Through the service operations strategy looking glass: Influence of industrial sector, ownership, and service offerings on B2B e-marketplace failures

Abstract

This paper contributes to the emerging area of e-service strategy in the context of business-to-business (B2B) e-marketplaces, which we view as Internet-based service delivery systems that link sellers’ offerings to buyers. Although a myriad of new B2B e-marketplaces were launched over the past decade, a substantial number failed shortly after the peak of the NASDAQ in 2000. The bursting of the Internet bubble provides a setting for assessing salient, theory-based determinants of failure—and success. Accordingly, we apply a service operations strategy lens and complementary organizational theories to explain how three strategic factors—industrial sector characteristics, ownership structure, and functionality of service offering—may have influenced B2B e-marketplaces’ odds of survival after the bubble. We empirically test these factors using logistic regression analysis on a sample of 854 B2B e-marketplaces. Consistent with emerging e-services literature, our empirical results indicate that B2B e-marketplaces serving industrial sectors that are a better fit with the Internet service delivery systems—by high information dependence and low information tacitness—have the highest likelihood of success, as do e-marketplaces with service offerings that facilitate collaboration among multiple buyers and sellers. We also demonstrate the positive influence of consortium ownership structure on B2B e-marketplace survival, albeit not for first-mover consortia-backed e-marketplaces. Our findings contribute to the service operations strategy literature and provide direction for managers in the areas of e-service strategy and investment.