EMPIRICAL STUDY ON THE APPLICABILITY OF REAL OPTION FRAMEWORK IN E-COMMERCE ADOPTION AMONG CANADIAN COMPANIES

Abstract

Ponte Academic JournalMay 2017, Volume 73, Issue 5 EMPIRICAL STUDY ON THE APPLICABILITY OF REAL OPTION FRAMEWORK IN E-COMMERCE ADOPTION AMONG CANADIAN COMPANIESAuthor(s): Abdullah Basiouni ,Kang Mun Arturo Tan, Hafizi Muhamad Ali, Abdullah Almansour, Ahmad AlojairiJ. Ponte - May 2017 - Volume 73 - Issue 5 doi: 10.21506/j.ponte.2017.5.52 Abstract:Three basic observations are presented from the Canadian businesses’ adoption of e-commerce for the year of 2000 to 2007. Previous literatures indicated that firms who adopted e-commerce are not from sectors who traditionally are adopting e-commerce. As a way to explain this observation, the basic real option theory was used along with Benaroch (2002)’s framework for information technology risk management. The uncertainty factors associated with real option theory were analyzed. These factors, namely: risks specific to the firm, market risks and demand risks were statistically analyzed based on its relation to whether the firm has adopted e-commerce or not. Analyzing these risks lead to the development of three hypotheses namely: first; regarding the in-house competencies and its effect on adoption of e-commerce, second; rivalry within the industry and its adoption of e-commerce, and third; uncertainty of the market demand and its adoption of e-commerce. The NEBIC Model has been utilized to present the in-house technical competencies, while on the other hand, standard deviation is used as a measure of competition and market demand. To ascertain how the various risk factors affect the adoption decision, three statistical approaches were used, namely: Maximum Likelihood Estimation, Correlation Matrix and T-test of Means Equality. Using these three statistical tools, it was found out that the following factors affect in a positive way the resolve to do business with e-commerce. These factors were high in-house competencies to manage the technology, high level of rivalry within the industry and high level of variability of market demand. Finally, three flexibility-attaining activities were suggested: first; intensive in-house training on e-commerce technology, second; promotion of its e-commerce facility to its customers and third; advocacy of the use of e-commerce among industry members. Download full text:Check if you have access through your login credentials or your institution Username Password