The Application of Dynamic Capabilities in E-commerce Innovation Context : The Implications for Chinese E-commerce companies

Abstract: This study mainly investigated how Chinese E-commerce companies should cope with E-commerce innovation with specific dynamic capabilities. E-commerce (Electronic Commerce) innovation includes three phases of innovation based on technology and time. They are web-based commerce, mobile commerce (M-commerce) and ubiquitous commerce (U-commerce). They caused not only technological changes but also organizational changes. To cope with E-commerce innovation, a prerequisite is to understand the impacts and changes brought by the innovation. Previous researchers Afuah and Bahram (1995) have proposed a hypercube innovation model to depict the relationship between innovation entities and diverse of participants of innovation value-added chain, forcing enterprises to face what the influence from their innovation will be on their stakeholders. Wu (2004) developed a new hypercube model of E-commerce innovation, explaining that impacts of E-commerce innovation should be based on both internal factors like technological component and business model and external factors like industrial partnerships. Based on the finding, the types and details of impacts caused by E-commerce innovation have been discussed in the study. Dynamic capabilities have been found that could help E-commerce company to identify emerging opportunities, renew its competences and keep its competitive advantages in a dynamic business environment. Further development of core dynamic capabilities that are necessary for E-commerce company transformation in different phase of E-commerce innovations were proposed in two dimensions, technological component and business model. For scientific preciseness, we have exemplified a successful case of Japanese E-commerce company (NTT DoCoMo). It helped to examine and prove the practicability of hypercube model of E-commerce innovation and feasibility of dynamic capability in helping E-commerce companies to cope with E-commerce innovations. The similarity and relativity of E-commerce companies in China and Japan have been found based on the comparison of technology, market opportunity, E-commerce innovation, customer value and network perspectives. In order to cope with E-commerce innovation successfully, Chinese E-commerce companies should improve five dynamic capabilities based on Chinese specific environment and conditions. They are: 1, choosing enabling technology, like 3G technologies. 2, matching with economic opportunities, like focus on entertainment market. 3, executing business innovation, like facilitate innovation of handset functions. 4, understanding customer value, like investigate more reduce switching cost for customers. 5, constructing alliance with co-opetitors, like establish safe payment mechanism with banks etc.