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e-Business in the chemical, rubber and plastics industry4.3 ICT, rivalry in the market and outsourcingThis section explores to what extent the deployment of ICT is linked with competition inthe market, the development of a company's share in this market, and firms' propensitytowards outsourcing . More specifically, the following questions are studied:1. How do companies perceive the impact of ICT on competition?2. Does the intensity of competition, notably a perceived increase in the market rivalry,constitute an incentive to adopt ICT (as a tool to withstand competitive pressure,e.g. by cutting costs)?3. Are companies that use ICT more intensively also more likely to experience marketshare?4. Does a higher level of ICT endowment have an impact on a firm's "make or buy"decisions by facilitating the outsourcing of business processes?In the SCP framework, these questions concern the relationship between marketstructure (market rivalry) and ICT adoption, as well as possible links between ICTadoption and performance, if market share is taken as a measure of performance.Structure Conduct PerformanceMarket / firmcharacteristicsSections4.3.1, 4.3.3ICTadoptionICT enabledinnovationSection4.3.2Performanceindicators (e.g.profits)4.3.1 Market structure as a determinant of ICT diffusionIncreasing rivalry in the market could be expected to be important factor that drives theadoption of new technologies and innovation, because more intense competition drivescompanies to search for opportunities to cut costs. Moreover, firms aim to escapecompetition by innovating. Successful innovation protected from imitating by means of apatent, a trademark, or a copyright enables companies to secure or increase their shareof the market or even to become the market leader. By being the first in the market, a firmmay secure an unchallenged position by building up the necessary capacity to enjoysubstantial economies of scale, or strategic know-how. Rivalry in the CRP industries isincreasing, mainly due to rising competition from emerging markets in Asia and LatinAmerica. Companies are forced to cut costs, even if European companies will not be ableto compete with producers in cheap-labour countries purely on a cost basis. Based onthese considerations, the following hypothesis is proposed:Hypothesis M.1: Increasing rivalry in the market is a driver for the adoption of e-businesssoftware systems in the chemical, rubber and plastics industries. 137137 The hypothesis has been tested on the basis of data from the e-Business Survey 2007, usingthe following variables:• Question G8a: "Please describe the type of competition in your main market. Do youagree that rivalry in the market is increasing?"122