ELSEVIER Information & Management 31 (1997) 335-345

Techniques

Web sites of the Fortune 500 companies: Facing customers through home pages

Chang Liu, Kirk P. Arnett*, Louis M. Capella, Robert C. Beatty College of Business and Industry, Mississippi State University, PO. Drawer 9581, Mississippi State, MS 39762, USA

Abstract

The growing popularity of the information superhighway has opened up exciting opportunities for companies looking to, not only maintain their current customer base, but also to reach new customers. One of the most popular methods to enter into cybermarketing has been to establish a home page or Web site on the Internet. Almost two-thirds of Fortune 500 companies currently maintain home pages on the Web. An analysis of the content of corporate home pages provides useful insights. Over four-fifths of the companies display products and services (93.2%) and company overview (86.1%) information. Roughly three-fourths of the companies present interactive feedback (79.3%) and what's new (71.1%). Less than one-third (26.2%) of Fortune 500 companies provide for online business. An analysis of the data also provides valuable insight into the future trends of home page usage by large business organizations. © 1997 Elsevier Science B.V.

Keywords: Home page; Electronic commerce; Fortune 500; World Wide Web; Internet; Cybermarketing; Web sites

1. Introduct ion

Interest in the Internet and, more specifically, the World Wide Web (or Web) has soared recently. Initi- ally, the Internet was developed and used by the U.S. government, educational, and non-commercial research institutions. Since 1991, however, this usage trend has profoundly changed. In 1993 business appli- cations of Internet exceeded traditional non-commer- cial uses for the first time [1]. Today the Web has over 20 million users and is growing at the rate of 130 000 new users each month [7]. It has become the fastest growing mechanism for electronic markets because it offers a variety of techniques with which to commu-

*Corresponding author: Tel.: 001-601-325-1999; e-mail: kar- nett @ cobilan.msstate.edu.

0378-7206/97/$17.00 ¢~), 1997 Elsevier Science B.V. All rights reserved PII S-0378-7206(97)00001-3

nicate and provides substantial market potential. The most popular communication technique and the one that has tweaked the public interest is the use of home pages on the Web [ 10, 12, 24]. There are generally four types of business revenue models on the Web:

I. direct selling or marketing a company 's products or services 2. selling advertising space 3. charging fees for the actual content on a Web site, and 4. charging fees for on-line transactions or links.

Eleven moderate-size companies which achieved Web-related revenues of nearly $25 million in the first 7 months of 1995 were profiled in [18]. Indeed, huge business opportunities exist on the Web and additional study is needed on Web-related business practices.

336 C. Liu et al./Information & Management 31 (1997) 335-345

Despite perceived problems with credit validation and individual security over the Web, there is a sub- stantial interest in conducting business transactions through a point and click environment. Vendors appear to be using home pages with these environ- ments for a variety of marketing thrusts yet little is known about large business use of the Web through home pages. Therefore, this is intended as a status report of Web usage and fills a gap in knowledge of large business Web usage.

2. Objectives and study questions

1. How many Fortune 500 companies have home pages? 2. What are the industry types of those who have and do not have home pages? 3. Are there any differences in revenues of compa- nies which have and do not have home pages? 4. What is the main content of home pages? 5. What are the companies' general objectives for establishing home pages? 6. Do these findings support the conceptual models of electronic markets? 7. What are the future trends of doing business through the World Wide Web?

Commerce-related studies of Fortune 500 compa- nies have provided fertile ground for study that should expand further with business use of the Web. When organizations initiate business on the Web and conduct on-line electronic marketing activities it results in new opportunities. These electronic markets are the buying and selling of goods and services where part, if not all, of the commercial transaction occurs over an electro- nic medium [34].

Home pages, referenced by URL addresses, are created by companies which try to reach potential customers through their Web sites. The term home

page tends to vary depending on its use and reference in the literature [25, 27, 32]. In order to establish a baseline definition for the home page, varied defini- tions from literature were used to develop a single one: a document on a web server that can be referenced under the corporate name and that is developed and maintained by the corporation and serves as an entry point for customers to access specified information utilizing an electronic medium. Therefore, a home page may represent an electronic vision of the recep- tion lobby where potential customers can visit a company or it may merely be composed of attractive graphics to capture attention. The objective of this study is to identify the ways in which large U.S. firms have responded to this new technology and how they use their Web sites and home pages to conduct busi- ness,

The Fortune 500 comprises the target group because they usually provide leadership in the use of informa- tion technology [16, 22]. The following questions make up this work:

3. Electronic markets literature

Conducting business on the Web is an instance of electronic market activity. For this reason, concepts of electronic markets should be related to business prac- tices on the Web. It may be quite helpful to review the conceptual realm of electronic markets in order to compare these concepts with our study results.

Malone et al. [19, 20] suggest that exchanging product and service information through the electronic medium could result in three major effects: electronic communication, electronic brokerage, and electronic integration. The first allows more information to be communicated in the same amount of time or the same amount in less time. At the same time, it also results in a decrease in the cost of this communication. An electronic market can act as a broker to match poten- tial buyers and sellers. Thus, the second effect will increase the number of alternatives that can be con- sidered, increase the quality of the alternative even- tually selected, and decrease the cost of the entire selection process. The electronic-integration effect tightly couples the buyers and sellers through the electronic markets. So innovations in information technologies, especially in communications and infor- mation processing, tremendously reduce the costs of market coordination and make this coordination more efficient.

Bakos [2] proposed that the electronic marketplace would reduce seller profits and increase buyer welfare. He analyzed the electronic marketplace based on economic models and concluded that reducing the search costs played a major role in determining the

(_7. Liu et al./Information & Management 31 (1997) 335-345 ~,37

implications of electronic markets for market effi- ciency and competitive behavior. He concluded that customers are better informed about the availability of products from electronic marketplaces, which in turn enables them to locate suppliers that better match their needs. On the other hand, sellers may benefit from the electronic marketplace by gaining revenues through directly and indirectly charging customers. Bakos predicted that sellers will use electronic marketplaces to emphasize product differentiation rather than to provide pricing information. Further, he suggested that electronic market systems will eventually become a strategic necessity and part of an industry's infrastruc- ture.

Sprague and McNurlin [28] confirmed the concep- tual framework of Bakos. They described the objec- tives of electronic markets to reduce the search costs of buyers and to make it easier for them to compare offerings. More importantly, electronic markets can create a mass to connect a large number of organiza- tions so that they can all receive benefits. However, they predicted that electronic markets would threaten the monopolistic power of suppliers because buyers can compare offerings more easily. Therefore, elec- tronic markets should promote price competition as well as product differentiation.

Several papers note that the Web is an excellent mechanism for carrying out electronic markets [15, 26, 3(/]. Baty and Lee [3] present a framework for the design of electronic markets. Two elements of this, attracting customers and providing security transac- tion, are critical for Web-related business applications

[23]. To address the security issue, Bhimani [4] pro- vided a detailed list of possible flaws in the Internet infrastructure. Further, Marion [21 ] suggested that the five capabilities of authentication, certification, con- firmation, nonrepudiation, and encryption should be built into the Web-related business transactions. Doing business on the Web requires both parties to be able to verify each other's identities, otherwise, electronic markets will not be considered a safe place and will not attract customers. Table 1 summarizes the studies conducted from different aspects of electronic mar- kets.

Despite the enormous potential for business trans- actions through the Internet, some papers [6, 8] indi- cate much of the activity on the World Wide Web which is in the form of external communications and advertising. Critics might argue that the low-sales volume actually occurring on the Web indicates a failing of electronic markets. However, Forrester Research, Inc. of Cambridge, MA forecasts revenues from Internet-related products and services will increase from $300 million in 1995 to $10 billion by 2000 1171. Apparently, incremental learning is occurring with firms moving fi'om external commu- nications and advertising to electronic markets in a sequential manner.

This literature provides basic conceptual ideas con- cerning electronic markets and some key issues in Web-related business applications. However, it does not address the specifics regarding firms' home pages in terms of current practice, especially for the large U.S. companit,s.

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338 C. Liu et aL /lnformation & Management 31 (1997) 335-345

4. Research methodology 5.1. Verification of search strategy

The general methodology involved a content ana- lysis of Fortune 500 companies' home pages. Two sources were used to locate and examine home pages: Hoover's company name master list database and Netscape's Net Search.

Fortune [9] provides summary information on the Web regarding the performances of the Fortune com- panies. A searchable database of the company name list is available on Hoover's Online (http://www.hoo- vers.com). Therefore, Hoover's served as the primary vehicle to search for the Fortune 500 home pages; this can be justified because the information is provided by Fortune magazine.

Netscape's Navigator accounted for more than 75% of the browser traffic in 1995 [31, 33], although it is thought that this percentage is much smaller today. Because of its popularity and the availability, Net Search was selected to verify the results obtained from Hoover's. InfoSeek was selected from Net Search as the validating search method because it is considered to be a comprehensive and accurate Web- search engine for company home pages [5, 11, 13]. The initial data were collected and validated between September 20, 1995 and November 1, 1995 by search- ing both engines on a company name search. The data were updated for the revision of this manuscript in July 1996 to capture, insofar as possible, this rapidly changing use of the Web and thereby provide a current and more realistic picture of Web business use.

5. Data analysis and results

A total of 322 Web sites were found through the two sources. This means 64.4% of Fortune 500 companies have Web sites. The original data collection (Novem- ber 1, 1995) found only 152 sites so the number of Web home pages for the Fortune 500 essentially doubled during a 9-month period from about one-third to two-third of the population. About one-third of Fortune 500 companies have not set up their own Web sites. Readers who are interested in seeing the list of names of the Fortune 500 companies who do not have their own Web sites can visit the authors' Web site: http://www2.mssate.edu/~ ci 1/page.html for detailed information.

To verify the data collected and the data collection process in the search of home pages, two separate efforts were completed. The two-fold objective of this verification process was to:

1. ensure that all companies listed as not having a home page actually still did not have a home page 2. identify the reasons why a major corporation would choose not to have a home page.

First, another member of the team performed a separate search for home pages of Fortune 500 com- panies listed as not having a page in July 1996. This researcher found nine additional firms with a home page. This discovery of additional company home pages may not necessarily indicate the existence of a methodological data collection problem but be due to the dynamic growth and astounding popularity of home pages on the Web that might have occurred over a two-week verification period.

In the second verification effort, random seeds were drawn for a starting sequence number in the revenue-sorted listing of the 178 Fortune 500 compa- nies whose home pages could not be located in the search. Telephone calls were made to the most appro- priate office (typically that of the CIO) of the selected companies. Four random seeds were drawn and 54 telephone calls were made to obtain 21 usable con- tacts. The limited responses were a result of not being able to speak with the right person once the company was contacted (54.5%), or of the person refusing to answer telephone survey questions (15.2%) or other reasons (30.3%) such as busy, wrong number and don't know.

Of the 21 companies contacted, eight reported having a home page and 13 verified that they had no home page. A follow-up question to the eight who reported having a home page revealed that six of the eight had 'just started the page' or 'started the page on July 1.' Only one of the eight confirmed the existence of a home page prior to July I. Further, only one company reported having a home page under the name of a division of the Fortune 500 company rather than as the corporate name.

Thirteen of the 21 companies contacted verified that their company did not have a home page. Nine of the 13 companies which had no home pages made state-

C. Liu et al./Information & 339

ments to indicate that they would have a home page soon or that a home page was under development or consideration. Reasons given for not having a home page include 'no need for one' and 'security concerns with the Internet.' In summary, only one of the 21 companies contacted could state with certainty that they had a home page under the company name at the time the data were gathered. It appears that the per- centage of home pages reported in this study was reasonably accurate at the time of the data collection.

5.2. Percentages of Web sites based on revenues

The Fortune 500 Companies were divided into three categories based on 1994 revenues: above $15 billion, between $5 and $15 billion, and below $5 billion. Forty-nine of the 58 companies (84.5%) whose rev- enues were above 15 billion, 121 of 169 companies (71.6%) whose revenues were between $5 and $15 billion, 152 of 273 companies (55.7%) whose reven- ues were below $5 billion have home pages. Figure 1 shows the percentages of Web sites based on revenues. The percentage numbers reveal that higher revenue companies are more likely to use home pages as a way to conduct business. This intuitive conclusion is con- firmed by the result of the chi-square test for inde- pendence. The chi-square value 23.1 (p- value < 0.0001) clearly supports a dependent rela- tionship between the presence of a home page and the r evenue .

Management 31 (1997) 335-345

100.0% 84.5%

E

4

2

1

Above 15 Between Below 5 billion 5 and 15 billion

billion

Fig. 1 Percent of home pages by revenue.

5.3. Industry types of companies with the Web sites

Table 2 lists the percentage of home pages within each industry. The classification of industry types is provided by the Office of Management and Budget (OMB) [29]. According to this classification, the industries are categorized as the following 11 divi- sions. These divisions are the so-called standard indus- try codes (SIC).

Division A: Division B: Division C:

Agriculture, forestry, and fishing. Mining. Construction.

Table 2 Industry types of companies with the home pages

Type of industry Company has home page?

Size No Yes

Percentage of home page within industry type

Transportation, communications, 85 11 74 87.1% electric,gas, and sanitary services Retail trade 91 29 62 68.1% Manufacturing 176 64 112 63.6% Finance, insurance, and 60 28 32 53.3% real estate Services 35 17 18 51.4% Agriculture, forestry, and 19 10 9 47.4% fishing Wholesale trade 26 15 1 I 42.3% Construction 7 6 I 14.3% Mining 1 1 (I 0.00% Total: 500 178 322 64.4%

340 c. Liu et al./lnformation & Management 31 (1997)335 345

Division D: Manufacturing. Division E: Transportat ion, communica t ions ,

electric, gas, and sanitary services. Division F: Wholesale trade.

Division G: Retail trade. Division H: Finance, insurance, and real estate. Division I: Services. Division J: Public administration. Division K: Nonclassifiable establishments.

The Fortune 500 companies fall into divisions A through I. The numbers in Table 2 are self-explana- tory. Industries in transportation, communications, electric, gas, and sanitary services, retail trade, man- ufacturing, finance, insurance, and real estate, and services have a large number and high percentage of companies which have home pages. On the other hand, industries such as construction and mining have a very small percentage of home pages. The broad coverage of industry classes indicates that the use of home pages for business practices is not restricted to

certain industries; rather Web information technolo- gies are widely used in many different industry cate- gories.

5.4. General profile of the home pages in Fortune 500 companies

The home pages for each of 322 Fortune 500 companies were visited through the URL address. Twenty-eight Web sites did not respond or were under construction at the time of the visits, therefore, only 294 sites were reached. The main features of the home pages include: products and services, company over- view, feedback, what's new, financial facts, customer service and assist, search, employment opportunities, guest book, index/directory, online business, links to other sites, CEO messages and Frequently Asked Questions (FAQ). Table 3 shows the main contents of the home pages.

Figure 2 shows the percentage distribution of main

content categories for Fortune 500 home pages. Over

Table 3 The main features of the home pages and their descriptions

Contents Description

Company overview/info.

Products/Services What's new

Search

Employment opportunities

Interactive feedback

Customer service/assist.

Index]Directory

Financial facts Links to other sites

Online business services/utilities

Guest book FAQ

Messages from CEO

brief history; how the company organized and operates; company capabilities; general business environment; challenges faced in today and tomorrow; etc. main products and services news releases for the products and services; updated news; pertinent industry information; new announcements; hot topics; what's cool/hot; etc. search engine for users to locate available interested items within the company's Home Page available opportunities for certain positions and their descriptions; requesting viewers to respond about their feelings/suggestions about a company Web Home Page; answering customers questions; sending forms to relevant person for products/services support; providing necessary help; etc. company's Web site direction; location distribution; department addresses; office phone numbers; etc. detailed financial performance; connection with Internet yellow page, funny things, weather, stock quotes, gopher server, news groups, or third party vendors; for information transformation on ordering/banking through the company's Home Page; requesting customers to sign in by providing their names and addresses questions and answers for the frequently asked questions about the company, its products, its services, or something else; greetings and brief introductions from CEOs;

Note: Not all home pages include all mentioned contents.

C. Liu et al./Information & Management 31 (1997)335-345 341

90.0%

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

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four-fifths of the companies display products and services (274) and company overview (253) informa- tion. Roughly three-fourths of the companies present interactive feedback (233) and what's new (209). More than one half report company financial informa- tion (158). These categories are followed by customer service and assistance (132); search (118), employ- ment opportunities (99), guest book (89), index/direc- tory (88) and online business (77). Only a small number of companies provide links to other sites t45), messages from the CEO (33) and frequently asked questions (21).

Obviously, introducing products/services and pro- viding company overview information account for a large percentage of home pages' functions. Online

business such as shopping and banking are included for over one-fourth of company home pages. Although the percentage of online business use has increased substantially, since the initial 9.4% usage was reported, at present, direct selling or generating rev- enues through home pages is not the main considera- tion for most Fortune 500 companies. These data contrast with the reports of Maddox et al. [18] and IBM [14] who found that many small-size companies such as Virtual Vineyards in Los Altos, CA, are moving faster and getting dramatic results using direct selling on the Web. This may be explained by different objectives for launching business on the Internet between small and large business organizations. The intentions of large companies seem to be to announce

342 C. Liu et al./Information & Management 31 (1997) 335-345

their presence on the Web, to promote the companies' image, to enhance public relations, to attract users to browse their products and services, and to collect user responses and other related data.

Company intentions can also be assessed from the interactive nature of the home pages. As defined ear- lier, electronic markets should allow buyers and sellers to interact through the electronic medium. It is inter- esting to note that all companies that provide online business or customer service also provide for feedback to the Webmasters or persons who manage the home pages. This means that a large percentage of the home pages are being used to communicate with potential customers without direct product and service selling. Figure 3 shows the percentage of the interactive nat- ure, that is, interactive feedback (233 companies), for home pages in the Fortune 500. Online business such as shipping and banking account for about 33.1% of those while customer service accounts for about 56.7%. Again, this percentage distribution strongly suggests that the main purpose of using Web sites of Fortune 500 companies at present is not for directly generating sales. Rather, the Fortune 500 companies are attempting to communicate with customers. Thus, we conclude at present that many large companies do not use their Web sites for the early touted advantages of business transactions.

Although more than 90% of the companies provide product and services information, only 46 companies (15.6%) such as Southwest Airlines, J.C. Penney, United Parcel Service, etc. specifically provide pro- duct price information. This confirms Bakos' predic-

tion that sellers would use the electronic marketplaces to emphasize product differentiation rather than pro- vide detailed pricing information. Further, it suggests that future business competition on Web sites may largely come from product and service comparisons rather than from pricing dimensions.

6. Discussion and conclusions

There is no doubt that corporate home pages pro- vide convenience for customers and increase oppor- tunities to reach more consumers. A review of Fortune 500 home pages shows that a Web site can be used to support pre-sales, sales, and after-sales business activities. Figure 4 illustrates the comprehensive reach of Web technologies. The functions on home pages such as global connection, products and ser- vices, company overview, guest book, news release, messages from the CEO, and financial performance can be used to support pre-sales activities of public relations, product and service introduction, answering specific questions, and distributing company materi- als. Visual-sales sites and online business can support the sales activities of online order, information/money transformation, and even off-line ordering. In addi- tion, the functions of customer service, search, feed- back, and FAQ can facilitate the after-sales activities of product updates, service, and solving problems. Therefore, Web technology can help reduce the cost of market coordination and make this coordination more efficient. In summary, the following are the main findings of this study:

100.0%

90.0%

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% Feedback to Customer Online Webmaster service business

Fig. 3. Interactive nature of home pages

• Almost two-thirds of Fortune 500 companies have set up a home page on the Web.

• The number of home pages among Fortune 500 continues to grow rapidly.

• Companies who have higher market performances measured by revenues will more likely use

• Web sites to reach their customers. • Using Web sites to reach potential customers is not

limited to certain industries.

The functions of providing information such as products/services, company overview, interactive feedback, and what's new dominate home pages in the Fnrtune 500.

C. Liu et al./lnformation & Management 31 (1997) 335-345

Business Activities I

I Pre-Sales ] [Sales ] ~fter-gales I

pu

neorder

World Wide Web • global connection • online business • FAQ • products/services • what's new • index/directory • company overview • interactive feedback • search • guest book * customer service • financial, messages, etc.

343

Fig. 4. Web site support of business activities

The intentions of large Fortune 500 companies seem to be to announce their presence on the Web, to promote the companies' image, to enhance public relations, to attract users to browse products and services, and to collect user responses and other related data.

Only a small number of companies (46) specifically mentioned pricing information on their home pages. Product or service differentiation appears to be the focus of competition through Web technology.

Most of the home pages in Fortune 500 companies are at the initial stages of development but updates may occur on a daily basis, and as a result the pages begin to have different looks to avoid becoming stale and to counter any page changes from traditional competition. Both, the number of and functional use of pages, are changing rapidly.

This manuscript represents an initial attempt to examine the basis of the competitive nature of Fortune

500 Web sites via data gathering from home page visits. Since Fortune 500 companies generally act as IT leaders, it is possible that other large companies will follow suit in terms of Web usage. Each of the usage categories increased from the initial data gath- ering period to the present data gathering period with the exception of 'links to other sites.' The dynamic nature of the use of home pages and the Internet by Fortune 500 companies and the continued growth of home page features reflects the movement toward fully developed electronic markets. This incremental learning from limited usage sites to more complex sites with online business indicates the direction in which Fortune 500 companies are moving. This increase from less than 10% to over 25% of the companies conducting online business through their home pages in a period of 9 months provides data on the pattern of change. We have captured the current status of Fortune 500 companies home pages and their

344 C. Liu et al./lnformation & Management 31 (1997) 335-345

reactions to Web technologies and provided insight for future directions for change.

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Chang Liu is a doctoral candidate in the College of Business and Industry at Mississippi State University. He holds a bachelor's degree in Computer and Electrical Engineering from Beijing United University. He also holds a Master of Business Economics from Beijing Institute of Business, and a Master of Science in Business Admin- istration from Mississippi State Univer- sity. His current research interests include electronic commerce, telecom-

munication, Internet/Intranet, and Management of Information Systems.

Kirk P. Arnet t is a professor of Information Systems at Mississippi State University. Dr. Arnett is an active member of the Association of Informa- tion Technology Professionals (formerly DPMA). His works are recorded in both practitioner and academic journals in- cluding Information and Management, International Journal of Man-Machine Studies, The International Journal of Computer Security, Datamation and

Computerworld. His research interests center on electronic commerce, human factors, and MIS job skills.

C. Liu et al./Information & Management 31 (1997)335-345 345

Louis M. Capella is a professor of Marketing at Mississippi State Univer- sity. He received his doctorate in Market- ing from the University of Kentucky. Among his publications are articles in Decision Sciences, Journal of the Acad- emy of Marketing Science, Journal of Health Care Marketing, Psychology and Marketing, Journal of Services Market- ing, Journal of Marketing Theory and Practice, and Journal of International

Management. He was co-author of Strategic Retail Management. Dr. Capella's current research interests include health care marketing, service pricing models, and cybermarketing.

Robert C. Beatty is a doctoral candidate in the College of Business and Industry at Mississippi State University. He holds a bachelor's degree in Computer Science from Texas Christian University. He also holds a Master of Computer Systems Management degree from Creighton University, and a Master of Business Administration from Mississippi State University. His research interests include electronic commerce, electronic data

interchange (EDI), and interorganizational information system adoption, implementation, and management.