Strategic IT Investment of B2B E-commerce Platform Considering the Variable Investment Cost

In the competitive market of B2B E-commerce platform, the former entrant has the advantage of switching cost while the later entrant has the advantage of declining IT cost. Considering the variable investment cost due to the improvement of platform quality, the paper develops an IT investment model to investigate the best investment strategy for B2B E-commerce platform under the impact of switching cost, declining IT cost, user price-sensitive coefficient and quality-sensitive coefficient. The results show that, switching costs helps former entrant increase investment in platform quality, assume an aggressive investment strategy. Declining IT cost helps later entrant increase investment in platform quality and assumes an aggressive investment strategy only when user switching costs are lower. With the increase of user price-sensitive coefficient, former entrant and later entrant should both decrease investment in platform quality. With the increase of user quality-sensitive coefficient, former entrant and later entrant should both increase investment in platform quality.