A Trade Value Perspective on Ecommerce Research: An Integration of Transaction Value and Transaction Cost Theories

The impact of web-based electronic commerce on the process of disintermediation and re-intermediation has been extensively studied. Two major limitations of the existing work are the focus on a single economic measure (i.e., transaction cost minimization) and the examination of channel-structure decisions from only a single perspective (the seller’s). This paper introduces transactional value theory in the context of channel-structure research and integrates it with transaction cost theory to generate a trade value framework. The trade value framework considers channel-structure decisions from the perspectives of both buyers and sellers and is used to analyze the impact of web-based e-commerce on intermediated channel-structures. The proposed framework suggests that intermediaries function best in a channel-structure if they can reduce trade-inhibiting factors and improve trade-enhancing factors. Intermediaries may also prosper if they deliver extraordinary value on one side of the trade value framework to the point that inhibiting factors on the other end of the trade can be overlooked. Intermediaries maximize the value of the trade for both the buyers and the sellers by trading through an intermediated channel-structure as opposed to trading directly.