Evaluating the operating efficiency of electronic market using a hybrid approach

This paper aims to evaluate the operating efficiency of e-market for exploring the efficiency-oriented critical drivers on the development of e-market. A hybrid approach consisting of data envelopment analysis (DEA) and bootstrapped Tobit regression analysis is adopted. The efficiency of forty-three emarkets is investigated with respect to their respective overall efficiency, technical efficiency and scale efficiency, leading to the identification of the efficient e-market and the underlying source of inefficiency in the existing e-markets. The efficiency-oriented critical drivers for e-market are then investigated using bootstrapped Tobit regression analysis based on the outcome of the DEA analysis, resulted in the identification of four critical efficiency-based drivers including the head office location, the coverage, the mechanism, and the social media engagement. The study shows that the source of inefficiency in the e-market is due to the scale of production. It further reveals that an emarket is more efficient if it (a) is headquartered in the United State, (b) focuses on offering the products or services internationally, (c) has a fixed-price transaction mechanism, and (d) engages more in social media. The findings of this study help existing e-markets improve their efficiency by focusing on the efficiency-based critical drivers and provide new players in e-market with guidelines for developing their efficient e-markets.