Value creation through expanding the online distribution channel

Purpose: Current literature provides limited insights into the supply chain contexts within which e-commerce can create higher value for firms. To address this literature gap, this research explores the value potential, and thus value creation process, of e-commerce initiatives for supply chain distribution channel expansions. Design/methodology/approach: Using secondary data collected from multiple sources, this research conducted an event study to examine the stock market reactions to the announcements of e-commerce initiatives of Chinese firms. Findings: The results indicate that the e-commerce initiatives increase average firm value by CNY 295.29 million in a three-day window around the initiative's announcement date. Moreover, we find that such stock market reactions are more positive for firms with poor operating performance, and more negative when firms deploy initiatives on their own (rather than third-party) platforms. Further, companies that integrate or complement their online sales with an offline sales channel experience more positive stock market reactions. Originality/value: This study provides new insights into the value creation process of e-commerce from an operation and supply chain process perspective.