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E-commerce: Electronically Changing Operations

Updated on May 7, 2013

This article examines how e-commerce affects the operations of a firm. First, e-commerce has the potential for reducing the transaction costs related to operations. Second, e-commerce can change the way in which departments communicate with one another across temporal and spatial boundaries. A third consequence of e-commerce upon operations is through electronic monitoring of production systems.

Several researchers have focused upon the effect that e-commerce has upon a firm’s operations1,2,3. One theme is the reduction of costs in an organization. Reporters for newspapers may now do in-depth research quickly online. Previously, reporters wishing to retrieve particular information were required to find the physical data, possibly requiring extensive amounts of time. This research may now be done very quickly and relatively inexpensively, reducing the firm’s costs.

Another area of a firm’s operations upon which e-commerce has an effect is communication. Communication may occur instantaneously and electronically over spatial boundaries. Several benefits arise from rapid communication. First, there is a decrease in aggregate costs to transfer objects. Objects that can be delivered electronically can now arrive instantly and incur no additional costs such as outside delivery or delayed production. This costs savings is echoed through the literature4,5. One example is in the newspaper industry where reporters transfer electronically stories to editors, the editors transfer finalized stories electronically to the layout department, the layout department designs the paper electronically, and then the layout department transfers the layout electronically to the production department.


1Johnston, R. B., & Mak, H. C. (2000). An emerging vision of Internet-enabled supply-chain electronic commerce. International Journal of Electronic Commerce, 4(4), 43-59.

2Maddox, K., & Blankenhorn, D. (1998). Web commerce: Building a digital business. New York, NY: John Wiley & Sons, Inc.

3Mahadevan, B. (2000). Business models for internet-based e-commerce: An anatomy. California Management Review, 42(4), 55-69.

4Boudreau, M. C., Loch, K. D., Robey, D., & Straud, D. (1998). Going global: Using information technology to advance the competitiveness of the virtual transnational organization. Academy of Management Executive, 12(4), 120-128.

5Weiser, M., & Brown, J. S. (1998). Center and periphery: Balancing the bias of digital technology. In D. Tapscott & A. Lowy & D. Ticoll (Eds.), Blueprint to the digital economy: Creating wealth in the era of e-business (pp. 317-336). New York, NY: McGraw-Hill.


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