Critical factors in e-business adoption: Evidence from Australian transport and logistics companies Hong-Oanh Nguyen n Department of Maritime and Logistics Management, Australian Maritime College, University of Tasmania, Australia article info Article history: Received 6 October 2011 Accepted 14 July 2013 Available online 26 July 2013 Keywords: Investment Transport and logistics E-business Information and communication technology (ICT) Factor analysis Logistic regression abstract This study develops a discrete variable investment model and applies it in the study of the decision to adopt e-business by transport and logistics companies. The data analysis is carried out in two phases; in the first phase, factor analysis is conducted to identify the principal components influential to the e-business adoption decision; in the second phase, logistic regression is conducted to further analyse the effect of individual components on the adoption decision. The analysis of the data obtained from a survey of Australian transport and logistics companies has found various factors influential to the adoption decision. The first factor relates to service quality improvements brought about by e-business adoption including a higher level of competitiveness, service differentiation, value adding, improved customer services and supply chain integration. The second factor concerns the financial aspect of e-business adoption including large initial investment expense, financial constraints, and costs of operation and maintenance. The third factor concerns expectations about market demand in terms of volatility and growth in demand for freight and logistics services. The analysis and results shed light on the behaviour of transport and logistics companies and the sector’s view toward e-business adoption. For example, the decision to adopt e-business should take into account not only the benefits but also the costs of adoption, running and maintenance as well as financial constraints. The model developed by the study can be applied to any sectors or industries, in which companies face discrete investment choices. & 2013 Elsevier B.V. All rights reserved. 1. Introduction Competition and opportunities in the era of global trade, investment and outsourcing have induced transport and logistics companies to look for different ways to grow and improve their competitive advantage. E-business offers a solution that allows companies to instantaneously share databases, forecasts, inven- tory and capacity plans, product information, financial data, and almost anything else that they may need to be operationally efficient and effective. Since transportation and logistics involves activities associated with the movement of products and informa- tion to, from, and between the members of the supply chain, e-business can help them achieve efficient coordination and integration of all these activities. In a highly competitive business characterised by time constraints and information management, technological effort especially the use of information and commu- nication technologies (ICT) has become vital for services differ- entiation and diversification (Evangelista and Sweeney, 2006). The result is that competitive advantage in the transport and logistics sector has been shifted to creating value chains whose activities are directly or indirectly assisted by e-business (Disney et al., 2004; Gunasekaran et al., 2002; Landers et al., 2000; Marchet et al., 2009). E-business has a number of applications that vary in complex- ity and could be defined as the use of the internet or any other electronic medium for the execution of transactions, the support of business processes and the improvement of collaboration opportunities with other businesses or clients (Matopoulos et al., 2007). Examples of e-business applications include, but are not limited to virtual logistics (Clarke, 1998), virtual warehouse (Landers et al., 2000), electronic marketplaces or logistics broker- age systems (Gudmundsson and Walczuck, 1999). In addition, Karthik et al. (2004) have shown that business to business (B2B) e-commerce enhances time-based delivery performance, while Quirós Romero and Rodríguez’s (2010) have found e-procurement has a positive influence on firm efficiency although the effect is insignificant for e-selling. According to Evangelista and Sweeney (2006), e-business has created new trends in the transport and logistics sector. First, the increasing dissemination of ICT has resulted in the integration of traditional services, such as transportation and warehousing, with information-based services such as tracking and tracing (T&T), booking, freight rate computation, routing and scheduling. Second, Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/ijpe Int. J. Production Economics 0925-5273/$ - see front matter & 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.ijpe.2013.07.014 n Tel.: +61 3 6324 9762. E-mail addresses: o.nguyen@amc.edu.au, o.nguyen@utas.edu.au, noanh68@yahoo.com Int. J. Production Economics 146 (2013) 300–312