Howard Rosenbaum Electronic commerce, digital information, and the firm School of Library and Information Science Center for Social Informatics Indiana University Center for Digital Commerce Syracuse University November

Rosenbaum: Ecommerce, digital information and the firm I.Introduction: the social context of ecommerce II. The digital information environment of ecommerce III. Information imperatives for the firm IV. Conclusion: information and the conduct of ebusiness

Rosenbaum: Ecommerce, digital information and the firm I.Introduction: the social context of ecommerce What is ecommerce The use of electronic networks to conduct business- to-business or business-to-consumer transactions Using the net buyers and sellers find each other and conduct negotiations and transactions They exchange of information, currency, and both digital and non-digital goods and services Ordering, order fulfillment and delivery of goods and services take place, although the latter may occur offline

Rosenbaum: Ecommerce, digital information and the firm Internet Economy Indicators Annual Employee Figures by Layer and Total Internet Economy Growth Layer 1 - Infrastructure 527, ,602 48% Layer 2 - Application513, ,568 33% Layer 3 - Intermediaries 290, ,673 17% Layer 4 - Internet Commerce577, ,735 26% The Internet Economy 1,819,716 2,476,122 36% (after removing overlap)

Rosenbaum: Ecommerce, digital information and the firm Internet Economy Indicators Annual Revenue and Growth Summary by Layer and Total Internet Economy (millions) Growth Layer 1 - Infrastructure $117,143$197,853 68% Layer 2 - Application $71,615 $101,304 41% Layer 3 - Intermediary $63,629 $96,809 52% Layer 4 - Internet Commerce $99,813 $171,473 72% The Internet Economy$322,530$523,92362% (after removing overlap)

Rosenbaum: Ecommerce, digital information and the firm Ecommerce is expected to grow worldwide Internet Economy companies generated almost one of every five dollars in revenue from the Internet 18.5% of the companies’ revenues were generated from the Web 17 million US households will be shopping online by the end of this year, with online retail sales expected to top USD 20.2 billion (Forrester Research) 56% of US companies will sell their products online this year, up from 24% in (NUA) Small businesses who use the net have grown 46% faster than those that do not (American City Business Journals)

Rosenbaum: Ecommerce, digital information and the firm

Rosenbaum: Ecommerce, digital information and the firm

Rosenbaum: Ecommerce, digital information and the firm I.Introduction: the social context of ecommerce II. The digital information environment of ecommerce III. Information imperatives for the firm IV. Conclusion: information and the conduct of ebusiness

Rosenbaum: Ecommerce, digital information and the firm II. The digital information environment of ecommerce Ecommerce takes place in a digital IE It is the social context within which ICTs are designed, implemented and used It is the context within which digital information is created, accessed, valued, manipulated, stored, disseminated, and used It affects the generation and flow of information through “ any defined entity, ” in this case the ecommerce firm and its web site(s) It is the setting in which people engage in the social interactions that constitute ebusiness

Rosenbaum: Ecommerce, digital information and the firm The digital IE is the setting within which ecommerce takes place Rules and resources constitute its basic structure are used together as people engage in social interaction They enable and constrain the transactions and information exchanges that comprise ecommerce As people draw upon the rules and resources of this IE to conduct business, they recreate and maintain the IE. Information is an important resource in this environment, as are the rules that shape its acquisition and/or generation, manipulation, dissemination, and use

Rosenbaum: Ecommerce, digital information and the firm Ecommerce is an information intensive activity A wide range of information is generated dynamically, continually, synchronously, and in great volumes Much is created by the actions of web site visitors The firm also produces a continual stream of digital information about its ecommerce activities All of this information is important to capture and use. The IE is dynamic and unstable and the rules and resources that constitute its structure are emerging One subset includes procedures and policies being developed in practice to handle this information flow

Rosenbaum: Ecommerce, digital information and the firm I.Introduction: the social context of ecommerce II. The digital information environment of ecommerce III. Information imperatives for the firm IV. Conclusion: information and the conduct of ebusiness

Rosenbaum: Ecommerce, digital information and the firm III. Information imperatives for the firm There are at least three information imperatives for the firm: Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through the entire organization The firm is responsible for the careful management of this information Firms must be involved in a continual effort to build and maintain trust with and customers and partners

Rosenbaum: Ecommerce, digital information and the firm 1. Managing the information flow Ecommerce firms must learn to manage the flow of digital information into and out of the organization and This info should be directed to the right person, at the right time and in the correct format They must learn how to mine this dynamic information flow, aggregating and segmenting it so that it can be used and reused when and where it is needed They should also be able to drill down into this information so that they can use “mass customization” Each unit in the firm must have real time access to current information about customers, competitors, firm activities and trends

Rosenbaum: Ecommerce, digital information and the firm Information flow Front end activities Back end activities Direct solitary interactions (browsing, making or abandoning purchases, filling out forms, accepting cookies, downloading, and searching the knowledge base) Indirect interaction (server, browser, error, and other activity log files) Social interactions (people interact with the firm and other customers through the web site, customer service and support) Group action (adding and removing content and functionality, changing design and structural features) “Customer facing information” (product and service descriptions, pricing information, warranty and service policies, return and complaint procedures, and privacy policies)

Rosenbaum: Ecommerce, digital information and the firm 2. Being responsible users of the information Firms must be the stewards of the information they, solicit, and receive from customers, partners, suppliers and others They must take care of this information and let their customers and others know what they are doing with it Firms must seek to “ balance the competitive advantages provided by the use of this information with the privacy concerns that use of personal information might raise among ” their customers (Culnan and Armstrong 1999; 112)

Rosenbaum: Ecommerce, digital information and the firm Responsibility has a social component There should be clear policies easily accessible throughout the firm ’ s web site explaining: ~How this information will be collected ~What it will be used for ~The rights that customers and other information providers have with respect to this information There should be social practices within the firm organized around protecting customer information

Rosenbaum: Ecommerce, digital information and the firm Responsibility also has a technical component Firms should investigate and become familiar with the range of privacy strategies that currently under discussion and evaluation by the ecommerce industry Platform for Privacy Preferences (P3P): individuals control their own personal information on the web Platform for Internet Content Selection (PICS): firms rate their own web pages and digital products RSACi: another labeling scheme INCORE: European self-labeling scheme

Rosenbaum: Ecommerce, digital information and the firm 3. Building and maintaining trust Firms should be involved in a constant effort to build and maintain trust There is a “ fundamental lack of faith between most businesses and consumers...[who] simply do not trust most Web providers enough to engage in ‘ relationship exchanges ’ involving money and personal information ” (Hoffman, Novak, and Peralta, 1999; 80) Trust influences the transition from browser to buyer and is the basis of relationships between customer and firm Trust is essential to repeat business and the strength and public perception of the firm ’ s reputation

Rosenbaum: Ecommerce, digital information and the firm Trust-building typically depends on face-to-face interaction or other shared experiences These are missing from the ecommerce experience The web site is the point of social contact between the customer and the firm and most exchanges are stripped to text, images, forms, links, and clicks. There are few social cues that the customer can garner from the presence of the other There is little online on which to base trust in the firm This is a limitation of the digital IE of ecommerce

Rosenbaum: Ecommerce, digital information and the firm To overcome this limitation, firms are developing means of building and maintaining relations of trust with customers Technical strategies for trust-building include the use of encryption and secure electronic transactions Social means of trust building are also important Perfect security will not encourage a person to purchase from an online firm if he or she does not trust the person or firm at the other end Web based customer service and support Privacy audits (TRUSTe)

Rosenbaum: Ecommerce, digital information and the firm I.Introduction: the social context of ecommerce II. The digital information environment of ecommerce III. Information imperatives for the firm IV. Conclusion: information and the conduct of ebusiness

Rosenbaum: Ecommerce, digital information and the firm IV. Conclusion: information and the conduct of ebusiness The social context of ecommerce (its digital IE) has an information-intensive character Two constituent and useful elements of the IE are rules and resources They influence the ways in which people in the IE work with information and ICTs The subset of these rules considered here are called information imperatives These affect the flow of digital information produced by the ecommerce activities of the firm and its customers, partners, and suppliers

Rosenbaum: Ecommerce, digital information and the firm One subset of these rules are composed of three information imperatives for ebusinesses: ~Digital information generated by the firm’s ecommerce activities must flow rapidly and effectively through the entire organization The firm is responsible for the careful management of this information Firms must be involved in a continual effort to build and maintain trust with and customers and partners The next step involves the investigation of ebusinesses to examine the instantiations of these imperatives Research on trust in ecommerce