The theoretical part of this thesis initiated by describing the explanatory power of traditional strategic management theories; The Resource Based View (Wernerfelt 1984; Peteraf 1993; Teece et al 1997), Schumpeterian Innovation (Schumpeter, 1934; Hospers, 2005; Zhuang, 2005), Value Chain Analysis (Porter, 1985; 2001), Transaction Cost Economics
(Williamson, 1981; 1985), and Strategic Network Theory (Gulati et al.
2000; Lau & Ka-leung 2008). The perspective was to describe how value is created in the circumstances of virtual markets. The section further described the shortcomings of these traditional approaches and described how value is being created simultaneously by all the mechanisms presented by these traditional approaches and noted, than an integrative approach to value creation would be a more consistent approach in the case of virtual markets. (Amit & Zott, 2001; Weiber & Kollmann,1998;
Cartwright & Oliver, 2000)
The case study proved to be consistent with the notions presented in the first section, and the research clearly described from a practical viewpoint how none of these theories have the ability to describe the value creation mechanisms of the Case Company e-tailer business model inclusively. In accordance with the Value Chain Analysis (Porter, 1985; 2001), the Case Company has organized its internal activities into primary and secondary activities, which are able to deliver a part of the total value to the customer. However, a large part of the value created throughout the Case Company e-tailer business model operations result from actors and activities outside the Case Company’s chain of activities which cannot be fully explained by applying the Value Chain-perspective. Further, the value the Case Company is able to provide is not only a result of combining the unique resources and capabilities (or the ability to further develop these capabilities or combine resources in new ways) found inside the Case Company as the Resource-Based View suggests (Wernerfelt 1984;
Peteraf 1993; Teece et al 1997), but to a high degree the value is created by actors and activities not controlled or owned by the company.
The Case Company has made strategic decisions to focus on its core competencies, and outsource the operations which are not part of these core competencies to different actors focusing on specific areas of
operations required to operate an e-tailer business model. The totality results in a network of value adding partners, which each are responsible for specific activities in the totality, but these different actors work in close cooperation and even share resources to some extent with each other in order to ensure that the entire Case Company e-tailer business model operations are carried out as planned. This mode of operations is consistent with the perspectives of Strategic Network Theory, as the companies are affiliated in networks of horizontal and vertical exchange relationships with other organizations spanning across industries and countries (Gulati et al. 2000, p.203).
Similarly Transaction Cost Theory is consistent with the research in terms of utilizing technology and automating processes in order to decrease costs of transactions (Williamson, 1981; 1985), but the theory proves to be inefficient in explaining the value being added by the network of value adding partners affiliated with Case Company e-tailer business model having been organized to operate in co-operation, sharing information and resources to some extent in order for things to proceed as planned and agreed.
Strategic Network Theory falls short in explaining the role of technology in organizing resources in new ways for value creation. This research is consistent with the perspectives of Schumpeterian Innovation (Schumpeter, 1934; Hospers, 2005; Zhuang, 2005), to the extent in which value is delivered through innovations and technological development enabling novel ways of organizing and making use of available resources.
Examples from empirical evidence of such factors include data integration and data mining technologies. Schumpeterian Innovations falls short in explaining the value created by the forms of collaboration, which can be explained by Strategic Network Theory.
To summarize the analysis in this chapter so far, this research is consistent with Amit & Zott’s (2001) notions about both the explanatory power and shortcomings of traditional strategic management theories in explaining value creation in virtual markets. This thesis presented the
“Theory of Value Creation in E-Business” introduced by Amit & Zott in 2001, which is an approach to integrate the above mentioned theories into a uniform entity. According to this model, the mechanisms of value creation comprises of four interconnected elements (Efficiency, Lock-in, Complementarities and Novelty), which are all present in the Case Company e-tailer business model, example including: automated business process management (efficiency), loyalty program (complementarity and lock-in), social media (complementarity), and unique brand identity (novelty).
The theoretical part of the thesis described the e-tailer business model framework by Dubosson-Torbay et al. (2002) in which an e-tailer business model is divided into four main components, (Product Innovation, Customer Relationships, Infrastructure Management, and Financial Aspects) and each of these include a number of subcategories. The components of the framework could easily be found by analyzing the documentation and research interviews and proves to be perfectly viable in organizing and presenting a complex structure full of interdependencies between actors and activities. From the evidence provided by this research the e-tailer business model framework could act as a managerial tool in the early e-tailer business model high-level planning and design phases.
The thesis described the role of technology in both supporting and enabling the efficient management of the various components and activities in the e-tailer business model. The theoretical part further presented the “General Agent Enhanced E-tailing Architecture” by
Warkentin et al. 2012), which presents a typical technology architecture for e-tailing business process management and making use of the immense amounts of data collected from the company’s operations for managerial decision support. Despite the fact that the Case Company e-tailer technology architecture was not identical to the framework presented by Warkentin et al (2012), it contained all the same components and connected the same elements with each other. Examples of such elements include the different software components and database-data warehouse structure. From the empirical evidence gathered, it seems justified to conclude that it supports the General “Agent Enhanced E-tailing Architecture”-framework.