Small and medium sized manufacturer performance on third party B2B electronic marketplaces: The role of enabling and IT capabilities

a r t i c l e i n f o This research investigates the determinants of the performance of small and medium sized manufacturers on business-to-business electronic marketplaces (B2B EMs). Based on the resource-based view, the framework proposed suggests that a manufacturing firm's performance on a B2B EM is determined by EM enabling capabilities, namely the online marketing capability, flexible manufacturing capability and content management capability. Further, the framework posits that these EM enabling capabilities are in turn determined by the firm's IT capability. Data from 358 online manufacturers participating in a B2B EM is collected and analyzed. The results confirm our hypotheses that the online marketing capability, flexible manufacturing capability and content management capability fully mediate the impact of the IT capability on the firm's online performance. Furthermore, the online marketing capability is found to be a stronger factor in influencing the manufacturer's online performance than the others. With recent developments in electronic commerce, there has been a significant increase in the number of small and medium sized manufacturers using third party business-to-business (B2B) electronic marketplaces (EMs), such as Alibaba.com, to sell to their customers directly. Online EMs allow manufacturers to bypass middlemen and possibly compensate for a decline in sales through traditional channels [1]. B2B customers often prefer to purchase directly from manufacturers as well because manufacturers can offer lower prices and more stable supply compared to B2B intermediaries. Recognizing the unique value propositions that can be offered by manufacturers, many B2B EMs, such as DHgate.com [2], consider manufacturers as their primary clients. At the same time, a small or medium sized manufacturer can be in a disadvantageous position when it comes to managing its business on-line. Selling on B2B EMs requires it to build organizational capabilities different from those tailored to sell offline [3,4]. In the traditional market, such manufacturers mainly acquire their customers through personal relationships [5] and rely heavily on a small number of major clients, who tend to place large orders [6]. However, selling on the Inter-net forces manufacturers to engage with a larger number of customers who order in small batches. Besides, unlike using traditional customer relationship practices, manufacturers should be able to use various Internet-based media to market their products to customers in a larger geographic area. They also need to adjust their manufacturing practices to accommodate for varying order volumes. In other words, direct selling on EMs requires manufacturers to …