Organizational and economic consequences of business e-procurement intensity

Abstract

The implementation of e-procurement by companies implies a diverse degree of Internet use during different purchasing processes. The purpose of this research is to analyze how the intensity of Internet use in the procurement process impacts firms from a different point of view: organizational and economical. The organizational consequences refer to the structure of the buying center in terms of size, participation, number of hierarchical levels and functional areas. Economical consequences materialize in concrete purchase results in terms of efficacy and efficiency. In this research, the intensity of Internet use in the procurement process is determined by two factors: the stage of purchasing process and the number of Internet tools involved in each stage. The survey was performed by splitting the sample of 103 industrial Spanish companies into two groups: those showing a low intensity of Internet use in the procurement process and a second group with a high intensity. Results show that intensity of e-procurement causes an increase in buying center size and in the number of functional areas involved in the purchase. We also notice that efficacy and efficiency increase, either by reducing costs in the search for information or by allowing the purchase of higher quality products at lower prices. To sum up, our research provides empirical evidence for Internet added-value in terms of its ability to transform the information stream within firms, and the consequences derived from this fact on industrial purchasing processes. All these factors allow better purchasing decisions to be made. It can be a powerful instrument to reach competitive advantage and can establish itself as a key factor for business success.