation of the findings that for the confluence of the entrepreneurship emerged from our analysis of 59 e-businesses d strategy research streams, as advocated by Although we do not go into detail on each of Hitt and Ireland(2000)and by McGrath and the businesses studied, we use examples from our MacMillan(2000). Yet, academic research on e- exploration to illustrate the concepts that emerged business is currently sparse. The literature to date Our analysis reveals four primary and interrelated has neither articulated the central issues related value drivers of e-businesses: novelty, lock-in, to this new phenomenon, nor has it developed complementarity, and efficiency. We observe that theory that captures the unique features of vir- value creation in e-business goes beyond the tual markets value that can be realized through the configu- This paper attempts to fill this theoretical gap ration of the value chain(Porter, 1985), the for by seeking to identify the sources of value cre- mation of strategic networks among firms(Dyer ation in e-business. To do this, we begin the and Singh, 1998), or the exploitation of firm paper with a theory section that highlights the specific core competencies(Barney, 1991).E- value creation potential embedded in virtual mar- business firms often innovate through novel kets, and that explores the sources of value cre- exchange mechanisms and transaction structures ation in the received entrepreneurship and stra- not present in firms that are more traditional tegic management literatures. Specifically, we Throughout the discussion of the value drivers of review how value is created within the theoretical e-business we include some observations regard- views of the value chain framework (Porter, ing the interrelationships among the four drivers. 1985), Schumpeter's theory of creative destruc- In the discussion section of the paper, we build tion(Schumpeter, 1942), the resource-based view on our findings to offer some new ways of of the firm(e.g, Barney, 1991), strategic network integrating the entrepreneurship and strategic theory(e.g, Dyer and Singh, 1998), and trans- management literatures. Our central observations action costs economics(Williamson, 1975). We are that no single entrepreneurship or strategic also discuss the applicability of these theories in management theory can fully explain the value creation potential of e-business. Rather, each of 3 Source: Forrester Research Report,"Global eCommerce the theories offers an important insight into one pproaches Hypergrowth, April aspect of value creation in e-business. In an 4 Source: Jupiter Communications(2000). s While e-business is still growing at an attempt to contribute to the work that seeks to rate,we are now witnessing a slowdown in the Business-to Integrate entrepreneurship and strategic man- Consumer(B2C) growth rate and an acceleration of the agement perspectives(e.g, Jones, Hesterly, and Business-to-Business(B2B)growth rate. The B2C segment Borgatti. 1997: Gulati. 1999 Hitt and Ireland pared to an annual growth rate of 110 percent in the B2B 2000: McGrath and MacMillan, 2000),we pro- segment (s oure e the bar ner fGreupts ht s eriu mnt is pose the business model construct as a unifying percent of the total trade, while online retail (B2C)is expected arising from multiple sources. The business model to represent less then 7 percent of total retail at that time. depicts the design of transaction content, Copyright o 2001 John Wiley Sons, Ltd, Strat, Mgmt. J. 22: 493-52

494 R. Amit and C. Zott $67.6 billion (for 2001).3 The increase in the number of e-business transactions at major web sites (60,000 per day in 1999 compared to 29,000 per day in 1998)4 highlights the extraordinary growth and transformation of this new global business landscape.5 E-business has the potential of generating tremendous new wealth, mostly through entrepre￾neurial start-ups and corporate ventures. It is also transforming the rules of competition for estab￾lished businesses in unprecedented ways. One would thus expect e-business to have attracted the attention of scholars in the fields of entrepreneurship and strategic management. Indeed, the advent of e-business presents a strong case for the confluence of the entrepreneurship and strategy research streams, as advocated by Hitt and Ireland (2000) and by McGrath and MacMillan (2000). Yet, academic research on e￾business is currently sparse. The literature to date has neither articulated the central issues related to this new phenomenon, nor has it developed theory that captures the unique features of vir￾tual markets. This paper attempts to fill this theoretical gap by seeking to identify the sources of value cre￾ation in e-business. To do this, we begin the paper with a theory section that highlights the value creation potential embedded in virtual mar￾kets, and that explores the sources of value cre￾ation in the received entrepreneurship and stra￾tegic management literatures. Specifically, we review how value is created within the theoretical views of the value chain framework (Porter, 1985), Schumpeter’s theory of creative destruc￾tion (Schumpeter, 1942), the resource-based view of the firm (e.g., Barney, 1991), strategic network theory (e.g., Dyer and Singh, 1998), and trans￾action costs economics (Williamson, 1975). We also discuss the applicability of these theories in 3 Source: Forrester Research Report, ‘Global eCommerce Approaches Hypergrowth,’ April 2000. 4 Source: Jupiter Communications (2000). 5 While e-business is still growing at an overall impressive rate, we are now witnessing a slowdown in the Business-to￾Consumer (B2C) growth rate and an acceleration of the Business-to-Business (B2B) growth rate. The B2C segment has grown at an annual rate of 76 percent since 1998 com￾pared to an annual growth rate of 110 percent in the B2B segment (source: the Gartner Group). This argument is additionally strengthened by the forecasts that predict B2B e￾business to reach $2.7 trillion in 2004, representing over 17 percent of the total trade, while online retail (B2C) is expected to represent less then 7 percent of total retail at that time. Copyright  2001 John Wiley & Sons, Ltd. Strat. Mgmt. J., 22: 493–520 (2001) the context of the emergence of virtual markets. In the data and methods section that follows the theory section, we describe the grounded theory development methodology (Glaser and Strauss, 1967) that we used to determine which of the sources of value suggested by the literature are germane to e-businesses. The terms ‘source of value creation’ and ‘value driver’ (which are used interchangeably in this paper) refer to any factor that enhances the total value created by an e￾business. This value, in turn, is the sum of all values that can be appropriated by the participants in e-business transactions (Brandenburger and Stuart, 1996). The data and methods section is followed by a presentation of the findings that emerged from our analysis of 59 e-businesses. Although we do not go into detail on each of the businesses studied, we use examples from our exploration to illustrate the concepts that emerged. Our analysis reveals four primary and interrelated value drivers of e-businesses: novelty, lock-in, complementarity, and efficiency. We observe that value creation in e-business goes beyond the value that can be realized through the configu￾ration of the value chain (Porter, 1985), the for￾mation of strategic networks among firms (Dyer and Singh, 1998), or the exploitation of firm￾specific core competencies (Barney, 1991). E￾business firms often innovate through novel exchange mechanisms and transaction structures not present in firms that are more traditional. Throughout the discussion of the value drivers of e-business, we include some observations regard￾ing the interrelationships among the four drivers. In the discussion section of the paper, we build on our findings to offer some new ways of integrating the entrepreneurship and strategic management literatures. Our central observations are that no single entrepreneurship or strategic management theory can fully explain the value creation potential of e-business. Rather, each of the theories offers an important insight into one aspect of value creation in e-business. In an attempt to contribute to the work that seeks to integrate entrepreneurship and strategic man￾agement perspectives (e.g., Jones, Hesterly, and Borgatti, 1997; Gulati, 1999; Hitt and Ireland, 2000; McGrath and MacMillan, 2000), we pro￾pose the business model construct as a unifying unit of analysis that captures the value creation arising from multiple sources. The business model depicts the design of transaction content, struc-

Value Creation in E-Business 495 ture, and governance so as to create value through As an electronic network with open standards, the exploitation of business opportunities. By the Internet supports the emergence of virtual addressing the central issues in e-business that communities(Hagel and Armstrong, 1997)and emerge at the intersection of strategic man- commercial arrangements that disregard tra- agement and entrepreneurship, we hope to con- ditional boundaries between firms along the value tribute to theory development in both fields. The chain. Business processes can be shared among paper concludes with final observations and firms from different industries, even without any avenues for further research awareness of the end customers. As more infor mation about products and services becomes instantly available to customers, and as infor THEORY mation goods(Shapiro and Varian, 1999)are transmitted over the Internet, traditional inter Before reviewing the sources of value creation mediary businesses and information brokers are implied by a range of theoretical perspectives in circumvented ('dis-intermediated), and the guid the entrepreneurship and strategic management ing logic behind some traditional industries(e.g literatures, we begin this section by highlighting travel agencies) begins to disintegrate. At the the value creation potential embedded in virtual same time, new ways of creating value are opened markets. Our literature review then focuses on up by the new forms of connecting buyers and value chain analysis, Schumpeterian innovation, sellers in existing markets (re-intermediation), the resource-based view of the firm, strategic and by innovative market mechanisms (e.g network theory, and transaction cost economics. reverse market auctions) and economic For each of these perspectives, we describe the exchanges main theoretical approach, expose the main There are several other characteristics of virtual sources of value creation suggested, and discuss markets that, when considered together, have a the theoretical implications of the emergence of profound effect on how value-creating economic irtual markets transactions are structured and conducted. These include the ease of extending one's product range Virtual markets to include complementary products, improved access to complementary assets (i.e,resources, Virtual markets refer to settings in which business capabilities, and technologies), new forms of col transactions are conducted via open networks laboration among firms (e.g, affiliate programs), based on the fixed and wireless Internet infra- the potential reduction of asymmetric information structure. These markets are characterized by high among economic agents through the Internet connectivity(Dutta and Segev, 1999),a focus on medium, and real-time customizability of products transactions(Balakrishnan, Kumara, and Sundare- and services. Industry boundaries are thus easily san, 1999), the importance of information goods crossed as value chains are being redefined and networks(Shapiro and Varian, 1999), and (Sampler, 1998). This in turn may affect the high reach and richness of information (Evans scope of the firm as opportunities for outsourcin and Wurster, 1999). Reach refers to the number arise in the presence of reduced transaction costs of people and products that are reachable quickly and increased returns to scale(see Lucking-Reiley nd cheaply in virtual markets; richness refers to and Spulber, 2001; for example, many companies the depth and detail of information that can be now find it economically viable to outsource their accumulated, offered, and exchanged between IT services) market participants. Virtual markets have unprec- In summary, the characteristics of virtual mar- dented reach because they are characterized by kets combined with the vastly reduced costs of a near lack of geographical boundaries information proce allow for profound The difficulty that some e-business firms experience in estab- lishing a pan-European presence indicates that the certain barriers to business, cample, to local 7 According to The Economist, 23 September 2000(A survey and tastes. or to cross- border However the of the new economy, p. 6) the of geographical boundar ars to be vastly reduced electronically has dropped from $150,000 to $O 12 in the past relative to the traditional "bricks-and- worl Copyright o 2001 John Wiley Sons, Ltd, sma. Mgmt. J.22:493-520(2001)

Value Creation in E-Business 495 ture, and governance so as to create value through the exploitation of business opportunities. By addressing the central issues in e-business that emerge at the intersection of strategic man￾agement and entrepreneurship, we hope to con￾tribute to theory development in both fields. The paper concludes with final observations and avenues for further research. THEORY Before reviewing the sources of value creation implied by a range of theoretical perspectives in the entrepreneurship and strategic management literatures, we begin this section by highlighting the value creation potential embedded in virtual markets. Our literature review then focuses on value chain analysis, Schumpeterian innovation, the resource-based view of the firm, strategic network theory, and transaction cost economics. For each of these perspectives, we describe the main theoretical approach, expose the main sources of value creation suggested, and discuss the theoretical implications of the emergence of virtual markets. Virtual markets Virtual markets refer to settings in which business transactions are conducted via open networks based on the fixed and wireless Internet infra￾structure. These markets are characterized by high connectivity (Dutta and Segev, 1999), a focus on transactions (Balakrishnan, Kumara, and Sundare￾san, 1999), the importance of information goods and networks (Shapiro and Varian, 1999), and high reach and richness of information (Evans and Wurster, 1999). Reach refers to the number of people and products that are reachable quickly and cheaply in virtual markets; richness refers to the depth and detail of information that can be accumulated, offered, and exchanged between market participants. Virtual markets have unprec￾edented reach because they are characterized by a near lack of geographical boundaries.6 6 The difficulty that some e-business firms experience in estab￾lishing a pan-European presence indicates that there still exist certain barriers to business, due, for example, to local languages and tastes, or to cross-border logistics. However, the importance of geographical boundaries still appears to be vastly reduced relative to the traditional ‘bricks-and-mortar’ world. Copyright  2001 John Wiley & Sons, Ltd. Strat. Mgmt. J., 22: 493–520 (2001) As an electronic network with open standards, the Internet supports the emergence of virtual communities (Hagel and Armstrong, 1997) and commercial arrangements that disregard tra￾ditional boundaries between firms along the value chain. Business processes can be shared among firms from different industries, even without any awareness of the end customers. As more infor￾mation about products and services becomes instantly available to customers, and as infor￾mation goods (Shapiro and Varian, 1999) are transmitted over the Internet, traditional inter￾mediary businesses and information brokers are circumvented (‘dis-intermediated’), and the guid￾ing logic behind some traditional industries (e.g., travel agencies) begins to disintegrate. At the same time, new ways of creating value are opened up by the new forms of connecting buyers and sellers in existing markets (‘re-intermediation’), and by innovative market mechanisms (e.g., reverse market auctions) and economic exchanges. There are several other characteristics of virtual markets that, when considered together, have a profound effect on how value-creating economic transactions are structured and conducted. These include the ease of extending one’s product range to include complementary products, improved access to complementary assets (i.e., resources, capabilities, and technologies), new forms of col￾laboration among firms (e.g., affiliate programs), the potential reduction of asymmetric information among economic agents through the Internet medium, and real-time customizability of products and services. Industry boundaries are thus easily crossed as value chains are being redefined (Sampler, 1998). This in turn may affect the scope of the firm as opportunities for outsourcing arise in the presence of reduced transaction costs and increased returns to scale (see Lucking-Reiley and Spulber, 2001; for example, many companies now find it economically viable to outsource their IT services). In summary, the characteristics of virtual mar￾kets combined with the vastly reduced costs of information processing7 allow for profound changes in the ways companies operate and in 7 According to The Economist, 23 September 2000 (‘A survey of the new economy’, p. 6) the cost of sending 1 trillion bits electronically has dropped from $150,000 to $0.12 in the past 30 years

496 R. Amit and C. Zott how economic exchanges are structured. They online. By doing So, it was able to add value to also open new opportunities for wealth creation. sales and fulfillment activities. Stabell and Fjeld Thus, conventional theories of how value is cre- stad (1998)found the value chain model more ated are being challenge suitable for the analysis of production and manu- facturing firms than for service firms where the Value chain analysis resulting chain does not fully capture the essence of the value creation mechanisms of the firm Porter's(1985) value chain framework analyzes Citing the example of an insurance company, value creation at the firm level. Value chain they ask: 'What is received, what is produced analysis identifies the activities of the firm and what is shipped? ' ( Stabell and Fjeldstad, 1998 then studies the economic implications of those 414). Similar questions can be asked about the activitiesItincludesfoursteps:(1)definingtheactivitiesofe-businessfirmssuchasAmazon.com strategic business unit,(2) identifying critical and about e-businesses whose main transactions activities, (3)defining products, and(4) determin- involve the processing of information flows ing the value of an activity. The main questions Building on this insight, Rayport and Sviokla that the value chain framework addresses are as (1995) propose avirtual value chain that follows:(1)what activities should a firm perform, includes a sequence of gathering, organizing, se- and how? and(2) what is the configuration of lecting, synthesizing, and distributing information. the firm's activities that would enable it to add While this modification of the value chain concept value to the product and to compete in its indus- corresponds better to the realities of virtual mar try? Value chain analysis explores the primary kets, and in particular to the importance of infor- activities, which have a direct impact on value mation goods(Shapiro and Varian, 1999), there creation, and support activities, which affect value may still be room to capture the richness of e- only through their impact on the performance of business activity more fully. Valuecreation the primary activities. Primary activities involve opportunities in virtual markets may result from the creation of physical products and include new combinations of information, physical prod- inbound logistics, operations, outbound logistics, ucts and services, innovative configurations of marketing and sales, and service transactions,and the reconfiguration and inte- Porter defines value as"the amount buyers are gration of resources, capabilities, roles and illing to pay for what a firm provides them. relation among suppliers, partners and cus- Value is measured by total revenue.. A firm is tomers profitable if the value it commands exceeds the costs involved in creating the product'(Porter 1985: 38 ). Value can be created by differentiation chumpeterian innovation along every step of the value chain, through Schumpeter(1934) pioneered the theory of eco- activities resulting in products and services that nomic development and new value creation lower buyers' costs or raise buyers' performance. through the process of technological change and Drivers of product differentiation, and hence innovation. He viewed technological development sources of value creation, are policy choices as discontinuous change and disequilibrium (what activities to perform and how), linkages resulting from innovation. Schumpeter identified (within the value chain or with suppliers and several sources of innovation (hence, value channels), timing(of activities), location, sharing creation) including the introduction of new goods of activities among business units, learning, inte- or new production methods, the creation of new gration, scale and institutional factors(see Porter, markets, the discovery of new supply sources, and 1985: 124-127). Porter and Millar(1985) argue the reorganization of industries. He introduced that information technology creates value by sup- the notion of creative destruction'( Schumpeter, porting differentiation strategies 1942) noting that following technological change Value chain analysis can be helpful in examin- certain rents become available to entrepreneurs ing value creation in virtual markets. For which later diminish as innovations become estab- example, Amazon. com decided to build its own lished practices in economic life. These rents warehouses in order to increase the speed and were later named Schumpeterian rents, defined as reliability of the delivery of products ordered rents stemming from risky initiatives and Copyright o 2001 John Wiley Sons, Ltd, Strat, Mgmt. J. 22: 493-52

496 R. Amit and C. Zott how economic exchanges are structured. They also open new opportunities for wealth creation. Thus, conventional theories of how value is cre￾ated are being challenged. Value chain analysis Porter’s (1985) value chain framework analyzes value creation at the firm level. Value chain analysis identifies the activities of the firm and then studies the economic implications of those activities. It includes four steps: (1) defining the strategic business unit, (2) identifying critical activities, (3) defining products, and (4) determin￾ing the value of an activity. The main questions that the value chain framework addresses are as follows: (1) what activities should a firm perform, and how? and (2) what is the configuration of the firm’s activities that would enable it to add value to the product and to compete in its indus￾try? Value chain analysis explores the primary activities, which have a direct impact on value creation, and support activities, which affect value only through their impact on the performance of the primary activities. Primary activities involve the creation of physical products and include inbound logistics, operations, outbound logistics, marketing and sales, and service. Porter defines value as ‘the amount buyers are willing to pay for what a firm provides them. Value is measured by total revenue … A firm is profitable if the value it commands exceeds the costs involved in creating the product’ (Porter, 1985: 38). Value can be created by differentiation along every step of the value chain, through activities resulting in products and services that lower buyers’ costs or raise buyers’ performance. Drivers of product differentiation, and hence sources of value creation, are policy choices (what activities to perform and how), linkages (within the value chain or with suppliers and channels), timing (of activities), location, sharing of activities among business units, learning, inte￾gration, scale and institutional factors (see Porter, 1985: 124–127). Porter and Millar (1985) argue that information technology creates value by sup￾porting differentiation strategies. Value chain analysis can be helpful in examin￾ing value creation in virtual markets. For example, Amazon.com decided to build its own warehouses in order to increase the speed and reliability of the delivery of products ordered Copyright  2001 John Wiley & Sons, Ltd. Strat. Mgmt. J., 22: 493–520 (2001) online. By doing so, it was able to add value to sales and fulfillment activities. Stabell and Fjeld￾stad (1998) found the value chain model more suitable for the analysis of production and manu￾facturing firms than for service firms where the resulting chain does not fully capture the essence of the value creation mechanisms of the firm. Citing the example of an insurance company, they ask: ‘What is received, what is produced, what is shipped?’ (Stabell and Fjeldstad, 1998: 414). Similar questions can be asked about the activities of e-business firms such as Amazon.com and about e-businesses whose main transactions involve the processing of information flows. Building on this insight, Rayport and Sviokla (1995) propose a ‘virtual’ value chain that includes a sequence of gathering, organizing, se￾lecting, synthesizing, and distributing information. While this modification of the value chain concept corresponds better to the realities of virtual mar￾kets, and in particular to the importance of infor￾mation goods (Shapiro and Varian, 1999), there may still be room to capture the richness of e￾business activity more fully. Value creation opportunities in virtual markets may result from new combinations of information, physical prod￾ucts and services, innovative configurations of transactions, and the reconfiguration and inte￾gration of resources, capabilities, roles and relationships among suppliers, partners and cus￾tomers. Schumpeterian innovation Schumpeter (1934) pioneered the theory of eco￾nomic development and new value creation through the process of technological change and innovation. He viewed technological development as discontinuous change and disequilibrium resulting from innovation. Schumpeter identified several sources of innovation (hence, value creation) including the introduction of new goods or new production methods, the creation of new markets, the discovery of new supply sources, and the reorganization of industries. He introduced the notion of ‘creative destruction’ (Schumpeter, 1942) noting that following technological change certain rents become available to entrepreneurs, which later diminish as innovations become estab￾lished practices in economic life. These rents were later named Schumpeterian rents, defined as rents stemming from risky initiatives and entre-

Value Creation in E-Business 497 preneurial insights in uncertain and complex plementary and specialized resources and capa- environments, which are subject to self- bilities(which are heterogeneous within an indus- destruction as knowledge diffuses. In his early try, scarce, durable, not easily traded, and difficul work, Schumpeter (1934, 1939) highlighted the to imitate), may lead to value creation(Penrose contribution of individual entrepreneurs and 1959: Wernerfelt, 1984: Barney, 1991; Peteraf placed an emphasis on the innovations and ser- 1993; Amit and Schoemaker, 1993). The vices rendered by the new combinations of tion is that, even in equilibrium, firms may differ resources in terms of the resources and capabilities they In Schumpeter's theory, innovation is the control, and that such asymmetric firms may source of value creation. Schumpeterian inno- coexist until some exogenous change or Schum vation emphasizes the importance of technology peterman shock occurs. Hence, RBV theory postu- and considers novel combinations of resources lates that the services rendered by the firms (and the services they provide) as the foundations unique bundle of resources and capabilities may of new products and production methods. These, lead to value creation in turn, lead to the transformation of markets and A firms resources and capabilities are valu industries, and hence to economic development. able if, and only if, they reduce a firms costs Teece(1987)adds that the effectiveness of pro- or increase its revenues compared to what would tective property rights(appropriability regime) have been the case if the firm did not possess and complementary assets can add to the value those resources'( Barney, 1997: 147). While the creation potential of innovations. Moran and Gho- RBV literature has often been concerned with shal (1999) highlight the role of economic questions of value appropriation and sustainability exchange through which the latent value imbed- of competitive advantage(e.g, Barney, 1991),a ded in the new combination of resources is realiz- recent extension to RBV, the dynamic capabilities able. Hitt and Ireland(2000)contribute to this approach (Teece, Pisano, and Shuen, 1997) theory by addressing the determinants and conse- explores how valuable resource positions are built quences of the innovation process and by linking and acquired over time. Dynamic capabilities are this process with the strategic management of rooted in a firms managerial and organizational growing enterprises processes, such as those aimed at coordination As innovative entrepreneurs exploit new oppor- integration, reconfiguration, or transformation tunities for value creation, the evolution of the (Teece et al., 1997; Eisenhardt and Martin, 2000) resulting virtual markets can be described in terms or learning (Lei, Hitt, and Bettis, 1996). These of Schumpeter's model of creative destruction. capabilities enable firms to create and capture However, virtual markets broaden the notion of Schumpeterian rents (Teece et al, 1997) innovation since they span firm and industry Examples of such value-creating processes are boundaries, involve new exchange mechanisms product development, strategic decision-making. and unique transaction methods (rather than alliance formation, knowledge creation, and capa merely new products, or production processes), bilities transfer(Eisenhardt and Martin, 2000) and foster new forms of collaborations among The emergence of virtual markets clearly opens firms. Furthermore, while innovation is certainly up new sources of value creation since relational a major driving force of the economic develop- capabilities and new complementarities among a ment of new and established markets, it may not firms resources and capabilities can be exploited be the only source of value creation in virtual (e.g, between online and offline capabilities) markets, as suggested by the other theoretical However, virtual markets also present a challenge frameworks reviewed in this section to rBv theory. As information-based resources and capabilities, which have a higher degree of Resource- based view of the firm mobility than other types of resources and capa- bilities. increase in their importance within e- The resource-based view (RBV) of the firm, business firms, value migration is likely to which builds on Schumpeter's perspective on increase and the sustainability of newly created value creation, views the firm as a bundle of value may be reduced. Also, time compression resources and capabilities. The RBv states that diseconomies(Dierickx and Cool, 1989)provide marshalling and uniquely combining a set of com- an effective barrier to imitation for firm-specifio Copyright o 2001 John Wiley Sons, Ltd, sma. Mgmt. J.22:493-520(2001)

Value Creation in E-Business 497 preneurial insights in uncertain and complex environments, which are subject to self￾destruction as knowledge diffuses. In his early work, Schumpeter (1934, 1939) highlighted the contribution of individual entrepreneurs and placed an emphasis on the innovations and ser￾vices rendered by the new combinations of resources. In Schumpeter’s theory, innovation is the source of value creation. Schumpeterian inno￾vation emphasizes the importance of technology and considers novel combinations of resources (and the services they provide) as the foundations of new products and production methods. These, in turn, lead to the transformation of markets and industries, and hence to economic development. Teece (1987) adds that the effectiveness of pro￾tective property rights (appropriability regime) and complementary assets can add to the value creation potential of innovations. Moran and Gho￾shal (1999) highlight the role of economic exchange through which the latent value imbed￾ded in the new combination of resources is realiz￾able. Hitt and Ireland (2000) contribute to this theory by addressing the determinants and conse￾quences of the innovation process and by linking this process with the strategic management of growing enterprises. As innovative entrepreneurs exploit new oppor￾tunities for value creation, the evolution of the resulting virtual markets can be described in terms of Schumpeter’s model of creative destruction. However, virtual markets broaden the notion of innovation since they span firm and industry boundaries, involve new exchange mechanisms and unique transaction methods (rather than merely new products, or production processes), and foster new forms of collaborations among firms. Furthermore, while innovation is certainly a major driving force of the economic develop￾ment of new and established markets, it may not be the only source of value creation in virtual markets, as suggested by the other theoretical frameworks reviewed in this section. Resource-based view of the firm The resource-based view (RBV) of the firm, which builds on Schumpeter’s perspective on value creation, views the firm as a bundle of resources and capabilities. The RBV states that marshalling and uniquely combining a set of com￾Copyright  2001 John Wiley & Sons, Ltd. Strat. Mgmt. J., 22: 493–520 (2001) plementary and specialized resources and capa￾bilities (which are heterogeneous within an indus￾try, scarce, durable, not easily traded, and difficult to imitate), may lead to value creation (Penrose, 1959; Wernerfelt, 1984; Barney, 1991; Peteraf, 1993; Amit and Schoemaker, 1993). The supposi￾tion is that, even in equilibrium, firms may differ in terms of the resources and capabilities they control, and that such asymmetric firms may coexist until some exogenous change or Schum￾peterian shock occurs. Hence, RBV theory postu￾lates that the services rendered by the firm’s unique bundle of resources and capabilities may lead to value creation. A firm’s resources and capabilities ‘are valu￾able if, and only if, they reduce a firm’s costs or increase its revenues compared to what would have been the case if the firm did not possess those resources’ (Barney, 1997: 147). While the RBV literature has often been concerned with questions of value appropriation and sustainability of competitive advantage (e.g., Barney, 1991), a recent extension to RBV, the dynamic capabilities approach (Teece, Pisano, and Shuen, 1997), explores how valuable resource positions are built and acquired over time. Dynamic capabilities are rooted in a firm’s managerial and organizational processes, such as those aimed at coordination, integration, reconfiguration, or transformation (Teece et al., 1997; Eisenhardt and Martin, 2000), or learning (Lei, Hitt, and Bettis, 1996). These capabilities enable firms to create and capture Schumpeterian rents (Teece et al., 1997). Examples of such value-creating processes are product development, strategic decision-making, alliance formation, knowledge creation, and capa￾bilities transfer (Eisenhardt and Martin, 2000). The emergence of virtual markets clearly opens up new sources of value creation since relational capabilities and new complementarities among a firm’s resources and capabilities can be exploited (e.g., between online and offline capabilities). However, virtual markets also present a challenge to RBV theory. As information-based resources and capabilities, which have a higher degree of mobility than other types of resources and capa￾bilities, increase in their importance within e￾business firms, value migration is likely to increase and the sustainability of newly created value may be reduced. Also, time compression diseconomies (Dierickx and Cool, 1989) provide an effective barrier to imitation for firm-specific