Connecting Cyberspace to Place: Understanding the Evolution of Transactions and Value Chains in Electronic Commerce

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Connecting Cyberspace to Place: Understanding the Evolution of Transactions and Value Chains in Electronic Commerce Matthew A. Zook (PI) Thomas R. Leinbach (co-PI)University of KentuckyThe project examines the forms, processes and geographies of E-commerce across a diverse set of firms in the U.S. More specifically, it examines how E-commerce contributes to firms' competitive advantage through the (re)formulation of value chains (comparing physical to virtual) and thereby affects existing geographies of production, distribution and sales. The first objective examines the degree to which structural characteristics of manufacturing firms in select industries relate to engagement in E-commerce. A second objective explores why firms engage in E-commerce and how E-commerce evolves in their operations. The third and paramount objective is to understand how the adoption of a particular form or model of E-commerce alters the nature of a firm's value chain. Of special interest are the spatial manifestations of this reconfiguration and the question of whether value chains and changes in their geographies differ among industries, companies and products. The project uses a series of sequential and complementary methodological efforts to accomplish the research objectives which have been set out. First E-commerce data is analyzed for a sample of individual firms from the Census Bureau's Annual Survey of Manufacturers. Second a more detailed interlocked mail/telephone survey of E-commerce is conducted using an additional sample of firms. This survey will provide evidence of the motivations for engaging in E-commerce, the sequential process of expansion, as well as, details on the linkages and the changing structure of value chains under E-commerce. Third, a series of in-depth interviews will be conducted from a select set of the above sampled firms in order to deepen information and findings gathered from the mail survey.The significance of the research can be characterized in a variety of ways. First and foremost, virtually none of the existing literature in geography and business/economics has examined E-commerce (and changes in firms' value chains) from a spatial or structural perspective. To address this deficiency, the project makes the following important contributions: (1) The provision of new insights on the incidence and magnitude of E-commerce and its relationship to firm structural and operational characteristics across manufacturing firm types. (2) The creation of new knowledge on the changing nature, both structural and geographical, of the interrelations between physical and virtual value chains by firm types across business models. (3) Increased understanding of how E-commerce enhances specific business operations and increases firms' competitive advantage; how efficiency gains are achieved; how E-commerce affects the range of products a firm offers; and how E-commerce affects networks of relationships between suppliers, customers and competitors. Finally, (4) the research will contribute to the literature on the theory of the firm, particularly from the broad "embeddedness and networks" perspectives. The project will show how E-commerce is affecting the spatial relations of firms with their suppliers/markets and will allow assessment of how E-commerce innovations in firms may impact the regions in which they are located. Finally the project results will be important to firms, local governments and development agencies which are now exploring the use and impact of E-commerce. Given the innovative capacity of E-commerce, these actors are eager to learn how it may affect their business models, location of jobs, and value chains.