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Internet and
Driving the internet and e-business
e-business technologies to technologies

generate a competitive
advantage in emerging markets 389

Evidence from Egypt Received 27 October 2017

Revised 30 September 2018
8 March 2019
Gamal Mohamed Shehata Accepted 30 April 2019
Department of Business Administration, Cairo University,
Giza, Egypt, and
Mohammed A. Montash
Business Division, Al-Azhar University, Cairo, Egypt and
College of Business, University of Jeddah, Jeddah, Saudi Arabia

Abstract
Purpose – The purpose of this paper is to develop and empirically examine a comprehensive model that
attempts to identify the factors that explain competitive advantage of implementing electronic business
(e-business) in an emerging market. It seeks to fulfill an inevitable lack of conducting rigorous and intensive
empirical studies on the Middle East and North Africa (MENA) region in which the internet use and
e-business applications are on the rise.
Design/methodology/approach – This research is descriptive in nature where a quantitative research
methodology is deployed. Data are collected using both interviews and e-survey for a sample of 302 Egyptian
companies serving in diverse industries. A multivariate partial least squares technique is employed to analyze
the collected data.
Findings – This study explores various e-business modes and applications widely employed in the MENA
region. It also addresses a set of e-business-driven competitive advantages that are mainly generated from
supportive ICT environment, major market forces and strategic opportunities, and at last, from electronically
driven customers’ relationship initiatives. A number of e-business barriers are claimed to moderate the
relationship between those forces and the resulting competitive advantages.
Research limitations/implications – Although this research main framework incorporates important
variables based on theoretical and empirical foundations, integrating other factors may extend understanding
of how these factors, independently and/or interactively, explain the adoption of e-business and its merit to
create distinctive competitive advantage.
Practical implications – This work helps managers and e-business experts alike to comprehend the ways
through which firms target the applications of e-business technologies to realize a competitive edge in MENA
region. It also helps practitioners and professionals comprehend the interrelationship between the type of
forces drive e-business based competitive position and key barriers that deteriorate such a connection in
emerging markets.
Originality/value – A model that enables scholars to better understanding the e-business phenomenon in
MENA market is developed and validated. This model rests on e-business experts’ perspectives, reflections
and it is evidently substantiated by past works in the areas.
Keywords Competitive advantage, Business models, Adoption, E-marketing, Online shopping,
Services operation and management, Barriers to e-business, E-business modes,
Internet and e-business applications, Electronically driven customer relationships management
Paper type Research paper

1. Introduction Information Technology & People

The environment of conducting business and competition has been changed throughout the Vol. 33 No. 2, 2020
pp. 389-423
last three decades. Worldwide, a significant amount of transactions and business operations © Emerald Publishing Limited
0959-3845
are increasingly conducted via the use of electronic networks such as the internet, intranet DOI 10.1108/ITP-10-2017-0360
ITP and extranet (Ifinedo, 2011; Song and Walden, 2007). Globally, business transactions and
33,2 operations have been accelerated in volume and value done via business to-consumer (B2C),
business-to-business (B2B), B2B2C, G2C forms of e-commerce and also, across different
countries worldwide. E-commerce statistics confirm the explosive pace at which this
industry has developed as worldwide B2C e-commerce sales was amounted to more than
$1.2 trillion in 2013 and is expected to score $2.356 trillion in 2018. Besides, B2C e-commerce
390 sales as percentage of the gross domestic product worldwide is expected to increase from
0.92 in 2009 to 1.61 percent in 2018 (Statista, 2015). The Organization for Economic
Cooperation and Development (OECD) has claimed that on average 96 percent of its sample
firms in certain countries had used the internet and 69 percent had their own websites in
2011 (OECD, 2012). In total, 175m of internet users are accessing the internet in Middle East
and North Africa (MENA) region, and a significant number of those users are shifting their
use of desktop computers to smartphone and tablets (Tabaza, 2015). This, in turn, creates a
productive environment for firms operate in MENA region to deploy a set of online business
models. A range of industries began to benefit from this evolving trend such as the media,
food and beverage, food ordering and restaurant reservation, transportation and travel,
automotive, education, cleaning and retailing (Tabaza, 2015). This new nature needs to be
reflected in the way a business organization is run to gain a competitive advantage.
Reviewing the literate available on the subject indicates that there is little, and in some
extreme situations, no attention is provided by Egyptian scholars in the field to examine the
shift made by Egyptian firms to conduct their business operations online and how such a
shift impacts their competitive capabilities.
The adoption and implementation of e-business by various organizations in emerging
markets has become increasingly important in order to remain competitive. Despite the
widespread adoption of electronic business technologies, it is not clear whether the adoption
of these technologies can affect firms’ competitive performance (Chae et al., 2014). Devaraj
et al. (2007) argue that “few empirical studies to measure Internet-based initiatives or gauge
the scale of their impact on firm performance” (p. 1200). Although the benefits and the
solutions provided by e-business, which are linked to competitive advantage, there is lack of
empirical studies analyzing the relationship between e-business benefits and competitive
advantage (Pilinkiene et al., 2013). In line with Soto-Acosta et al. (2016), our reviewing of the
literature indicates that the impact of e-business technologies on organization performance
and/or strategic measures is still weak, and much of the existing research relies heavily on
one single view of e-business use. Zhu et al. (2004) identify three missing in e-business
literature: a solid theoretical framework for identifying factors that shape the organizational
performance, a research model for examining the drivers of e-business value and empirical
investigation based on a broad data set instead of a few isolated cases (Piccoli and Ives,
2005). From another perspective, both emerging and developing countries are home to more
than 80 percent of the world’s population and are the site for growing use of e-business.
There are conceptual claims that e-business could bring important benefits to firms in those
countries, but we know very little empirically about the actual outcomes of e-business
implementation. E-business literature that focuses on developing countries are hardly found
(Rahayu and Day, 2015). The difference between developing countries and developed
countries is not only an economic, but also political, environmental, social and cultural
differences. Yang et al. (2009) see that using and adopting technology in the developing
countries might show a different interaction pattern because they may take advantage of
their late adoption, and clearly “this difference is worth investigating” (p. 196).
The main objective of this paper is therefore to identify a holistic model to mainly
investigate how technological and environmental factors impact the adoption of e-business
in order to gain competitive advantage. Accordingly, this paper tries to deeply examine such
an issue; first, to shed more light on a set of forces drive e-business, encountered barriers,
resulting benefits and competitive advantages; second, to advance scholars’ understanding Internet and
on e-business status in emerging economy that maintains especial features such as the e-business
Egyptian one. Furthermore, our study intends to direct Egyptian managers’ attention to technologies
recognize the values that can be generated from such a shift into the e-business design.
Furthermore, it aims at clarifying and diagnosing the current situation in terms of drivers,
enablers and barriers of e-business environment in Egypt. Data collected from 302 firms
operate in Egypt enables such a research to address a set of issues considered to be highly 391
significant to scholars and managers alike. Those issues incorporate informants’ viewpoints
on benefits gained from e-business, current e-business applications, critical barriers to
advance e-business in Egypt, requirements to successful adoption of e-business platforms
and existing modes currently adopted by the investigated firms. Thus, this research aims to
make a contribution to the body of knowledge by providing and validating practical
guidance for companies working in the Egyptian market and seeking to sustain and/or
boost their competitiveness by adopting e-business.
A conceptual framework is first developed in light of conducting an intensive
literature review. Structural equation modeling (SEM) using partial least square (PLS)
with relevant statistics are deployed to validate the measurement model and also, to test
the structural model.

2. Conceptual background and related work

2.1 The evolution of new business models
Since M.E. Porter and Millar (1985) highlighted the strategic significance of information
technology and its role in directing the future success of a business, utilizing the internet in
doing business has become a subject of interest to diverse scholars and businesses alike. It is
claimed that the IT industry transformed the nature of products, processes, companies,
industries and the competition itself. IT altered structures of many industries, supported the
cost and differentiation strategies, and created entirely new business models. Consequently,
the concept of a business model is seen of particular significance. Afuah and Tucci (2000)
argued that a business model is the method by which a firm builds and uses its resources to
offer its customers better value than its competitors and to make money. Scarpa (2000)
argued that scholars are in a need to design a step by step model that guides modern
organizations not only to adopt e-business but also to create value for its customers. This
definition comprises two fundamental elements; the first element is that the transformation
of resources into value, and the second is that the extraction of profit from such value.
Modern firms are thus required to identify and manage customer needs, to produce products
and services demanded by those customers, to focus on delivering product value for
customers, and at last, to build and to maintain the internal storefront. In other words, they
are demanded to create what is named Internet Commerce Management. That is, new
business models that rest on the internet increasingly receive much popularity.

2.2 The e-business concept

Hunt and Barnes (2001) defined e-business as the conducting of business transactions over
electronic or computer network including the internet. Ebrahim and Irani (2005) viewed that
the adoption of information and communication technology and related practices in the
commercial sector such as e-commerce, and the diffusion of the internet among the general
population have resulted in intensifying the level of ease and knowledge with the
technology. E-business was also defined as the integration of “systems, processes,
organizations, value chains, and entire markets using Internet-based and related
technologies and concepts” (Deresky, 2014, p. 51). E-business was introduced as one
major application driven by the advances in information technology. Similarly, e-business
ITP was defined as a way of integrating applications including enterprise resource planning
33,2 (ERP), electronic customer relationship management (e-CRM) and e-SCM in order for them
to work together and help in managing, organizing, routing and transforming information
(Deresky, 2014; Kalakota and Robinson, 2001). It is simply about doing business digitally
(Brache and Webb, 2000). As Zwass (1999) claimed societies have been shifted toward
cashless transactions and business communications have already moved to a higher level
392 beyond basic computer-to-computer exchange of information. Other scholars have drawn
clear distinction between e-commerce and e-business. In the one hand, e-commerce was seen
as the process of buying, selling or exchanging products, services or information via
computer networks. On the other hand, e-business was defined as the process that includes
not just the buying and selling of goods and services, but also servicing customers,
collaborating with business partners and conducting electronic transactions with the firm
(Turban et al., 2005). Accordingly, e-business is considered to be a broader concept that
widens the e-commerce focus and scope. Hoque (2000) and OECD (1998, 1999) viewed
e-business as the range of online business activities for products and services, both
business-to-business (B2B) and business to-consumer (B2C), through the internet.
E-business is believed to be an important form of technology innovation and it is
deployed not only as a process-oriented but also as a new way for firms to do business.
The most widely used models of e-business incorporate: B2B, B2C, portals, websites as
goodwill or promotional vehicles and peer to peer or consumer-to-consumer systems
(Winsor et al., 2001). However, some past studies argued that the majority of organizations
that utilize e-business mostly use B2B and/or B2C. But B2B is considered to be the most
widely utilized model of the two models in an electronic marketplace (e-marketplace). In
some nations, the B2B model accounts for 90 percent of all e-commerce transactions
(E-Stats, 2012). One major application of e-business is known as the inter-organizational
systems (IOS). Chi et al. (2007) claimed that IOS are distributed computing systems that
support processes shared by two or more firms. This, in turn, provides new understanding
of how competitive behavior is influenced by network structure. Three e-business research
streams resulted from introducing the IOS concept; they involve IOS, social network
analysis and competitive dynamics. Consequently, this enriches the understanding of how
network structure and IOS use evolve together not only to influence firms’ competitive
actions but also to enable those firms differentiate their performance from rivals. In
conclusion e-business is seen as a way for companies to conduct business transactions
electronically not only to become more efficient, but also to promote operational flexibility
and competitiveness. Besides, e-business enhances not only the degree of responsiveness to
customers’ needs but also business–intermediaries relations.

2.3 Theorizing for the e-business competitive advantage notion: the internet and ICT role
Although the concept of e-business as a tool to gain competitive advantage has been
broadly covered in the literature, the sustainability of the competitive advantage by
e-business is not well examined; particularly in emerging economies (Brache and Webb,
2000). As Ranjith (2016, p. 203) put it “participants in the emerging markets have always
had a problem in common. It was not just about competitive advantage, but it was about
sustainable competitive advantage.” Also, Kapurubandara and Lawson (2006) stated that
emerging markets are still slow to keep up with the-state-of-the-art ICT solutions to aid
e-business. In addition, a few studies were conducted on emerging nations to address such
an issue (Hasan et al., 2013; Kirk et al., 2016; Sambhanthan and Good, 2012). Nevertheless,
more business transactions are being conducted remotely than before and hence, the
existence of e-business in emerging markets becomes a necessity (Lerer, 2002; Lockett
et al., 2006). Ansoff (1965, p. 79) was the first to broadly define the competitive advantage
concept as the “properties of individual product/markets which will give the firm a strong
competitive position.” Later, the term sustainable competitive advantage was defined as Internet and
long term profitability and above-average performance in the long run (Porter, 1985). e-business
According to M. Porter (1985, p. 3) a competitive advantage grows basically out of value a technologies
firm is able to create for their buyer that exceeds the firm’s cost of creating it. Porter
viewed the term value as what buyers are willing to pay, and superior value stems from
offering lower prices than competitors for equal benefits or providing unique benefits to
compensate for a higher price. M. Porter (1985) claimed that competitive advantage stems 393
from a firm’s ability to leverage its internal strengths to respond to external
environmental opportunities while averting external threats and internal weaknesses.
Although Barney (1991) preferred not to use calendar time as a reference, and instead
defined the term sustainable competitive advantage as an advantage continues to exist
after efforts to duplicate it by rivals come to an end.
It is also argued that most of our understanding of the term competitive advantage
comes from the strategic management literature. The strategic management or the
industrial organization (IO) perspective states that firms’ competitive advantages often arise
from an industry forces not from the firm specific performance (Porter, 1985, 1990). It is
named a market-based view or competitive forces-standpoint as stated by M. Porter (1985).
This standpoint is grounded in neoclassical economics and deals with optimal outcomes in
an external environment (Lado et al., 1992). It seeks to tie returns and maximization of return
into a firm’s competitive environment (Sheth and Sisodia, 2002). Markets free of regulatory
constraints and major entry barriers are thus more attractive to e-business. The IO
perspective stresses the fit between a firm’s business strategy and its environment
(Venkatraman and Prescott, 1990). It rests on two main assumptions. The first indicates that
firms in an industry or strategic group are controlling their identical strategic resources.
The other states that even if the firms acquire unique resources; they tend to be highly
movable and short lived because new competitors from outside the industry tend to
replicate them and hence, pick the premium profit (Porter, 1985; Rumelt and Lamb, 1997).
That is, the IO perspective suggests that a fit between business strategies and environment
is critical to realize a competitive advantage. Besides, the structure of the industry is another
element that impacts such competitive advantage and this is well addressed in Porter’s five
forces model (Porter, 1985; Porter et al., 2001). The IO standpoint treated the competitive
advantage as an outcome resulting from positioning and should be treated as an end in
itself. In the internet era, firms must capitalize on its strengths and capabilities and guard
themselves against their weaknesses. Porter’s ideas seem to be in line with the economic
efficiency theory; which suggests that the decreasing search cost will cause electronic and
physical markets to move toward perfect competition. Online customers can now search for
a cheap supplier in a matter of second via the internet and this, in turn, forces sellers to
reduce their prices to secure their market shares. The efficiency theory states that electronic
markets are directed to sell more homogeneous products by reducing the transaction cost
(Bakos, 1997). However, this notion is not fully supported due to existence of other factors
such as branding, trust and product differentiation (Lee, 1998; Lynch and Ariely, 2000).
Although the basic notion of competitive advantage stems from optimizing economic
theory; the shortfall of this was a leading force to the founding of the resource-based view.
Advocates of the resource-based view theory argued that firms need to develop capabilities
and resources to earn above-average economic returns (Barney, 1991; Zhuang, 2000). The
resource-based view suggests that industry is not the sole determinant of competitive
advantage. It is argued that the persistence of a firm’s superior economic performance
derives from strategic resources (Castanias and Helfat, 1991). According to Barney (1991)
firms must acquire or develop resources or capabilities that are valuable, rare and exhibit
imperfect imitability and imperfect substitutability to secure their sustainable competitive
advantage. Collis and Montgomery (1995) argued that a competitive advantage can be
ITP attributed to the ownership of a valuable resource that enables the company to perform
33,2 activities better or more cheaply than its competitors. Wernerfelt (1984) explained that the
resource-based view focuses on resources that are permanently tied to the firm. The
resources that our paper examines and believes to add value to the firm incorporate the ICT
and e-business technologies and platforms such as network effect, ICT-driven relationships
and e-business-related skills. The ICT management skills in terms of establishing strong
394 relationships with customers, suppliers, employees and other stakeholders and also, the
ability to integrate technologies of e-business with firms’ business strategies are crucial to
secure a sustainable competitive advantage (Tan et al., 2004). Furthermore, it is believed that
customer value can be enhanced through the growth of networks of customers and
suppliers, and even competitors. This is facilitated by the advance in e-business
technologies that enable modern firms to tighten and better managed their value chains
electronically (Mike, 2005). These resources meet the criteria of valuable, rareness and
immobility, and hence, can serve as a base for sustainable competitive advantage. It has to
be noted that it is the competency emerges from the resource which is the most important
not the resource ownership as such. The competency must also help firms realize their
intended purpose (Collis and Montgomery, 1995; Prahalad and Hamel, 2006). That is, the
resource-based view counts on the firm’s internal approach. The rationale is that the firm’s
distinctive capabilities in terms of know-how and personnel abilities and knowledge are
important sources that lead to sustainable competitive advantages.
The literature was then shifted to explore various competitive advantages arise from the
knowledge management, which views knowledge as a valuable strategic resource that
leverages firms’ competitiveness (Argote and Ingram, 2000; Day, 1994; Moustaghfir, 2009).
Nonaka (1991) clarified that in an uncertain business environment the only real source
of sustainable competitive advantage is knowledge creation. Knowledge is a source
of sustained competitive advantage because it is valuable, rare, inimitable and
non-substitutable. The resource-based view of the firm suggests that knowledge as a
valuable resource should be integrated into the firm’s strategy (Kamya et al., 2010).
Ghingold and Johnson (1998, p. 74) explained that “valuing knowledge as a strategic asset
that can contribute to business capabilities and competitive advantage is an atypical view
for most business marketers.” Knowledge helps firms enhancing its capabilities to find new
solutions and opportunities that provide the base for a competitive advantage (Reid, 2003).
We argue here that internet-based firms need to capitalize on the integration between
absorptive capacity (Cohen and Levinthal, 1990) or market-based knowledge and
transformative capacity or internally created knowledge (Garud and Nayyar, 1994) to
secure its sustainable competitive advantage. This is a crucial move to deal with complex
nature of today’s competitive pressures. Nevertheless, a new paradigm has arisen that
couples knowledge processes with cybernetics or how emerging knowledge is controlled
and communicated in a particular organizational setting. Studying the competitive
advantage notion from the e-business standpoint requires scholars to configure a clear road
map from which various sources of competitive gains can be addressed. Relying on a single
paradigm when seeking a competitive advantage; firms may fall short to deal with the
complex nature of today’s competitive advantage.

2.4 Competitive gains and barriers of e-business applications

Internet pioneers such as Amazon.com and e-bay.com have an advantage in recognizing
competitive advantage in e-business since they enter the market backed by strong inside-
out capabilities such as systems knowledge, programming skills, logistical capability and
so forth. Though the customer attraction rates were acceptable, many dot.com firms failed
not only to convert these visitors into purchasers, but also to turn purchasers into repeat
purchasers (Fahy and Hooley, 2002). A reconsideration of the dynamics of the
organization–environment interface is both necessary and a potentially rich source of Internet and
research on linking e-business to competitive advantage and this becomes evident due to e-business
the emergence of the digital economy, which is built on the increase use of the information technologies
and knowledge and is facilitated by the explosion of bandwidth and connectivity brought
about by developments in internet technology. A large number of e-business scholars
suggest that the e-business done via the internet has revolutionized traditional business
practices (Daniel et al., 2002; Geiger and Martin, 1999; Lee, 2001; Siu, 2002). This may 395
emerge from a range of reasons. That is, the internet offers location and time
independence, ease of communication, internet can help firms gain efficiencies and cost
savings that previously were only obtainable for large firms, and an ability to gain
customer satisfaction through enhancing customization.
E-business adoption also enables firms to realize a relationship advantage that emerges
from an e-CRM (Kennedy, 2006). E-CRM creates a digital loyalty cycle that ends up in a long-
lasting competitive advantage. For instance, internet-based customer relations management
(CRM) technology has allowed a company like Nestle to personalize its interactions with
individual customers, cut the number of phone calls into its call centers, and provide
employees with one computer system to tap for information across numerous sales channels
(Anon, 2001). This indicates that companies at the front of CRM development do have
significant opportunities to reinforce their competitive advantage through the extension of
the customer-centric strategic orientation to incorporate innovative e-CRM strategies and
technologies. Another advantage from e-business resides in incorporating the internet into
supply chain management (e-SCM) practices (Levenburg, 2005). Competitive advantages
result from e-SCM involve improved lead times, faster deliveries, improved communication
and cooperation between supply chain members, reduced lost shipments and reduced
shipper claims, and greater cost efficiencies. Those advantages are of great importance
taken into consideration that 70 percent of a firm’s sales revenues are typically spent on
supply chain-related activities (Presutti, 2003). This, in turn, suggests that the potential
results occurring from integrating internet technologies into SCM appear to be valid. First,
the internet is an enabler that ultimately revolutionizes management of the supply chain,
and certainly, the way business is conducted in some industries. Second, there is now
growing recognition that success in e-business depends on a firm’s internal production and
supply processes (Barnes et al., 2003; Jambekar and Pelc, 2002). That is, e-business
encourages many organizations to develop a web presence and exploit the opportunities
offered by the internet (Smith and Correa, 2005). However, it is uncertain for companies
commercialize their tangible product offerings online to protect their sustainable
competitive because of competitors’ imitative behaviors (Saeed et al., 2005). This, in turn,
requires firms enhance the product ownership experience of their customers. In addition, in
order to compete in supply chain partnership and the many-to-many model of collaborative
marketplace exchanges, a firm needs an internal fluid process that connects data across the
firm. Firms also have to eliminate information bottlenecks, and to ensure interoperability
among different business units (Borck, 2000).
Scholars addressed the significance of examining e-business barriers in an era of
evolving electronic business paradigm (Smart, 2005). Alongside barriers, scholars also
stressed that e-business requirements need to be in place for such initiative to succeed. For
instance, Y. Malhotra (2002) states that a great need to integrate across extended inter-
enterprise value chains and supply chains demands better combination of ERP applications
with supply chain management (SCM) applications and CRM applications. It was also
argued that such integration of inter-enterprise information value chains was not possible
without supporting set of integration standards, computing processing power, data storage
capacity and network bandwidth capacity. E-business also requires top management and
executives support. This requires reasonable rationale for the investments to be made in IT
ITP and related technology and infrastructure. It also demands the possible outcomes and
33,2 benefits to be realized. Executive support can be seen in the development of the right
mindset, in understanding how information creates business value, in using IT to build
appropriate business competences, and in balancing business flexibility and
standardization (Marchand, 2000; O’Brien, 2004). That is, organizations entering the area
of e-business must frequently re-examine their system’s development methodology
396 (Weill and Vitale, 2001). The era of individual firm is redundant and value created for
customers is not developed by a single firm rather by a cluster of organization operating
together throughout the value chain (Adebanjo et al., 2006). As a result, e-business has
become the preferred way of operating for firms aiming to conduct not only effective and
efficient value-chain activities, but also better customer relationship management. This, in
turn, requires the elimination of communication barriers inside firms (Beasty, 2005).
A very major issue in e-business, particularly B2C model, is uncertainty; which claims that
the online environment still makes many consumers reluctant to engage in online exchange
relationships; more particularly in emerging and developing nations (Pavlou et al., 2006).
Uncertainty is evident in a number of directions. For instance, it can be seen in a perceived
information asymmetry, fears of seller opportunism, information privacy concerns and
information security concerns. Thus, the existence of uncertainty is a major impediment to
online exchange relationships. Factor such as trust, website informativeness, product
diagnosticity and social presence can ease such uncertainty. Trust is a critical element in
e-business adoption and it has been identified by many scholars as one of the key factors of
technology adoption in general (Isikdag et al., 2011; Kim and Tadisina, 2010; McKnight et al.,
2002; Wakefield et al., 2004). Emotional dimension in customer services was also highlighted
as a mean for achieving competitive advantage from e-business. It is widely claimed that
unless emotional aspects of customer services are considered alongside the functional ones,
barriers to enhanced customer service in e-business will not be overcome (Barnes et al., 2005).
Another fundamental barrier to e-business is that many organizations both large and small
do not have in place the controls and requirements to effectively manage electronic records
(Waldron, 2002). In an environment newly adopting e-business, this shortcoming results in
printing documents and managing records using existing paper systems and hence, this
create cost inefficiencies and delays in access. Attempts were made to find solutions for
tackling such a barrier (Evans et al., 2005). It needs more time for emerging economies,
however, to fully comprehend major characteristics of an electronic record management
system. That is, electronic record management needs to be considered as a core element of any
e-business model either in public or in private organization. Branding is also seen as an
important requirement for e-business success (Helm, 2007). That is, competences in marketing
and brand management increasingly become important factors to achieving competitive lead.
To conclude, e-business requires specific technology, building strong customer relationship
management, virtual value chain management, adopting a particular mode of conducting
online transactions, better branding, trust, uncertainty management and efficient electronic
data management. Consequently, this paper argues that a successful e-business model in
emerging markets has to rest upon major elements. These elements include environmental
forces drive e-business adoption, information and communication technology-driven
relationships with both customer and other value chain partners, a change in the way
people are managed and developed, the availability of state-of-the-art internet technology, a
consideration of the effect of barriers that impede e-business success, and finally, addressing
major competitive gains realized from e-business applications.

3. The emerging conceptual framework and hypotheses development

The above discussion indicates that e-business is growing dramatically in emerging
economies throughout the last two decades. For instance, by the end of 2015, 3.2bn people
have internet access, of which 2bn are from developing countries (ITU, 2015). Between 2000 Internet and
and 2015 developing countries’ internet user population grew by more than 500 percent e-business
(400m–2bn), increasing their global share of all internet users from 25 to 62.5 percent technologies
(ITU, 2015). Internet bandwidth has also been expanding at a fast pace, the share of
developing countries in total international bandwidth increased from around 9 percent in
2004 to almost 30 percent in 2013. What this growth means for e-business uptake is difficult
to determine because the data for developing countries is virtually absent and sketchy. 397
Previous research indicates that a new competitive landscape was developed largely
based on the technological revolution, increasing globalization and an ever-increasing rate
of change (Baker, 2001; Dedhia, 2001; Hitt et al., 1998). It is seen that the internet has
drastically changed the e-business industry structure. Internet technologies and e-business
provide new opportunities for companies to compete successfully and to play a major role in
modern economies (Čiarnienė and Stankevičiūtė, 2015; Greenberg, 2007; Matthew Hinton
and Tao, 2006; Migdadi et al., 2016). Not only the internet increases sales channel and
broaden the geographical market but also it attracts new players to compete at the local
market, and hence reduce the overall profit of the industry. The e-business technologies
have also led to change the cost structure moving toward more destructive price
competition resulting from the higher fixed cost and lower variable cost pattern (Porter and
Kramer, 2002; Porter et al., 2001; Sprano and Zakak, 2000). This, in turn, encourages
e-business firms to focus on increasing market share resulting from the network effect as a
main competitive driving force in the internet-based competitive environment. This fits with
Guarda et al. (2012, p. 128) clarification of e-business as a mechanism to share information,
maintain relationships and conduct business transactions via telecommunications networks
inside and outside the enterprise. The ability of firms to drive a competitive advantage from
e-business technological resources rests on their ability to use platform technology
(Ma et al., 2017), network and telecommunication technology (Lai et al., 2006), core data and
data processing applications (Bajgoric, 2006), the alignment of ICT to business objectives
(Matlay and Addis, 2003), e-business technological skills and skills in e-business technology
management (Kumar, 2004). For instance, the social commerce report indicated that online
firms put in place customers feedback and products review applications were able to
significantly increase their sales volume and average order value. Firms increasingly use
customers’ review as a tool to understand their perception and buying behavior (Li et al.,
2017; Shi and Liao, 2017). Furthermore, e-business can have a competitive potential because
of its ability to build, integrate and remodel with other resources such as management skills,
business network, information synergy and customer network (Rowley, 2001). This ability
depends to a large extent on e-business use to generate results and share product
information across remote geographical regions. This is because large part of transactions
done via information sharing rather than the physical delivery of materials (Morelli, 1999).
Advances in ICT have reduced transaction costs while improving a firm’s information flows
both internally and with suppliers/customers; leading to higher labor productivity (Bryan,
2007; Higón, 2012; Koellinger, 2008). The ICT enable firms to offer customized products and
services to diverse customer groups without paying high cost for greater-variety and low-
volume operations. The ICT is not a barrier to e-business any more (EC, 2005). Rather
e-business can be viewed as a powerful vehicle for different kinds of improvement within a
company ( Jeon et al., 2006; Levenburg et al., 2006; Pavic et al., 2007).
We view that e-business technologies and applications enhance the Egyptian firms to
generate values for costumers including: complete orders and accept payment online, allow
customer to track order, respond promptly to order, allow customer to search products and
prices easily and respond to complains promptly. Kapurubandara and Lawson (2006) argued
that e-business evolved as a result of commerce taking advantage of the diverse benefits the
ICT has to offer. Collaboration is widely used in internet-based business to realize a unique
ITP competitive advantage (Liao et al., 2017). This fits with the resources-based view that not only
33,2 considers resources as the source for unique capabilities but also the road to competitive
advantage (Barney, 1991). Online collaboration allows firms to manage change and capitalize
quickly on new opportunities and thus, it is significant to gain competitive advantage
(Rohm et al., 2004). The ICT and networking enable the Egyptian firms to be competitive
because they enhance inter-firm cooperation and coordination, provide access to skills and
398 competencies, facilitate information sharing and exchange, and also, provide new
opportunities for growth (Gallego et al., 2014). Besides e-business technologies and
applications help those firms leveraging knowledge management use, better connect with
customer, map out evolving market opportunities, build strong employees relationships,
better access new customers and new markets, and maintain strategic market intelligence
(Castelli et al., 2017). Del Rowe (2017) argued that firms that can better deploy its technological
analytics will be better positioned to gain a unique competitive advantage. It is viewed that the
way by which firms select, deploy, manipulate and use e-business technologies plays a
significant role in achieving a competitive lead over rivals (Ghingold and Johnson, 1998). It is
reported that cooperative e-business technology can lower transaction cost, enhance vendor
reputation and facilitate knowledge sharing, and hence, improve firms’ performance and
competitiveness (Beheshti et al., 2006; You et al., 2017). Drawing on the above discussion and
the emerging theoretical model, we propose the following hypothesis:
H1. There is a positive significant effect of ICT-driven relationships on a firm’s
competitive advantage of adopting e-business.
The environmental supporting factors refer to external influences such as pressure from
market/competitors, customers, suppliers and external support that influence e-business use
such as government. The adoption of IT innovations requires supporting environment that
facilitates the utilization of this technology. When firms work in a complex and rabidly changing
environment, IT utilization is both vital and justified (Chau and Tam, 1997). M.E. Porter and
Millar (1985) argued that competitive pressure is an innovation-diffusion driver. They claim that,
by adopting innovation, organizations can alter the rules of competition, affect the structure of
the industry and leverage new ways to outperform other competitors, thus changing the
landscape of competition (Oliveira and Martins, 2010). Competitive pressures as well as
competitive gains were addressed as two core driving forces to e-commerce and e-business
adoption in emerging markets (Sin et al., 2016). Similarly, government support and strategic
direction are essential in leveraging e-business adoption. The perception of the government
support is required to identify to what extent the firms in the emerging markets have been
assisted and motivated to use information technology. Jeon et al. (2006) reported that the external
forces operationalized in government support and firm’s orientations to globalization were
significant drivers of adopting e-business by the Korean’s SMEs. Other empirical evidence
reveals a significant relationship between external and environmental forces and IT adoption
(e.g. Duan et al., 2012; Oliveira and Martins, 2010; Zhu et al., 2004):
H2. There is a positive significant effect of the environmental forces on a firm’s
competitive advantage of adopting e-business.
Previous literature has recognized that developing countries have a slower rate of employing
e-business compared to developed countries which is caused by environmental, managerial
and organizational constraints that made developing countries encounter greater risks than
developed countries ( Janita and Chong, 2013). These studies identified that organizations in
developing countries still tend to use the basic functions of the internet only to send e-mails,
transfer files or documents or gather information. Throughout the literature, it has been
contended that effective use of ICTs depends on individual factors such as human and
financial resources and capabilities (Nelson et al., 2009). Furthermore, organization in
developing countries may not believe that the internet is a good utilization for their Internet and
businesses. Therefore, a lack of perceived benefits, IT skills and information technology e-business
literacy as well as the avoidance of managers to be responsible for technological change, may technologies
influence the level of IT used in these organizations (Pavic et al., 2007).
From another side, competitive advantage can be brought from physical capital
resources, human capital resources and organizational capital resources. However, as
argued by Drucker (1999), the main foundation of the utilization and development of both
physical capital resources and organizational capital resources is human capital resources.
399
Human capital in an organization is responsible for providing a stable and reliable
technology environment, thus, the organization can run smoothly and gain a competitive
advantage in the marketplace (Haag and Cummings, 2012). Therefore, when organizations
employ ICT, in addition to successful integration with business processes, they should pay
more attention to the human factors. Thus, the following hypothesis is suggested:
H3. There is a negative influence of the barriers to e-business adoption on a firm’s
competitive advantage.
Many Egyptian firms adopted various e-business applications aiming to realize a
sustainable competitive advantage. However, some of those firms fall short to realize such
a competitive advantage due to a number of evolving barriers to e-business. These
barriers incorporate lack of technological support and service, lack of an information
friendly environment, poor regulations, lack of e-business knowledge, skill-deficiencies
and lack of personnel buying-in the e-business applications. Those barriers are either
organization based or environment based (Mehrtens et al., 2001). Based on our exploratory
findings and the intensive literature review conducted; our model aims to tests the impact
of those barriers on the e-business applications use. It is seen that the impact of ICT on
firms’ sustainable competitive advantage can be lowered due to a set of barriers (Poon,
2000). This results from poor technology, the delay of ICT investment return, resistance to
change, preference for traditional technology, lack of IT skills and technical knowledge
among employees, time constraints, lack of awareness of ICT’s business benefits, security
concerns and lack of adoption among business partners (MacGregor et al., 2002). Barriers
to e-business in emerging markets vary from those of developed nations (Kapurubandara,
2009). Other scholars listed a set of barriers to ICT’s adoption in emerging nations that
incorporate lack of telecommunications infrastructure, lack of qualified staff to develop
and support ICT initiatives, lack of skills among customers, lack of timely and reliable
systems of product delivery, low bank accounts and credit card penetration, low income,
low access to computers and internet and the absence of regulatory systems (Ah-Wong
et al., 2001; Bingi et al., 2000; Kapurubandara, 2009; Marshall et al., 2000). The ICT
provides unique opportunities for firms to sustain a competitive advantage via reducing
personnel requirements and both agency and transaction costs. However, this can only be
recognized when those firms guard this competitive advantage against possible erosion
due to internal and external barriers encountering the business (Beheshti et al., 2006). As
stated by Beheshti et al. (2006, p. 156) further research is needed in this area in order to
determine the reasons why e-business applications are not working well as they should for
companies adopting various e-business applications. This, in turn, motivates us to
investigate the internal and external barriers that impact the competitive gains result from
adopting e-business technologies. This can help us understand why there is a growing
number of companies are dissatisfied with their e-business applications. Hence, a careful
study of those barriers and their moderate impact on the connection between forces drive
e-business adoption and competitive advantage can be hypothesized as follows:
H4. The positive effect of environmental forces on competitive advantages gained of
e-business adoption decreases as barriers to e-business increase (Figure 1).
ITP H5. The positive effect of ICT-driven customer relationship (ICT-DCR) on competitive
33,2 advantages gained of e-business adoption decreases as barriers to e-business increase.

4. Research method
4.1 Development of instruments
400 The measures for this study were generated based on previous literature (see Table AI). A
number of marketing academics and practitioners were interviewed to validate the research
measurement qualitatively. Then, a large-scale pilot study was conducted to validate the
research questionnaire statistically. Both qualitative interviews and pilot study showed
reliable and valid measures.
A questionnaire was designed to find out a number of significant issues of this research
main interest. These involve the perception of interviewees of the e-business benefits and
advantages in comparison with the traditional way of doing business. Besides, respondents’
viewpoints on the major barriers to the progress of e-business in Egypt are investigated.
The various models of conducting e-business were also questioned. Respondents’
viewpoints on the contribution of e-business to improve e-business-driven customer
relationship management were also investigated. Participants’ perceptions of the
determinants or the essential requirements of establishing e-business were also examined.
Respondents’ perspectives about the managerial gains of e-business were also examined
and discussed. The respondents were also asked to answer some firm’s specific and
personal profile questions.
Finally, to rule out alternative explanations and to examine the non-spurious
relationships in our research model, control variables were included. Based on previous
research and remarks made by our research respondents in the pilot study phase, firm size
was identified as a key control variable (e.g. Bordonaba-Juste et al., 2010; Devaraj et al., 2007;
Mithas et al., 2013; Oliveira and Martins, 2010). The Firm size variable was operationalized
as the actual number of employees in the sample.

4.2 Data collection

This study rests on examining the phenomenon under investigation throughout surveying
perceptions and viewpoints of key decisions makers in a sample of Egyptian enterprises. The
research population is the largest body of individuals (or other units) being researched. The
participating companies have revealed remarkable interest in the subject and therefore, their
participations were of value to this research. Data were collected based on a structured
questionnaire. The questionnaire is one of the most common tools of e-business research as it
employs a set of precise and structured questions to cover the study topic and to target a large
number of participants in a practical and efficient way (Devaraj et al., 2007; Zhu et al., 2004).

ICT-driven Customer
Relationship

Competitive
Advantages

Figure 1. Environmental Forces

Forces drive an drive E-business
e-business-driven
competitive advantage
in emerging markets Barriers to E-business
Two methods were applied in the data collection stage; one-on-one interview and electronic Internet and
mail. Both firms and managers responsible for e-business in the surveyed sample are e-business
approached. Except for firm’s specific information, all items were measured on a five-point technologies
Likert scale on which 1 indicates strongly “disagree” and 5 is strongly “agree.” Finally, the
data collection process lasted for five months; September 2015 till February 2016.
Throughout the course of this research, the number of companies that were actively
engaging in e-business activities was roughly determined by 3,350 and hence, a sample of 401
370 representative companies was randomly chosen at confidence level 95 percent. In total,
302 companies have positively responded and agreed to participate in this work. The
response rate is nearly 82 percent. The profile of e-business in Egypt indicates that this new
form of organization is attractive for a large number of firms. Table I indicates that 4 percent
of firms participated in the study came from oil and gas sector, 16.5 percent of the
participants firms were from the telecommunication and IT industry and 11.2 percent were
from education and consulting sector. Real estate firms represented 2.7 percent of the
selected firms, 10.5 percent of the selected firms were from the banking and finance sector
and 13.4 percent of the participant firms were from the intermediary or distribution sector.
Government organizations represented 6.7 percent of the responding firms. Manufacturing
firms represent 17 percent of the selected firms. Companies serving in the financial service
represent 8 percent. Travel and tourism firms represent 6.7 percent and media companies
represent 3.6 percent of the sample. These firms were chosen randomly where all firms have
a similar chance to be chosen in this research sample. Table I also indicates that the
manufacturing sector has the largest percentage of 17 percent; while real estate firms have
the lowest percentage of 2.7 percent.

4.3 Data analysis method

An intensive literature review was conducted to develop the items that can be used to
measure the concepts of this study. An exploratory factor analysis (EFA) using principal
components with Varimax rotation was mainly used to assess the structure of the
underlying concepts. The results of EFA revealed that the competitive advantage of
adopting e-business consists of four components; namely, market-driven competitive
advantage (MDCA), knowledge-driven competitive advantage (KDCA), customer-driven
competitive advantage (CDCA) and ICT-driven competitive advantage. The construct of
“ICT-driven employee-customer relationship” was found to be formed of four factors which
are matching online orders, e-business-driven employees’ relationship, effective market
intelligence and customer information management, while the construct of environmental
forces drive e-business was found to be consisted of two factors, namely; supporting
e-business environment and future strategic opportunity. Finally, the results of EFA
revealed that the barrier construct consists of three factors; skill-deficiencies, lacking of
e-business technology and lack of information management. The research model was
examined using PLS, which is a powerful statistical technique to estimate structural models
involving multiple constructs with multiple indicators (Igbaria et al., 1997).
As recommended by Armstrong and Overton (1977), non-response bias can be checked
by verifying that early respondents are not statistically different from late respondents.
The independent samples t-test for the difference of means between groups was run to
compare the resulting means between early survey wave (Group 1) and late survey wave
(Group 2) for all observed variables. Moreover, χ2 test was run to compare the
respondents’ characteristics in terms of market scope, number of employees, participants’
knowledge and level, sector, qualifications and size of business. The results of both sets of
tests indicated that all variables showed non-significant differences between the two
groups. Furthermore, as Table I shows, the research sample was distributed across a wide
range of sectors, different sizes, operating in different market scopes with the majority
 ITP
33,2

402

Table I.
The profile and

research sample
characteristics of the
Experience of
Sectors Market scope Management level Qualifications e-business Size of e-business
11 Sector F % 4 M/Scopes F % 3 levels F % 5 levels F % 5 levels F % 4 options F %

Oil and gas companies 13 4.0 Local 53 17.4 Top manager 84 27.7 Diploma/higher 21 6.7 Fair 6 1.8 Less than 25% 86 28.6
institute
Telecommunication and IT 48 16.5
companies
Training, education and 34 11.2 Regional 39 12.9 Bachelor 218 72.3 Moderate 18 5.8 From 25% to less 65 21.4
consulting firms than 50%
Real estate companies 9 2.7 Middle 114 37.9
manager
Banks 32 10.3 National 101 33.5 Professional 7 2.2 Good 150 49.6 From 50% to 75% 88 29.0
certificate
Distributors or intermediaries 41 13.4
Government agencies 20 6.7
Manufacturing firms 51 17.0 International 109 36.2 First-line 104 34.4 Master 48 16.1 Excellent 120 40.2 From 75% to 100% 63 21.0
manager
Financial services firms 24 8.0
Travel and tourism firms 20 6.7 PhD 8 2.7 Exceptional 8 2.7
Media companies 10 3.6
Total number of firms 302 100.0 Total 302 100.0 Total 302 100.0 Total 302 100.0 Total 302 100.0 Total 302 100.0
being good to exceptional experience in e-business that provides us confidence in Internet and
the fidelity of their responses. Thus, the non-response bias was not found to be a problem e-business
in this study. technologies
5. Data analysis and results
Table II indicates that the widely used form of e-business is the model number one (M1),
which is representing a minimum degree of online transactions. This model is adopted by 403
154 (50.9 percent) firms out of 302 firms surveyed. This e-business model focuses on
providing clients a firm’s specific information as well as allowing those clients an
opportunity to send feedback information and comments to such a firm. The model that has
shown little interest by the Egyptian firms surveyed is the model number nine (M9). Only 16
(8.9 percent) firms out of 302 firms surveyed adopt this type of online business. This is a
far-too complex type of e-business models that requires company alert to both internal and
external business interactions. Table II also shows that 111 (36.6 percent) of the surveyed
firms adopt the model number two (M2). This model main focus is on the marketing
functions conducted by the firm via online channel to target both existing and potential
clients. The attractiveness and design of a firm’s website contributes significantly to the
success of such a particular model.
Table II also indicates that 91 (29.5 percent) of the examined firms adopt the model
number three (M3). This model is directed to serve a firm’s internal purposes such as
providing electronic means for communication, conducting work, joint projects, sharing of a
firm-wide information and experience, and finally, sharing of company owned electronic
applications. Besides, Table II illustrates that 43 (14.3 percent) firms out of the 302
investigated firms adopt the model number four (M4), which is B2C. This model of
e-business represents a form of transforming a firm from brick and mortar to brick and click
or dot.com form.

5.1 The measurement model

Based on the two-step approach recommended by Hair et al. (2014) and MacKenzie et al.
(2011), the psychometric properties of the measurement model was examined first, then the
structural model was analyzed to validate the research hypotheses. Both models were

E-business Cumulative
models Model description Frequency Percent Valid percent percent

Model 1 E-business as communication model 154 50.9 50.9 50.9

(such as e-mails and web access)
Model 2 E-business as a marketing model (website) 111 36.6 36.6 36.6
Model 3 E-business as a productivity model 91 29.5 29.5 29.5
(e.g. Microsoft Office, intranet)
Model 4 E-business as B2C e-commerce model 43 14.3 14.3 14.3
(buying and selling online)
Model 5 E-business as collaborative model (extranet) 43 14.3 14.3 14.3
Model 6 E-business as an enterprise model 78 25.9 25.9 25.9
(accounting, payroll, vertical application)
Model 7 E-business as a marketplace model (e- 40 13.4 13.5 13.5
marketplace)
Model 8 E-business as a collaborative enterprise 27 8.9 8.9 8.9 Table II.
model (supply chain management, customer The Major e-business
relationship marketing management) models and
Model 9 E-business as a collaborative platform 16 5.4 5.4 5.4 applications adopted
model (emerging platforms) by the Egyptian firms
ITP analyzed using SmartPLS 3.0 software (Ringle et al., 2005). The use of PLS has been
33,2 suggested to test models that include formative constructs.
First, and based on Li et al.’s (2006) study, the EFA with Varimax rotation was run to set
the appropriate structure of the competitive advantage construct. The results of EFA
produced four-factor solution representing MDCA, KDCA, ICTCA and CDCA. Table III
shows clearly that almost all factor loadings exhibit very high values of above 0.7. The
404 smallest loading of 0.52 still ranges above the commonly suggested threshold value of 0.5
(Hair et al., 2014). The cumulative variance explained by the four factors is 63.86 percent.
For the other three constructs, the convergent validity can be examined using the average
variance extracted (AVE) and the composite reliability (CR) (Lewis et al., 2005; Straub et al.,
2004). As shown in Table V, all AVE values are higher than 0.50 which is the recommended
cut-off value (Chin, 2010; Urbach and Ahlemann, 2010). All CR values, as seen in Table V,
showed values higher than 0.60 (Bagozzi and Yi, 1988; Bagozzi, 2010; MacKenzie et al., 2011).
Furthermore, item loadings were examined for convergent validity (Chin et al., 2008;
MacKenzie et al., 2011). As seen in Table IV, all items loaded on their hypothesized constructs.
Discriminant validity was assessed by examining the square root of the AVE as
recommended by Fornell and Larcker (1981). The square root of the AVE for each latent
variable should be greater than its correlation with the other latent variables. The diagonal
cells in Table V represent the square root of the AVE for every construct. Table V shows
that every square root of AVE for each construct is higher than its correlations with the
other variables. This means that every latent variable shares more variance with its
hypothetical indicators than with any other indicators. As more advanced measure, the
Heterotrait–Monotrait (HTMT) ratio of correlations was used to assess the problem of
discriminant validity. The HTMT for each pair of constructs was computed through
obtaining the ratio of the average correlations between constructs to the geometric mean of
the average correlations within items of the same constructs (Henseler et al., 2015; Voorhees
et al., 2016). All values were less than the threshold of 0.85 (Kline, 2015; Voorhees et al., 2016).
These results suggest that all constructs used in this study are valid and reliable.

Item Mean SD F1-MDCA F2-KDCA F3-ICTCA F4-CDCA

CA1 4.16 0.89 0.523

CA2 3.81 0.90 0.760
CA3 3.97 0.93 0.589
CA4 4.03 0.87 0.738
CA5 3.90 0.89 0.710
CA6 3.95 0.91 0.680
CA7 4.01 0.92 0.738
CA8 4.06 0.88 0.719
CA9 3.84 0.90 0.763
CA10 4.03 0.89 0.670
CA11 4.07 0.90 0.736
CA12 4.10 0.96 0.737
CA13 3.90 0.89 0.749
CA14 3.93 1.02 0.785
CA15 4.34 0.91 0.783
CA16 4.04 0.94 0.702
Table III. Eigenvalue 2.92 2.72 2.64 2.12
Factor analysis % of variance 18.26 17.00 15.38 13.23
(EFA) for Cumulative % of variance 18.26 35.25 50.63 63.86
competitive advantage Reliability (α) 0.81 0.84 0.78 0.77
Second-order Factor
Internet and
constructs First-order variables Items Mean SD loading t-value e-business
technologies
Competitive Market-driven CA MDCA 3.96 0.68 0.84*** 36.44
advantage (CA) Knowledge-driven CA KDCA 3.98 0.74 0.79*** 19.88
Information-driven CA ICTCA 4.03 0.77 0.82*** 32.33
Customer-driven CA CDCA 4.10 0.75 0.85*** 36.58
Barriers to Lacking of e-business technology BAR1 2.20 0.92 0.65*** 8.49 405
e-business (BAR) (LEBTE) BAR2 2.52 1.08 0.87*** 19.22
BAR3 2.47 1.12 0.81*** 15.69
Lacking of information BAR4 2.43 1.04 0.70*** 13.43
environment (LIE) BAR5 2.67 1.01 0.71*** 15.51
BAR6 2.22 1.00 0.82*** 15.19
Skill-deficiencies (SD) BAR7 2.36 1.17 0.86*** 22.27
BAR8 2.37 1.10 0.87*** 22.26
BAR9 2.35 1.16 0.83*** 23.51
ICT-driven customer Customer information ICT-DCR1 4.29 0.90 0.81*** 18.42
relationships (ICT-DCR) management (CIM) ICT-DCR2 4.12 1.02 0.85*** 20.32
ICT-DCR3 4.23 0.93 0.83*** 16.44
Matching online order (MOLO) ICT-DCR4 3.97 0.97 0.74*** 15.71
ICT-DCR5 3.85 1.07 0.71*** 15.81
ICT-DCR6 4.04 1.09 0.81*** 19.09
ICT-DCR7 3.85 1.17 0.80*** 20.62
ICT-DCR8 3.79 1.12 0.71*** 15.18
ICT-DCR9 3.78 1.00 0.66*** 12.04
Effective market intelligence ICT-DCR10 4.04 0.97 0.67*** 10.24
(EMI) ICT-DCR11 4.02 0.89 0.73*** 11.45
ICT-DCR12 4.01 0.97 0.82*** 16.51
ICT-DCR13 4.03 0.93 0.77*** 13.26
E-business-driven employees– ICT-DCR14 4.17 0.89 0.74*** 12.35
customer relationship (EBDER) ICT-DCR15 4.14 0.94 0.78*** 13.83
ICT-DCR16 3.97 0.97 0.79*** 15.54
ICT-DCR17 3.97 1.07 0.75*** 11.35
Environmental forces drive Supporting e-business EFDeB1 3.54 0.96 0.68*** 15.83
e-business (EFDeB) environment (SEBE) EFDeB2 4.09 0.91 0.81*** 19.15
EFDeB3 3.97 0.91 0.76*** 16.96
EFDeB4 3.64 1.02 0.73*** 16.57
EFDeB5 4.00 0.89 0.80*** 17.55
EFDeB6 3.99 0.84 0.68*** 12.91 Table IV.
Future strategic opportunities EFDeB7 3.91 0.96 0.79*** 13.96 Mean, standard
(FSO) EFDeB8 3.52 0.99 0.89*** 20.28 deviation and
EFDeB9 3.46 1.13 0.74*** 14.01 loadings of the
Notes: **p o0.01; ***p o0.001 indicator variables

Finally, Harman’s one-factor test was used to assess the severity of common method
variance CMV (Bagozzi, 2011; Malhotra et al., 2006; Podsakoff et al., 2003; Sharma et al.,
2009). Harman’s one-factor test was employed through the statistical technique: EFA. Using
principal components with unrotated solution, the EFA results emerged with 13 factors with
eigenvalues W1.0 and accounted for 67.78 percent of the total variance. The first factor did
not account for the majority of the variance (21.64 percent). Thus, CMV was considered not
to be a problem in this study.

5.2 The structural model

Having confirmed the psychometric properties of the measurement model, the structural
model (main model) was next examined to test the structural relationships. The PLS findings
 ITP
33,2

406

Table V.

correlation
Latent variables
validity, reliability and
Variables CR AVE α CA CIM EBDER EMI FSO LEBTE LIE MOLO SD SEBE

CA 0.90 0.68 0.85 0.83

CIM 0.87 0.69 0.77 0.38 0.83
EBDER 0.85 0.59 0.76 0.39 0.35 0.77
EMI 0.84 0.56 0.74 0.38 0.40 0.42 0.75
FSO 0.85 0.65 0.73 0.28 0.05 0.31 0.21 0.81
LEBTE 0.82 0.61 0.68 −0.42 −0.10 −0.22 −0.23 −0.31 0.78
LIE 0.79 0.56 0.60 −0.44 −0.12 −0.28 −0.19 −0.25 0.47 0.75
MOLO 0.88 0.55 0.83 0.53 0.50 0.36 0.49 0.26 −0.34 −0.27 0.74
SD 0.89 0.73 0.82 −0.41 −0.17 −0.19 −0.14 −0.10 0.44 0.48 −0.27 0.86
SEBE 0.88 0.56 0.84 0.57 0.31 0.35 0.29 0.40 −0.25 −0.34 0.43 −0.20 0.75
Firm size na na na
Notes: AVE, average variance extracted; CR, composite reliability; α, Cronbach’s alpha; CA, competitive advantage; CIM, customer information management; EMI,
effective market intelligence; EBDER, e-business-driven employees’ customer relationship; FSO, future strategic opportunities; LEBTE, lacking of e-business technology;
LIE, lacking of information environment MOLO, matching online order; SD, skill-deficiencies; SEBE, supporting e-business environment. Italic entries in the diagonal row
are the square roots of the average variance extracted (AVE)
(see Table VI and Figure 2) show that all the hypothesized relationships are statistically Internet and
supported. ICT-DCR was found to affect competitive advantage positively (β ¼ 0.33, po0.001). e-business
The influence of barriers on competitive advantage was found to be significantly negative one technologies
as hypothesized (β ¼ −0.31, po0.001), and finally the dependent variable; competitive
advantage, was found to be positively determined by the environmental forces drive e-business
or EFDeB (β ¼ 0.27, po0.001). Thus, H1–H3 are supported. Overall, the main model explained
51 percent of the variance in competitive advantage. 407

Main model Moderation 1 ICT-DCR → CA Moderation 2 EFDeB → CA

β t-value β t-value β t-value

ICT-DCR → CA 0.33 5.61*** 0.28 5.39*** 0.32 5.94***

EFDeB → CA 0.27 3.87*** 0.25 4.09*** 0.22 3.72***
BAR → CA −0.31 5.26*** −0.28 5.10*** −0.31 6.05***
ICT-DCR × BAR → CA 0.24 6.38***
EFDeB × BAR → CA 0.19 2.16*
R2 0.51 0.58 0.55
Effect size (ƒ2)d 0.17 0.09
Notes: aShaded cells are not applicable for the specific column; bβ refers to the path coefficient; cR2 refers to
the determination coefficient; df2 is calculated as (Henseler and Fassott, 2010):
R2 ðmodel with moderatorÞ R2 ðmodel without moderatorÞ
:
1 R2 ðmodel with moderatorÞ Table VI.
PLS structural
**p o0.01; ***p o0.001 model analysisa,b,c,d

CIM

0.31*** MDCA
MOLO
0.40***
ICT-driven
customer 0.84***
0.31***
EMI relationship KDCA
0.31*** 0.33***
0.79***
Competitive
advantage 0.82***
EBDER 2 ICTCA
(R = 0.51)

0.27*** 0.85***

SEBE –0.31***
0.72*** Environmental CDCA
Forces drive
0.47*** E-business
FSO Barriers to
E-business

0.40*** 0.41*** 0.43***

Second-order construct
***p-0.001 SD LEBTE LIE

Notes: CDCA, customer-driven competitive advantage; CIM, customer information management;

EMI, effective market intelligence; EBDER, e-business-driven employees–customer relationship;
FSO, future strategic opportunities; ICTCA, information-driven competitive advantage; KDCA,
knowledge-driven competitive advantage; LEBTE, lacking of e-business technology; LIE, lacking Figure 2.
Results of the
of information environment; MDCA, market-driven competitive advantage; MOLO, matching structural model
online order, SD, skill-deficiencies; SEBE, supporting e-business environment
ITP Moderation takes place when one variable affects the relationship between two other
33,2 variables by either strengthening or weakening this relationship (Baron and Kenny, 1986).
The product term approach was applied to estimate the moderation effect (Chin et al.,
2003; Henseler and Fassott, 2010). Prior to building the interaction terms, all variables
were mean-centered (Chin et al., 2003). Mean-centering is recommended for its merit in
minimizing the potential multicollinearity and facilitating the interpretation of the
408 estimation (Aiken et al., 1991).
For H4 and H5, the strength of the influences of ICT-DCR and EFDeB on competitive
advantage CA are hypothesized to be affected by BAR. The results revealed that the
barriers or BAR variable significantly moderated the effects of ICT-DCR and EFDeB on CA
such that the effects were higher with decreasing BAR. As for H4, as seen in the moderation
Model 1 in Table V, if BAR becomes lower (i.e. BAR is decreased by one standard deviation
point), this would imply that the relationship between ICT-DCR and CA would increase by
the size of the interaction term and obtain the value of 0.28+0.24 ¼ 0.52. Thus, when BAR
becomes lower, ICT-DCR becomes more important for explaining CA. As for H5, as
moderation Model 2 explains in Table V, if BAR is decreased by one standard deviation
point, this would increase the relationship between EFDeB and CA by the size of the
interaction product term (0.22+0.19 ¼ 0.41). Therefore, when BAR decreases, EFDeB
becomes more important for explaining CA.
To better understand the nature of the interaction by the barriers BAR variable, we
plotted the moderation effects. Figures 3 and 4 show that ICT-DCR and EFDeB have greater
impacts on CA when BAR is lower.
For assessing the magnitude of the interaction effect, Cohen’s effect size formula (ƒ²)
where 0.02, 0.15 and 0.35 have been recommended as low, medium and large effects,
respectively (Chin et al., 2003; Cohen et al., 2003). Regarding our study, the effect size was
found to be moderate for both interactions (ƒ2 ¼ 0.09 and 0.17). Finally, the empirical results
revealed that firm size represented in the number of employees has no significant influence
on competitive advantage of e-business adoption (β ¼ 0.06, p W0.05).

6. Discussion and implications for research

Previous research suggests that information and communication technology and its applications
in the developing countries might be under-utilized and, as a result, might not provide a

5
Low BAR
4.5 High BAR

4
Competitive Advantage

3.5

2.5

1.5
Figure 3.
Interaction Plot
(Moderation 1) 1
Low ICT-DCR High ICT-DCR
 5
Low BAR
Internet and
e-business
4.5 High BAR
technologies
4
Competitive Advantage

3.5
409
3

2.5

1.5
Figure 4.
Interaction Plot
1 (Moderation 2)
Low EFDeB High EFDeB

significant contribution to improving and supporting individual and organizational

performance. There is an obvious limitation of e-business research in the MENA emerging
markets, and the empirical evidence in the developing world, in general, lags behind empirical
and theoretical development. Therefore, there have been calls for research on developing
country-based firms e-business strategies (Kshetri, 2007). We have integrated several streams in
the literature and come out with an interesting integrated model. This model rests on unique and
modified measures that are not deployed before in the Egyptian market. Its constructs were
validated by employing different statistical techniques and hence, the evolving model advances
our understanding of the unique features of e-business in such an emerging market.
Our study has endeavored to make several contributions to the body of knowledge by, first,
providing an empirical investigation of theoretical assumptions in the extant of the influence of
e-business technologies on organization competitive performance. The relationship between IT
applications and organization performance is long-debated question in information systems
research (e.g. Bharadwaj, 2000; Chae et al., 2014; Tanriverdi, 2005; Vaccaro et al., 2010). Drawn on
the resource-based view and by using a large-scale survey, the results indicate that ICT
utilization can improve the competitive advantage of e-business. The effective adoption of
e-business model was found to be a significant organizational enabler, for example, to access to
new customers, enhance the customization of products and services, support brand image,
provide better cost control and communicate better with customers and employees. These
results may contradict with recent research stream proposes that modern IT is characterized to
be standardized, homogenous and easier for firms to catch up; thus, organizations might not
gain competitive advantages of IT adoption (Chae et al., 2014; Devaraj et al., 2007). One possible
explanation is that IT use behavior does not hold across all cultural groups, and the utilization of
IT in emerging and developing countries may show different patterns due to the late adoption
(ter Hofstede et al., 2010; Yang et al., 2009).
Second, this study contributes to the e-business literature by: uncovering and integrating
nine important organizational and environmental variables that have not received sufficient
attention in previous literature; and examining how these integrated variables can leverage or
hinder the competitive performance of an organization. Clearly, the current study identifies some
prominent drivers that can help organizations, particularly in emerging markets, effectively
utilizing the e-business model for gaining competitive advantage. Although the previous models
of e-business technology adoption depend massively on the perceived outcomes; other resources
ITP are needed to leverage this adoption (Mao et al., 2016). Our empirical investigation reveals that
33,2 improving competitive performance of adopting e-business is contingent also upon internal and
external resources. For instance, government support, global orientation, clear vision and
strategy and effective organizational structure were found to be positive and significant
predictors of adopting e-business to improve the competitive performance. These findings
consent with previous research in that ICT resources can improve organization performance,
410 but only when they are accompanied by other internal and/or external resources (Chae et al.,
2014; Nevo and Wade, 2010). Moreover, based on the standardized coefficients, the findings of
this study contribute to knowledge by supporting Zhu et al. (2004) argument in that e-business
adoption is more associated with internal resources (e.g. ICT capabilities) rather than external
resources (e.g. competition pressure).
Third, achieving competitive advantage through e-business is not free of challenges. We
presented and investigated a causal mechanism through PLS–SEM, by which ICT-DCR
(customer information management, matching online orders and market intelligence) and
environmental forces drive e-business, moderated by the barriers of technology, information
and employees’ skills can produce competitive gains. The findings support that barriers
such as employed technology, internet bandwidth and accessibility, the legal and policy
environment, skill deficiency, lack of senior management commitment, employees’
resistance, security and trust; can hinder the investigated firms’ ability to achieve the
desired competitive advantages. Emerging markets are faced with lack of talented
personnel and insufficient knowledge of e-business technologies. They also suffer from
difficulties in hiring talented personnel. E-business applications also brought new
considerations of security issues, trust and business level risk.
Another noticeable aspect is that the statistical results further demonstrate that the
e-business adoption aiming for a competitive advantage was not significantly affected by
firm size. Although the size of firm is not a central interest of this study, this result is in
accordance with previous literature where firm size was not confirmed as a significant
control variable (e.g. Bordonaba-Juste et al., 2010; Devaraj et al., 2007; Mithas et al., 2013;
Oliveira and Martins, 2010). However, for small firms, the insignificant influence of firm size
suggests that the advantage of being powerful and have more resources is not a
determinant of adopting e-business. On the other hand, for large firms, our results suggest
that the disadvantage of being more reluctant to change, less active and less flexible is not
an obstacle of deriving greater benefits of e-business application.
Finally, the study model is seen useful to the Egyptian firms and emerging markets.
It may help firms in emerging markets learn how to be more competitive when deploying
e-business technologies. E-business may not be an issue in developed nations but in
emerging markets, due to some critical barriers, it is a challenge. Our model was devoted to
address such a critical issue in the setting of an emerging market like the Egyptian one. Our
work also provides detailed recommendations for firms in order to help them yield various
competitive gains. Firms are required to select the right mode of e-business and also, the
right technology in order to reap extreme benefits. However, this study revealed some
moderating variables that negatively influence firms’ ability to achieve the expected
competitive values. If such a negative effect is high, e-business will not be considered as a
desirable business model. Thus, we view that firms should work hard to decrease barriers to
e-business and adopt the most useful e-business mode to reach its expected targets.

6.1 Implications for management

Previous research emphases that instead of just encouraging firms to adopt e-business
technologies, the most significant step is to identify the effective drivers and antecedents
involved in e-business use. Therefore, adding values to firms and management is achieved by
carefully identifying and testing the salient drivers/obstacles that may contribute/hinder the
adoption of e-business. Thus, one of the main implications for management is to provide Internet and
managers and practitioners, especially in emerging markets, with the most successful drivers e-business
that can boost the competitive advantage of adopting e-business. The above discussion technologies
indicates that adopting e-business for competitive performance requires that managers should
pay more attention to use of customer information and leveraging existing resources such
employees’ skills and clear strategic direction to fulfill customer orders better than competitors.
Firms in MENA region increasingly need to exploit e-business technologies to reach remote 411
customers and to expand into new markets. By analyzing relevant internal, external and
moderating factors in our model; managers can have better understanding of their business
environment and the potential from adopting e-business technologies. Furthermore, this
research provides managers with a number of ways through which competitive advantages can
be gained in emerging markets; which vary drastically from those of developed nations. Early in
Table II, common e-business modes deployed in emerging markets were presented and can thus
be considered by managers when they aim to design business strategies.
The awareness of the perceived benefits of deploying e-business (i.e. effective market
intelligence, effective information management and effective customer and employees’
relationships) is only one piece of the puzzle in building successful e-business in emerging
markets. In general, the organizational barriers of adopting e-business can be solved internally;
however, the governmental intervention might be required to solve barriers that might be
beyond the control of the organizations. Slow internet diffusion can be attributed mainly to
infrastructural factors controlling the availability of ICTs (Kshetri, 2007), and it can significantly
affect the effectiveness of e-business. The governments of emerging markets should give a
considerable attention to the adoption of e-business by devising policies and regulations that
make the internet environment reliable, secure and trustworthy business platform. Also, they
need to promote the diffusion of the internet among people and organizations regardless of their
location and size. They need to make it available at both reliable use and affordable prices. The
governmental intervention and efforts to diffuse the technology and the internet can solve
several barriers to e-business such as security and privacy concerns, and regulation issues.

6.2 Implications for e-business researchers

In rapidly changing emerging markets, government policies of those nations will be a subject
that requires more investigation by e-business scholars. M-commerce is further trend of
e-business that needs to be intensively researched; especially in the emerging markets. More
research is further needed to develop appropriate e-business strategies that help firms increase
their online sales in the MENA region since the current online sales figures are clearly less than
those realized in developed nations. Comparative studies between developed nations and other
developing and emerging markets are highly needed areas of research. Why emerging nations
fail to realize the benefits of e-business is also a promising subject of research.
The slow rate of adopting e-business in emerging markets also opens a room for future
investigation. Supportive factors and e-business facilitators in emerging markets are also
areas for further research. Those supportive factors will offset the negative impact resulting
from key barriers to e-business. Connecting the common e-business modes – presented in
Table II – deployed in emerging markets into firms’ ability to generate a competitive
advantage from e-business technologies is another subject for future research. Reasons why
more advanced e-business models – presented in Table II – are not attractive to firms in
emerging markets also require future research and interpretation.

7. Limitations
This study may suffer from several limitations that generally relate to measurement and survey.
First, the generalization of the findings of this study is limited by the context of
e-business in Egypt: all of the observations were from Egypt and e-business adoption drivers in
ITP other countries and cultures may not resemble those in Egypt. New investigation in other
33,2 countries and cultural settings can deepen our knowledge about the factors that explain the
adoption of e-business and the factors that may hinder this adoption. Second, because of the
cross-sectional nature of the current study, causality cannot be inferred based on the study
findings. Any statements and/or conclusions about the causal relationships were based on a
theoretical foundation rather than the empirical evidence of the study. Finally, the motivation for
412 adopting e-business to create competitive advantage could be related to many variables.
Although important variables were included based on theoretical and empirical foundations,
integrating other factors or other theories may extend our understanding of how these factors,
independently and/or interactively, explain the adoption of e-business and its merit to create
distinctive competitive advantage. Thus, future research may contribute to knowledge by
accounting for the unexplained variance in the research models by extending and integrating
(or substituting) other factors that may increase the explanatory power.

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Constructs
Competitive advantage of
adopting e-business (CA)
Barriers to e-business (BAR)
ICT-driven customer
relationships (ICT-DCR)
The research
Table AI.
measures
Variables
Market-driven competitive
advantage (MDCA)
Knowledge-driven competitive E-business supports the management of my company value chain (CA7)
advantage (KDCA)
Information-driven competitive E-business helps us communicate better with channel partners (CA11)
advantage (ICTCA)
Customer-driven competitive
advantage (CDCA)
Lacking of e-business
technology (LEBTE)
Lacking of information
environment (LIE)
Skill-deficiencies (SD)
Customer information
management (CIM)
Matching online orders
(MOLO)
Item wording and codes Sources
E-business helps my company to gain more market share (CA1) Fillis et al. (2003), Hsu
E-business enhances the customization of our product (CA2) et al. (2006), Levenburg Appendix
E-business enhances sales increase (CA3) et al., (2006),
E-business facilitates the access to new customers (CA4) Seethamraju, (2006) and
E-business helps us improve marketing intelligence (CA5) Singh and Byrne (2005)
E-business helps us improve customer support (CA6)
E-business supports our brand image (CA8)
E-business helps us to carry better competitors’ analysis (CA9)
E-business helps us disseminate company’s information (CA10)
E-business helps us communicate better with employees (CA12)
E-business helps us find information on large number of suppliers (CA13)
E-business helps us reduce administrative cost (CA14)
E-business reduces paper work (CA15)
E-business provides better cost control (CA16)
The telecommunication bandwidth is a barrier to e-business emergence (BAR1) Kapurubandara and
Internet accessibility is a common barrier to e-business evolution (BAR2) Lawson (2006) and
Lacking of universally accepted standards for quality, security and reliability are Turban et al. (2002,
core barriers to e-business (BAR3) 2003)
Regulation is insufficient to secure e-business emergence (BAR4)
Information is not available to support the transformation into e-business
(BAR5)
Security protection is a common barrier to e-business (BAR6)
Lack of skillful staff is a barrier to e-business (BAR7)
Lack of board interest is a major barrier to e-business (BAR8)
Reluctance of staff is a barrier to e-business (BAR9)
E-business facilitates sending e-mail-to current customers (ICT-DCR1) Amit and Zott (2001),
E-business helps us e-mail-prospective customers (ICT-DCR2) Lin and Lin (2008),
E-business helps us e-mail-customer service (ICT-DCR3) Mougayar (1997), Phan
E-business helps us carry out online product demonstration (ICT-DCR4) (2003) and Sanders
E-business helps us conduct online product delivery (ICT-DCR5) (2007)
E-business helps us get online ordering (ICT-DCR6)
E-business enhances online order tracking (ICT-DCR7)
(continued )
e-business
421
Internet and
technologies

Table AI.
Constructs Variables
Effective market intelligence
(EMI)
E-business-driven employees’
relationship (EBDER)
Environmental forces drive e- Supporting e-business
business (EFDeB) environment (SEBE)
Future strategic opportunities
(FSO)
ITP
33,2
422
Item wording and codes Sources
E-business meets the demands of a large customer or suppliers (ICT-DCR8)
E-business enhances target small or hard-to-reach markets (ICT-DCR9)
E-business helps us find information about customers (ICT-DCR10)
E-business facilitates e-mail – support for channel partners (ICT-DCR11)
E-business helps us find new markets or customers (ICT-DCR12)
E-business helps us find other marketing data (ICT-DCR13)
E-business helps e-mail-employees (ICT-DCR14)
E-business facilitates general administration uses (e.g. travel reservation)
(ICT-DCR15)
E-business mode facilitates the provision of education/learning
(ICT-DCR16)
E-business helps us allow for employees to participate in discussion groups
(ICT-DCR17)
The government supports the transformation into e-business transformation Hsu et al. (2006), Lin
(EFDeB1) and Lin (2008) and
E-business creates significant benefits and advantages to our company Turban et al. (2002)
(EFDeB2)
Our global orientation supports the adoption of e-business modes (EFDeB3)
The business climate in our country supports the move to e-business (EFDeB4)
Our company size is a key to the adoption of e-business modes (EFDeB5)
Motivated by its potential benefits, the possibility of adopting e-business
increases (EFDeB6)
We have a clear vision to address the future of e-business in our strategy
(EFDeB7)
Our strategy is rested on and is directed by the e-business mode (EFDeB8)
Our organizational functions (e.g. marketing finance, production) are built
specifically to fit the e-business requirement (EFDeB9)
About the authors Internet and
Gamal Mohamed Shehata is Professor in the Business Administration Department, e-business
Faculty of Commerce, Cairo University. He has a Bachelor of Business Administration
from Cairo University, Egypt, MSc in Management from Cairo University, Egypt, and technologies
PhD in Knowledge Management from the University of Nottingham, UK. His research
interest covers a variety of areas incorporating knowledge management, intellectual
capital, e-commerce in emerging markets, organizational learning, e-human resources
management, virtual learning and global strategies. He has published in the 423
International Journal of Knowledge-based Development, the Journal of Information and Knowledge
Management Systems and the Learning Organization Journal. He has published a book entitled
Organizational Learning and Transformative Capacity: A Real Road Map to Transform Knowledge
Created Via Organizational Learning Into Business Success by Lap Lambert publishing. Professor
Shehata is also a Reviewer to a number of top tier journals including Knowledge Management Journal,
Journal of Information and Knowledge Management Systems (VINE), the Learning Organization Journal,
Internet Research, Electronic Commerce, and European Business Review. Gamal Mohamed Shehata is the
corresponding author and can be contacted at: gamal_mohammed_shehata@foc.cu.edu.eg
Mohammed A. Montash is Lecturer of Management Information Systems in the
Department of Business Administration at Al-Azhar University, Cairo, Egypt. He has a
BSc in Business administration, MSc in Service Marketing from Al-Azhar University and a
PhD in Management (Systems Sciences) from The University of Hull, Kingston Upon Hull,
UK. His research interests include: information systems; technology usability, electronic
commerce, systemic leadership, high-performing firms and employees engagement. His
work has been presented at the International Society for Systems Sciences.

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