Connecting Cyberspace to Place: Understanding the Evolution of Transactions and Value Chains in Electronic Commerce

The broad goal of this project is to examine and evaluate the forms, processes and geographies ofE-commerce across a diverse set of firms. We are particularly interested in how Ecommerce contributes to firms' competitive advantage through the (re)formulation of value chains (comparing physical to virtual) and thereby affecting existing geographies of production, distribution and sales. From our viewpoint a significant shortcoming common to existing transactions cost and value chain approaches (particularly vis-a-vis E-commerce) is their aspatial nature. Concerned primarily with changes from the perspective of a firm, it says little about the locations in which these activities are based. Thus, the central theoretical contribution of the project is understanding the spatial implications of changes in value chains and transaction costs brought about by E-commerce. The three research goals of this project are focused on the nature ofE-commerce and its spatial ramifications as expressed through a set of firms in the U.S. economy. Our first objective is to examine the degree to which operational and structural characteristics of firms in various industrial sectors are related to their engagement in E-commerce. A second objective is to understand in greater detail why firms engage in E-commerce and in what aspects of their business E-commerce first takes hold. In particular we are interested in identifying factors beyond differences such as firm age, industry, ownership, location and size. The third and paramount objective, is to understand how the adoption of a particular form or model ofE-commerce has altered the nature ofa firm's value chain. The reconfiguration of value chains brought about through E-commerce may affect and challenge an entire sector. We are especially interested in the spatial manifestations of this reconfiguration and whether value chains and changes in their geographies differ among companies and products. We propose a series of sequential and complementary methodological efforts to accomplish the research objectives which have been set out. First we will analyze E-commerce micro data gathered for a sample of individual firms in the Census Bureau's annual surveys. Second we will carry out a our own more detailed interlocked mail/telephone survey of E-commerce. This survey will allow us to gain insights on the motivations resulting in the initiation of E-commerce, the sequential process of expansion, as well as, details on linkages and the changing structure of value chains under E-commerce. Third, we will use indepth interviews with a select set of sampled firms to deepen and extend our mail survey findings. Virtually none of the existing literature has examined E-commerce from a spatial perspective despite the clear implications for economic geography. An important omission in this regard is the production and distribution configurations of firms' operations as expressed through the value chain as they engage in Ecommerce. Our major contributions, as we envision the project unfolding, will be fourfold: (I) The provision of new insights on the incidence and magnitude of E-commerce and its relationship to firm structural and operational characteristics across manufacturing firm types as measured by the U.S. Census Bureau's CNUS and ASM Surveys. (2) We will create new knowledge on the changing nature, both structural and geographical distinctions, and the interrelations of physical and virtual value chains by firm types across particular business models. (3) We will demonstrate how E-commerce enhances specific business operations and increases firms' competitive advantage; how efficiency gains are achieved; how Ecommerce affects the range of business activities and products a firm offers; and how E-commerce affects networks of relationships between suppliers, customers and competitors. And (4) Finally, our research will contribute to the literature on the theory of the firm, particularly trom the broad "embeddedness and networks" perspectives. Our results will show