A Security Framework for E-Marketplace Participation

The increasing trend in the use of Internet-based emarketplace applications has created tremendous opportunities for businesses to manage effective supply chain management. An electronic market exists when a supplier provides goods and services to a customer in a transaction partially or fully automated by information technology. E-Marketplaces can be defined as a digital infrastructure that supports industrial commerce, such as auctions, catalogues and exchanges (Ivang & Sorenson, 2005). IDC predicts IT and e-marketplace spending will reach $496.7 billion in the U.S. and $1.3 trillion globally by the year 2009. Despite extensive research on this topic, there has been limited work in the realm of e-marketplace security. These e-marketplaces are generally implemented on the Internet, whose original purpose was to provide a robust heterogeneous distributed computing environment for applications that may not yet be developed. Previous researchers have noted that the formation of electronic marketplaces has been declining and that the failure rates are high. For instance, Dai and Kauffman (2002) suggest that only one-fifth of the electronic marketplaces in operation would succeed since firms have to face serious technical challenges. Theoretically e-marketplaces should enable firms to trade and collaborate more efficiently. The reason for this is due to the proliferation of affordable technology and the explosive growth of B2B transactions that have allowed buyers and sellers to conduct transactions electronically and to generate substantial savings and revenue for participants and owners (Sharifi, Kehoe, & Hopkins, 2006). Nevertheless, in reality, many emarketplaces disappeared during major consolidation phase (Tran, 2006).This study aims to examine the nature of security in e-marketplaces. We identify four types of risks, namely economic, technological, implementation, and relational risks in seven e-marketplace firms from a cross-section of different industries. We then present the control measures as in the responses that the seven firms enforced in order to reduce and manage their risks. The contribution of this study is the development of a security framework based on the findings for e-marketplace participation.