Open E-Business Standard Development and Adoption: An Integrated Perspective

Xu Mia, Department of Business Administration University of Illinois at Urbana-Champaign, Kexin Zhao, Department of Business Administration University of Illinois at Urbana-Champaign, and Michael Shaw, Department of Business Administration University of Illinois at Urbana-Champaign

6/13/2008
(Original Publish Date: 6/1/2003)

The recent growth of e-Business has called for open standards for inter-organizational electronic information sharing. Many firms form consortia to facilitate the development and adoption of open e-Business standards (OEBS). In this paper we study the consortium-based open e-Business standard development and adoption from an integrated perspective that recognizes the fact that firms have the choice of 1) joining the development of the standards; 2) being an adopter only and 3) not adopting at all. We consider the network effects and the interaction between the developer network and the adopter network. We find that the size of both the developer network and the adopter network is positively related to the network effect of the standards. The developer network's size is also positively related to the “insider” effect of being in the development. Furthermore, by increasing developer firms' “insider” effect and reducing the myopia for developers, the total value of the standards can be increased.