Volume 2, Issue 6, June 2017 International Journal of Innovative Science and Research Technology

ISSN No: - 2456 2165

The Impact of E-Business and Competitive Advantage

Supriya G K
*Supriya.gk,faculty member,IMSR,
Kuvempu university,shankarghatta,
shimoga.
supriya.sahana.gk@gmail.com

Abstract :- The article presents the impact of e business business has been applied in this research and in order to make
on competitive advantage. Different approaches of authors the definition fully clear, the definition was adopted from e-
towards e-business and competitive advantages have been Business , which defines e-business as an automate business
analyzed, the analysis of the e-business impact on usual processes (both intra-and inter-firm) over computer mediated
business processes has been outlined. The model put networks. Literature on e-business impact focuses on the
positive impact of e-business and business processes hence application of various e-business solutions and their impact on
competitive advantage was developed. The model may help the business processes. Drawing on various studies, key
for integration of broader research framework application areas of e-business solutions may be inward
constructed for the analysis of e-business development and oriented (internal business processes) and outward oriented (to
its role in gaining competitive advantage in any industry. the external environment oriented business processes).
Although many studies proved that e-business solutions Concrete outward oriented application areas of e-business are
have a positive impact on various business processes, e- value system integration.
business benefits do not necessarily lead to the increased
profits or sales, thus the association of e-business value
with the competitive advantage should be made with huge II. OBJECTIVES
caution.
1.The of the article is to find out the relationship between e-
Keywords: e-business, competitive advantage. business benefits and the competitive advantage.
2. The Impact of e-business on the Usual Business Processes.
I. INTRODUCTION
III. IMPACT OF E-BUSINESS
E-business as the processes and tools that allow
companies to use internet-based information technologies to The impact of e-business on the usual business processes
conduct business internally and externally. Lately companys are as follows:
investments into e-business infrastructure and e-business It improves business processes through the
solutions have been considered to be of primary importance automation and optimization of usual business
for the companies seeking to compete successfully in any processes.
industry and market. Though e-business is considered to be The main advantage associated with e-business
more important and beneficial for companies and there fore solutions are increased efficiency and effectiveness
there is growing concern about the payoff of the investments of various business processes.
into e-business. These growing concerns mainly stem from the Improved internal and external communication.
fact that the materialization of e-business impact on the Reduction of administration cost and hence lead to
improved financial performance of the company is not reduced costs.
obvious . It is based on information technologies, With the Improved expenditure control.
spread of internet usage, e-business has gained large attention
in the academic literature. However the meaning and IV. THE RELATIONSHIP BETWEEN E BUSINESS
understanding of e-business is not fully developed and means AND COMPETITIVE ADVANTAGE
different thing to different researchers. Electronic business is
very often understood just as the financial and commercial This study results showed the association of e-business with
transactions online thus using the definition of e-business strategic and operational benefits. The value chain model
interchangeably with e-commerce concept. The broader proposed by Porter is most suitable for manufacturing
definition of e-business term covers all business processes companies. Using value chain model activities of the company
which also include e-commerce . The second approach to e- are divided into primary and supportive activities. According

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Volume 2, Issue 6, June 2017 International Journal of Innovative Science and Research Technology

ISSN No: - 2456 2165

to Porter the primary activities are directly related with the exploration of the relationship between e-commerce and
value of the manufactured goods and encompass inbound performance. Results showed that e-commerce capabilities in
logistics, services, outbound logistics, marketing and combination with IT infrastructure significantly correlated
operations. Primary activities are supported by supportive with improved performance measures of the firm. Operational
activities, which may support one primary activity and entire benefits in this research was the construct of variables- cost
value chain. Supportive activities are very important for efficiencies from higher sales volumes, improvement to
smooth working of the company and cover such activities as current processes, higher profitability. A strategic benefit was
firm infrastructure, technology development, procurement and constructed from these three variables as well learning about
human resource management .Regarding the primary activities customers and markets, creation of new products and product
such as inbound and outbound logistic, e-business solutions enhancement and development of business opportunities. The
enable companies to atomize processes and effectively results showed that the integration of buyer and supplier
monitor and control inventory, which improves planning and achieved through e-business had both strategic and operational
the effectiveness of those processes. Atomization of the benefits for the supplier companies. Integration of e-business
processes enables to save time and thus increase effectiveness. solutions in the usual business processes may improve all
In another primary activity operations, applied e-business activities throughout the value chain however e-business
solutions improves flexibility and the production of goods, impact on the improvement of firms financial performance of
which meet demand more accurately. Marketing and sales the company is debatable. In many studies when analyzing e-
through e-business solutions provides new marketing and sales business impact on business process from the beneficiary
channels, enables to receive clearer picture of the market. In point of view, the benefits created by e-business are very often
the primary activity such as service, e-business enables related with the value creation and competitive advantage of
enterprises to spread information to their clients much faster. the firm. Relating the benefits created by e-business with the
For the procurement processes e-business may be beneficial competitive advantage in a way suggest that investments in e-
by enabling various companies to minimize the number of business solutions may generate better performance and thus
transactions and reaching the suppliers much faster. In the lead to improved financial performance.
field of human resources management, e-business through e-
learning enables companies to develop new capabilities faster. VI. COMPETITIVE ADVANTAGE
Totally e-business value may be created by e-business
application through several broad areas: information It provide an edge over rivals and an ability to generate greater
management knowledge management, atomization, value for a firm and shareholders. Theoretical approach The
coordination and faster processes. By applying e-business into concept of competitive advantage is used very often in
usual business processes, companies may improve various economic literature without clear definition what does the
business processes by shorter shipping time, faster response to author mean by applying this concept in his or her research
demand, much faster exchange of information in the whole thus leading to the situation that the meaning of competitive
value system, which is more important because the advantage is taken for granted but not fully understood.
communication between the suppliers or manufacturers abroad Though there is no one clear definition of competitive
might be more complicated and more time-consuming advantage, the creation of value is the milestone of any
process. As it was mentioned already, though IT value is definition of the concept. Given the different theoretical
discussed widely, there is quite few studies on the evaluation approaches to the value creation the approach to competitive
of e-business impact on firms financial performance. One of advantage may be segmented into two dominant approaches.
the first attempts to evaluate e-business impact on firms Resource based view approach to competitive advantage and
performance was made by Zhu and Kraemer in the year 2002, approach to competitive advantage developed by M. Porter. In
who expanded the literature about IT impact on the companies an effort to develop appropriate conceptualization of
by introducing into the analysis internet and e-commerce. The competitive advantage, previous studies on the subject are
authors tested the interaction between e-business capabilities reviewed in the following sub-parts. Resource-based approach
and IT intensity and the associations of the interaction to competitive advantage. The beginning of the theory of
between those variables with the improved supply chain competitive advantage is related with the industry focused
efficiency, lower cost measures and profitability. approach, developed in 1960s which rested on the logic that
competitiveness of the company in the market depends on the
V. E-BUSINESS AS A SOURCE OF COMPETITIVE structure of external environment and on the companys action
ADVANTAGE by which company attempts to adapt competitive advantage.
The important weakness of industry focused approach to
The conceptual framework relating two set of variables that competitive advantage was its weakness to explain diversity
is e-commerce capabilities and IT infrastructure with firm because all companies operating in the same industry based on
performance. Many specific hypotheses were related with the its logic were very forced to choose the same strategy in order

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Volume 2, Issue 6, June 2017 International Journal of Innovative Science and Research Technology

ISSN No: - 2456 2165

to be competitive. Contrary to the industry focused approach sales and service. Thus the improvement of value chain
to competitive advantage, models developed by the approach activities was the main indicator of Ebusiness benefits. The
known as resource based view became established and benefits induced by e-business solutions are often associated
accepted approach to competitive advantage in the academic with the competitive advantage in various studies, but the
literature. Studies grounded on resource based view focus on concept of competitive advantage is usually applied as a self-
the firms internal resources and capabilities, which are evident. Performance, however the financial indicators differs
analyzed with the references to firms external environment. across various studies. It is known that the ultimate goal of
The possession of specific resources, which are the main any company is to generate profits by which the success of
source of competitive advantage, and the issue of the company is usually measured. Thus, following this logic,
emphasized the importance of combining companys profitably working company in any industry has a competitive
resources and capabilities in creating competitive advantage. advantage, which defines companys good performance. The
Authors related competitive advantage with the economic and critique of linking competitive advantage with the
simple rents and argued that the only source of it is the performance was expressed in the work of Hao in the year
holding of valuable resources. e-business solutions could be 1999, who criticized previous studies on competitive
analyzed as a resource of the company, which influences advantage, especially the resource based view approach, for
companys activities and has a potential to create competitive the interchangeable use of competitive advantage concept and
advantage which leads to successful financial performance . improved financial performance of the company. It seems
However, despite the fact that the resource based view to promising conceptualization of the term, it raises the problem
competitive advantage is widely accepted in the academic when there is a need to identify competitive advantage upon
literature, several limitations of this approach may be one dimension in a big sample. Halos approach to
identified, The resource based view approach to competitive competitive advantage differs from the developed approach to
advantage does not provide clear explanation and empirical competitive advantage in a sense that it is a relative position
evidence which resources and what combination of resources oriented and not the result oriented. However, the relative
creates competitive advantage, hence it is difficult to apply the better position or resource possessed by one company is also
approach to the real strategy, because too much emphasis in an important stimulus for the improvement of financial results.
the literature is focused on the definition of resources. The Hence the logic of linking certain resources with the improved
resource based view could also be criticized for circular financial performance and claiming that certain resource is
reasoning, because resources may lead to competitive important in gaining competitive advantage seems to be
advantage, but this is in turn defines relevant competitive appropriate when analyzing whole industry. In this research
structures, which in turn defines what a valuable resource is following the studies on competitive advantage, was
and so on. M. Porters approach to competitive advantage. measured by the increase in profit or sales due to e-business
applications. Model linking e-business benefits with the
VII. CONCEPTUALIZATION OF E-BUSINESS competitive advantage.
BENEFITS AND COMPETITIVE ADVANTAGE
VIII. CONCLUSION
E-business may be understood as one of the IT-dependent
strategic choices to create value and competitive advantage. Although the integration of e-business solutions in the usual
However, more developed research field is in evaluating the business processes may improve all activities throughout the
IT impact on competitive advantage rather than e-business value chain, ebusiness impact on the improvement of firms
impact on competitive advantage. related the benefits of e- financial performance of the company is debatable. Most of
business with value creation. However there are not clear the studies analyzing e-business impact on the usual business
evidence that the benefits created by e-business really lead to processes emphasize ebusiness benefits as the improvement of
competitive advantage, which following the resource-based those processes and relate them with the competitive
view and Porters approach to competitive advantage is related advantage. In other words, studies on the e-business benefits
to firms financial performance. e- business benefits in this regard e-business solutions as an important source of
research is understood as the positive impact of e-business competitive advantage. however, the empirical research
solutions on various business processes or in other words we exploring the relationship between e-business benefits and
can say that it lead to the improvement of these processes. The competitive advantage is limited. E-business benefits based on
processes in which e-business impact was measured were the literature review were conceptualized the positive impact
identified using value chain model, which divides business of e-business on different business processes. The competitive
processes into different four supportive activities that is firms advantage was conceptualized as the increase in profits and/or
infrastructure, human resource management, technology sales due to e-business solutions. The model relating positive
development, procurement and five primary activities they are impact of e business on nine different business processes and
inbound logistics, operations, outbound logistics, marketing or competitive advantage was developed. Although many studies

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Volume 2, Issue 6, June 2017 International Journal of Innovative Science and Research Technology

ISSN No: - 2456 2165

confirmed that e-business solutions have a positive impact on

business.

References

[1]. Aaker D.A- Managing Assets and Skills: The Key to

Sustainable Competitive Advantage.
[2]. Amit.R and Schoemaker:Strategic Assets and
Organizational Rent
[3]. Akkermans H :Intelligent E-business from
Technology to Value.

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