Electronic Commerce: Definition, Theory, and Context

Electronic commerce is a relatively new concept that crept into the business vocabulary during the 1970s. A picture of electronic commerce is emerging in which the Internet will become the essential dial-tone for conducting business by the year 2000. This contribution addresses definitional, theoretical and contextual issues including the nature, drivers, enablers, and the magnitude of electronic commerce. The author discusses the role of electronic markets, the effects of information technology on electronic commerce, interactivity, and the evolution of disintermediation to reintermediation. A definition and typology of electronic commerce are offered. Theoretical and conceptual approaches to electronic commerce are advanced in terms of (1) transaction cost theory, (2) marketing, (3) diffusion, (4) information retrieval, and (5) strategic networking. Lastly, the author poses the question of how electronic commerce adds value.