The development of electronic trading between construction firms
Electronic Trading is a business relationship that relies upon the use of computer and telecommunication technology for information exchange. In order to understand the development of electronic trading between construction firms, the CONNET model was developed. This model identifies the factors and variables determining whether firms adopt electronic trading systems, and its configuration. The model is grounded in the relationship perspective and network approach, and assumes that there is mutual commitment and an economic rationale behind the development of electronic trading. The CONNET model explains that electronic trading systems emerge from the complex interplay of three major factors. These are: a) the relationship between the two firms, i.e. what is exchanged (information, product, financial, social) and how (power/dependence, co-operation, closeness, mutual expectations); b) the business and IS/IT strategies, and the organisational and IT infrastructures and processes of each of the firms; and c) the characteristics of the web of relationships - production network, in which the firms are embedded, i.e. interconnections, input-output structure, governance structure and territoriality. In order to validate the model, six case studies were conducted in construction situations and four in automotive and retailing situations. Analysis of the data collected concluded that some variables have a more important role in the adoption decision, e.g. social contacts, business strategies or territoriality. Other variables are influential on the adoption but more important on the configuration of the systems, e.g. TT strategies and organisational and IT infrastructures. Most variables have an influence on both the adoption decision and the configuration of systems, e.g. information and finance exchanges, co-operation, individual interconnections, or governance structure, though the importance of their influence varies. It was concluded that, in general, electronic trading and sophisticated systems emerge where there is a higher concentration of enabling factors. The implications of the validated model lie in its potential use in explaining when and how electronic trading is likely to occur in construction. By exerting influence over variables in the model it can be used by construction organisations to create an environment to encourage electronic trading to take place.