Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, May 18, 2011

Do Market Leaders Lead in Business Process Innovation? The Case(s) of E-Business Adoption

Posted by D. Daniel Sokol

Kristina Steffenson McElheran, Harvard University - Technology & Operations Management Unit asks Do Market Leaders Lead in Business Process Innovation? The Case(s) of E-Business Adoption.

ABSTRACT: This paper investigates the relationship between market position and the adoption of IT-enabled process innovations. Prior research has focused overwhelmingly on product innovation and garnered mixed empirical support. I extend the literature into the understudied area of business process innovation, developing a framework for classifying innovations based on the complexity, interdependence, and customer impact of the underlying business process. I test the framework’s predictions in the context of e-buying and e-selling adoption. Leveraging detailed U.S. Census data, I find robust evidence that market leaders were significantly more likely to adopt the incremental innovation of e-buying but commensurately less likely to adopt the more radical practice of e-selling. The findings highlight the strategic significance of adjustment costs and co-invention capabilities in technology adoption, particularly as businesses grow more dependent on new technologies for their operational and competitive performance.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/05/do-market-leaders-lead-in-business-process-innovation-the-cases-of-e-business-adoption.html

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