244
B2B E-Business
Sullivan, L., & Dunn, D. (2004, February 9). The
rules of the road still apply to Covisint. Informa-
tion Week, p. 92.
Survey: A market too far. (2004). The Economist,
371(8375), 12.
KEY TERMS
Back-End System: The support components
of a computer system. It typically refers to the
database-management system (DBMS), which
is the storehouse for the data.
Business-to-Business (B2B) E-Business: The
sale of products or services, or an information
exchange, among two or more businesses through
electronic technology, usually involving the Inter-
net, through a public or private exchange.
Consortium: A group of companies within
a particular industry establishing an exchange
connecting each of them and their suppliers.
E-Business (Electronic Business): The
administration of conducting business via the
Internet. This would include the buying and sell-
ing of goods and services, along with providing
technical or customer support through the Internet.
E-business is a term often used in conjunction with
e-commerce, but it includes services in addition
to the sale of goods.
Enterprise Application Integration (EAI):
The process of coordinating the operations of vari-
ous applications across an enterprise so they can

perform as an integrated, enterprise-wide system.
This term also refers to the set of commercial ap-
plications designed to facilitate this process.
E-Procurement: E-procurement is the busi-
ness-to-business purchase and sale of supplies
and services over the Internet. An important
part of many B2B sites, e-procurement is also
sometimes referred to by other terms, such as
supplier exchange. Typically, e-procurement
:HEVLWHVDOORZTXDOL¿HGDQGUHJLVWHUHGXVHUVWR
look for buyers or sellers of goods and services.
Depending on the approach, buyers or sellers may
specify prices or invite bids. Transactions can
be initiated and completed. Ongoing purchases
may qualify customers for volume discounts
or special offers. E-procurement software may
make it possible to automate some buying and
selling. Companies participating expect to be
able to control parts inventories more effectively,
reduce purchasing agent overhead, and improve
manufacturing cycles. E-procurement is expected
to be integrated with the trend toward computer-
ized supply-chain management.
Independent B2B Marketplace (or E-Mar-
ketplace): An Internet destination where busi-
nesses from around the world can come together
to buy and sell goods and services in an auction
format.
Middleware: Software that sits between two
or more types of software and translates infor-

mation between them. Middleware can cover a
broad spectrum of software and generally sits
between an application and an operating system,
a network operating system, or a database-man-
agement system.
Private B2B Exchange: An e-marketplace
created by a single company to provide e-business
capabilities to its business units and preferred
trading partners.
This work was previously published in Encyclopedia of E-Commerce, E-Government, and Mobile Commerce, edited by M.
Khosrow-Pour, pp. 26-30, copyright 2006 by Information Science Reference (an imprint of IGI Global).
245
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 1.17
Innovation and B2B
E-Commerce:
Explaining What Did Not Happen
Steve New
University of Oxford, UK
ABSTRACT
The massive wave of enthusiasm for B2B (busi-
ness-to-business) e-commerce generated with
WKH³GRWFRP´ERRPOHGPDQ\WREHOLHYHWKDWD
IXQGDPHQWDOWUDQVIRUPDWLRQRIKRZ¿UPVERXJKW
and sold products was just around the corner. The
QHZ³ZLUHG´ZRUOGRIFRPPHUFHZRXOGOHDGWR
U H D O  W L P H  , Q W H U Q H W G U LYH Q W U D G L QJ  Z L W K V LJ Q L ¿ F D Q W 
implications for — amongst other things — the
nature of buyer-supplier relationships, pricing,
and the management of industrial capacity. De-

spite the excitement, such a transformation has
largely failed to materialise, and whilst there has
been a limited uptake of B2B innovations (for
example, the use of online reverse auctions), the
fundamental character of B2B trade has remained
mostly unchanged. Drawing on a multi-stranded
empirical study, this chapter seeks to explain the
divergence between the expected and realised
degrees of innovation.
INTRODUCTION
The extraordinary rise and fall of the late 1990s
technology bubbleZDVQRWWKH¿UVWVSHFXODWLYH
boom of its kind — and presumably will not
be the last. As with the successive 19
th
century
booms relating to the railways, the frenzy was
accompanied by an astonishing explosion of
rhetoric, folklore, and intellectual and manage-
ULDO IDVKLRQ ² FUXGHO\ ³K\SH´ 7KLV OHG WR D
VLJQL¿FDQW ÀXUU\ RI LQQRYDWLRQ SDUWLFXODUO\ LQ
the founding of large numbers of Internet-based
intermediaries³KXEV´RU³H[FKDQJHV´%DNRV
1991, 1998; Bloch & Catfolis, 2001; Barratt &
Rosdahl, 2002; Le, Rao, & Truong, 2004). Inves-
tors and organisations poured vast sums into these
ventures and, for the most part, lost their money.
Consultants and investment banks made shrill
claims that interorganisational trade would be
transformed, but the predicted revolution failed

to materialise.
246
Innovation and B2B E-Commerce
I address two central questions in this chapter.
7KH¿UVWLVWKHVLPSOHTXHVWLRQ:K\GLGWKHUHYR-
lution not happen? The second is: What substan-
tive ideas for business practice can be salvaged
from the wreckage? This is an important task;
to adapt George Santayana’s famous quip, those
who do not understand the past are condemned
to repeat it.
2QHIHDWXUHRISXEOLVKHGZRUNLQWKLV¿HOGLV
that there has been relatively little solid empirical
material; on the other hand, there has been a great
deal of generalised comment and unsupported
speculation regarding the causes and consequenc-
es of the bursting of the B2B bubble. Day, Fein,
and Ruppersberger (2003) present an analysis that
HPSKDVLVHVWKHVLPLODULWLHVZLWKRWKHU³VKDNHRXWV´
associated with disruptive technologies.
This chapter reports the results of a multi-
stranded investigation into the extent to which
organisations are prepared to make use of the
Internet in buying and selling, and into the patterns
of life and death of B2B exchanges. Unlike much
of the literature in this area, which has largely
focused on leading companies or the few success-
ful hubs, this chapter concentrates more on the
RSSRUWXQLWLHVDQGREVWDFOHVWKDWIDFH³RUGLQDU\´
organisations, and the innovations which failed.

The logic behind this is that there is often much
to be learnt about the process of innovation from
the mundane and the typical. The purpose of this
study was not to recount the organisational suc-
FHVVVWRULHVRIOHDGLQJ¿UPV²RWKHUVKDYHGRQH
that before, and the potential EHQH¿WV RI %%
e-commerce are well documented (e.g., Sculley
& Woods, 1999; Timmers, 2000; DeMaio, 2001;
Raisch, 2001). For this study, the challenge was
to understand the reality of organisations’ experi-
ences, and to gauge the key issues and obstacles
that they face.
BACKGROUND: THE B2B
PHENOMENON
A simple starting point to the complex origins
of the B2B e-commerce phenomenon lies in the
well-established technologies of electronic data
interchange(EDI). At the beginning of the 1990s,
for many industries, the direct system-to-system
transfer of data over proprietary networks follow-
ing industry standard protocols had become a
routine element of doing business. The technology
DOORZHGVLJQL¿FDQWVDYLQJVIURPERWKLQFUHDVLQJ
the speed and accuracy of data transmission, and
in some cases was progressing to more advanced
uses whereby buyers and suppliers could not only
PDQDJHURXWLQHWUDQVDFWLRQVEXWDOVR³VHH´LQWR
each others’ systems, facilitating such operational
innovations as collaborative planning forecasting
and replenishment, and vendor managed inven-

tory. In addition, electronic linkages also were
developing for the easier sharing of technical and
GHVLJQGDWDHQFRXUDJLQJLQWHU¿UPFROODERUD-
tion in technical design. The downside of these
³inter-organisational information systems”
ZHUHWKHFRQVLGHUDEOH³KRRNXS´FRVWVLQFXUUHG
by the parties involved, a fact which limited the
adoption of the technologies by smaller suppliers,
often faced with meeting the costs of linking their
own systems with the non-matching requirements
of several customers. In parallel, in the academic
literature, there was a limited debate as to the
ORQJWHUPHIIHFWVRIWKHVHWHFKQRORJLHVRQ¿UPV¶
switching costs, and good arguments could made
for expecting both a reduction and increases in
PDUNHW³VWLFNLQHVV´DQGWKHFRQVHTXHQWLDOVKLIW
WR SXUHU ³PDUNHWV´ RU JURZLQJ ´KLHUDUFKLHV´
respectively (Malone, Yates, & Benjamin, 1987;
Bakos, 1991). The debate was rather theoretical,
and was rather neglected outside of a handful of
learned journals.
The arrival of the Internet, and its adoption by
businesses as a serious tool for business, however,
247
Innovation and B2B E-Commerce
radically changed the character of the debate.
Three key features of the Internet and two innova-
tions transformed the horizons of possibility. The
Internet was ubiquitous, cheap, and — being built
around the idea of a standard and simple set of

WHFKQLFDOSURWRFROV²UHODWLYHO\HDV\IRU¿UPVWR
adopt. The two innovations — the search engine
and the online auction — opened up a range of
new possibilities for online B2B trading. Over
time, two basic connected perceptions emerged
regarding the potential for a new approach.
7KH¿UVWRIWKHSHUFHSWLRQVZDVWKDWWKH,QWHUQHW
could radically transform procurement and sales
processes, collapsing the costs and timescales of
trading. Prospective buyers could seek out pro-
spective suppliers very rapidly, and suppliers could
present vast quantities of searchable information
on their products and capabilities. Furthermore,
buyers could use Internet mechanisms to identify
the cheapest supplier in real time using multilateral
reverse auctions. Correspondingly, suppliers could
be more responsive in their pricing. The scope for
WKHVHQHZDSSURDFKHVWR\LHOGVXEVWDQWLYHEHQH¿WV
was widely acknowledged.
The second perspective, however, took these
new potentials as heralding something far more
VLJQL¿FDQWWKDQVRPHGROODUVVKDYHGRIIDGPLQ-
istrative transaction costs. As Bill Gates (1995)
VWDWHG WKH ,QWHUQHW ZLOO ³FDUU\ XV LQWR D QHZ
world of low-friction, low-overhead capitalism,
in which market information will be plentiful and
transaction costs low.” This vision of the future
initially fuelled enthusiasm for online business-
to-consumer (B2C) retailing, but after a while
many observers realised that the B2B market was

of a vastly larger scale. B2B e-commerce was
KHOGWRVLJQLI\D³IXQGDPHQWDOFKDQJHLQWKHZD\
capitalism works” (Prigg, 2000; Tapscott et al.,
2000). A report by AT Kearney (2001) suggested
WKHHPHUJHQFHRI³GLIIHUHQWLDWHGYDOXHQHWZRUNV´
WKDWZRXOG³UHGH¿QHHQWLUHLQGXVWULHVDQGYDOXH
F K D L Q V ´ D Q G W K D W W K D W H  P D UN H W V ³F D QG U D P D W L F D O O\
affect the power balance in today’s value chain.”
Partly driven by an almost ideological faith in the
QDWXUHRI³PDUNHWV´WKLVSRVLWLRQDVVXPHGWKDW
supply markets for corporate purchasers would
be transformed: The features which stopped
industrial markets behaving like the theoretical,
HTXLOLEULXP¿QGLQJ PDUNHWV RI WKH QHRFODVVL-
FDOPRGHOVPDOOQXPEHUVFRQVWUDLQHGÀRZVRI
information, high switching costs, high barriers
to entry) could be removed by the new technol-
RJ\UHDSLQJVXEVWDQWLDOHI¿FLHQF\JDLQV)RU
these gains to be realised, however, new market
LQVWLWXWLRQV ZRXOG EH QHHGHG WR DFW DV ³KXEV´
between buyers and sellers, and these — even
if charging just a tiny fraction of the throughput
— stood to reap phenomenal economic rewards.
7KHVHKXEVZHUHWREHWKH³NLOOHUDSSOLFDWLRQRI
the B2B Internet revolution” (Sculley & Woods,
$VDUHVXOWDQ,QWHUQHW³ODQGJUDE´HPHUJHG
as entrepreneurs and existing market participants
sought to establish themselves in the controlling
positions in their chosen market or industry.
As time has passed, many of these new inter-

mediaries have fallen by the wayside — and their
fate is examined later in the chapter. However,
it is important to note that there is far more to
B2B e-commerce than online exchanges and
marketplaces, and some organisations have
DFKLHYHGVLJQL¿FDQWDGYDQWDJHWKURXJKWKHXVH
RIHSURFXUHPHQWDQGWKHXVHRIVRFDOOHG³SUL-
vate exchanges.” However, many organisations
have struggled to develop their e-procurement
or e-marketing activities, and it is interesting to
explore why this might be so.
METHODOLOGY
The investigation described here used multiple
research methods. First, an e-mail questionnaire
ZDVVHQWWRRYHU¿UPVZKRVXSSO\WKHPDMRU
UK utilities, generating 240 usable replies that
248
Innovation and B2B E-Commerce
provided information on these companies as both
buyers and sellers. Second, follow-up telephone in-
WHUYLHZVZLWKDGR]HQRIWKHVH¿UPVKHOSHGSURYLGH
greater insight into their experiences. Third, this
was complemented by nine case studies (involv-
ing site visits, multi-informant interviews, and
documentary analysis) involving a range of both
public and private sector organisations. Fourth,
the work used a database of 663 e-marketplaces
and B2B hubs constructed by Meakin (2002). This
ODUJHGDWDEDVHUHSUHVHQWVDVLJQL¿FDQWVOLFHRIWKH
SRSXODWLRQDOWKRXJKWKHUHLVQRZD\RIGH¿QLWLYHO\

establishing what percentage it represents. Grubb
(2000) estimated 1,400 B2B exchanges had been
ODXQFKHG/HYDX[³HVWLPDWHGDWKRXVDQG
or so.” Caspar (2000) cited an Andersen Consult-
ing study that claimed there were 7,500 by late
2000. Day et al. (2003) claim a peak of 1,520. (For
UHDVRQVGLVFXVVHGQH[WDOOWKHVH¿JXUHVPXVWEH
taken with considerable caution).
7KHVDPSOHIRUWKHHPDLOVXUYH\ZDV¿UPV
in the Utilities Vendor Database of the Achil-
les Group — a B2B company whose activities
concentrate on public and regulated procurement
(see www.achilles.com). The pool of companies
UHSUHVHQWHGDEURDGUDQJHRI¿UPVVXSSO\LQJWKH
UK utilities sector. Our approach was to initially
use a very brief questionnaire and to use the im-
PHGLDF\RIHPDLOIHHGEDFNWRUH¿QHWKHVWUXFWXUH
and examine the effect on response rates by adapt-
ing the number and sequence of questions asked.
The survey was administered in the autumn of
2001, and we e-mailed just over 4,000 organisa-
tions, reaping over 240 usable replies (we asked
¿UPVDERXWHLWKHUWKHLUSXUFKDVLQJRUVHOOLQJRU
both). However, due to our adaptive design, we
did not collect data on all questions from every
respondent. Participants were entered into a draw-
ing to win a £50 gift voucher.
The mechanism of the questionnaire was to
send a plain text e-mail, for which the answers
could be simply overtyped on the reply and

returned. We did this to avoid using e-mail at-
WDFKPHQWV ZKLFK PLJKW EH EORFNHG E\ ¿UPV¶
¿UHZDOOVDQGWRDYRLGWKHQHHGIRUUHVSRQGHQWV
to access a Web page (we knew that for at least
VRPHRIWKHVPDOOHU¿UPVLQYROYHG ZKRVHDF-
cess to the Internet was by standard telephone
line, this requirement would be a disincentive).
We also offered each participant access to the
¿QGLQJVRIWKHUHSRUWDQGDEULHIEHQFKPDUN-
ing report comparing their response with other
DQRQ\PRXV¿UPV'XHWRWKHH[SORUDWRU\QDWXUH
of the research, we have not employed formal
scaling or rigorous hypothesis testing in the in-
terpretation of the data; the full analysis is still
in progress. Here, we present an overview of the
descriptive data, which in this case we believe
is more instructive than looking for intricate
correlations of scores. As we were dealing with
non-anonymous returned questionnaires, we were
able to additionally incorporate further public
domain information about the organisations into
RXUDQDO\VLVLQFOXGLQJ¿QDQFLDOLQIRUPDWLRQDQG
(subject to data protection constraints) data from
the original database. The median turnover of the
respondents was £11m, with the median number
of employees being 124.
The qualitative aspects of the research entailed
a series of visits to nine organisations with a view
WR¿QGLQJRXWZKLFKLVVXHVDQGDVSHFWVRI%%
e-commerce at the top of their agendas; we sought

(within the time and budget available) as wide
a selection of organisations as possible (large,
small, public, and private sector), and sought to let
managers and staff in these organisations largely
steer the direction of the discussions. This rather
unstructured approach meant that we did not
(nor did we expect) to collect commensurate or
matching data from these organisations; however,
it helped us engage with some of the underlying
issues regarding B2B and e-procurement, which
we suspect would have been rather lost if we
had framed the meetings too strictly in our own
terms. We believe this trade-off to be particularly
important given managers’ propensity to discuss
aspiration in these areas as if it were current fact,
and the way in which interviewees’ responses may
249
Innovation and B2B E-Commerce
sometimes encapsulate that which they have read
in professional magazines rather than the actual
experience of their organisations. However, the
serious downside to this approach is that much of
the material generated is not directly relevant to
issues at hand, and of course generalisations are
even more problematic than with survey data.
Methodological trade-offs also were needed in
the analysis of the B2B hubs. Much of the writing
on these initiatives has assumed that relatively
few of them would survive, for example, Levaux
(2001) estimated that only 200 would still be

around by 2003. Drawing from the prior database,
this phase of the research worked through 302
e-marketplaces with a highly structured search
process which entailed examining the Web site
(where available) and using two search engines
(Factiva
™
and Lexis-Nexis
™
) to collate news
and PR-agency coverage (typically from trade
journals). There are obvious problems with these
secondary sources not being wholly accurate or
reliable; on the other hand, for some of the ini-
tiatives we examined, these reports are the only
accessible information left. Where necessary
and possible, e-mail messages were sent to the
exchange to gain further information.
This highly structured process allowed the
systematic analysis of data regarding each of
the initiatives and also allowed a rational deci-
sion to abandon the search for information on a
particular exchange and move on to the next one.
This Taylorist approach to data gathering proved
particularly effective, as experimentation showed
that without a programmed cut-off point, a great
deal of time could be spent searching fruitlessly
IRUH[FKDQJHVZKLFKZHUHWKHHTXLYDOHQWRI³va-
pourware” — initiatives which were announced
in the press but subsequently disappeared without

trace.
A key aspect of the data collection process was
WKHFODVVL¿FDWLRQRIWKH%%LQLWLDWLYHDFFRUGLQJ
to a set of dimensions (such as type of exchange,
industry, etc.). These included whether the site
was alive, dead, or had a continued existence via
merger with or acquisition by another initiative.
Sites that appeared to be dormant were contacted
via e-mail, but if the link was broken and the e-
mail returned, it was assumed the operation had
FORVHG,IWKHVLWHDSSHDUHGWREHLQDVWDWH³\HW
to go live” it was left until the end of the project
and then rechecked — if it was still pending, it
was ignored.
During the course of the data collection, it be-
came clear that it was not easy to judge the level of
activity or indeed in some cases the seriousness of
intent of the initiatives. Many of the marketplaces
described what they did in principle, but displayed
no evidence that the site or the services provided
were genuinely operational. This transpires to be
a major problem when investigating organisations
that may or not be viable, and which exist in a
business context where it is not in the actors’
interests to be completely honest about their cur-
rent degree of success. What was needed was an
LQGLFDWLRQRIVXEVWDQWLYHDFWLYLW\²DQ³$FWLYLW\
Test.” We eventually settled on a simple proxy for
EHLQJ³JHQXLQHO\DOLYH´ZKHWKHUWKHUHZDVDQ\
reported quantitative indication of the transac-

tion volume (in number of transactions or dollar
value) or throughput. These were deemed to be
³$FWLYHV´+RZHYHUWKLVGRHVQRWLPSO\WKDWWKH
LQLWLDWLYHVZHUH¿QDQFLDOO\YLDEOHDQH[FKDQJH
FRXOGKDYHWKURXJKSXWEXWQRWPDNHDQ\SUR¿W
7KHUHLVFOHDUO\DULVNRI³W\SHRQH´HUURULQWKLV
FODVVL¿FDWLRQLQWKHFDVHVZKHUHDQ$FWLYHVLWH
has simply not gotten around to releasing some
indicative numbers, or there is some other strategic
UHDVRQIRUREIXVFDWLRQ7KHUHLVDOVRD³W\SHWZR´
error for marketplaces that falsely declare activity.
However, as there will be a general incentive for
initiatives to publicise their vitality in order to at-
tract participants, this seems a reasonable criterion
to apply. Büyüközkan (2004) describes another
DWWHPSWWR³VFRUH´WKHDFW LY LW \RIHPDUNHW SODFHV
but, from the experience gained in the current
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be operationalised in practice.
250
Innovation and B2B E-Commerce
SUDDEN BIRTH AND LINGERING
DEATH OF B2B EXCHANGES
Figure 1 illustrates that — given the extensive
reportage of the death of B2B — a surprising
QXPEHU RI LQLWLDWLYHV UHPDLQHG ³DOLYH´ LQ WKDW
there was still a Web presence of some kind.
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quantitative evidence of any substantial kind of

any kind of activity.
Interestingly, the small difference between
sites passing the Activity Test and those not was
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This can be explained by two ideas: The relatively
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Internet-based businesses (and the relative ease
of fundraising during the boom years) can mean
that sites with meagre levels of real activity may
be able to sustain some type of Internet presence
for some time as they simply burn off the initial
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al.’s (2003) study uses the construct that a mar-
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work points to the fact that these two things are
separable concepts.
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and suppliers to participate in an exchange would
be to charge minimal fees, or to offer attractive
but expensive-to-provide services, thereby mak-
ing continuing operations unviable.
There are a very wide range of schemes for
classifying different types of exchange. Here we
adopt that proposed by Ramsdell (2000), which
is summarised in Table 1.
7KHFODVVL¿FDWLRQRIH[FKDQJHVWUDQVSLUHVWR
be a rather complex matter, as there are many

instances of hybrid and unconventional ap-
proaches. However, in this study we found that
the total sample — where categorisation was
possible — was split roughly equally between
the categories as shown in Table 2. Figure 2
illustrates the status of these categories; again,
Figure 1. Survival of B2B e-marketplaces — comparison of whole sample with those passing the ‘suc-
cess test’
0.0% 20.0% 40.0% 60.0%
80.0%
Dead
M&A
A
live
Status
A
ctivity Test (N=27)
Overall (N=302)
251
Innovation and B2B E-Commerce
WKHUH LV QR VWDWLVWLFDO VLJQL¿FDQFH EHWZHHQ WKH
types of exchange.
The lesson that emerges here is that despite
the widespread assumption in the prescriptive and
speculating writing at the time, no one particular
exchange model turned out to be dominant.
The emergence of B2B needs to be understood
in the context of the technology boom of the late
Table 1. B2B marketplace types (after Ramsdell, 2000)
Table 2. Breakdown of marketplaces by category

Figure 2. Status of exchange types
Type
Typical
Owners
Type of market Description
Product
Suppliers or 3
rd

Parties
Fragmented
Horizontal e-marketplace usually formed around a supply
market that cuts several industries. E.g. MRO market
Industry Buyers
Buyer power
dominated
Vertical e-marketplace, usually revolving around an
industry sector. E.g. Chemical Industry
Function 3
rd
Parties Non-fragmented
Focuses on services and capabilities rather than products,
such as Supply Chain Integration (SCI) or Project
Management.
Type Percentage
Function 38%
Product 35%
Industry 27%
0% 20% 40% 60% 80% 100%
Function

Product
Industry
Type of B2B
percentage
Alive M&A Dead (N=231)
252
Innovation and B2B E-Commerce
Figure 4. Birth and death of e-marketplaces (n = 193)
Figure 3. Announcements of marketplaces
0
5
10
15
20
25
30
Jan-94
Jun-94
Nov-94
Apr-95
Sep-95
Feb-96
Jul-96
Dec-96
May-97
Oct-97
Mar-98
Aug-98
Jan-99
Jun-99

Nov-99
Apr-00
Sep-00
Feb-01
Jul-01
Dec-01
May-02
Oct-02
Time
Frequency
0
1000
2000
3000
4000
5000
6000
price
First Announcement (N=209) NASDAQ Composite
Jan-94
Jul-94
Jan-95
Jul-95
Jan-96
Jul-96
Jan-97
Jul-97
Jan-98
Jul-98
Jan-99

Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Time
DEAD
MERGED/
A
CQUIRED
A
LIVE
253
Innovation and B2B E-Commerce
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nouncement against the value of the NASDAQ
composite index. This pattern is illustrated in more
detail in Figure 4, which illustrates the lifelines
of exchanges by category.
The data presented in Figures 3 and 4 points
to some interesting speculation. On the one
hand, the close match of announcements to the
NASDAQ index is suggestive that much of the
enthusiasm for B2B intermediaries was driven
as much by the potential of making money from
investors in the heat of the technology investment
boom as it was by the desire to build genuinely

viable businesses. Simply setting up some kind
of intermediary B2B organisation is not in itself
capital intensive (although making it really deliver
value to buyers and suppliers may be). Therefore,
it seems unlikely that the decline in the launching
of B2B initiatives is completely explained by the
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If, on the other hand, the motivation for many of
the enterprises was simply to get to the invest-
ment markets quickly, then the sharp drop off in
announcements between April 2000 and February
2001 makes more sense.
Figure 4, however, suggests that the fate of the
initiatives cannot be explained by looking at the
launch date. A very cynical view might expect
that those launched at or just before the frenzy
might be the least likely to survive, being the most
driven by fashion and being subject to the least
rigorous degree of scrutiny. However, if this is the
case, it is not clear from the data. Furthermore, it
does not seem that the early initiatives were more
or less likely to fail than the later starters. A key
point in the consideration of this data is that many
of the initiatives may well be alive, and yet not
very active, and not generating very much or any
revenue. As nearly all the initiatives are small
SULYDWHEXVLQHVVHVLWLVJHQHUDOO\YHU\GLI¿FXOW
to get convincing or informative data on their
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perhaps indicative that the task of bringing buy-
ers and suppliers together is far more complex
than many initially thought. To explain why this
might be, it is sensible to begin by reviewing the
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— and this brings the discussion to the survey
and case studies.
EXPERIENCES OF B2B
E-COMMERCE: INITIAL
OBSERVATIONS
Before we turn to the substantive data gathered
by the survey and the cases, it is worth noting
some incidental aspects of the research that we
found interesting. First, an immediate feature
of the survey was the large number of e-mails
(roughly 10%) that were returned as undeliver-
able — even though we had used contact e-mails
SURYLGHGE\WKH¿UPVWKHPVHOYHVWRDGDWDEDVH
to which they paid a fee. Following up these
cases revealed several potential problems: Many
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addresses; individuals had left the organisation;
and a surprising number were addresses based
on non-company e-mail systems (for example,
Hotmail™ or Freeserve™), and the addresses
were no longer active. For reasons we discuss next,
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and surprising observation was that eight of the
responses were returned by conventional post
rather than by e-mail.

For reasons of available space, we concentrate
here on just three aspects of the substantive re-
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buying, selling, and the character of the buyer-
seller relationship.
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We suspected that much of the hype surrounding
B2B e-commerce was based on a naïve view of
corporate procurement. For example, many of