Computer Mediated Markets: An Introduction and Preliminary Test of Market Structure Impacts

Electronic commerce may influence the way in which goods are traded between businesses. Many believe that Internet-based business-to-business e-commerce will reduce the extent to which firms buying goods and services are “locked in” to a single supplier. Using a secondary analysis of data collected in late 1996 on firms' use of electronic networks for transactions, we empirically test the effects of Internet use on buyer lock-in. Results are weak, but suggest that using the Internet rather than proprietary computer networks in connecting with external trading partners appears to lessen a buying firm's dependence on its primary supplier. The Internet seems to be especially valuable in allowing small firms to connect to external constituents.