Market Microstructure for Practitioners
![]() Trading and Exchanges
Request PDF On Jun 30, 2009, Stuart J. Fitz-Gerald and others published Essvale Corporation Limited, Business Knowledge for IT in Trading and Exchanges: A Complete Handbook for IT Professionals.
Describes in plain words how markets work; how governments and exchanges regulate them; and how traders create liquidity,volatility, informative prices, trading profits, and transaction costs. It identifies the trading strategies that make markets liquid, produce prices that reflect information about fundamental values, and allow some traders to consistently profit while others lose. Since the success of trading strategies depends on the trading rules that markets use, the text also considers the regulatory forces that create and enforce trading rules.
Small businesses, in general, play dominant roles in terms of employment generation and share in total business activities. However, studies have shown that small businesses are also slow in their uptake of modern technologies including electronic commerce. This paper presents the result of an empirical study that investigates the adoption behaviour of small businesses in relation to business-to-business (B2B) trading exchanges in the context of Western Australia.
![]()
Following extensive literature review on innovation adoption–diffusion theories and qualitative field study, a research model was developed which treated six sets of antecedents of small business's attitude towards B2B trading exchanges. The findings revealed that external influences raise the small business's awareness of an innovation. This awareness leads to the evaluation of the perceived direct and indirect benefits and a positive evaluation leads to a positive attitude towards the innovation.
The results confirmed that a positive attitude towards B2B trading exchanges leads to the intention to adopt B2B trading exchanges in small businesses. The findings also confirm that external, belief, contextual and control factors drive the attitude towards B2B trading exchanges. Implications of the results are highlighted. Small businesses contribute significantly to economic activities in Australia, employing over 47% of the private sector workforce and contributing over 40% to Australia's goods exports (, accessed on 12 February 2007).
In Western Australia (WA), small businesses account for 96.7% of total business numbers thus making it a significant industry in terms of employment generation and other economic activities. However, studies have shown that small businesses are slow to apply technology to improve their competitiveness as they are affected by their sheer small size and limited resources. Found that small businesses in Australia have been slow in their uptake of electronic commerce even though electronic commerce and its associated technologies could provide unique opportunities to small businesses to overcome issues with geographical remoteness and time differences. These are relevant issues for WA small businesses given that location and time constraints isolate them from the major markets in the world.Business-to-business electronic commerce (B2B) is an electronic commerce framework that facilitates business relationships and transactions between firms at relatively low cost.
This low cost adds to its appeal to small to medium businesses. It is envisaged that B2B trading exchange can address the issues of isolation and remoteness of WA small businesses by bringing buyers and sellers together in a virtual marketplace. This study, therefore, explores the adoption behaviour of WA small businesses of B2B trading exchanges.The motivation of this research was also influenced by the challenge of modelling the adoption process of B2B trading exchanges, which is executed at the organisational level. Most of the technology adoption studies are aimed at individual level using a number of prominent theories such as the theory of reasoned action (TRA) , Theory of Planned Behaviour (TPB) and Technology Acceptance Model (TAM). Organisational level adoption has been studied by a number of researchers (;;;;;;; ). In this research, we take an integrative approach by combining the individual level adoption variables of ‘awareness’, ‘attitude’ and ‘intention to adopt’ B2B trading exchanges by small businesses with the organisational level adoption determinants of external factors, external control factors, internal control factors, contextual factors and cognitive and normative beliefs.The paper is organised as follows. The next section presents the background literature followed by the research model, which has been developed based on an extensive literature review, which was then enhanced through a qualitative field study.
The hypotheses are then presented. The sample, measures and the data analysis method, based on partial least square, are presented in research method section. The findings are presented next. Finally, the paper concludes with the discussion and implications of the results.
A B2B trading exchange is a trading portal or trading hub, which aligns buyers and sellers in a virtual marketplace for the online exchange of goods and services. The intent of B2B trading exchanges is to create a market for all market participants without allowing any one of the participants’ interests to dominate the exchange. There is a criteria set for participating in trading in the exchange and any buyer or seller can gain trading status on the exchange providing they meet the criteria set. There are no physical exchanges of goods of services in the exchange; instead, the exchange only facilitates the matching of buyers and sellers. External and external control factorsAs the name implies, external factors are the factors outside of the control of an organisation. These factors influence the awareness of a technology (in our case B2B trading exchange) among the adopting organisations.
Confirmed small business dependency on external factors for technology adoption. Argued that the external environment of the organisation is an important factor in the adoption of new technologies.External factors have been operationally defined in various ways such as consumer readiness, competitive pressure, trading partner readiness, vendor of the innovation, Government (;;;; ).
In this study, we propose to use the external factors as vendors, competition, government and trading partners.The perception of control was the key addition to the TRA to formulate TPB model. External control factors are external to the organisations. However, organisation can have indirect control in shaping these factors. A number of studies on ICT have highlighted the importance of a critical mass of users in the adoption of an innovation (;; ).
The availability of ‘vendor support’ has also been found to be a key factor in technology adoption (; ).Thus, in this study, we have used the external control factors of ‘critical mass’ and ‘vendor support’ influencing the small businesses’ attitude towards B2B trading exchange adoption. Internal control and contextual factorsAn internal control is an organisation's confidence in its ability to perform or undertake a particular behaviour. Conceptualisation of internal control refers to internal situational enablers or constraining factors. In the context of this research, internal controls are those factors that are in direct control of the organisation and are based on the perception of the level of readiness of the organisation.studied the adoption of technology at the organisational level and found organisational contextual factors to be significant.
Previous studies in IT adoption also identified a number of organisational factors that influence the adoption of IT. Therefore, this study adopted a more micro perspective of the organisational environment and proposed that B2B trading exchange adoption can be hindered or enabled by the organisation in which it is being implemented. This will include attributes and experience of owner/managers and other organisational level variables of size, industry, level of computer use (;; ). Cognitive and normative response/beliefsThe concept of cognitive belief has been studied by a number of prominent theories, for example, TRA , TPB and Hierarchy of Effects model. Belief is primarily composed of ‘awareness’ about the technology to be adopted which is affected by various external influences, for example vendor, competition, government etc. Literature suggest that attitude towards a given behaviour (e.g.
Adoption of B2B trading exchange) is a function of the belief that a certain behaviour would lead to specific outcomes and then to the evaluation of these outcomes. To facilitate evaluation we include perceived direct and indirect benefit of B2B trading exchange as factors under cognitive belief (; ).The concept of normative response/belief has been theorised by the TRA. A form of norm, which has been studied in inter-organisational research, is the concept of coercion. Found that subsidies and other influencing tactics used by trading partners could increase the rate of adoption. Small businesses are vulnerable to more powerful trading partners; hence, we propose to use coercion as a form of normative belief in this research. Attitude and intention to adoptAs mentioned earlier, this research proposes to study the influencing determinants of attitude and intention to adopt B2B trading exchange. Attitude is a behavioural response, which has been widely studied by TRA, TPB and related past studies.
The attitude and intention to adopt concepts have been applied in a number of TRA-related studies, such as education , beer , and Internet banking , among many others. The research model primarily draws from the literature on Hierarchy of Effect model , the traditional Diffusion of Innovation theory , the TRA , the TPB , TAM and various factors identified in studies on IT, EDI and Electronic Commerce adoption. The initial research model was developed first from an extensive literature review.
This initial model was further enriched through a qualitative field study that was concerned with further exploring and confirming the factors and variables identified during the literature review. The final research model is shown in. As mentioned in the background section, the research model studies the impact of ‘external factors’ on ‘awareness’ about B2B trading exchange. This awareness then leads the small business to seek information about B2B trading exchange in terms its ‘benefits’. These perceived benefits then influence small business to form an ‘attitude’ that eventually leads to an ‘adoption’ decision. The research model also shows that ‘external control factors, ‘internal control factors’ and ‘contextual factors’ of small business influence the ‘attitude’.
The literature review section justified the theoretical basis of the research model. Using the research model as a basis, the links among the factors in represent the hypotheses. The hypotheses are developed formally below. It is noted that much of the supporting literature for hypotheses are also provided in the Background section.
Hypotheses related to external factorsargued that the persuasive activities of the vendor could influence the likelihood that an innovation will be adopted by increasing the awareness. Also contested that the marketing tactics employed by vendors increase awareness.Therefore, the following hypothesis is proposed:Hypothesis 1 (H1):.The activities pursued by the vendor will positively influence the awareness of a B2B trading exchange in small business.Studies conducted by found empirical evidence that supported the theory that intense competition stimulates the rapid spread of an innovation. Argued that the existence of similar innovations in a particular industry would influence the organisation's adoption of an innovation via increased awareness. A number of studies have shown that competitive pressure influences an organisation's awareness of IT/electronic commerce and ultimately its adoption (;; ).Therefore, the following hypothesis is proposedHypothesis 2 (H2):.Competitors using B2B trading exchange are likely to influence the awareness of B2B trading exchanges.According to, the more intense the government involvement, the greater is the likelihood of any potential adopter embracing the innovation. Government could facilitate or inhibit the adoption of an IT-based solution by imp.
![]() Comments are closed.
|
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
February 2023
Categories |