Title: Strategic IT investment in B2B e-commerce platform on user loyalty: considering variable investment cost

Authors: Li Zhu; Li Li; Yue Zhang; Qiaosheng Shi

Addresses: School of Economics and Management, Nanjing University of Science and Technology, Nanjing, 210094, China ' School of Economics and Management, Nanjing University of Science and Technology, Nanjing, 210094, China ' California State University, Northridge, 18111 Nordhoff Street, Northridge, CA 91330-8372, USA ' School of Economics and Management, Nanjing University of Science and Technology, Nanjing, 210094, China

Abstract: In the competitive market of B2B e-commerce platform, the early entrants have the advantage of switching cost while the late entrants have the advantage of declining information technology (IT) cost. Considering the variable investment cost due to the improvement of platform quality, the paper develops an IT investment model to investigate the best investment strategy for B2B e-commerce platform under the impact of switching cost, declining IT cost, price-sensitive coefficient and quality-sensitive coefficient. Results show that switching cost helps early entrants increase investment in platform quality, assume an aggressive investment strategy. Declining IT cost helps late entrants increase investment in platform quality and assume an aggressive investment strategy only when switching costs are lower. With the increase of price-sensitive coefficient, early entrants and late entrants should both decrease investment in platform quality. With the increase of quality-sensitive coefficient, early entrants and late entrants should both increase investment in platform quality.

Keywords: B2B e-commerce platform; IT investment; user loyalty investment; variable cost; decision model.

DOI: 10.1504/IJNVO.2017.085517

International Journal of Networking and Virtual Organisations, 2017 Vol.17 No.2/3, pp.290 - 313

Received: 03 Nov 2015
Accepted: 11 Apr 2016
Published online: 30 Jul 2017 *

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