Private Network EDI vs. Internet Electronic Markets: A Direct Comparison of Fulfillment Performance

a College of Business & Economics, Lehigh University b College of Business, College of William and Mary c Robert H. Smith School of Business, University of Maryland ABSTRACT Prior literature has documented the performance benefits from the use of electronic data interchange (EDI) and the Internet. Little research, however, has provided a direct comparison between the performance of the two systems. Using purchase and fulfillment records gathered from the U.S. government’s Federal Supply Service, a direct comparison of performance is provided between a private network EDI channel and an Internet electronic market. Performance is measured using order cycle time and complete orders fulfilled. Our findings show that the Internet-based electronic market performs superior to the EDI-based channel. Order cycle times were significantly lower when using the Internet-based channel, while the percentage of complete shipments was significantly higher after controlling for product, transaction, seller, and buyer specific factors. Since EDI is still prevalent in many industries, these results point to the gains that may be realized by switching to the newer technology.