Electronic Procurement in Supply Chain Management: An Information Economics‐Based Analysis of Electronic Markets

SUMMARY Electronic procurement is currently one of the most discussed topics in supply management. Without doubt, it will dramatically change the way purchasing is done in the near future. Telgen (1998) calls it a “revolution through electronic purchasing.” This article analyzes the possibilities of electronic marketplaces for buyers, primarily from a theoretical perspective. The article develops an analytical framework that is based on information economics theory, which may be the most important theory to analyz market problems in general. It is combined with a systematic approach for procurement transactions based on Williamson's (1985a) transaction theory. An e‐procurement matrix is developed that could help to systematize different e‐procurement instruments. Various data types available from electronic marketplaces are analyzed with a business model for electronic marketplaces. These business models show the real value added by e‐procurement.