7 Chapter 2 Literature Review: Markets, Intermediation and E ...

Conclusion
This chapter reviewed the literature on e-commerce and intermediation, looking at
various perspectives including an historical analysis of changing marketing and
distribution patterns, transaction costs analysis of the efficiency of exchange, and
understanding market relations from the perspective of value chain. This latter was
found to be the most appropriate level of analysis when applied to technological
change in the electronic commerce era.
The first section examined the historical tendency towards hierarchical organisational
structures, vertical integration, and domination of supply and distribution by large
manufacturers. These studies suggested that, although the type of distribution system
depends upon the nature of the market and the nature of the product, there are broad
similarities across large sectors of industry.
The next section showed how this trend stands in contrast with more recent economic
conditions that point towards more flexible value systems composed of tightly
collaborating organisations with specific roles. The section then reconsidered the
advantages of markets compared to hierarchies, and the relevance of this dichotomy in
the electronically networked era. Nevertheless it was seen that the earlier discussion
provided a worthwhile and relevant basis for analysis, by framing our understanding
of market and value chain restructuring issues relating to e-commerce.
Section 2.3 re-examined the theories of technology impact in the light of this
understanding of value chain relations. The main problem for the initiator of an e-
commerce system is to encourage a sufficient number of business partners to
participate. Studying this problem involves considering a great number of sociological
issues relating to the design and use of new technological systems. However, there are
many similarities with problems encountered in the introduction of EDI systems in
industry over the past fifteen years.
Section 2.4 discussed whether the Internet could be thought of as a replacement for
EDI, or whether EDI provides certain unique benefits. These issues are also discussed
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