The Benefits of E

The Benefits of E Abstract In this paper, a critical review of e-contracting is conducted. This is achieved conducting a background analysis of the concept of e-contracting in which the benefits associated with e-contracting are highlighted. The method used to achieve this is literature review. The author asserts that there are a number of challenges associated with e-contracting.Advertising We will write a custom research paper sample on The Benefits of E-contracting specifically for you for only $16.05 $11/page Learn More As a result, it is vital to minimize these challenges so as to achieve the benefits of e-contracting. The author identifies a number of e-contracting challenges on which he formulates a set of hypothesis. Some of the challenges which the firm evaluates relates to modeling and representing contractual relationship, negotiation, monitoring, and contract management. Finally, a conclusion of the entire study is given together with a recommendation for further research to be conducted in order to seal the existing gaps. Introduction According to Grefen (2010, p.19), contracts form the basis upon which businesses establish formal relationship with various stakeholders. Traditionally, physical documents such as papers were used as evidence of an existing contract between two or more parties. However, the 21st century has witnessed rampant technological growth (Angelov, 2005. p.54). Some of the technological fields which have witnessed rampant growth include software development and telecommunication. Currently, communication is not limited by geographical and time constraints. Due to technological advancement, it is possible to exchange information more easily and rapidly. The high rate of technological innovation has led to emergence of electronic commerce which entails undertaking all business processes electronically. As a result of growth in electronic modes of collaboration between firms, business contracting has also been affected thr ough emergence of a new modes of collaboration referred to as electronic contracting [here after referred to as e-contracting] (Angelov, 2005. p.54). E-contract refers to a contract which is designed and executed through a software system. In e-contracts, business contracts are designed using computer programs which make it possible to automate the respective business processes. It is possible to map e-contracts to other related computer programs.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, e-contract programs cannot be able to deal with complex relationship arising between the various parties to the contract. The concept of e-contracts is similar to that of traditional contracts.In e-contracts, the vendors offers their product and the respective terms such as price to potential buyers. On the other hand, the buyers evaluate the terms, and negotiate the price . After this, they are able to order the particular product or service and make payments. However, all these activities are conducted electronically. In an effort to improve their operational efficiency, firms in different economic sectors such as the construction industry are increasingly incorporating e-contracting in their operation. This arises from the benefits associated with e-contracting. However, there are a number of challenges associated with e-contracting. In order to gain insight on these challenges, the researcher identifies and analyses some of these challenges. To evaluate e-contracting challenges effectively, the researcher have adopted a number of null hypothesis. All the hypotheses are based on the various elements of a contract as outlined below. Modeling and representing business contractual relationships using e-contracts is a challenging task. There are a number of hindrances which affect e-contract negotiations. Monitoring e-contracts is challenging compared to monitoring physical contracts. There are a number of issues which hinder e-contract management. By understanding these challenges, this paper will contribute towards management teams of firms which have adopted e-contracting developing strategies aimed at eliminating challenges. This arises from the fact that they will appreciate the effects of these challenges on their contractual relationship. For example, poorly developed e-contract can result into financial and legal implications on the parties to the contract. Therefore, understanding the contract will culminate into improvement of the firms’ overall operational efficiency, for example by strengthening contractual relationships. Background and history of e-contracting Through e-contracting, a firm is able to undertake a number of activities associated with contracting purely in an electronic environment. For example, the parties to the contract are able to undertake negotiations via electronic communication methods. Upon the parties to the contract coming to a consensus and a contract being established, each of the parties to the contract manages the various activities electronically.Advertising We will write a custom research paper sample on The Benefits of E-contracting specifically for you for only $16.05 $11/page Learn More For example, the parties may incorporate online collaboration systems in various communication processes such delivering contractual notices. In addition, e-contracting enables the collaborating parties to undertake necessary contractual amendments. This makes the process of contracting to be more efficient. According to Camarinha-Matos, Afsarmanesh and Ollus (2008. p. 193), traditional contracting involves human actors and is considered to be slow while e-contracting is faster and cost effective. E-contracting does not result into changes of the businesses processes. It is only the efficiency of the contracting process which is improved. E-con tracting mainly involves two main processes which include contract formation or establishment and contract enactment. According to Xu and Vrieze (2010, p. 3), contract formation involves a number of activities which include identification, negotiation, checking, and validation of all the contractual parties. On the other hand, contract enactment or performance involves monitoring contract performance. Grefen (2010, p.19), asserts that there has been emergence of new business settings over the past few years which require new contracting paradigm. To align themselves with the changes in the environment, firms are considering incorporating e-contracting in their operation. E-contracting process is distinct with regard to the result. This arises from the fact that e-contract is developed as a semi structured document which can be in various formats such as Microsoft Word, XML, or PDF formats. Some of these include XML based words, clauses and sentences. In addition, e-contracts are com posed of semi-structured information. In addition, some electronic contracts attain legal status through digital documents. According to Xu (2004, p.3), legal e-contracting is aimed at establishing a contractual document which addresses the intentions of all the parties.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More According to Xu and Vrieze (2010, p. 3), es of these aspects relate to development of the first contract models and frameworks. In addition, Legal and regulatory frameworks were also instituted. This period also saw the development of concepts such as the digital signature, certificate authority and certificate mechanisms. Other es of these protocols include the Transport Layer Security and the Secure Socket Layer (O’Shea et al, p. 14). In addition, lack of effective encryption and decryption by the parties involved can result into the transmission being hacked. In addition, some of the e-contracting negotiation platforms such as the email do not offer a comprehensive system which can be used in auditing electronic records. This means that the evidentiary value of e-documents and records is diminished. The resultant effect is increased inefficiencies with regard to disclosure process if a dispute occurs (O’Shea et al, p. 14). This illustrates the fact that each of the e-contracting stages results into emergence of security and legal risks. An example of industries which have increasingly incorporated the concept of e-contracting in their operation is the construction industry. In order to minimize the associated risks, it is vital for the management teams of these firms to take into account the associated risks. To eliminate these risks, construction companies should ensure that their e-contracting system is well configured. This can be achieved by considering a number of security goals which include confidentiality, integrity, authenticity, availability and cryptographic non-repudiation. Confidentiality will entail ensuring that only authorized parties can read the details of the contract. The integrity of the e-contracting system entails ensuring that the e-contract documents are not modified, deleted or duplicated. On the other hand, authenticity entails ensuring that individuals who have access to the e-contracting system are the real parties to the contract. Availability entails ensuring that the parties to the contract can access the e-contracting systems and other e-contract documents (O’Shea et al, p. 14). E-contracting challenges on monitoring Contract monitoring refers to the process of analyzing the activities conducted by the parties to the contract. This aids in detection of any possible contract violations (Meersman Tari, 2007, p. 303). According to Camarinha-Matos, Pereira and Ribiero, (2010, p. 85), it is necessary for the parties to the contract to closely watch the activities of the collaborating parties. This will aid in ensuring that the activities by the parties are according to the stipulations of the contract. Contract monitoring can be classified into two. These include proactive monitoring and reactive monitoring. In the proactive monitoring, it is possible to identify any anomalies and take necessary actions to avoid their occurrence. In reactive monitoring, the parties responsible for the occurrence of the anomalies are identified. In this case, compensation to the affected party is necessary. One of the purposes of electronic contract is to clearly distinguish what is expected from the collaborating parties (Xu Vrieze, p.4). In addition, the contract also stipulates the acceptable behavior. During the contract fulfillment phase, messages related to the contract are transmitted through the established network. These messages can be used as a source of additional information to aid in pro-active monitoring. However, e-contract monitoring is challenging since most of the networks being used in the e-contracting process of on automation of the entire process instead on developing services which would aid in supporting contract fulfillment. Some of the services considered to support contract fulfillment include monitoring. Lack of these services limits the effectiveness of creating a trustworthy electronic commerce environment. E-contract challenges on contract manageme nt Over the past few decades, the concept of contract management has increasingly become prominent. This is mainly so amongst project oriented companies such as construction firms. Demand for contract management has resulted from the fact that the business environment is experiencing rapid changes. As a result, it has become paramount for firms to be effective and efficient in how they manage their contracts. In an effort to move with the market changes, firms are incorporating e-contract management systems. An effective electronic contract management system should have the capacity of supporting the firm’s networking development. In addition, the system should be effectively distributed and connected to the internet. Camarinha-Matos, Afsarmanesh and Ollus (2008. p. 193), asserts that the system should support end to end integration. In addition, other features which should be ensured include flexibility, security and accessibility. This will increase the systems efficiency i n handling complex contracts. According to Xu and Vrieze (2004, p.5), there are various aspects associated with contract management. Xu and Vrieze are of the opinion that contract management should involve establishment of a single repository. In addition, contract management also involves tracking the performance of each contractual partner. This should be achieved through incorporation of Key Performance Indicators (KPIs). The information obtained should be used to determine the necessary improvement actions and establishment of ranks. In addition, contract management also entails informing and reminding the partners on the milestones. Contract management entails ensuring that parties to the contract honors the contract terms (Betts, 1999, p.76). Through contract management, a firm is able to save on its operating costs. Despite the fact that e-contracting is considered to be cheap, there are some challenges which may result. This is mainly experienced if the firm has entered into a number of contractual agreements with firms which have adopted different electronic commerce standards. In such a case, it becomes difficult for the firm to manage the contract. This arises from the fact that the firm will be required to monitor the operations of every party which is a daunting task. In addition, the firm may not be able to maximize the expected benefit in the contractual relationship. This arises from difficulties in its effort to minimize potential costs and determining the cost of the contract violation. According to Xu and Vrieze (2004, p.6), multiparty contractual relationships may result into loss of variable information. In addition, e-contracts involving a large number of parties result into increment in the degree of complexity. This arises from the fact that the large number of collaborating parties makes the relationships to be hidden. In addition, it becomes difficult to manage e-contracts involving multiple partners with regard to modeling the contra ct and identification of responsible parties. Xu and Vrieze (p. 6) further assert that multi-party e-contracting is challenging with regard to provision of extra services such as monitoring. Conclusion As a result of technological innovation, firms are increasingly being pressurized to improve their operational efficiency. One of the technological innovations which have affected firms entails the emergence of electronic commerce. In an effort to attain their profit maximization objective, firms are integrating online services in their operation. E-commerce has also affected other business processes such as contracting. This is evident in the fact that firms in different economic sector are increasingly incorporating the concept of e-contracting in their operation. Through e-contracting, firms are able to enter into business contract with various parties electronically. The shift is also associated with the benefits resulted from e-contracting. For example, through e-contracting, a f irm can be able to minimize the costs involved in contracting. Additionally, electronic contracts result into reduction in paper work. A firm’s operational efficiency is significantly improved as a result of incorporating electronic contract. This arises from the fact that human errors which may occur during traditional method of contracting as eliminated. Electronic contracting also minimizes risks associated with contractual agreement established over public networks for example the internet. This arises from the fact that issues such as confidentiality, authenticity, integrity and security of the contract may be compromised. It is also possible to re-use content after the contract is closed in addition to provision of a machine-processible document. E-contracting will also result into improvement of business relationships thus minimizing legal and financial risks. The resultant effect is that e-commerce will be greatly enhanced. Through e-contracting, there is a high proba bility of firm’s improving their productivity and hence their competitiveness. Despite these benefits, there are a number of challenges associated with e-contracting. This means that it is necessary for firm’s to consider ways on how to eliminate these challenges. These challenges are related to technical, legal and business perspectives. For instance, for e-contracts to be effective, it is necessary for there to be effective modeling and representation of the contractual relationship. This presents a challenge to most firms since they may not be acquainted with e-contract modeling knowledge. In addition, firms may be required to have the necessary web-technology. E-contracting is also faced with a challenge with regard to negotiation. Contract negotiations ensure that all the parties to the contract are acquainted with sufficient understanding of their obligations to the contract. Contract negotiation may be compromised for a number of reasons. One of them arises from the fact hat there are various electronic platforms upon which e-contracting negotiations can be conducted. Some of these platforms such as the email may pose a threat to the contract with regard to confidentiality. This is mainly so if the security protocols are not well configured. Therefore, e-contract negotiations require the support of other technologies in order to improve security, confidentiality, integrity and authenticity of the contract. The success of an e-contract is also determined by the efficiency with which the collaborating parties monitor the activities of the parties involved. However, monitoring e-contracts may not be effective due to lack of the necessary support services. E-contract management is also challenging if the parties to the contract have adapted different e-commerce standards. In order to deal with the challenges associated with e-contracting, it is necessary for further research to be conducted. These studies should focus on the best way to seal t he challenges associated with e-contracting. In order to succeed in their e-contracting processes, firms should continuously evaluate the external environment in order to identify possible technological changes. 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