Research Article Open Access

Strategic Context for Internet Banking: How Traditional Banks Manage e-Commerce to Build IT Capabilities and Improve Performance

Abstract

Many studies have undertaken to show the impact of e-commerce on firm performance, but with mixed results. Therefore this study examines e-banking strategy and implementation, by developing a comprehensive model showing the particular strategic context (strategic role) of the e-commerce unit, the strategic control systems employed, and the nature of IT capabilities developed, in order to explain firm performance for banks. This study found that a more aggressive strategic context is associated with greater usage of strategic control systems, which comprise input controls, informal controls, formal targets and formal processes. Further, strategic controls is partly associated with IT capabilities, IT capabilities is partly associated with intermediate performance metrics (revenue enhancement, but not cost reduction), and intermediate performance metrics are associated with final firm profitability. A discussion and managerial implications for banks are given.

STEPHEN KENT CALLAWAY and SANDEEP BHAILALBHAI JAGANI

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