Analyzing information intermediaries in electronic brokerage

Robert J. Kauffman, Mani Subramani, Charles A. Wood

Research output: Chapter in Book/Report/Conference proceedingConference contribution

5 Scopus citations

Abstract

In the past, full-service stock brokerage firms had a strategic advantage over discount brokers because of the control full-service brokers had over the information provided to the customer. Full-service stockbrokers acted as information intermediaries in that they were able to capture residual value from the transfer of information to make a profit. Strategic vulnerability occurs, in this case, when technology makes the information intermediaries' market contestable, by allowing easy transfer of information, thus allowing competitors to establish themselves as alternatives to market leaders. This research explores how technological innovation sets the stage for strategic vulnerability for information intermediaries. We develop a model of the phases of strategic vulnerability and discuss three propositions that involve strategic vulnerability, stalling of technological adoption and value creation. We show how strategic vulnerability affects information intermediaries. We examine the electronic brokerage industry to illustrate how firms can retain competitive advantage by rebundling their product offerings to separate contestable from non-contestable products.

Original languageEnglish (US)
Title of host publicationProceedings of the 33rd Annual Hawaii International Conference on System Sciences, HICSS 2000
PublisherIEEE Computer Society
Pages203
Number of pages1
ISBN (Electronic)0769504930
ISBN (Print)0769504930
StatePublished - 2000
Event33rd Annual Hawaii International Conference on System Sciences, HICSS 2000 - Maui, United States
Duration: Jan 4 2000Jan 7 2000

Publication series

NameProceedings of the Annual Hawaii International Conference on System Sciences
Volume2000-January
ISSN (Print)1530-1605

Conference

Conference33rd Annual Hawaii International Conference on System Sciences, HICSS 2000
Country/TerritoryUnited States
CityMaui
Period1/4/001/7/00

Bibliographical note

Funding Information:
The authors thank Eric Clemons of the University of Pennsylvania for offering a variety of insights on the industry that are reflected in the perspectives that we offer in this article. We also thank Joseph Galaskewitz, University of Minnesota, for his advice on the application of social network theory, and Alina Chircu for input on the theory of intermediation. Rob Kauffman also acknowledges financial support for portions of this work by American Express Financial Advisors (AEFA), Minneapolis, Minnesota. He especially thanks Doug Lennick (Executive Vice President), Rebecca Roloff (Senior Vice President), and Tom Perrine (Chief Information Officer), as well as other senior leaders at AEFA for the opportunities they offered to discuss the issues that we analyze. This opportunity came in the context of the 1999 AEFA Group Vice President's Conference, held in Tucson, Arizona in February 1999, in which the author was a keynote speaker. Kathryn Oakley, Program Development Specialist at the Executive Development Center of the Carlson School of Management, University of Minnesota also provided crucial logistical support at the early stages of the field study.

Funding Information:
The authors thank Eric Clemons of the University of Pennsylvania for offering a variety of insights on the industry that are reflected in the perspectives that we offer in this article. We also thank Joseph Galaskewitz, University of Minnesota, for his advice on the application of social network theory, and Alina Chircu for input on the theory of intermediation. Rob Kauffman also acknowledges financial support for portions of this work by American Express Financial Advisors ( AEFA),

Publisher Copyright:
© 2000 IEEE

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