Managing the transition to global electronic markets in the resource engineering sector

Abstract

PurposeMost electronic market (e‐markets)‐based research that has been undertaken has primarily focused on the design and development of systems to support electronic trading within national boundaries and it has been implied that conducting business through this medium is beneficial to the organisation. The purpose of this paper is therefore to examine the relative significance of economic, social, political and cultural factors and their interconnections in the transition to global e‐markets.Design/methodology/approachThe paper uses an interpretive case study as this facilitates an understanding of how globalisation constructs affect the transition of organisations to the global market environment.FindingsThe case study has found the need for organisations to address a wide range of issues if they are to benefit from participation in global electronic marketplaces (e‐marketplaces). The development of information communication and technologies (ICT) has been viewed as a primary factor in the reduction of transaction costs and one which allows for a greater number of suppliers in electronic markets. A large supplier base is seen as an advantage by some since it improves the bargaining position of the buyer. Dealing closely with a small number of suppliers may reduce transaction costs and risk, but such costs and risks have been significantly reduced by the development of internet based e‐marketplaces where the market absorbs a high proportion of both. In the case study, an organisation moving to the e‐market because of the advantages of significantly reduced transaction costs has been seen.Originality/valueThe literature adoption of global procurement platforms stresses the economic benefits. However, few studies have examined the social, cultural and political factors that are part of the globalisation trend and how these impact on companies trying to make a transition to global procurement strategies. In this paper, it is revealed that the trend toward globalisation fuelled by ICT is affected by a complex array of economic, social, political and cultural factors. The economic benefits of globalisation cannot be fully realised without consideration of the social, political and cultural issues.