The Impact of E-Procurement on the Number of Suppliers: Where to Move to?
This paper examines how electronic procurement influences the organization of economic transactions. It seeks evidence for ICT-induced changes in how companies organize their activities and whether ICT lead to more competitive and transparent markets. Testing the relationship between the effect of electronic procurement on procurement cost and sourcing strategy, I provide new evidence that electronic procurement leads to more market transactions. This leads to the conclusion that electronic procurement increases market transparency, lowers search and supplier switching costs and improves the management of supply chain and contradicts the predictions that ICT will lead to a dominance of network-like organizational form and an increasing reliance on hybrid forms of organizing economic transactions. Two implications emerge from these results. The first one is relevant for companies engaging in ICT projects. ICT combined with changes in business strategy leads to a reduction of market transaction costs and, as a result, opens up new possibilities in terms of how business activities can be organized and/or how to structure competition in upstream markets. This effect of new technologies is of clear benefit to companies successfully implementing and using new technologies. The second implication is of great importance for companies whose customers implement ICT to intensify competition among suppliers. Changing environment forces them to adapt to new market conditions and look for new ways of maintaining profitability.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Mohrenstraße 58, D-10117 Berlin|
Web page: http://www.diw.de/en
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp587. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.