Analyzing firm-level strategy for Internet-focused reintermediation

Abstract

We propose a framework for understanding circumstances under which information technology (IT) innovations for electronic commerce (EC) change firm-level strategic choices, and the economic forces behind these choices, in Internet market competition. We identify a recurring pattern of intermediation, disintermediation and reintermediation: the IDR cycle. With this framework, we explain technological reintermediation, where a disenfranchised player is able to compete again, by combining technological innovation with leveragable co-specialized assets. We build this perspective with evidence from the corporate travel industry. The analysis reveals that traditional travel firms have access to a range of strategies that enable them to avoid disintermediation and become more powerful in the long run.