More than just a transaction: conceptualising industry-based networks for virtual trading communities

This paper addresses the questions of why failure in industry-based networks has been so persistent and whether it is possible to avoid failure and achieve success in internet based markets [iMarketplaces]. A better explanation of implementation failures is important for both improved empirical outcomes and theory building. We construct a theoretical framework based on Bijker’s technology frame (1995) and a contextualization typology developed by Nowotny, Scott and Gibbons (2001). The framework helps us understand how industry-based networks function, why they fail and how we can apply the framework to assist better empirical outcomes. In this paper we apply our framework to Food Connect Australia, a vertically integrated marketplace, representative of the first wave of B2B markets. Sponsors of these iMarketplaces were quick to see and exploit the opportunities online access offered to bring together large numbers of buyers and sellers in new ways. However a lack of understanding of firstly, what represented true value in these networks and secondly, how to achieve buy-in at sustainable levels, meant that many of these first wave sites failed. Application of our framework reveals why there has been a radical shift from the trading role originally envisioned for these sites to the information hub model of the iMarketplace that industry is now being urged to adopt (Berryman and Heck, 2001).