A Risk-Control Framework for E-Marketplace Participation

Abstract

The increasing trend in the use of Internet-based e-marketplace applications has created tremendous opportunities for businesses to manage effective supply chain management. Forrester Research predicts that the growth and use of e-marketplaces may reach US $7 to $10 trillion by the year 2005 and may account for 53% of all online businesses by the year 2005. White and Daniel (2003) describe e-marketplaces as Web-based systems that enable automated transactions, trading, or collaboration between business partners. According to Bakos (1998), an electronic marketplace is an interorganizational system that allows participating buyers and sellers to exchange information about processes, products, and services. This study aims to examine risks in e-marketplaces. We identify four types of risks: economic, technological, implementation, and relational risks in seven e-marketplace firms from a cross-section of different industries. We then present the control measures in the responses that the seven firms enforced in order to reduce and manage their risks. The contribution of this study is the development of a risk-control framework based on the findings for e-marketplace participation.