The Success and Failure of Dotcoms: a Multi-Method Survival Analysis
THE SUCCESS AND FAILURE OF DOTCOMS: A MULTI-METHOD SURVIVAL ANALYSIS Robert J. Kauffman Co-Director, MIS Research Center Professor and Chair rkauffman@csom.umn.edu Bin Wang Doctoral Program bwang@csom.umn.edu Information and Decision Sciences Carlson School of Management University of Minnesota Minneapolis, MN 55455 ______________________________________________________________________________ ABSTRACT: Using a multi-method survival analysis, we explore the drivers behind DotCom success and failure. Specifically, we test the impact of industry-, firm- and e-commerce-specific factors on a DotCom’s sustainable competitive advantage. KEYWORDS: DotCom firms, econometric analysis, electronic commerce, empirical research, strategic morphing, survival analysis. ______________________________________________________________________________ ACKNOWLEDGEMENTS: The authors thank Kemal Altinkemer and Kaushal Chari, cochairs of the Fall 2001 INFORMS Conference on Information Systems and Technology, and the anonymous reviewers of an earlier version of this manuscript for helpful comments. We also thank Tim Miller, President, Webmergers.com, for access to data and project sponsorship. ______________________________________________________________________________ INTRODUCTION The number of DotCom firms exploded during the last six years, as pure-play Internet startups emerged and existing companies migrated some of their operations onto the Internet to take advantage of the new channel for business. We define DotCom firms as those that do business via the Internet only. Among the DotComs that are publicly traded or have obtained investments of more than $1 million, more than 500 have ceased their operations since January 2000 (Internetweek, 2001). Still, many of the remaining DotComs are struggling to sustain themselves in a marketplace with fiercer competition coming from both online and offline competitors, and more reluctant investors. Why are so many DotComs failing? With this
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