Daily Archives: April 16, 2015

Articles

Commoditized Digital Processes and Business Community Platforms: New Opportunities and Challenges for Digital Business Strategies

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The emergence of the digital business strategy concept has coincided with three other conceptual advances for our field. First, it is increasingly recognized that companies need to strategize not just about product-market segments), but also about their ecosystems. Second, there is growing awareness of the potential benefits of replacing proprietary data exchange conventions with open, Internet-based standards such as RosettaNet’s partner-interface-processes in high tech, MISMO standards in the mortgage industry, and RFID standards in retailing. Third, there is great interest in the possibilities of shared digital platforms like Salesforce.com and Amazon’s cloud-based hosting services (Markus and Loebbecke, 2013).

With their article, Markus and Loebbecke (2013) want to invite the Information Strategy Community to consider the implications of three new conceptual developments in the field. First of all, they propose the concept of the business community as consisting of overlapping ecosystems of competing orchestrators (large, powerful companies at the core of an ecosystem) in defined areas of business activity (for example automotive retailing or mortgage lending). Secondly, they distinguish standardized and commoditized digital processes in business. According to Markus and Loebbecke (2013), whereas standardized business processes are still heavily customizable to the preferences of an orchestrator, commoditized business process seem to be substantially the same across an entire business community. Finally, there must be a differentiation between customizable digital platforms that are ‘shared’ by many companies that are not necessarily in the same industry and business community platforms that are tailored for use by all members of a business community.

As stated by Markus and Loebbecke (2013), when ecosystems overlap, the digital business strategies of orchestrators have consequences beyond the boundaries of their own ecosystems. Orchestrators impose the costs of multiple platforms and process variations on their partners by pursuing competitive advantage through customized business processes and closed digital platforms. By doing this, the orchestrators will be harmed as much as their partners due to the resulting inefficiencies in terms of costs, errors and, delays. The holy grail of the digital business strategy is to achieve efficiency without sacrificing flexibility or differentiation. Markus and Loebbecke (2013) wonder whether truly efficient, dynamic business interoperability can be achieved without commoditizing business processes. Additionally, they wonder whether business community platforms are the way in which process commoditization and commonality of business practices will first come about.

Based upon the former doubts, Markus and Loebbecke (2013) believe that the concepts of business community, commoditized business processes, and business community platforms open up a range of important research opportunities concerning digital strategy. The following three opportunities are important to consider:

  • How much advantage do orchestrators really get from business processes tailored to their preferences?
  • When, how, and why do business process commoditization and/or widespread adoption of business community platforms occur?
  • What are the consequences of process commoditization and/or business community platform adoption, to the extent that they occur?

The focus of Information Strategy research needs to be expanded beyond business ecosystems to business communities.

Source:

Markus, L.M., Loebbecke, C. (2013). Commoditized Digital Process and Business Community Platforms: New Opportunities and Challenges for Digital Strategies. MIS Quarterly, Vol. 37 No.2/June 2013.

Articles, Opinion

What Drives Consumers To Spread Electronic Word Of Mouth In Online Consumer-Opinion Platforms?

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Introduction

The advancement of the Internet allows everyone to share opinions and experiences related to products with complete strangers. Electronic Word of Mouth (eWOM) is a relative new concept but already highlights an increasing importance in shaping consumer purchase behaviour.  There has been a lot of research on the effectiveness of eWOM, but little attention has been given to why consumers spread positive eWOM.

Difference WOM and eWOM

eWOM differs from traditional word-of-mouth (WOM) in many ways. For example, eWOM involves multi-way exchanges of information in asynchronous mode and various technologies. Other examples are that eWOM is more accessible and measurable than traditional WOM. The measurement of eWOM is made possible due to advanced technologies and increased quantities of eWOM. A good example of a company that still relies on traditional WOM is BzzAgent (https://www.bzzagent.com/). A good industry where eWOM becomes increasingly important is healthcare.

Theoretical Insights and Practical Relevance

The authors find four perspectives that explain why consumers spread eWOM in online consumer-opinion platforms, based on the social psychology literature: egoism, collectivism, altruism and principlism. In  short, egoism refers to serving the public good to benefit oneself. Collectivism means serving the public good to benefit a group. Altruism refers to serving the public good to benefit one or more others. Lastly, principlism refers to serving the public good to uphold a principle (typically a moral principle). An additional variable that is taken in their conceptual model is knowledge self-efficacy, which is a personal judgement of one’s capability to execute actions required for designated types of performances. The last hypotheses is then stated as ‘the higher the knowledge self-efficacy, the higher the tendency to spread eWOM’.

I believe that the latter hypotheses is most interesting because it can be, more than the other perspectives, influenced by companies. The challenge for companies is to provide a broad variety of product related information and interact with consumers. This should increase consumers’ level of expertise and mastery of experiences, thus increasing self-efficacy and the motivation to provide eWOM, which in the end can increase purchase intentions. I’d like to hear your opinion on this!

The statistical results show that sense of belonging (construct of collectivism), reputation (construct of egoism) and enjoyment of helping (construct of altruism) have significant effects. Sense of belonging had the most impact on consumers’ eWOM intention. Thus, for companies it is important to take into account social factors to affect consumers’ eWOM intention. When companies foster this, consumers can benefit from the community, which help them with their purchase decisions.

Results Blog post 2

Source: Cheung & Lee (2012)

Conclusion and Further Reading

Though there are some significant findings that open up possibilities for companies to actively affect consumers’ eWOM intention, it should be noted that there are still other constructs that need to be taken into account (for example, rewards, costs and social influence) as well as the exploration of motives that drive users to spread negative eWOM. An interesting paper (for further reading) from Willemsen (2013) highlights the challenges of eWOM, as a consumer decision aid, from two perspectives, namely the consumer perspective and the company perspective.

References:

Cheung, C.M.K., Lee, M.K.O. (2012) ‘What Drives Consumers To Spread Electronic Word Of Mouth In Online Consumer-Opinion Platforms, Decision Support Systems, vol. 53 (1): pp. 218-225.

Willemsen (2013) ‘Electronic Word of Mouth: Challenges for Consumers and Companies’, retrieved from: http://www.uva.nl/binaries/content/assets/uva/en/research/phd/summaries/2013/06/summary-willemsen.pdf