An empirical research of the effect of internet-based innovation on business value.

Abstract

In recent years, much debate about the value of information technology (IT) in general and e-business in particular and has been raised. Aiming to contribute to the investigation of whether and how Internet/WWW technologies create business value, this paper develops a conceptual model, grounded on a well established theoretical foundation from the strategic management domain, the resource-based view (RBV) of the firm, which analyzes web infrastructure and internet-based innovation as sources of business value. The methodology involved a large data source collected by the European e-Business Market Watch, an established e-business observatory organization sponsored by the European Commission. Results show that web infrastructure is not significantly related to business value, while on the contrary Internet-based innovation has a positive significant impact on business value. In addition, results show no significant complementarities between web infrastructure and internet-based innovation. These findings indicate that firms should be very careful when they decide to make this kind of investments, since they have to combine ‘hard’ investments in web infrastructure with ‘soft’ investments for the development of new products, services and processes exploiting the capabilities of this infrastructure.