Impact of E-Commerce Sales on Profitability and Revenue. The Case of the Manufacturing Industry

E-commerce has grown significantly in recent years. Although the factors that contribute to the implementation of e-commerce have been studied in prior literature, little has been done about the impact that the introduction of e-commerce has on both profitability and revenue. This is important because, as Solow (1987) points out, the information technology expenditures do not always allow firms to achieve a better performance. For this purpose, the authors use the data from the Spanish Survey on Business Strategies (ESEE). The research covers an eight-year period (2008-2015). 2,544 Spanish companies belonging to the manufacturing sector were analysed. Results show that neither business-to-business (B2B) nor business-to-consumers (B2C) e-commerce seem to have influence on the revenue growth. Therefore, a substitution effect may exist between the sales by physical channels and e-commerce sales. However, the authors have found evidence that companies which adopt a high level of e-commerce (B2C and B2C simultaneously) immediately experience increase in their profitability. Moreover, if firms adopt only B2B or B2C the positive effects on profitability are achieved in the year subsequent to that of the measurement of the e-commerce status.

The Relevance of Information Technology Expenditures

ABSTRACT: Although information technology (hereafter, IT) expenditures represent an increasingly large investment for most corporations, firms are not required to disclose them separately in their financial statements. We hypothesize and find evidence that information about a firm’s IT expenditures helps explain its future performance as reflected in both accounting measures (residual income, earnings volatility) and market measures (stock price and long-run abnormal returns). In particular, we provide evidence of market mispricing and suggest the lack of firm-level annual IT expenditure disclosure as one potential reason for such mispricing. Altogether, the evidence presents a persuasive case that information about a firm’s IT expenditures is useful to stock market participants. The evidence we report is useful to managers and accounting policy makers contemplating the public disclosure of firm-level information about IT investments.