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Factors in Adopting Multi-acccess Technologies in Online Consumer Auction Markets in Finland


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Factors that lead to the adoption of online consumer auction markets in Finland.

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Factors in Adopting Multi-acccess Technologies in Online Consumer Auction Markets in Finland

  1. 1. European Management Journal Vol. 23, No. 2, pp. 182–194, 2005 Ó 2005 Elsevier Ltd. All rights reserved. Printed in Great Britain doi:10.1016/j.emj.2005.02.007 0263-2373 $30.00 ARTICLE IN PRESS Factors in Adopting Multi-access Technologies in Online Consumer Auction Markets in Finland JARKKO VESA, Helsinki School of Economics ERIC VAN HECK, Erasmus University Rotterdam In this article we analyse factors relevant for Keywords: Online auction markets, Multi-access adopting multi-access technologies in online auc- technologies, Marketing channels, Media richness, tion markets. Its focus is on how multi-access Digital TV, Mobile data services technologies, such as Web and Internet technolo- gies, mobile and wireless technologies, and digital TV technologies are adopted in online consumer auction markets. From a literature review four fac- Introduction tors were identified based on theories of online auction markets, channels in marketing and logis- Since the beginning of the 1990s, various types of on- tics, and communication channels and media fea- line markets have become increasingly popular (e.g., tures that could explain the adoption of multi- Lucking-Reiley, 2000; Kambil and van Heck, 2002). access technologies. The four factors are: perceived Online auctions discussed in this paper are a subset appropriateness of a given multi-access technol- of such online markets. Business-to-consumer ogy, media richness of various multi-access tech- (B2C), consumer-to-consumer (C2C) and business- nologies, support of multiple modes of to-business (B2B) online auctions represent ‘‘a new communication relationships, and the level of class of mercantile processes that are ushering in experience in using multiple marketing channels. the networked economy’’ (Bapna et al., 2003). In this We analysed five Finnish consumer auction mar- paper we will focus on consumer-to-consumer ¨ kets: Huuto.Net, Keltainen Porssi, QXL Finland, auctions. Systeemi.Net, and Tori. Our analysis of five Finn- ish online auctions shows that the Internet and One of the key drivers behind the increasing number World Wide Web are the predominant—and in of online auction markets has been the rapid prolifer- most cases the only—online access technology ation in the use of the Internet both by consumers available to the users. Furthermore, not even the and by firms. An exciting feature of the Internet is Web-technologies are used to their full potential. that it makes auctions accessible even to novice bid- Our paper suggests that media richness and ders. In other words, you don’t have to be an expert the ability to provide multiple modes of communi- in auctions in order to participate in online auctions. cation relationships stimulate the adoption of Furthermore, another valuable feature of an online multi-access technologies. Conclusions are pre- auction is that the consumers can participate simulta- sented and implications are drawn for future neously in several auctions giving the customer free- research. dom to surf between online auctions all around the Ó 2005 Elsevier Ltd. All rights reserved. world (Bapna et al., 2003). Therefore we can antici- 182 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  2. 2. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS pate that along with the Internet, both the number of through the Internet Protocol (IP) layer that sur- consumers entering the exciting world of online auc- rounds the core system. tions and the number of auctions they participate in will grow—provided that online auctioneers manage This paper is about online or electronic markets. to implement exchange processes and supporting According to Bakos (1991), an electronic market al- technologies is such a manner that consumers not lows buyers and sellers to exchange information only try their services once, but continue their partic- about prices and product offerings by using informa- ipation in online auctions again and again. tion systems. Various types of closed information systems had been used in the implementation of on- There are also two other trends making online com- line markets before the Internet became widely ac- merce (including online auctions) more attractive cepted, but as Malone (1995) has argued, the for consumers: Firstly, the number of retailers offer- market prefers the decentralized and open Web for ing multiple channels (i.e. traditional ‘bricks-and- electronic commerce to the traditional centralized, mortar’, mail-order catalogs and virtual on-line and closed environments provided by different types of wireless channels) is increasing, and secondly, as a service providers. In spite of the increasing use of result of rapid technological development, the Inter- market mechanisms and the wide adoption of new net has become a powerful and efficient ‘‘search-pur- communications technologies in the execution of chase tool’’ (Shim et al., 2004). We argue that online business transactions, little is known about the role markets represent a novel ‘‘search-purchase tool’’ of various types of multi-access technologies (i.e., that consumers will adapt at an increasing rate in the Internet, mobile networks, and digital TV net- the future—as the success of for example eBay works) in supporting the business processes in the indicates. context of online markets. In this paper we will dem- onstrate how the use of different technologies some- We will demonstrate that, in the context of service times enhances and sometimes constrains the ways businesses such as online auctions, the Internet is in which various exchange processes are executed more than just a new technology. Or as Montoya- in an online market such as an online auction. The fo- Weiss et al. (2003) have argued, ’’the Internet is a cus of this paper is on the factors that contribute to channel innovation’’. Our analysis of selected Finn- the adoption of different multi-access technologies ish online auction markets demonstrates how the in online auction markets. In previous research (see Internet technology of today—and the mobile and for a detailed discussion De Ruiter and van Heck, digital TV technologies of tomorrow—will offer 2004) we already investigated the relationship be- superior functionality and thereby added value for tween multi-access technologies and the maturity le- various stakeholders (i.e., sellers, buyers, and the vel of business or exchange processes in online auctioneer) in online auctions. auction markets. This article is exploring the ques- tion of what factors are responsible for the decision As Figure 1 demonstrates, the variety of devices used to adopt multi-access technologies. The reason for to access online auctions will increase in the future as choosing online auctions as the context of our re- new online channels such as interactive digital televi- search is related to the fact that the exchange pro- sion and multimedia mobile services gain more cesses of auctions are typically advanced by nature. ground. The auction system and the exchange pro- It is important to keep in mind, however, that the fo- cesses support these new multi-access technologies cus of this explorative research is on the adoption of multi-access technologies—and not on the business or exchange processes in online auctions as such, al- beit our empirical analysis naturally touches on sev- eral aspects that are characteristics of these processes in online auctions. Our findings indicate that Finnish online auctions have built their business on a single channel—the Internet. Alternative technologies, such as mobile data services, and digital TV networks and set-top- boxes, have not been implemented yet, although the mapping of various multi-access technologies and exchange processes suggests that for instance mobile services could offer added value for various stakeholders. The fact that Finnish online auctions support only the Internet channel is surprising if we look at the penetration rate of various multi-ac- cess technologies in Finland. While approximately 40% of Finnish people between 15–79 years of age Figure 1 Multi-access Technologies used in the used the Internet daily or almost daily in January– Online Auction Environment February 2004 (Source: Taloustutkimus Oy), the European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005 183
  3. 3. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS mobile phone penetration rate in Finland in end of matically’’ (Kambil and van Heck, 2002, p. 18–19). year 2003 was already 94% of households (Source: This, according to Malone et al. (1987) should lead Tilastokeskus). The number of set-top-boxes for dig- to increased use of markets and outsourcing. We ital television was close to 18%; however, only 5% of can conclude that electronic markets, or online mar- those supported the MHP standard, which has been kets as they are often called nowadays, will provide selected as the platform for interactive digi-TV ser- exciting new business opportunities both for busi- vices in Finland. Based on these figures, one would ness-to-business and business-to-computer markets. expect to see more implementations of mobile tech- It may well be that these Internet-based marketplaces nology in the context of online auctions. We believe represent the kind of ‘‘significant changes in the tech- that our study will help service providers in identify- nology’’ that may ‘‘arouse dissatisfaction with the ing the processes in which mobile technology could types of arrangements for transactions which the offer significant benefits. market affords’’ leading to the entry of new players in the markets, as Balderston (1958, p. 170) suggested The structure of this paper is as follows. We will be- already in the 1950’s. gin by reviewing three relevant theories in the litera- ture: the theory of online auction markets, the theory Online auctions, also known as electronic auctions or of channels in marketing and logistics, and the the- e-auctions, have been studied extensively in recent ory of communication channels and media features. years (e.g., Bakos, 1998; Lucking-Reiley, 2000; Paarl- In the next section we will present—based on the lit- berg, 2001; Kambil and van Heck, 2002; Bapna erature review—our conceptual model and proposi- et al., 2003). The main driver behind most of these tions and the research methods and techniques articles appears to be the huge success of eBay, the used. Section four presents the investigated five on- leading consumer-to-consumer online auction in line auction markets in Finland. Section five presents the world. Finnish online auctions have also been and discusses the results of our empirical analysis, subject to academic research (e.g., Puhakainen and and the final section provides the conclusions. Tuunainen, 2001; Vesa and van Heck, 2003). There are three basic types of Internet-based auc- tions: business-to-consumer (B2C), consumer-to-con- Conceptual Foundations of Multi-channel sumer (C2C), and business-to-business (B2B) online Services auctions. In this paper we will focus on the C2C-type of online auctions. The number of consumer-oriented online auctions (i.e., B2C and C2C auctions) is huge. In this section we will familiarize ourselves with se- Paarlberg (2001) reviewed 196 online auctions in lected theories and frameworks in areas of research eight European countries; Lucking-Reiley (2000) in- relevant to our analysis of online auction markets. cluded 142 different auction sites in his study, and The selected areas are theories of online auction mar- Puhakainen and Tuunainen (2001) identified 21 Finn- kets, channels in marketing and logistics, and com- ish Web-based auctions in the December 2000–May munication channels and media features. 2001 timeframe. Internet auctions analyzed in this paper are so called listing-agent sites that ‘‘act as an agent for other sellers, allowing them to register Online Auction Markets their items and running the auctions on their behalf’’ (Lucking-Reiley, 2000, p. 234). The other primary Various types of online markets and especially online business model for Internet auctions is called the auctions have become increasingly popular during merchant site, where an auction site itself acts as a re- the past few years (e.g., Lucking-Reiley, 2000; Kambil tailer. This business model is, however, not very and van Heck, 2002). Next we will go briefly through common at least in the Finnish market. Internet- some of the basic characteristics of these exchange based online auctions are typically using the English mechanisms. According to Kambil and van Heck auction model (or ascending auction), other major (2002, p. 11) ‘‘information technologies are trans- auction models being the Dutch auction (or descend- forming key market processes and the very architec- ing auction), First-Price and Second-Price sealed-bid ture of markets’’. Bakos (1998) argues that emerging auctions, and the Double Auction (Kambil and van Internet-based electronic markets ‘‘leverage informa- Heck, 2002, p. 75–78). tion technology to match buyers and sellers with in- creased effectiveness and lower transactions costs’’ and thereby lead to ‘‘more efficient, ‘friction-free’ Channels in Marketing and Logistics markets’’ (p. 35). An electronic market allows buyers and sellers to exchange information about prices and In order to be able to discuss the role of multi-access product offerings by using information technologies technologies in the context of online auctions it is (Bakos, 1991). As a result of the increased use of elec- important to investigate the concept of channels in tronic communications—the Internet in particular— marketing and logistics. The concept of marketing ‘‘the cost of searching for trading partners, verifying channels is widely used in various contexts albeit the their capabilities, and monitoring contracts fall dra- term itself appears to have different meanings to dif- 184 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  4. 4. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS ferent people—largely depending on their academic the question of how to take the characteristics of var- or professional background. Table 1 summarizes ious new communication technologies into account some of the numerous terms and definitions that have when designing new business models such as online been used in this context in various fields of research. auction markets. Combining the terminology used in the channel theories of marketing literature with the For instance, in the field of marketing there appears terminology used in the research of communication to be some confusion about the definition of the term and communication technologies leads easily to mis- marketing channel, and the same applies also to the understanding regarding the key terms and con- definition of logistics channel. Terms like ‘marketing cepts. Therefore we will next go through interesting channel’ and ‘logistics channel’ are often used almost pieces of research in the field of communication tech- interchangeably. The complexity of this field of re- nology research in order to develop a conceptual search has led Rosenbloom (1999) to conclude ‘‘it is foundation for the review of multi-access technolo- not possible to have one definition that can be accept- gies in the context of Finnish online markets later able to all viewpoints’’. in this chapter. During the past twenty years, the concepts of communications medium, channels, But let us go briefly through some of the basic terms and channel features have been used in the research and definitions that are related to the concept of of communication technologies (see Table 2). channels in marketing, logistics, and communication research, in order to gain mutual understanding of One attempt to clarify the conceptual foundations of what we mean by the term ‘‘multi-channel’’ in this the various dimensions of communications technol- context. Traditionally in the channel theory compa- ogy research was introduced by Griffith and North- nies have been working through two different chan- craft (1994) who pointed out that the key constructs nels: the logistics channel for the transfer of physical used in communication research have not been very goods, and the marketing channel for the informa- clearly defined. But let’s take a closer look at these tion flow between the company, its partners and three constructs (i.e., communication medium, chan- the end-customers (Rosenbloom, 1999). nel, and feature) that apparently are used in a differ- ent way within various research disciplines. Trevino According to Rosenbloom, marketing channel can be et al. (1990, p. 87) have defined communication medium defined as ‘‘the external contactual organization that as a ’’pipeline, a carrier of messages’’. Along the management operates to achieve its distribution same lines was Steuer (1992, p. 77–78) who stated objectives’’ (1999). This definition emphasizes the that when dealing with interaction between two per- external nature of a marketing channel, meaning that sons, media are ‘‘important only as a conduit, as a it is not part of a firm’s internal organization struc- means of connecting sender and receiver, and are ture. Furthermore, the term ‘‘contractual organiza- only interesting to the extent that they contribute to tion’’ implies that only those firms or parties who or otherwise interfere with the transmission of mes- are involved in negotiary functions (i.e., buying, sell- sages from sender to receiver’’. According to Griffith ing, and transferring title to products or services) are and Northcraft (1994), a communication medium can members of the marketing channel. Rosenbloom be thought of as a ‘‘constellation of communication emphasizes also the increasing role of technology, channels’’, where channels within an electronic com- as the Internet ‘‘may someday provide highly effi- munication medium could include electronic text, cient electronic marketing channels’’ (p. 8). He points voice, and visual channel components (see Figure out that ‘‘Internet-based technology cannot be ig- 2). The relationship between communication chan- nored in the distribution of goods and services’’. nels and media was already studied in the 1940s by Shannon and Weaver who proposed that a channel was any medium that could carry information (Shan- Communication Channels and Media Features non and Weaver, 1949). The emergence of electronic channels (e.g., the Inter- A third element that can be used to make a distinc- net, mobile networks, and digital television) raises tion between various communication media is the Table 1 Definitions for the Term Marketing Channel Authors Term/definition Description Balderston (1958) ‘‘Distribution channel’’ Channels of distribution as conduits for information between the buyer and the seller Balderston (1958) ‘‘Marketing channel’’ ‘‘. . .the set of entities that are brought into relation with one another in respect to a particular commodity flow’’ (p. 155) Etgar and Zusman (1982) ‘‘Marketing channel’’ ‘‘Marketing channels are interlinked marketing institutions concerned with the transfer of products from producers to final users.’’ (p. 284) Rosenbloom (1999) ‘‘Marketing channel’’ ‘‘The external contractual organization that management operates to achieve its distribution objectives’’ European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005 185
  5. 5. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS Table 2 Terms and Definitions used in Communications Technology Research Author(s) Term/definition Description Eveland (2003) ‘‘Communication channel’’ ‘‘The channel attribute is one of the more traditional means of defining a medium and is based upon the senses used to receive the message.’’ (Eveland, 2003, p. 399) Griffith and Northcraft (1994) ‘‘Communication medium’’ ‘‘. . .a constellation of communication channels’’ Griffith and Northcraft (1994) ‘‘Electronic communication medium’’ channels within an electronic communication medium could include electronic text, voice, and visual channel components Griffith and Northcraft (1994) ‘‘Communication channel’’ ‘‘ category of feature and specify how the information is transmitted (e.g., an electronic mail system, for example, may use both twisted pair and satellite transmission channels)’’ Shannon and Weaver (1949) ‘‘Communication channel’’ Any medium that could carry information Steuer (1992) ‘‘Communication medium’’ Media are ‘‘important only as a conduit, as a means of connecting sender and receiver’’ (p. 77–78) Trevino et al. (1990) ‘‘Electronic communication medium’’ ‘‘...a pipeline, a carrier of messages’’ (p. 87) electronic text Electronic Communication medium Communication voice ”a pipeline, a carrier of messages” channels (Trevino et al. 1990, p. 87) visual channel components Figure 2 Communication Medium vs. Communication Channels (adapted from Griffith and Northcraft, 1994) concept of features. Based on their review of previous theories and models of communication technologies, Communication media Griffith and Northcraft state that media refers to (technology or system such as technology or system (e.g., electronic mail or group electronic mail, group decision decision support system), whereas a feature is much support system etc.) more specific. According to Griffith and Northcraft, ‘‘features are both the objective (e.g., speed of infor- mation transmission) and psycho—social (e.g. ano- Feature nymity of the communicators) characteristics of a medium that result from communication channel objective psycho -social selection or media design considerations.’’ In our (e.g., transmission (e.g., anonymity) analysis of the relationship between multi-access speed) technologies and exchange processes in online mar- kets, we will cover both objective and psycho-social features of various electronic communication media Communication channel selection or media design considerations (i.e., the Internet, mobile data networks, and the dig- ital TV). See Figure 3 for a graphical presentation of the hierarchy introduced by Griffith and Northcraft Figure 3 Relationship between Communication Media (1994). Taking the analysis presented by Griffith and Feature (adapted from Griffith and Northcraft, and Northcraft further, they point out that features 1994) are characteristics of a communication medium, and provide the distinguishing attributes of the med- channels)’’. These objective features may have an ef- ium. Channels, on the other hand, are ‘‘one category fect on the medium’s use and users’ perceptions. of feature and specify how the information is trans- mitted (e.g., an electronic mail system, for example, Griffith and Northcraft (1994) conclude their review may use both twisted pair and satellite transmission of different aspects of communication media, chan- 186 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  6. 6. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS nels and features by stating that ‘‘the use of technol- the interaction occur in real time). In Table 3 the se- ogy (e.g., communication media) is relatively fluid’’, ven objective characteristics of communication media and that ‘‘different implementations and contexts have been applied to some of the multi-access tech- may determine the perceived appropriateness of a gi- nologies analyzed in this paper. ven medium’’. They refer to Fulk et al. (1990) who ar- gued that factors such as media evaluation, task Table 3 reveals some interesting characteristics of the evaluation, and situational factors combine in a com- various communication media. Firstly, the same plex manner to influence users’ perceptions of a com- communication media (or multi-access technology) munication medium and its use. For the purposes of may have different characteristics depending on this paper, i.e. the analysis of the use of various com- how it is being used. Let us take MMS (multimedia munications or multi-access technologies in online messaging) as an example: when used for person-to- auctions, both the concept of the perceived appropri- person (P2P) communication, the communication rep- ateness of a given medium, and the medial and/or resents person-interactivity (i.e., the communication task evaluation are very interesting. Another way takes place through the medium), communications of comparing different media types was presented model is traditional one-to-one, the content is rich by Hoffman and Novak (1996, p. 54) who identified (i.e., MMS can contain text, images, audio, and vi- two main categories of media. According to their deo), media feedback is symmetric (i.e, same band- view, ‘‘traditional media include both mass media width for both parties), and the interaction occurs (e.g., television, radio, newspaper, magazines, direct (almost) in real time. However, MMS can also be mail), and personal communications (e.g., word of used for person-to-content (P2C) type applications mouth.). The second main category is called new med- (for instance, requesting product data of an item ia, which consists of ‘‘interactive media, such as vid- being auctioned from an online auction system by eotex, interactive CD-ROM, online-services, and sending a SMS and receiving the product attributes hypermedia CMEs, as well as emerging so-called as a MMS message to mobile phone). In this case, interactive multimedia, such as pay-per-view, vi- the communication represents machine-interactivity deo-on-demand, and interactive television’’ (Hoff- (i.e., the communication takes place with the med- man and Novak, 1996, p. 54). By hypermedia ium—in this case the online auction system), com- CMEs, or computer-mediated environments, Hoff- munications model is one-to-many (the MMS send man and Novak refer to the Internet and the World by the mobile phone user may end up being pre- Wide Web. Like Griffith and Northcraft, Hoffman sented on a mobile chat on TV or as a bid on the on- and Novak (1996) based their new media typology on line auction web site), the content is rich, the objective characteristics of communication media, be- feedback may not be symmetric anymore and the cause objective characteristics ‘‘permit a relatively er- communications may not occur in real time (e.g. de- ror-free classification’’ of media. The seven lays on the server side in mobile chat or in the online characteristics used by Hoffman and Novak were auction system). person-interactivity (i.e., does the communication take place through the medium), machine-interactivity (i.e. Yet another way of classifying various media can be does the communication take place with the med- found in the media richness theory developed by Daft ium), number of linked sources available (i.e, how many and Lengel (1986). By using criteria such as the med- sources of content are readily accessible or available ium’s capacity for immediate feedback, the number to the user), communications model (i.e., one-to-one, of cues and channels utilized, personalization, and one-to-many, many-to-many), content (i.e., whether language variety, the media richness theory presents static or dynamic information can be delivered by the following hierarchy in order of decreasing rich- the medium in the form of text, image, audio, video, ness: (1) face-to-face, (2) telephone, (3) personal doc- or experimental content), media feedback symmetry uments such as letters and memos, (4) impersonal (i.e., whether different parties in the communication written documents, and (5) numeric documents. Daft process employ the same bandwidth for sending and Lengel (1986, p. 560) use the richest medium, i.e. information), and temporal synchronity (i.e., does face-to-face communication, as an example when Table 3 Objective Characteristics of Multi-access Technologies (adapted from Hoffman and Novak, 1996, 56) Media Characteristics Face-to-Face MMS P2P Email MMS P2C WWW DigiTV Person-interactivity yes yes no no no no Machine-interactivity no no yes yes yes yes Nr of linked sources one one one many many few Communications model 1-to-1 1-to-1 1-to-1 1-to-M M-2-M 1-to-M Richness of content A, V, E T, I, A, V T T, I, A T, I, A, V T, I, A, V Feedback symmetry yes yes yes no no no Real time yes yes no yes yes yes European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005 187
  7. 7. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS they explain how the media classifications work. the use of telephone is not very common during the Face-to-face receives the highest rating because it auction process. The question is if the difference provides ‘‘immediate feedback so that interpretation among the use of various communication or access can be checked’’, it also ‘‘provides multiple cues via technologies can be attributed to the fit between the body language and tone of voice, and message con- task in hand and the features typically identified with tent is expressed in natural language.’’ We will re- the given medium (e.g., the World Wide Web, brow- turn to the concept of information richness in our ser in a mobile phone, interactive service in a digital analysis of the adoption of various multi-access tech- TV set-top-box). Figure 4 provides the conceptual nologies of online markets. It is important to keep in framework and each of the constructs and proposi- mind, however, that information richness is defined tions will be discussed. as ‘‘the ability of information to change understand- ing within a time interval’’ (Daft and Lengel, 1986, p. 560). So media richness does not directly refer to the Perceived Appropriateness of a Given objective characteristics or attributes of the medium Multi-access Technology use, such as transmission speed or the quality of According to Griffith and Northcraft (1994), ‘‘differ- the presentation of visual data. ent implementations and contexts may determine the perceived appropriateness of a given medium’’. Furthermore, they define media as ‘‘technology or Conceptual Framework and Propositions system’’, which has certain objective and psycho-so- cial characteristics. Fulk et al. (1990) argued that fac- tors such as media evaluation, task evaluation, and In this section we will describe the conceptual frame- situational factors combine in a complex manner to work used in the analysis of the adoption of multi-ac- influence users’ perceptions of a communication cess technologies and its relationship with the medium and its use. A positive correlation is ex- exchange processes of online auctions. Due to the pected between the perceived appropriateness of a emergence of new technologies, multiple online chan- given multi-access technology and its use in conjunc- nels (a.k.a electronic channels, automated channels of tion with various exchange processes. The observa- delivery, and virtual channels) combine the theory of tions discussed suggest the following proposition: marketing and logistics channels, and the models of communication channels and media features. The Proposition 1. The more appropriate a stakeholder (i.e., emergence of new online technologies has added buyer, seller, or the market maker) perceives a given new complexity to the concept of channels: Tradi- multi—access technology for performing a given exchange tional channels, such as ‘bricks-and-mortar’ store process, the more they will use multi—access technologies and mail-order catalogs, are being complemented offered by online markets. by new ‘‘virtual on-line and wireless channels’’ (Shim et al., 2004, p. 34). Although the role of these new on- line channels has become more and more important as the business impact of the Internet has increased, Media Richness of Various Multi-access the phenomenon itself is not as novel as one might Technologies think: According to Reynolds (1997), ‘‘the importance and viability of electronic channels to market has As discussed earlier in this paper, Daft and Lengel been a continuing subject of debate among retailers (1986) argue that some media are richer than others, and commentators for over 20 years’’. In online auc- if we compare the ability of information provided by tions we will face an interesting research setting, as a given medium ‘‘to change understanding within a all communication will be based on electronic media; time interval’’. Online auctions are using only elec- face-to-face communication is non-existing and even tronic channels that cannot compete with richer med- ia such as face-to-face contact in a physical auction facility or telephone conversation with an auctioneer. This view is supported by Connolly et al. (1990, p. 5) Perceived P1 who highlighted the ‘‘impersonal, anonymous char- appropriateness of technology acter of electronic communication in general, sug- gesting that social cues necessarily seem to be Media richness P2 decreased by the use of electronic media’’. This leads of multi-access technology Use of Maturity of the us to anticipate that there is a negative correlation be- exchange multi-access processes in online tween the use of multi-access technologies and the technologies auctions Support of multiple modes of P3 quality of communication when measured in terms communication of media richness. This leads us to the following proposition: Experience in the P4 use of multiple channels Proposition 2. The inability of electronic channels to support rich communication reduces the use of multi- Figure 4 Conceptual Framework access technologies in online auctions. 188 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  8. 8. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS Support Multiple Modes of Communication in other service situations it will affect positively Relationships the use of multiple multi-access technologies in the context of online auctions: Hoffman and Novak (1996) have identified three dif- ferent communication relationship types: consumers Proposition 4. More experience in the use of multiple can interact with the medium (e.g., surf the Web), channels by consumers increases the use of multi-access firms can provide content to the medium (e.g. a firm technologies when participating in online auction markets. establishes a Web server), and even the consumer can create content in the medium (note that the Table 4 summarizes the four propositions that were World Wide Web is defined as a medium in this con- formulated based on the review of theories of mar- tent). Furthermore, Hoffman and Novak note that the keting channel and communication technologies. Internet can also be ‘‘used for computer-mediated communication among consumers and/or firms’’ through the medium. A positive correlation is ex- Maturity of Exchange Processes in pected between the multi-access technologies’ ability Online Auction Markets to support multiple modes of communications and the use of those technologies: In our research we are using a process-approach based on the model of exchange processes (Kambil Proposition 3. The ability of the stakeholders of an online and van Heck, 1998; Kambil and van Heck, 2002). auction to engage in multiple types of communication The three main elements of the model of exchange relationships increases the use of multi-access processes are the Basic Trade Processes (i.e., search, technologies. pricing, logistics, payment & settlement, and authen- tication), Trade Context Processes (i.e., product repre- sentation, regulation, risk management, influence, Experience in the Use of Multiple Channels and dispute resolution), and finally Communications and Computing facilitating and supporting the two There is a clear trend in the market towards in- sets of exchange processes. Previous research dealt creased use of multiple online channels amongst con- with the relationship between the sophistication of sumers (e.g., Montoya-Weiss et al., 2003; Shim et al., multi-access technologies and the maturity level of 2004). Nunes and Cespedes (2003) claim that custom- the basic trade processes and trade context processes, ers are ‘‘using all the available channels, entering dif- see for example De Ruiter and van Heck (2004). Their ferent ones to fulfil their needs at different stages’’. research indicates that more sophisticated multi-ac- For instance in the retail industry, consumers of to- cess technologies such as wireless data technology day face a wider variety of retail channel choices, and interactive TV will lead to more mature pro- as increasing number of retailers are implementing cesses and might lead to a higher expected success multi-channel operations, ‘‘including not only tradi- of online auctions. In this paper we will not analyse tional ‘bricks-and-mortar’ store and mail-order cata- that relationship but focus on the factors explaining logs but also virtual on-line and wireless channels’’ the adoption of multi-access technologies. (Shim et al., 2004, p. 34). According to Montoya- Weiss et al. (2003), in a relational multi-channel con- In this article we analyzed five online auction mar- text (i.e., a customer has a long-term relationship kets in Finland. Selection criteria were that the auc- with the service provider which offers multiple alter- tions have to be located in Finland, that the auction native channels for its customer base) customers are should have a web site, and that the selected auction also assumed to actively use these various channels. has to be a consumer auction, and that the online Offering a wider selection of channels is typically ex- auctions are either independent exchanges or private pected to be beneficial both for the customers and the exchanges, meaning that the owner of the auctions services provider. However, a Jupiter Consumer Sur- are respectively a third party, or a ‘‘private’’ seller vey called ‘‘Redefining the Online Retail Consumer’’, (or rather business). Consortia exchanges are not in- that was conducted in March 2002, concluded that cluded in this research. Interviews were held with active multi-channel shoppers might be more of a lia- representatives of each of the auctions and secondary bility than other on-line shoppers. As online auctions data were gathered and analyzed. In a previous arti- do not operate in isolation to the rest of the society, it cle—see Vesa and van Heck (2003)—we performed is expected where there is more experience adopted an in-depth functional analysis of the exchange pro- Table 4 Summary of Propositions Proposition Effect Description P1 + Perceived appropriateness of technology P2 À Media richness of multi-access technologies P3 + Support multiple modes of communication P4 + Experience in the use of multiple channels European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005 189
  9. 9. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS cesses of the five Finnish online auctions using a re- when it bought a web auction called that fined audit tool initially created by Paarlberg (2001). had at the time over 55,000 customers. During our Using the same online auction markets provided us previous study in February 2003, QXL was operat- with the opportunity to apply a ‘‘longitudinal ap- ing actively in Finland. However, in July 2004, the proach’’ in our work. Therefore we are able to com- Finnish web site of QXL was ‘‘temporarily out of pare the situation of each online auction market use’’. during the previous review in February 2003 with the current review in July 2004. Systeemi.Net is a free web auction mainly for stamps and other collectors’ items. In February 2003, Syste- emi.Net placed second in Google’s page-ranking list for online auctions, albeit the volumes were small. In July 2004, Systeemi.Net is still functioning, with no Online Auction Markets in Finland apparent changes in the scale or functionality of the business. The following five online auction markets were analyzed. Tori is a small free online auction site. In February 2003, this auction site held the fifth position in Goo- Huuto.Net was started in January 1999 by a young gle’s page-ranking list, but on the review date Tori entrepreneur who reserved the domain name and web auction did not have a single item on sale. In started to run the service on a hosting platform in July 2004, web auction Tori was still functioning— Florida (Lohikoski, 2002). At the time, eBay had al- and still there were no items on sale. ready become very successful in the US, which of- fered a good reference point for the new service. As Huuto.Net grew very fast, the founder decided to sell it to one of the oldest and most famous auction houses called Bukowski in August 1999. However, as Lessons Learned the Internet boom faded, Bukowski sold Huuto.Net to Sonera, which is the largest telecom and Internet In this paper we carry out a deeper analysis of the operator in Finland. Today, Huuto.Net is part of ways in which factors influence the adoption and the leading Internet portal called Sonera Plaza. In use of multi-access technologies. In this section we September 2003, Huuto.Net had over half a million go through the four propositions in order to see if visitors per month. The business model of Huuto.Net they are supported by our empirical findings. We builds around advertising revenue, although there is have summarized our findings below. a limited number of services customers have to pay for (e.g., paid authentication and extra visibility). The first proposition stated that the more appropriate According to a representative of Sonera, ‘‘advertising a buyer or seller perceives a given multi-access tech- alone cannot support service like this’’ (Lohikoski, nology for performing a given task, the more it will 2002). During our previous analysis in February be used (i.e., a positive impact). As discussed earlier 2003, Huuto.Net was clearly the leading online auc- in this paper, different technologies have different tion in Finland with over 80,000 items on sale. It characteristics making them more or less suitable was the only online market offering a mobile for performing various exchange processes. Based (WAP) version of their auction service. In July 2004, on the characteristics of the multi-access technologies Huuto.Net is still going strong: The number of items reviewed here, one would expect for instance that on sale (over 110,000 items) is about 100 times more digital television will be a superior technology for than in the next biggest online auction in this group performing the product representation process as of companies. Huuto.Net is still the only online mar- digi-TV offers a rich combination of text, images, ket offering a mobile (WAP) version of their service. audio, and video (see e.g. Hoffman and Novak, 1996)—not to mention the fact that for most people Keltainen Porssi web auction is a ’’sideshow‘‘ of the ¨ using TV would offer a much more natural context leading printed and online free-ad publication in Fin- of use than sitting in front of a PC while browsing land. The role of this online auction is to support the various items on sale (albeit in this paper we do catalogue business. Since our previous audit of this not focus on the context of use while participating online auction site in February 2003, Keltainen Porssi ¨ in online auctions). However, as the digital television Internet auction has remained apparently the same, if system in Finland does not yet offer a return channel we look at the volume of business or the functional- (i.e., in Finland digi-TV is still mainly about broad- ity offered. In July 2004, the number of items on sale casting) interactive services are too complicated to was well below 1,000 items. implement from a market makers’ point of view. Fur- thermore, mobile phones equipped with appropriate QXL is one of the few international online auctions data services would support well the intense bidding that operated in Finland during our previous analy- phase of an online auction—allowing buyers to par- sis of the five case auctions. The British online auc- ticipate in online auctions independent of time and tion landed in Finland in the summer of 2000 place. However, although the penetration of mobile 190 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  10. 10. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS phones in Finland is among the highest in the world, cesses that had to deal with more complicated issues so far only one online auction in this country offers such as dispute resolution. On the other hand, when this option. Despite these obvious strengths of differ- dealing with numeric information such as price of ent multi-access technologies, our analysis shows products or a new bid, multi-access technologies that the buyers and sellers do not have the possibility are performing very well (i.e., in the so-called basic of choosing the most appropriate technology in a trade processes as described by Kambil and van Finnish online auction, because most online auctions Heck, 2002). This finding is not surprising because support only the Internet channel. Even in the only earlier research has demonstrated that in situations auction that offered mobile access to exchange pro- where the level of uncertainty (absence of informa- cesses, the functionality of the WAP version of the tion) and the level of equivocality (multiple and con- service was very limited. One could argue that the flicting interpretations of the situation) are high, market maker has made this decision on the custom- richer media are often needed. There are, however, ers’ behalf—most likely based on financial calcula- certain areas where new technology enables new tions and less likely on what customers might find forms of more collective ways of communications. most suitable. Also the size of the Finnish market Let’s take an example. An online auction’s reputa- (i.e. a population of little over five million people) tion system supported by an online chat room func- may have an impact on this, as the cost of imple- tionality gives the buyers and sellers an opportunity menting for instance a mobile version of a web-based to create ‘‘social pressure’’ on misbehaving partici- auction creates additional costs. As for the use of dig- pants. In traditional auctions it would have been dif- ital-TV as a part of the channel mix, the penetration ficult to offer such an efficient feedback system by a rate of interactive set-top-boxes is still very limited, traditional ‘word of mouth’ approach. Once again it which probably explains why market makers have is important to keep in mind that only conclusions not introduced online auction services in this with regard to the Internet channel can be drawn channel. as other technologies have not been implemented yet. Based on the functional analysis of the exchange Based on the previous discussion we are forced to processes of the selected Finnish online auctions we conclude that the first proposition presented in this conclude that our second proposition was supported paper is not supported—albeit the real reason behind by the empirical findings, i.e. limitations of commu- the current situation is more likely the lack of alterna- nication richness in electronic channels reduces the tives rather than the lack of interest in using a combi- use of the technologies in the context of the more nation of multiple electronic channels: it is difficult to complex trade context processes (Kambil and van choose the most appropriate technology for a given Heck, 2002). As a result the second hypothesis task (or in this case for a given exchange process) (H2) is proposed as: when there is not even an option to do this. This fact is often ignored in multi-channel research, as one of H2: ‘‘The inability of electronic channels to support rich the assumptions behind the research setting is that communication reduces the use of multi-access technolo- the users have the possibility to choose between dif- gies especially in the complex trade context processes of ferent channels—or perhaps even more often, they online auctions’’. are asked if they will use a new technology under the assumption that multiple electronic channels will The third proposition stated that the ability of stake- be available for performing a given task. As a result holders to engage in multiple types of communica- of the empirical analysis, the first hypothesis (H1) tion relationships increases the use of multi-access could be proposed: technologies (i.e., positive correlation). Our analysis showed that an online auction offers a rich communi- H1: ‘‘The more available and appropriate a given multi- cation environment for both sellers, buyers, and the access technology for performing a given exchange process market maker, who all have the opportunity to com- is, the more multi-access technologies will be used’’. municate both with the medium (i.e. with the auction web site) and through the medium (sending e-mails The second proposition argued that inability of elec- or SMS to each other, or participating in an online tronic channels to support rich communication re- chat on the auction site). Innovative implementations duces (i.e., a negative correlation) the use of multi- of multi-access technology, such as a reputation sys- access technologies. As discussed earlier in this pa- tem on the Internet or online chat, can offer rich com- per, the limitations of electronic forms of communi- munication even though the media is electronic. cation have been pointed out in several earlier Although one might easily think that an online auc- studies (e.g., Daft and Lengel, 1986; Connolly et al., tion site is yet another web-based service for consum- 1990; Griffith and Northcraft, 1994). The findings ers to surf through every now and then, it is indicate that communication over electronic media important to bear in mind that in markets—online has less social cues, is less immediate psychologi- or offline—the role of the people involved in auction cally, and is not as efficient in problem solving as transactions is essential. According to Kambil and ‘‘non-electronic’’ communication. Our analysis indi- van Heck (2002, p. 3) ‘‘human beings have always cate that electronic multi-access technologies had a made markets, and they will continue to do so in very limited role in supporting those exchange pro- the future—even if business is conducted through European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005 191
  11. 11. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS cyberspace’’. Therefore it is justified to say that, at the context of Finnish online auctions. Therefore we have end of the day, online auctions are about communi- to conclude that Proposition 4 is not supported. cation—between buyers and sellers, and within the online auction community in general. The role of Our analysis shows that Finnish online auctions are communications technology is to support this: ‘‘Elec- to a great extent applying ‘‘a single-channel’’ strategy tronic markets are not technological interactions sup- by supporting only the Internet channel. Despite the ported by humans. They are human interactions high penetration rate of mobile phones in Finland, supported by technology’’ (Kambil and van Heck, the mobile channel is used only by one online auc- 2002, p. 3). tion house. One explanation for this could be that the current mobile handsets and networks are suffer- If we also keep in mind that short-message service ing from poor user-interface (i.e., small screen size) (SMS) has been by far the most successful non-voice and slow data transfer rates, respectively. The results mobile service in Finland, and that e-mail has been also show that the trend predicted by consumer the driving force behind the growth of PC use and behavior researchers towards increasingly multi- Internet connections in households, it is easy to channel oriented consumers (Shim et al., 2004), who understand why multi-access technologies are often actively surf between various channels (Nunes and used for communication also in the context of online Cespedes, 2003) does not seem to be the case in this auctions: asking for additional information through context. In one area the Finnish online auctions are the auction web-site (one-to-many), or directly from doing reasonably well. The buyers and sellers com- the seller by sending an e-mail or SMS (one-to-one); municate actively with the auction site but also with making arrangements for the delivery and payment each other by using multiple technologies—or at of the product by sending an e-mail or by calling least multiple applications within one technology. (one-to-one electronic or non-electronic communica- For instance, the Internet is used to access the World tion); or checking other buyers’ experiences of a sell- Wide Web with a browser, to send e-mail messages er in online-chat or bulletin board (many-to-many during the bidding process and after the deal is computer-mediated communication). These are only closed, and to chat online to share experiences with a few examples of the numerous ways in which mul- other users. Likewise, mobile phones are used dur- ti-access technologies are used when various stake- ing the bidding process but also to establish a contact holders interact with the auction site and with each between the buyer and the seller once a deal has been other. The discussion above leads us to the conclu- made either by sending SMS messages or by calling. sion that the proposition number three is supported One could argue that this phenomenon is very typi- by our empirical findings and as a result hypothesis cal for Finland where person-to-person communica- (H3) is proposed as: tion for instance by SMS has been a huge success, while person-to-content services have typically H3: ‘‘The ability of the stakeholders of an online auction to failed. This study raises the question why the Finnish engage in multiple types of communication relationships online auctions are performing so poorly, when com- increases the use of multi-access technologies’’. paring with the leading international players. There are several potential explanations for this situation: Proposition four argued that the current trend (e.g, in retail and banking) of increased use of multiple chan- v The Finnish consumer protection and remote nels will lead to an increased experience level and sales legislation prevents auction houses from use of multi-access technologies in online auctions. getting involved in a auction process, and there- Finnish consumers use their mobile phones very ac- fore they are not in a position to develop the tively for ordering ringtones and screen savers, for exchange processes. paying for parking or car wash, not to mention all v Developing new multi-channel services is expen- the SMS messages sent almost daily. On the other sive and the Finnish markets are too small for hand, Finnish banks have been very successful in these kinds of investments. moving bill payments and other financial transac- v Finnish people do not take auctions very seri- tions to electronic channels. Against this background ously and there might be a cultural barrier in that one would expect that Finnish consumers have expe- sense. rienced the current trend towards a ‘‘multi-channel v There is a lack of dominant players in the Finnish philosophy’’ when dealing with other types of ser- auction industry as eBay is not at the moment vices. Our empirical data do not provide evidence present in Finland (due to regulatory issues). for this theoretical argument. Although we think that a positive relationship exists between the experience level of a multi-channel approach in other industries, and the use in online auctions—as suggested for in- Our analysis supports the following hypothesis: stance by innovation diffusion theories—we could not find support for this proposition. The reason is H4: ‘‘The small size of the potential consumer population that the Finnish online auctions typically do not offer combined with the high investment costs of multi-access more than one channel, thus the trend towards the technologies will hamper the use of multiple channels in use of multiple channels cannot be verified in the online auction markets’’. 192 European Management Journal Vol. 23, No. 2, pp. 182–194, April 2005
  12. 12. FACTORS IN ADOPTING MULTI-ACCESS TECHNOLOGIES ARTICLE IN PRESS We think that validating our conceptual model and these statements could be generalized over all types the set of propositions developed in this paper in of online consumer auction markets. other (more advanced) markets would provide more detailed empirical results. References Balderston, F.E. (1958) Communications networks in inter- mediate markets. Management Science 4(January), Conclusions and Further Research 154–171. Bakos, J.Y. (1991) A strategic analysis of electronic market- places. MIS Quarterly, 295–310. This paper provides three key contributions to the Bakos, Y. (1998) The emerging role of electronic market- literature of multi-access technologies and online places on the Internet. Communications of the ACM 41(8). markets. The first contribution is that this paper Bapna, R., Goes, P. and Gupta, A. 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