Strategic Drivers and Organizational Impediments to E-Business Performance: A Latent Class Assessment

Abstract

Despite the waning of popular enthusiasm for e-business following the bursting of the tech bubble, there is still considerable awareness amongst leading corporations of the strategic potential of the Internet and related technologies. What remains poorly understood is why certain firms are successful in capturing the potential of sophisticated information technologies - in particular e-business systems - while others remain hesitant or unable to change. Building on the major theoretical arguments in strategic management, this paper investigates the complex drivers of e-business performance. At the aggregate level, we report a mediation effect between the underlying drivers of e-business performance. More importantly, however, latent class modeling techniques enable us to show that these variables are heavily influenced by the unobservable heterogeneity across firms. Four distinct types of firms populate our data, and the relationship between performance and its underlying determinants varies greatly between them. The implication is that a single model cannot explain the relationship between environment, structure, feasibility, managerial beliefs and performance.

Keywords: E-Business, Performance, Latent Class Models

JEL Classification: L1, L2