Internet retailing is one of the fast-growing business sectors in the UK, and thissector is currently entering a more stable development stage. In this stage, the issueof business strategy and performance measurement, often neglected during thedotcom era, is gaining in importance. Although various studies have been done, theinvestigation of this issue is limited. This study helps to fill this gap by investigatingperformance measurement and business strategy of Internet retailing business, and their significance in enhancing business performance. A mail questionnaire wasused in a survey of UK Internet retailers. The questionnaire contained variables ofperformance indicators, use of performance measurement, strategic orientation,businessp erformance, and business profile. The survey produced 252 responses ofsmall-and-medium-sized internet retailers, defined as having less than £10 million ofannual online sales turnover. By factor analysis, strategic orientation can be treatedas having two dimensions:( 1) conservativeness, and (2) aggressiveness; business performance, two: (1) financial, and (2) operational; and performance measurement, one: the number of performance indicators measured. The findings show that UKInternet retailers are likely to concentrate their performance measurement more onfinancial, market-sales, and web-related indicators rather than customer and process.After controlling for variations of business size, the empirical results reveal that (1)more conservative retailers are likely to measure more performance indicators, (2)retailers using more performance indicators are likely to have better operationalperformance, and (3) less aggressiveness retailers tend to be associated with betterfinancial performance. This study has provided evidence that strategic orientation is associated with the financial aspect of business performance, and performancemeasurement with the operational aspect of business performance. The resultsprovide useful insights for Internet retailing managers, especially concerning theimportance of performance measurement, and the choice of strategic orientation.More importantly, this study opens up possibilities for further study of performance measurement and businesss strategy of internet retailing business
