The Survival of Internet-Based B2B Exchanges: The Critical Role of Relationships

Researchers have suggested that businesses are undergoing a paradigm shift due to the emergence of the Internet. In the business-to-business arena, fundamental process changes are taking place due to the emergence of Internet-based B2B exchanges. Three types of B2B exchanges have emerged-independent or third party industry specific B2B exchanges, buyer or supplier coalition-based B2B exchanges, and corporate B2B exchanges. While the costs savings associated with Internet-based B2B exchanges are well understood, this paper highlights the critical role that relationships will play in the success or failure of B2B exchanges. Using transactional cost framework, we analyze the various types of Internet-based B2B exchanges and conclude that corporate exchanges have a comparative advantage over open market exchanges, as well as over buyer or supplier coalition-based exchanges. It is our expectation that this paper will serve as a catalyst for future research in this area.