Evaluating E-Business Leadership and Its Links to Firm Performance



Evaluating E-Business Leadership and its Links to Firm Performance

Jing Quan Salisbury University, USA

Chapter XXV

AbstrAct

Electronic business (e-business) has been popularly lauded as “new economy.” As a result, firms are prompted to invest heavily in e-business related activities such as supplier/procurement and online exchanges. Whether the investments have actually paid off for the firms remain largely unknown. Using the data on the top 100 e-business leaders compiled by InternetWeek, the leaders are compared with their comparable counterparts in terms of profitability and cost in both the short-run and long-run. It is found that while the leaders have superior performance based on most of the profitability measurements, such superiority is not observed when cost measurements are used. Based on the findings, managerial implications are offered accordingly.

IntroductIon

The rapid expansion of e-business witnessed in the late 1990s was nothing short of a spectacle. It seemed that almost everyone was talking about it, and every firm was eager to invest in it, hoping to take away a slice of the pie. Andy Grove, chairman of Intel Corp, stated in 1998: “Within 5 years, all companies will be Internet companies or they would not be companies” (Intel, 2000). Merely mentioning of the “e” word could mean multi-million dollars. The case at hand was Zapata Corp., a fish oil processing company, co-founded by former U.S. President George H. W. Bush. The company announced on December 23, 1998 that it would transform itself into an Internet portal to compete with Yahoo!, Lycos, and alike. Immediately following the announcement, Zapata’s

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Evaluating E-Business Leadership and its Links to Firm Performance

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