Evaluating E-Business Leadership and Its Links to Firm Performance

Abstract

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 stock price skyrocketed nearly 100% from 7.19 to 14.25 with trading volume at more than 2,000% higher than normal, according to Yahoo! Finance. Academic researchers rushed in and concluded that “a new economy was born.” The potential benefits of e-business are well documented by academic researchers and practitioners alike (InternetWeek, 2000/2001; Phan, 2003). Organizations that integrate e-business applications, such as shared online database and Internet-based reporting in their business processes, can lead to reduced cost, increased efficiency and profitability, and better customer relationship management. Perhaps one of the most significant contributions of e-business applications is its abilities to directly bring sellers and buyers together with little middleman’s interventions. Although the advantages of e-business exist in theory, little empirical work has been done to confirm them.