Agent-Based Modelling Incorporating Qualitative and Quantitative Methods:
A Case Study Investigating the Impact of E-commerce upon the Value Chain.
(Doctoral Thesis)

By: Richard Taylor
Date: 17th September 2003
CPM Report No.: CPM-03-137

Published as:
Taylor, R.I. (2003).
Agent-Based Modelling Incorporating Qualitative and Quantitative Methods: A Case Study Investigating the Impact of E-commerce upon the Value Chain. Doctoral Thesis, Manchester Metropolitan University, Manchester, UK.


This thesis investigates the question of how new e-commerce technology is changing the organisational structure of value chains. The research presented in this thesis illustrates a new methodology that unites qualitative and quantitative approaches, by undertaking a detailed case study within a major international organisation. The focus is upon exploring those issues identified as interesting and important by a small stakeholder group working in the company and actively participating in the research.

The qualitative investigation involves an interpretive study of interview data collected during a fieldwork phase. The context of the case study is a business transformation programme due to the introduction of Internet-based e-commerce that is designed to link customers to an electronic mall, thereby improving information flow, customer service, and internal efficiency. The qualitative research aims to capture the attitudes, perceptions and behavioural patterns observed in customers and other trading partners. The quantitative approach is embodied in an agent-based simulation model, which produces numerical outputs that are compared with statistical data gathered during the fieldwork. The objective is to develop an explanatory model that can be used to improve stakeholders’ understandings of the workings of the value chain.

Simulation experiments are carried out to investigate a number of projected system scenarios, and to test hypotheses about the impact of e-commerce drawn from the literature and from the findings of other e-commerce case studies. The main findings of this research relate to the anticipated role of intermediaries in the value chain, and to the identification of key drivers and inhibitors to customer take-up of e-commerce. The thesis argues that a multi-methodology approach is appropriate to simulation-based projects. It identifies stakeholder participation as being particularly useful because it enables strong validation procedures to be carried out.

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Title Page, Abstract
Table of Contents

Chapter 1 Introduction    3

Chapter 2 Literature Review: Markets, Intermediation and E-Commerce    7
                Introduction    7
                    2.1 Historical Analysis of The Process of Exchange    9
                    2.2 Drawing Parallels with Todays Economic Development    13
                    2.3 Models of Technology Diffusion    17
                    2.4 Electronic Commerce    23
                    2.5 The Arrival of the Internet    27
                    2.6 The Value Chain and the Impact of EC    33
                    2.7 Some Empirical Examples    36
            Conclusion    43
Chapter 3 Agent-Based Social Simulation    45
            Introduction    45
                3.1 Distributed AI, Emergence and Complexity    47
                3.2 Multi-Agent Systems    48
                3.3 Objectives of Modelling and Social Simulation    50
                3.4 Agent-Based Social Simulation Modelling (ABSS)    52
                3.5 Modelling Methodology    56
                3.6 Experimental Design, Implementation, and Analysis    60
                3.7 Validation Methods    65
                3.8 Review of Models of Exchange    67
            Conclusion    73
Chapter 4 Qualitative Research Methodology    75
            Introduction    75
                4.1 Qualitative Methodology    77
                    4.1.1 Qualitative Research Paradigms    77
                    4.1.2 Case Study Research and the Interpretative Approach    82
                    4.1.3 Methodology of Information Systems Research    84
                    4.1.4 Methods and Methodological Design    86
                4.2 The Case Study    92
                    4.2.1 Overview of the Project    92
                    4.2.2 Targeting an Industrial Sector and Finding Potential Case Studies    93
                    4.2.3 The First Meeting: Establishing the Context for the Research    97
                    4.2.4 Case Study Research Design    98
                    4.2.5 Carrying out the Case Study    101
            Conclusion    104
Chapter 5 Case Study Fieldwork    106
            Introduction    106
                5.1 Background on the Company    107
                5.2 EDI and EC policy    109
                5.3 Data Collection Methodology    112
                5.4 Emergent Themes from the Case Study Fieldwork    113
                    5.4.1 Drivers and Inhibitors of Electronic Commerce Adoption    115
                    5.4.2 Incentives Offered by the Initiator and the Mandate-of-Adoption Policy    118
                    5.4.3 The Role of the Distributor and the Likely Impact of E-commerce    120
                    5.4.4 The Impact of E-commerce on Efficiency Gains and Productivity    124
        Conclusion    127

Chapter 6 Linking Fieldwork Data with the Agent-Based Model    129
            Introduction    129
                6.1 Relationship with the Stakeholders    130
                6.2 Research Questions    133
                6.3 Experimental Design: Model Scenarios    136
                6.4 Use of the ATLAS.ti Software    139
                6.5 Validation of the Model    142
                6.6 Hypotheses in the Model: HEC and HINT    146
                6.7 Using Stakeholder Participation in Conjunction with ABSS modelling    148
            Conclusion    154

Chapter 7 Description of the Model and Simulation Experiments    155
            Introduction    155
                7.1 Overview of the Model and the Aims of Simulation    157
                7.2 Model Description    158
                    7.2.1 Agents and Environment    158
                    7.2.2 Customer Demand    160
                    7.2.3 Intermediaries    162
                    7.2.4 The Endorsements Model    164
                    7.2.5 Beliefs    165
                    7.2.6 Manufacturer’s Strategy    167
                    7.2.7 Customer and Distributor Characteristics    169
                    7.2.8 Ranking of Agent Beliefs    171
                    7.2.9 How Endorsements Relating to HINT and HEC are Asserted    173
                    7.2.10 Interaction Processes    175
                    7.2.11 Agent Attitudes and Decision-Making    179
                7.3 Simulation Experiments    180
                    7.3.1 First Scenario    182
                    7.3.2 Second Scenario    193
                    7.3.3 Third Scenario    202
                    7.3.4 Fourth Scenario    208
                    7.3.5 Sensitivity Analysis    211
                    7.3.6 Analysis of Results on the Success of Intermediary Strategies    215
                    7.3.7 Comparison of Simulation Results with the Mall Statistics    217
            Conclusion    220

Chapter 8 Discussion    222
            Introduction    222
                8.1 Reflection on the Stakeholder Participation    224
                8.2 Reflection upon the Usability of the Approach    227
                8.3 Other Participatory Approaches    230
                8.4 Revisiting the Research Hypotheses    235
                8.5 Limitations of the Research    238
                8.6 Reflection on the Areas Deserving Further Work    241
            Conclusion    243

Chapter 9 Conclusion    245