How does this help explain why some firms moved more rapidly into e-commerce than did others?. In this paper I attempt to explain how successful Transaction Cost theory of vertical integration is in explaining why some businesses have moved into e-commerce faster than others. Please note that by ‘faster’ I do not specifically mean the speed at which the adoption has taken place. More emphasis is put on the extent of adoption and the extent of products or services offered online. While there is countless literature on the impact of the Internet on transaction costs, very little is available explaining why vertically integrated firms may be at an advantage adopting an e-commerce strategy. In fact it seems the only empirical study in the field has been carried out by Gartner & Stillman1, who analysed the apparel industry in particular to identify several factors that contribute to this tendency. However it is limited in the sense that it considers B2C (business-to-consumer) e-commerce only, while B2B (business-to-business) is equally important, if not more. B2B will account for 87% of online sales in 2010 (IDC). C2C and C2B e-commerce lines are not very important at this stage due to their size.

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