Does Electronic Business Create Value For Firms? An Organizational Innovation Perspective


Youlong Zhuang


This study applies organizational innovation theory to one specific type of innovation—electronic business. It describes e-business innovation along seven dimensions: organizational focus, radicalness, centrality, adaptability, uncertainty, pervasiveness, and communicability. E-business is identified as both an administrative and technical innovation that is flexible, has median centrality, high levels of radicalness, uncertainty, pervasiveness, and communicability. The study also links innovative use of e-business to firm performance. By analyzing data from InformationWeek and the Compustat database, the study shows significant differences between the performance of e-business innovative firms versus the performance averages for their respective industries. The identification of e-business innovation attributes and the linkage between innovation and performance assists researchers in building e-business theories. The study also provides managers a basis for choosing the appropriate level of involvement in e-business.

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May, 2005

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