Making sense of e‐commerce as social action

Purpose To provide a social‐theoretic framework which explains how e‐commerce affects social conditions, such as availability of information and equality of access to information, influences actors' behavior, shapes e‐commerce business models, and in turn impacts industry structure. Design/methodology/approach Empirical investigation based on one‐hour interviews with owners/managers of nine vehicle dealerships and six vehicle buyers in a large US metropolitan region. The hermeneutic method of understanding was used, involving a circular process from research design and attentiveness to data, to data collection and interpretation. This circular process exemplified the dialectic relationship between the theoretical framework (derived from Habermas'sTheory of Communicative Action) and empirical data, through which interpretation and theoretical explanations grounded in the data emerged. Findings Demonstrates that e‐commerce gives rise to increasing competition among the dealers, decreasing prices and migration of competition to price, decreasing profitability of the average dealer, and erosion of traditional sources of competitive advantage. Moreover, e‐commerce emancipates and empowers vehicle purchasers while reducing the power of automobile dealers. Research limitations/implications The research findings focus on the effects of e‐commerce on the automobile distribution industry. However, one could argue that a number of the findings extend to other retailing‐based industries. Practical implications The paper illustrates a research methodology that may be useful to study other e‐commerce applications. Originality/value This paper illustrates the application of Habermas'sTheory of Communicative Actionto studying the effect of e‐commerce.