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Putting e-commerce adoption

in a supply chain context

E-commerce
adoption

Elmer Bakker, Jurong Zheng, Louise Knight and Christine Harland

School of Management,
Centre for Research in Strategic Purchasing and Supply (CRiSPS),
University of Bath, Bath, UK

313
Received February 2006
Revised November 2007
Accepted December 2007

Abstract
Purpose The objective of this paper is to gain a better understanding of the impact of context on
the adoption of e-commerce in supply chains.
Design/methodology/approach A literature review, 45 semi-structured interviews in four
different supply chains in the UK healthcare sector, involving 16 different organisations, and
additional documentation is used in this study.
Findings The adoption of e-commerce in supply chains is simultaneously affected by two
contextual meta-variables: external pressure, which is influenced by supply chain structure, demand
and industry characteristics; and internal readiness, which is influenced by IT, organisational and
buying need characteristics. Different combinations of these two main variables lead to four different
trade-off situations affecting adoption or non-adoption.
Research limitations/implications The empirical research has been undertaken in the specific
context of the UK healthcare supply chains. It would be useful to test our findings in other sectors and
countries.
Practical implications The paper helps to understand the contextual factors that affect
e-commerce adoption and concludes with a framework that differentiates four situations that can
improve managers and researchers understanding of e-commerce adoption in the future.
Originality/value The contribution of this paper is the recognition that the adoption of
e-commerce is affected by factors in both an organisational and a supply chain context, which
simultaneously lead to trade-off decisions. Also, unlike most other studies which refer to supply chains
and are limited to an organisational perspective or at most a dyadic perspective, this paper builds up a
supply chain picture of context by including perspectives from multiple actors in a chain.
Keywords Electronic commerce, Supply chain management, Health services sector
Paper type Research paper

Introduction
It has been argued in the literature that greater benefits of e-commerce can be obtained
when applied and integrated throughout a supply chain (Currie, 2000). E-commerce can
also support supply chain integration (Christopher, 2000; Croom, 2001; Cagliano et al.,
2005; Power, 2005). This could benefit competitiveness if taking the perspective that
supply chains compete instead of firms (Christopher, 1999; Cousins and Spekman, 2003).
Despite the potential benefits of e-commerce solutions, organisations in the private and
public sectors are still cautious (Cox et al., 2000; Zheng et al., 2004). Some e-commerce
initiatives also still seem to fail to derive the predicted benefits. A relatively recent UK
example is supermarket chain Sainsbury, whose financial status and reputation were at
the time affected after introducing an automated supply chain that led to problems with
stock availability and dissatisfied consumers (OBrien, 2004).

International Journal of Operations &

Production Management
Vol. 28 No. 4, 2008
pp. 313-330
q Emerald Group Publishing Limited
0144-3577
DOI 10.1108/01443570810861543

IJOPM
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314

E-commerce refers to all electronic means of doing business and e-procurement, a

sub-set of this, refers to all technology based purchasing solutions to simplify
transactions within and between organisations (Timmers, 1999; Van Weele, 2002). For
a better understanding of the adoption or non-adoption of e-commerce
(e-adoption), many studies refer to the importance of taking context into account as
organisations and supply chains differ (Van Weele, 2002; Garcia-Dastugue and
Lambert, 2003; Cagliano et al., 2003, Zheng et.al., 2006). This is supported by the open
systems approach (Boulding, 1956; Katz and Kahn, 1978) and contingency studies
(Burns and Stalker, 1961; Lawrence and Lorsch, 1967).
Context refers to the circumstances or conditions in which the adoption of
e-commerce takes place. Although context in relation to e-adoption has been part of
earlier research (Croom, 2001; Power and Simon, 2004; Caputo et al., 2005), this
paper explicitly acknowledges that whilst operating in a supply chain context,
adoption still occurs at an organisational level. This results in an interesting picture
that shows e-adoption in supply chains is influenced by the internal, organisational
context and the external, supply chain context.
In general, decisions or actions involve a trade-off, as somewhere along the line an
alternative is given up (March, 1994). The outcome of a decision (here: whether or not to
adopt e-commerce) is affected by other factors (here: contextual factors). In the case of
e-adoption, the two contexts internal and external become intertwined in
influencing e-adoption decisions. Different combinations resemble different situations
with different starting points for e-adoption and could result in a trade-off situation
pulling in different directions: adoption versus non-adoption. This paper aims to
understand the impact of internal and external contexts on the adoption of e-commerce
in supply chains and the different trade-off situations.
This paper is the result of a larger project that focussed on e-adoption in UK health
care supply chains. In an earlier paper, we reported on the strategic case for e-adoption
(Zheng et al., 2006), whereas this paper explicitly focuses on the role of context in
e-commerce adoption: representing a separate aspect of the larger project. Most research
on e-business and e-commerce studies supply chains from an organisational perspective
or at most at a relationship level (Croom, 2001; Levy et al., 2001; Power and Simon, 2004;
Da Silveira and Cagliano, 2006; Caputo et al., 2005). In this paper, we investigate
e-adoption in four supply chain cases in healthcare and explicitly include different
actors perspectives to create a rich picture of the supply chain. Five UK National Health
Service (NHS) Trusts (hospitals) feature as members of all four chains to enable an
organization-level analysis. The selection of the NHS to study e-adoption was driven by
two reasons. Firstly, to overcome the difficulty of building a supply chain level picture,
the long working history (11 years) of the Centre for Research in Strategic Purchasing
and Supply (CRiSPS) with the NHS provided the opportunity of sufficient access.
Secondly, despite potential benefits there is little history of extensive e-adoption in
the public sector (Tonkin, 2003; Vaidya et al., 2004), and the NHS was expected to
provide insight into the relationship between different contexts, adoption and
non-adoption.
This paper consists of the following parts:
.
literature review;
.
methodology;

findings focussing on which contextual factors affect e-adoption;

discussion focussing on the interplay between internal and external context
and trade-offs; and
conclusions.

E-commerce
adoption

Literature review
This section deals with the different e-commerce technologies, gives an overview of
contextual factors that influence e-adoption on both an organisational level and at the
level of a supply chain and concludes with trade-off literature.

315

.
.

E-commerce technologies
The exploratory nature of the study led us to consider the adoption of any e-commerce
form in purchasing and supply to gain an understanding of the adoption decision.
To recognise different technologies, we presented an overview based on literature
(Easton and Araujo, 2001; de Boer et al., 2002) (Table I).
E-commerce technologies further vary between systems that are open to many other
actors, such as internet based technologies, versus those that only connect two or a few
actors and are not open to others, such as EDI (Levy et al., 2001; Power and Simon,
2004). The type of technology may form the basis for 1-to-1, 1-to-many, or
many-to-many relationships. A recent taxonomy of e-commerce business-to-business
(B2B) transactions has been developed by Cullen and Webster (2007) who suggest that
transactions vary between nine scenarios depending on the connectivity (number of
buyers and sellers) and purpose of the transaction. They do not look at contextual
factors other than the supply market situation (i.e. number of buyers and sellers) and
do not explicitly focus on the influence these contextual factors can have on the actual
e-adoption.

Technology

Function

E-procurement
e-MRO/web-based ERP:

Automating the purchasing processes:

to create and approve requisitions (e.g. e-requisitioning) and
place and receive orders (e.g. e-ordering), often within
framework agreements;
e-sourcing:
identifying new suppliers for specific purchasing categories;
e-tendering:
sending and receiving RFIs and RFPs to and from suppliers;
e-reverse auctioning/e-auctioning:
enables real-time bidding comparison
e-informing:
gathering and distributing information from internal
(internal clients or users) and external parties (suppliers)
E-marketplaces
Virtual intermediaries for trading products/services.
E-marketplaces involve both a number of sellers and buyers;
e-auctioning involves only one buyer
Electronic data interchange (EDI)
Integration of business systems, only available to a limited
number of organisations who agree on its use
Enterprise resource planning
Facilitates information flow within organisations based on a
(ERP)/e-collaboration
web-integrated ERP system. E-collaboration is the expansion of
an ERP system, linking firms.
Sources: Adapted from Easton and Araujo (2001); de Boer et al. (2002)

Table I.
Different e-commerce
technologies and their
function

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316

Table II.
A literature overview of
contextual factors
influencing the adoption
of e-commerce

Context and the adoption of e-commerce

From the literature review, contextual factors that affect e-adoption can be grouped
into internal and external factors (Table II). To facilitate our understanding, we further
inductively clustered the factors around six themes three relating to the internal
context and three to the external context. In the internal context we differentiate
between:
.
IT characteristics for a technical perspective, as we focus on e-commerce
technology;
.
organisational characteristics to include an organisational perspective, as
adoption takes place within an organisation; and
.
buying need characteristics to take into account a purchasing perspective, as
e-technology is a means to help fulfil a buying need and characteristics of the
buying need influence potential advantages of e-adoption.

Internal context

External context

Organisational characteristics
Size of the organisation (Joo and Kim, 2004;
Min and Galle, 1999; Power and Simon, 2004)
Degree of excess (financial/human)
resources (Joo and Kim, 2004; Min and Galle,
1999)
Integration of departments/shared vision &
plans (Caputo et al., 2005;
Howard, 2004; Howard et al., 2006)
Management control/leadership/way of
managing (Caputo et al., 2005; Howard, 2004;
Howard et al., 2006)
Who decides (budgets/investments decisions)
(Howard, 2004; Howard et al., 2006)
Strength/diversity of identity (Howard, 2004;
Howard et al., 2006)
Attitude to risk taking/fear of change (Howard,
2004; Howard et al., 2006)
Provision of learning/support (Howard, 2004;
Howard et al., 2006)
IT characteristics
Technical infrastructure (legacy/stage of
development) (Venkatraman, 1991;
Willcocks et al., 2001; Power, 2005; Howard,
2004; Howard et al., 2006)
Buying need characteristics
Importance of purchase (volume/spend),
(Van Weele, 2002; Olsen and Ellram, 1997;
Garcia-Dastugue and Lambert, 2003)
Order frequency, impact on service
(Van Weele, 2002; Olsen and Ellram, 1997;
Garcia-Dastugue and Lambert, 2003)

Supply chain structural characteristics

Number of buyers against sellers (Malone et al.,
1987; Levy et al., 2001; Van Weele, 2002;
Joo and Kim, 2004; Caputo et al., 2005)
Relative size of suppliers and buyers
(Malone et al., 1987; Levy et al., 2005;
Van Weele, 2002; Joo and Kim, 2004;
Caputo et al., 2005)
Intermediation/re-intermediation (Timmers,
1999)
Demand characteristics
Repetitiveness (re-buy)/client specificity
(Robinson et al., 1967; Garcia-Dastugue and
Lambert, 2003)
Industry characteristics
Industry standards (Howard, 2004;
Howard et al., 2006)
Legislation (Howard, 2004; Howard et al., 2006)
External pressure/E-readiness of suppliers
(IT-legacy) (Arnold et al., 2003;
Joo and Kim, 2004)
Dynamics (competition/innovations) (Burns
and Stalker, 1961; Porter, 1980)

In the external context, we differentiate between:

.
supply chain structural characteristics to include power balance structural
variables that may influence selection of purchasing and supply management
strategy;
.
demand characteristics to allow for a marketing/sales perspective, as a buying
need is ultimately influenced by customer/patient demand; and
.
industry characteristics to include non-structural variables that are descriptive
of the supply chain context.
Trade-offs in supply chain management
The supply chain literature on trade offs mainly refers to choosing between delivering
customer specific products and/or services by being flexible agile versus being
efficient in a standardised, non-customer specific process without waste lean
(Naylor et al., 1999; Christopher, 2000). Similarly, Da Silveira and Cagliano (2006) refer
to stable versus dynamic networks; Fisher (1997) refers to markets that demand
efficiency or responsiveness through customer specificity; Lamming et al. (2000) refer
to delivering functional versus innovative products; Harland et al. (2001) refer to a
routinised versus a dynamic, innovative supply chain. Like Levy et al. (2001) the above
all imply the importance of aligning a firms supply chain with its organisational
strategy, which subsequently has to be linked to its manufacturing or service strategy
(Skinner, 1969; Schmenner; 2004). Although a strategic choice is affected by legacy it
is also influenced by the environment (Porter, 1980). Also, ones choice also influences
the environment in which one operates and could even influence the environment one
pays attention to and selects out for sensemaking the so-called enacted
environment (Weick, 1979). In fact, the process is iterative and dynamic, yet it can be
assumed that a choice is ultimately made and involves a trade-off. The choice reflects
an organisations strategic choice between being low-cost through efficient processes
versus adopting a strategy to differentiate itself through marketing means or through
innovation (Porter, 1980; Treacy and Wiersema, 1993). When operating in a volatile
market, agility is required and information technology is focussed on exchange of
demand information, whereas in a stable market lean is required, which allows
working on forecasts and inventory-focussed information exchange (Christopher and
Towill, 2000a,b). Hybrid strategies can also be used when combining the paradigms of
lean and agile (Christopher and Towill, 2000b). The adoption of a technology is
however also influenced by the situation within an organisation. This can lead to
another trade-off situation as organisations are part of a multiplicity of supply chains
which are likely to differ in degree of stability.
The existence of trade-off situations in purchasing and supply is well recognised
(Fisher, 1997; Skinner, 1969; Schmenner, 2004), yet this literature does not pay attention
to the adoption of e-commerce as affected by the context in which it takes place and
how this results in trade-offs. Further, it does not explicitly look at the interrelationship
between supply chain and organisational context and how this affects e-adoption.
Earlier studies focussed either on supply chain context (Van Weele, 2002;
Garcia-Dastugue and Lambert, 2003; Cagliano et al., 2003, Zheng et al., 2006),
organisational context (Willcocks et al., 2001; Joo and Kim, 2004; Howard et al., 2006),
or where both are considered (Howard, 2004; Howard et al., 2006) the adoption situation

E-commerce
adoption

317

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Table III.
Supply chain cases and
characteristics

is not treated as one where internal (organisational) and external (supply chain)
contexts play a role at the same time and involves trade-offs. This paper aims to fill
this gap.
Methodology
We define a healthcare supply chain as: a small group of NHS Hospital Trusts,
suppliers, and relevant contracting and distribution intermediaries (Zheng et al., 2006).
To investigate the interplay between different contexts in the NHS, we conducted four
in-depth case studies of supply chains based around four types of products: cardiac
stents (very small metal scaffolding-like structures to hold open arteries), orthopaedic
footwear (special footwear needed because of physical problems), intravenous fluid
bags (containers that hold fluids that are administrated to patients intravenously) and
blood bottles (tubes in which blood samples are collected for testing). These were
selected to ensure a variety of contexts based on aspects such as: product value and
volume, supply market structure, pattern of demand, strategic and policy profile of the
service area in which products are used within NHS trusts and the Department of
Health (Tables III and IV). Five different trusts were selected: capital trust (L),
conurbation trust (B), city trust (S), provincial trust (T), and distant trust (P). Selection
was based on diversity in type, size of Trust and whether they were part of a
purchasing alliance with other trusts.
To build a comprehensive picture of context in the chains, we interviewed people
from 16 organisations, consisting of: five NHS Trusts, nine suppliers spread over the
chains, NHS Purchasing and Supply Agency (NHS PASA: central supporting and
coordinating body) and NHS Logistics (NHS PASAs warehousing and distribution
subsidiary, which only recently has been outsourced). The sample of suppliers gives a
sufficient picture of the role of context, as in most cases at least two suppliers
are included to enable comparison within chains, and as in total four chains are
included for comparison between chains. To build a picture from an NHS perspective,
Intravenous fluid
bags

Blood bottles

Low
Low
Many,
small
suppliers,
stable
Patient
specific

Low
High
Few suppliers

Low
High
Few suppliers

Routine
predictable, but
wide variety of
usage
Low

Not patient specific,

but wide range of
products for
different usage
High

Low

Low

High

Stents

Footwear

Value of product
Volume of demand
Supply market
structure

Medium high
High
Few, big suppliers,
innovative

Pattern of demand

Increasing demand,
difficult to forecast
due to high variety of
sizes, etc.
High
Low

Profile/importance
on a strategic level
in Trusts
High
Policy
profile/importance
in DH

Trusts
Characteristics
Typea
Number of hospital
sites
Part of purchasing
alliance
Turnover in
2004/2005 X1000 (incl.
all sites)
Staff (incl. all sites
measured in 09/2005)

Capital
Trust L

Conurbation
Trust B

City
Trust S

Acute
Trust

Foundation Trust

Acute
Trust

Acute
Trust

Acute Trust &

Teaching
hospital
3

No

Yes

No

No

Yes

480.5

319.3 (figure from

2004, 2005 not
available)
4894

361.1

148.5

261.8

5679

2701

4700

5835

Provincial Distant
Trust T Trust P

Note: aHospitals are managed by Acute Trusts, which make sure that hospitals provide high quality
health care, and that they spend their money efficiently. Foundation Trusts have increased
freedoms regarding their options for capital funding to invest in delivery of new services. Details taken
from and for more information, see: http://www.info.doh.gov.uk/nhsfactsheets.nsf

E-commerce
adoption

319

Table IV.
NHS trust cases and
characteristics

we included different trusts in which we interviewed buyers and heads of procurement,

and different category specialists at NHS PASA for the different supply chains. In total
45 interviews were conducted, both face-to-face and by phone (Table V shows the
spread across organisations and supply chains).
The methods for data collection for the project as a whole included: the literature
review, workshops, interviews and use of additional documentation (e.g. internal
strategy documents). The two workshops with academics and practitioners were used
to test our understanding and interpretation at different stages during the project and
to gather further information. The first workshop was also used to develop an initial
understanding of e-commerce adoption in the healthcare sector. From the workshop
Type of organisation
Non chain specific
interviews
Interviews Interviews
with senior with NHS
No. of
logistics
personnel
NHS
(supply
(heads of
No. of
PASA
chain
procurement
supplier
buyer
expert)
interviews interviews Sub-total in 5 Trusts)

Chain specific interviews

Type of chain

No. of
NHS
trust
buyer
interviews

Blood tubes
7
Cardiac stents
5
Orthopaedic
footwear
6
IV fluids
6
Sub-total
14
Total interviews 45 ( 39 5 1)

1
1

1
4

9
10

2
1
5

2
3
10

10
10
39

Table V.
Overview of the 45
interviews

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discussion and literature, we developed an interview guide. Aligned with our aim to
better understand the impact of context on the adoption of e-commerce, semi structured
interviews were used to build-up a rich picture of each supply chain case. To prevent
guiding answers and minimise the ability to select data to fit theory, open questions
were asked to elicit arguments and contextual factors that affect the use or non-use of
e-commerce technologies and to ensure our data reflects interviewees experiences. To
elicit contextual factors the following questions were asked:
. . . what types of e-commerce do you currently use and why?; what is your future plan with
regards to e-commerce and why?; what is your e-commerce strategy and why?; what are the
perceived benefits in using e-commerce?; what are the perceived risks in using e-commerce?;
what are the problems in using e-commerce?; what other factors influence your use of
e-commerce?; what actors influence your use of e-commerce?

The interviews were transcribed, and loaded into NVivo in order to structure the text
(Miles and Huberman, 1984, p. 216). The subject in the questions (e.g. use, future use,
e-commerce strategy, benefits, etc.) were used to code and organise the raw data (Miles
and Huberman, 1984, p. 56), after which we used our literature review findings to
further analyse the data and find which contextual factors were relevant.
To understand relevant supply chain differences, a picture of the supply chain
context was built for each supply chain case by combining data from the different
perspectives in a supply chain, e.g. the supplier, buyer, procurement manager, NHS
PaSA, and NHS Logistics. Across the themes in each supply chain and the group of
NHS Trusts we looked for differences and commonalities in contextual factors that
were mentioned to affect e-adoption. To facilitate our interpretation of commonalities
and differences data matrices were used (Miles and Huberman, 1984). One data matrix
was based around the themes set off against the four supply chains, and another was
used around the themes and the NHS trusts. As a form of triangulation, documentation
provided by interviewees was used and one researcher, who had not been involved in
the NVivo process, listened to tapes and summarised them using the main themes as
represented in the questions. All data were compared with the findings from literature,
verifying plausibility and at the same time assessing the relevance of the attributes of
context as derived from the literature (Miles and Huberman, 1984, p. 216-17). Finally,
the findings and conclusions were fed back to, discussed with and validated in
presentations and reports to the NHS.
Findings
Prior to the discussion section of the interplay between supply chain and
organisational context and how this relates to trade-offs, this section presents a
summary of data on the influence of supply chain and organisational context on
e-adoption. This is done by looking at the variations between supply chains and
Trusts. Table VI shows which types of e-commerce were used in the different product
groups and Trusts and shows the variation between supply chains and trusts.
Context and e-commerce the variation between supply chains
Stents are a high priority product in the NHS due to high spend, rapid innovations,
increasing demand (stretching budgets), and high stock levels. The high stock level
requirement is necessary due to the variety of stent sizes, unpredictable demand and
delivery problems into trusts due to the diversity of agreements and supply routes

(sometimes resulting in the inability to track supplied products). Hence, stents receive
much attention and are regarded as a suitable area for improvements by using
e-technologies. The uptake of GHX (Global Healthcare eXchange: an e-marketplace)
was driven by external pressure from the suppliers who were involved in its
development. They were able to organise a joint initiative being a small supply market
(only four major suppliers) and having worked together in the past (e.g. lobbying
against regulations). Furthermore, as big multinationals, they had the resources to
invest and through working in an innovative product market, suppliers were used to,
and open to, changes.
Footwear is regarded as a relatively unimportant area in the NHS; it does not get
much attention or budgets to invest. Most of the suppliers are small firms, do not have
the resources and have low margins due to driven-down service fees. There are many
suppliers, making the organisation of joint initiatives difficult. Most suppliers adopted
a wait and see approach: they wanted to trade with the NHS and not pro-actively go
ahead and adopt an incompatible e-technology. On the other hand, trusts motivation to
invest was low through the uncertain demand (client specificity), and the threat of
direct selling of suppliers to end-customers. Hence, they too adopted a wait and see
approach, waiting for suppliers to be ready.
Blood bottles differ from the other cases as many (not all) of the deliveries go
through NHS Logistics. Trusts order with NHS Logistics and the latter receive the
products from the suppliers. NHS Logistics provided NHS trusts with hand held
scanning devices for automated ordering as part of their service to improve stock
control. Stock is an issue as clinicians decide what to use at the point of treatment, and
blood bottles vary in size and use, so a variety of products from different suppliers
need to be stocked. This is further affected through the presence of switching costs
(retraining for use of products and recalibration of testing equipment). There is no
pressure from suppliers to adopt an e-commerce technology: they value the contacts
with clinicians as a route for introducing new products into the NHS. Purchasing is
fragmented and consequently there are multiple supply routes, and no accurate usage
information. This makes it difficult to predict demand and assess benefits of
e-adoption.
IV-Fluids are low-price, high volume usage products, which implies a pressure to
improve the efficiency of the purchasing process. Hence, e-requisitioning and EDI

Product
group
Stents
Footwear
Blood
bottles
IV fluids

Type of e-technology
Automated ordering system
through point-of-sale scanning
Electronic
systems and bar code technology e-marketplace requisitioning/e-ordering
Trust P
Trust P Trust S

Trust T
Trust P

321

EDI

Trust B Trust P
Trust T
Trust P Trust S
Trust P Trust T
Trust P Trust T

E-commerce
adoption

Trust P
Trust L

Table VI.
An overview of
e-technologies in use
related to different
product groups and NHS
Trusts

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was used. EDI is a relatively cheap solution and was suitable as there were not many
suppliers in the market. Owing to low margins, price reduction through for example
e-marketplaces was not expected and hence not used. There are many different
varieties and products are bulky, which affects inventory space and costs. As turnover
is predictable there is scope for the adoption of e-commerce. The competition is
intensive due to a small supply market (four suppliers) and prices being driven down
by central framework contracts. This resulted in lack of pressure from suppliers to
adopt e-commerce as they are short of additional resources.
Context and e-commerce variation between organisations in a supply chain
Trust L is a large organisation, yet did not use many e-commerce solutions. Purchasing
had a low profile: they were mostly excluded in decisions by clinicians and the board
and finance directors had other priorities. Hence, the adoption of e-commerce was not
supported. Furthermore, they used old paper-based requisitioning systems, which
made the leap to e-commerce technologies difficult, requiring resources and time.
Trust B uses an e-ordering system, but only for stents. Stents was chosen as it was
regarded as an important area, but even here it was not fully integrated as the trust
was in an early stage of e-development. Also, B was part of a purchasing alliance and
they were held back by other less developed alliance members. On the other hand,
purchasing was seen as important and investment in e-commerce was supported.
Trust B, although limited in their use of e-, adopted a new e-procurement system
because Finance had to replace their old system. Their current system was becoming
obsolete, future service provision was not guaranteed. Finance realised purchasing
was a heavy user of the old system and hence invested in an electronic system that
included e-commerce options. This shows that support for e-commerce investments
can be driven by individuals who see a benefit in it (or so-called project champions).
Trust S was also limited in its adoption of e-commerce. They did not have an IT
legacy (still used paper based systems), which made it difficult to see the benefits. Also,
the value of procurement was not widely acknowledged in the trust, so there were no
investments in e-commerce systems.
Trust T was more advanced in using e-commerce systems and purchasing was
regarded as important. Together with the board, purchasing was working on an
e-commerce strategy and the finance manager supported e-commerce investments.
This attention for purchasing was partly fuelled by three negative external audit
reports that claimed purchasing had to be taken more seriously.
Trust P used different e-commerce technologies. As they had built up experience in
e-commerce, they moved to using an electronic marketplace. Purchasing was seen as
valuable and e-commerce was included in the purchasing strategy. The chair of the
board was supportive of purchasing and investments in e-commerce.
An overall factor that explains the difference between the trusts is the decentralised
and fragmented structure of the NHS. This explains why some Trusts are more
developed than others (e.g. Trust P and T adopted e-ordering systems for stents, blood
bottles and IV fluids whereas others like Trust L were waiting for central direction).
Finally, although e-adoption in Trusts is affected by the profile of purchasing and the
presence of a purchasing and/or e-commerce strategy, organisational size in terms of
turnover and staff can also be relevant, as it affects the ability to invest in e-commerce
(cf. stent vs footwear suppliers).

Summary of contextual factors and their influence

Combining our literature review (Table II) with our empirical findings, presents the
following summary of relevant factors and their influence on e-adoption (Table VII).
Discussion
Following the supply chain trade-off literature (Christopher, 2000; Christopher and
Towill, 2000a, b), one could conclude from the findings that product categories differ in
terms of variety and volume and have different requirements for e-commerce solutions.
For example, in stents, blood bottles and footwear variety of products is high and
demand is unpredictable as usage of a specific type of product can only be assessed at
the point of treatment. This means these chains are demand driven, which would
require agility and demand-focussed e-commerce systems to enable a quick response.
Demand for IV fluid bags seems more predictable and would be a more appropriate
category for lean strategies, exchanging inventory and forecast data (Christopher and
Towill, 2000a, b). This idea of differentiation based on demand characteristics
theoretically makes sense as it could inform ones e-commerce strategy and support the
management and integration of a supply chain. However, our findings show that
e-adoption decisions are still made on an organisational level, which for understanding
e-adoption and designing an e-commerce strategy means that this context has to be
taken into account together with the wider supply chain context. To understand the
outcome of the e-adoption decision, purpose of the transaction and supply market
are important (Cullen and Webster, 2007), but in addition internal context and broader
supply chain context characteristics are relevant for a full picture.
The interplay between contexts and trade-offs
Comparing Tables I and VI, our findings support the relevance of most of the earlier
contextual factors. There is no direct support for some of the organisational and
industry-related factors such as the provision of learning, or the presence of legislation
(Howard et al., 2006). This however could be due to our limited attention to one sector
(healthcare). More importantly, the variation across our examples can only be
explained by looking at both contexts. This supports the idea that internal and
external contextual factors simultaneously play a role in e-adoption and external
pressure and internal readiness do not exist in isolation of each other. When combining
the latter two meta-variables, four situations can be recognised (Figure 1).
There is no clear relationship between the four situations and the choice of an agile or
lean strategy, or the choice of a technology to match this strategy (being a 1-to-1,
1-to-many, or many-to-many based technology). In line with Cullen and Websters (2007)
findings, e-adoption is affected by the purpose the initiating actor(s) has(have) with
introducing a technology, but yet is further affected by the supply market situation and
internal context (i.e. readiness) of the actors involved. This means that, in principle, all
can be chosen in all four situations. Whether for an organisation a lean or agile strategy
is appropriate depends on the market situation, and the choice of technology is affected
by ones supplier relation strategy: whether one wants to achieve efficiency or flexibility
through close working relationships or taking advantage of competition in the market.
The challenge is to combine organisation-thinking with supply chain-thinking and the
quadrants relate to different trade-offs for e-adoption strategy, as they reflect different
starting points and considerations when thinking about e-adoption.

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323

Table VII.
Empirical findings of
relevant contextual
factors and their effects
on e-adoption

Demand characteristics:
Uncertainty of demand
Client specific demand
Industry characteristics:
Innovativeness
Readiness of suppliers
Switching costs
Standards
Margins
Performance

Organisational characteristics:
Size of organisation in turnover and staff
Size of organisation in product volumes
Centralised/decentralised structure
Position of purchasing
Presence of e-business strategy or plan
Presence of leaders/project champions
IT characteristics:
Advancedness in IT/Experience with IT
Presence of past failures
Buying need characteristics:
Importance of product/service in volume, size,
spend, usage (frequency)
Investments necessary for usage of products
Variety in product used
Supply chain structural characteristics:
Number of suppliers
Size of suppliers in turnover and staff
Number of customers
Size of customers
Supply chain/market structure

Ready/open to try something new

Ability to adopt new technology
Ability to standardise and gain benefits
Pressure to adopt a certain technology
Ability to adopt/invest by having excess resources
Ability to adopt/invest through having excess resources vs pressure to adopt triggered
by problems, e.g. financial situation.

Ability to forecast demand affecting possible benefits of e-commerce,

Ability to forecast demand affecting possible benefits of e-commerce

Affects competition and pressure to adopt and ease of organising joint initiatives to
create standard
Ability to invest
Ability to pressure suppliers to adopt e-commerce
Ability to pressure suppliers to adopt e-commerce
Ability to organise joint initiatives, suppliers as stakeholder in technology leading to
pressure to adopt certain standard, presence of central node to diffuse technologies,
threat of direct selling affecting rational for e-commerce.

Likelihood of perceiving problems and possible benefits of e-commerce

Presence of switching costs, ability to standardise and gain benefits from
e-commerce
Possibility of benefits (economies of scale or efficient processes).

Stage of development making it easier to adopt new technologies

Staff perception of benefits and willingness to change

Ability to invest
Possibility of benefits of using e-commerce
Autonomy vs integration: having central direction or need for own initiative
Influence on e-commerce investment decisions
Gives direction and affects position of purchasing
Pro-active pursuit of e-initiatives

Effects of factors on e-adoption

324

External context

Internal context

Empirical factors influencing e-adoption

IJOPM
28,4

Balanced
adoption
Initiative

325
Internally
driven
adoption

No adoption /
wait-and-see

IT characteristics

Internal readiness

Buying need
characteristics

Externally
driven
adoption

Organisational
characteristics

Industry
characteristics

External pressure

Demand
characteristics

Supply chain
structure
characteristics

E-commerce
adoption

If suppliers do not exercise pressure and Trusts are not ready, organisations adopt a
wait and see strategy and can become stuck in a prisoners dilemma. In this case, an
organisation that is willing to invest in e-commerce can do so by assisting, e.g. suppliers.
A trade-off then is about whether to develop multiple suppliers to maintain competition,
or develop a few suppliers and create switching costs and dependency. E-adoption in
this case is also affected by supply market structure and suppliers dependency on the
NHS (Malone et al., 1987; Van Weele, 2002; Joo and Kim, 2004). Suppliers can adopt a
low-cost strategy (e.g. modular shoes) or try to differentiate themselves (e.g. custom
made shoes) (Porter, 1980; Naylor et al., 1999; Da Silveira and Cagliano, 2006). As the
NHS buys both modular and custom made shoes and some suppliers supply both types,
a trade-off has to be made between adopting one system or differentiating between
chains (modular and custom made). The predictability of demand varies and can affect
the desired information exchange and the potential technology to choose (e.g. e-ordering
via an e-catalogue or also exchanging specifications).
If external pressure is high and results in trusts adopting an e-commerce solution,
but when they are not ready, the risk is that benefits are not realised. The stents supply
chain for example is innovative and dynamic (Da Silveira and Cagliano, 2006; Harland
et al., 2001), yet suffers from misalignment between Trusts capabilities and suppliers
market and e-commerce strategy (Levy et al., 2001). Trust P for instance adopted GHX
(pushed by stent suppliers) for stents. However, as they were not quite ready they
wanted to keep using standing orders next to GHX, which led to duplication. Adoption
then leads to inefficiency and potentially a negative image of e-commerce and
purchasing. This could disrupt the evolutionary process as described by Venkatraman
(1991) and Willcocks et al. (2001) and could mean further integration benefits will not
be realised. A risk of adopting a supply market driven technology is that it could result

Figure 1.
Adoption situations

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326

in a mismatch with the trust internal systems and potential incompatibility with other
supply chains a trusts operates in. The trade-off is between adopting a supply driven
e-commerce strategy and reaping benefits versus waiting whilst working towards an
organisation-wide e-commerce strategy, missing opportunities and possibly
frustrating supply market developments.
If a trust is ready, but there is no external pressure from the supply chains in which a
trust operates e.g. suppliers are not ready due to a lack of perceived urgency adoption
can lead to becoming frustrated with the technology. For example, in some trusts
paper-based requisitioning is used next to using an electronic form, as suppliers are not
ready and users hence do not trust the technology. This can affect others perception of
e-procurement and could slow further evolution (Venkatraman, 1991; Willcocks et al.,
2001). A solution could be to assist suppliers in becoming e-enabled with the risk of a
relationship lock-in or ending up with a mismatch with wider industry standards. One
important decision that involves a trade-off for a trust is where to start with e-commerce
adoption. If it is decided to go ahead, a trade-off has then to be made between rolling-out a
supply chain wide e-commerce initiative versus limiting it to certain suppliers, maybe
even by developing suppliers capabilities creating dependency (Joo and Kim, 2004).
If external pressure is high and trusts are ready, adoption of an e-technology on a
supply chain level can be balanced. The main trade-off here is between creating a
dependency relationship between buyer-supplier when adopting a specific technology
that enables further close integration (e.g. EDI), versus building in flexibility by
adopting a more generic technology (e.g. internet-based) (Da Silveira and Cagliano,
2006). The risk of adopting a specific technology is increased dependency, whereas a
generic technology could lead to a loss in tailored functionalities. The latter is likely to
make it more difficult to pursue a partnership, as it leaves room for opportunism.
Conclusions and future research
The evidence from the cases in this paper supports the importance of context in
understanding the adoption of e-commerce in supply chains. Earlier literature
highlighted the influence of external pressure and internal readiness; here we suggest
that the actual e-adoption decision is influenced by simultaneously taking into account
the factors in the internal and external context that are found to affect these factors.
External pressure is affected by supply chain structure, demand, and industry
characteristics, whereas internal readiness is affected by IT, organisational, and buying
need characteristics. Organisations are part of a vast number of supply chains a
supply network as they purchase (and/or sell) a portfolio of products and services.
Overall this means that putting e-commerce adoption in supply chain perspective
cannot be done without also taking into account the organisational context.
Building on earlier trade-off literature (Christopher, 2000; Christopher and Towill,
2000a, b), one way to deal with this is to differentiate between supply chains with a stable
demand where a lean focussed e-commerce strategy is appropriate, and volatile supply
chains where an agile focussed e-commerce strategy is appropriate. Although this
distinction can be helpful, adoption is not necessarily that easy due to, e.g. misalignments
between capability/readiness and e-commerce strategy. When designing an e-commerce
strategy, managers are likely to find tensions between the case for adoption if
taking a supply chain perspective versus the case from an organisational perspective.
When combining external pressure and internal readiness, four situations can be

recognised, which reflect different starting points, tensions and related trade-off decisions.
This could help provide a richer, more integrated picture of the situation and so, if
appropriate, support more sophisticated cost-benefit analyses. In all four situations the
trade-off decision is affected by the specificity of a technology, allowing or constraining
future flexibility and integration. For the e-commerce strategy of an organisation this
means choosing between developing a few close relationships or using open systems to
allow for switching and keep competition in the market, which is influenced by the
strategic importance of a supply chain related product/service category and the supply
market (Van Weele, 2002; Cullen and Webster, 2007).
From this we conclude that future research on e-commerce adoption might usefully
be reframed. Where previously the focus has been on which adoption decision is
appropriate in which context, the research problem can be seen as one of understanding
the tensions that occur when taking different perspectives on contextual factors
influence over an adoption decision and then how to manage the consequent, inevitable
trade-offs between different risks and benefits. To help reflect on this, we advocate a
differentiation between four situations (Figure 1).
Although our research has been limited to UK healthcare, we believe the findings
and conclusions have value beyond this sector, as general concepts and context
characteristics are used. However, there are specifics to the healthcare setting such as
the unpredictability of patient demand and the strong interrelationship between
clinical (operations) and materials (supply and distribution) processes (Rivard-Royer
et al., 2002); and the presence of strong social and political pressures due to the risk
involved in supply and e-commerce decisions impact on patients and society. Another
limitation has been the low number of supply chains that were investigated. However,
as we set out to compare supply chains, the limited number allowed us to conduct
many interviews per chain with individuals in different positions to gain an in-depth
understanding of each chain. Further research should include more chains, more
organisations and focus on the implication(s) of each of the four situations on benefits
and risks. Finally, including supply chains and organisations in different contexts
could further verify and build on the contextual factors found in this study.
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Corresponding author
Elmer Bakker can be contacted at: eb226@management.bath.ac.uk

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