A Study of Electronic Business Relationships.
Ryu Hungs (2009) study, published as E-Commerce Transaction Mechanisms and Buyer-Supplier Relationship was conducted so as to deepen managerial knowledge about electronic business relationships between suppliers and purchasers (79). The research article is especially intended for managers given various choices of transaction mechanisms, including electronic marketplaces and electronic data interchanges (Ryu Hung, 79). With an emphasis on rational choices in the economic sense, this research is quite important as it examines a number of studies on e-commerce relationships, thereby supporting the managerial quest to cut costs by saving organizational time and money that would otherwise be spent perusing all of the studies mentioned. This research is also essential in academia, as it gives shape and adds meaning to information gathered by many other researchers on various topics related to electronic business-to-business relations. In fact, academicians must be grateful to Ryu and Hung for integrating this information and showing them the path to increase their understanding of the subject.
The study conducted by Ryu Hung is a qualitative meta-analysis. Considering the fact that it was written with managers in mind, the methodology is perfect, for this research paper may be understood by laymen, too. From the academic standpoint, however, this methodology is controversial, as it allows the authors to evaluate previous studies however they deem fit (Rochford, 5). There are questions of feasibility, validity, study selection, mechanism, and interpretation and even ethics surrounding qualitative meta-analyses (Rochford, 5). Even so, the fact that Ruy Hung had clearly stated that their research paper was authored for managers rather than academicians allows readers to give them the benefit of the doubt (Ruy Hung, 79). Indeed, this study is comparable to a research-based article in Harvard Business Review, written for managers in particular. Moreover, Ruy Hungs article extensively covers the economics of electronic B2B relations, unlike Nakayamas (2000) study, for example, based on the survey method to discover that EDI reduces the perceived bargaining power of wholesalers (Nakayama, 195). If Nakayamas study had been covered in Ruy Hungs research, the latter would be expected to include many other studies on EDI to allow managers to understand the economics behind the subject with an integrative view.
Ruy Hung describe EDI and electronic marketplaces as cost-cutting transaction mechanisms, allowing for frequent and rapid exchanges of information (81-84). As perfect competition is based on perfect information, and firms must reduce costs to increase efficiency and revenues, these are vital features of these transaction mechanisms, as explained by Ruy Hung with the support of various published articles. Because electronic business is dependent on the viability of the information systems in place, the advantages of building electronic data interchanges to suit environmental needs are also discussed (Ruy Hung, 84). If, for example, the economy is unstable in one place and strong in another, and EDI involves a buyer for an international business dealing with both places at the same time, the demand for perfect information requires EDI to be perfectly appropriate to face this form of environmental diversity (Ruy Hung, 84). Likewise, both EDI and e-marketplaces despite the fact that they allow for quick relay of information between buyers and suppliers need to be perfected in a time of technological uncertainty, when product features or technologies are rapidly evolving (Ruy Hung, 84).
Ruy Hung note that the present-day EDI and e-marketplaces are not equipped to handle technological uncertainty (Ruy Hung, 84). Furthermore, when there are many suppliers, buyers are not likely to opt for electronic transaction mechanisms, seeing that the implementation procedures for EDI and e-marketplaces are both expensive and complicated (Ruy Hung, 84-85). Sutton, Khazanchi, Hampton, Arnold (2008) write that B2B elements must be in place and integration with external and internal applications and feasible with available financial and technological resources (154). The buyers and suppliers organizations must choose suitable information systems, hire highly skilled staff, and do much more to ensure that B2B linkages are flawless (Sutton et. al., 154). Additionally, the use of electronic transaction mechanisms depends on the suppliers and buyers beliefs about their ability to successfully conduct electronic business (Ruy Hung, 85). So, although complex product features render EDI and e-marketplaces attractive as these electronic transaction mechanisms make it cost-effective, speedy and efficient to exchange important facts about the product, participants in an electronic business relationship must be sufficiently comfortable about their use of information technology (Ruy Hung, 85). Ruppel, Underwood-Queen, Harrington (2003) add that users of electronic systems for business must also trust these transaction mechanisms as secure (30-31).
Ruy Hung further describe trust as an essential factor influencing the use of electronic transaction mechanisms (86-86). Ruppel et. al. in addition to various other scholars have written about trust in electronic business relationships, including relations between electronic banks and their customers (Ruppel et. al., 29-30 Shu Han, 2000, 248 Kim Prabhakar, 540-541). Moreover, although Kim Prabhakar have extensively described risks related to electronic transaction mechanisms, Ruy Hungs approach in this context may be referred to as risk mitigation as their article appears focused on the pros of electronic business transactions. According to Ruy Hung, electronic business relations reduce the risk of opportunism as perfect information is relayed between suppliers and buyers (86-87). In addition, the authors note that EDI allows for long-term relations to be developed between buyers and suppliers, even if e-marketplaces do not promise this (Ruy Hung, 87). Of course, relationships are explored in almost every scholarly article on e-commerce, including studies on internet banking (Nakayama, 195 Lang Colgate, 2003). But, even though all of the above research findings condensed by Ruy Hung have been related before, by putting them together to help managers choose between paper and electronic transaction mechanisms, the authors have done a great service, not only to private business organizations but also the public sector already involved with e-governance. The authors should also have mentioned that electronic transaction mechanisms help organizations gain a competitive edge by allowing suppliers and buyers to swiftly exchange information to develop new products based on changing tastes and demands.
Ruy Hungs conclusions are derived from the various studies with which they conducted a qualitative meta-analysis. The authors recommend a strategic approach to decision-making when it comes to choosing transaction mechanisms. After all, electronic transaction mechanisms involve uncertainties that information systems may or may not be equipped to handle at any given time. Because the choice of transaction mechanism affects the firms performance as well as costs and revenues, the decision-making process must necessarily involve a consideration of the organizations short-term goals versus its long-term strategic plan (Ruy Hung, 87-88).
These recommendations are perfectly reasonable. What is more, they are consonant with Ruy Hungs positive approach to the subject. In other words, they encourage managers to feel comfortable with the use of EDI and e-marketplaces, and work to develop electronic transaction mechanisms that would eventually handle many types of technological uncertainties as well. Although Ruy Hungs article is research-based, the fact that it is a qualitative meta-analysis allows the reader to doubt its objectivity in the academic sense. Regardless of this methodological problem, the authors conclusions and recommendations may be expected to inspire private and public enterprises to reduce costs whilst increasing effectiveness, efficiency, and productivity by joining the electronic herd, as Thomas Friedman would put it.