“Fit” for Success or Failure: An Exploration of How Marketplace Design Affects Performance

Abstract

Within the IS literature, there remains a lack of understanding of the performance of electronic marketplaces. Extant research, while strong in relation to describing and characterizing marketplaces, provides few insights on how management can design their marketplaces in order to improve their performance. By providing insights into the performance of three marketplaces, two of which failed and one that continues to operate, this article provides insights on how management might design marketplaces to maximize performance.

Keywords:

• electronic marketplace
• performance
• strategic alignment

Notes

1. A marketplace can operate both physical and financial markets.

2. Traditional Financial Services (TFS) is a market leader in the inter-dealer brokering of over the counter physical and derivative products (www.tfsbrokers.com).

3. A physical contract is a product whose value arises from the owner's right to sell as well as the right to use the product (in this case, coal). Such contracts are traded on a marketplace's physical market.

4. Generic term used to refer to a derivatives contract (i.e, futures, forwards, swaps). A financial contract's owner has the right to buy or sell an underlying instrument at a certain date in the future. Such contracts are traded on a marketplace's financial market.