1304 Laws and Regulations on Proprietary Trading System (PTS) in Japan both operate a securities market. The boundary between them becomes more ambiguous. The issue is how to implement and secure self regula- tory function or its substitute measures in order to protect investors. Although a stock exchange still maintains its character as a self regulatory organization, its function may be considered weakened by demutualization. Taking into ac- count of investor protection and competition among securities markets, the combination puzzle of a market, a stock exchange, a securities com- pany, and a self regulatory function increases its complexity. Designing a whole market structure with consistency is not easy. REFERENCES Bessembinder, H., & Venkataraman, K. (2003). Does an electronic stock exchange need an up- stairs market?Journal of Financial Economics, 73(1), 3-36. Fuchita, Y. (1999). Regulations on stock exchanges and regulations on proprietary trading system. Jurist, 1155, 185-191. JSDA (Japan Securities Dealers Association). (2002). Development on JSDA regulations re- lated to announcement system of quotation, etc. of proprietary trading system. Shoken Gyoho, 615, 6-13. Kanzaki, K. (2000). Abolition of no off–exchange trade rule. In Shouken Torihiki Hou Kenkyu Kai (Securities Law Study Group) (Ed.), Kin’yu shisutemmu kaikaku to shoken torihiki seido (pp. 145-160). (Financial System Reform and Securities Trading System). Tokyo: Nihon Shouken Keizai Kenkyujyo Kawashima, I. (2001). Electronic securities trad- ing system and securities law (Issues on Civil & Commercial Law No. 10). Senshu Daigaku Hogaku Kenkyujo Kiyou, 26, 31-73. KINYU HO IINKAI (Financial Law Committee). (2002). Interim organizing of issues concerning WKHFRQFHSWRI³6HFXULWLHV0DUNHW´Jurist, 1225, 38-50. Konishi, N. (2000). Regulations on electronic securities market: Focusing on ATS (Alternative Trading System) Regulation. Sandai Hogaku, 33(3&4), 326-360. Miyoshi, H. (2000). Shoken shijo denshika no subete (All about computerization of securities market). Tokyo: Tokyo Shoseki Kabushikigai- sha. Mühlberger, M. (2005). Alternative trading sys- tems: a catalyst of change in securities trading. Deutsche Bank Research, 47, 1-12. Nakanishi, K., & Ogura, T. (2005). Outline of development of cabinet orders, etc., with respect to introduction of obligation of best execution under the Securities and Exchange Act. Shoji Homu, 1726, 31-37. Nikko Shoken Homubu (Ed.). (1999). Provision RI GH¿QLWLRQV FRQFHUQLQJ VHFXULWLHV HWF Shoji Homu, 1528, 28-35. Osaki, S. (1999). Electronic Communications Network (ECN). Shihon Shijo Quarterly, 3(2), 49-61. Osaki, S. (2000). Kabushiki shijo kan kyoso- NASDAQ no sekai senryaku to nihon (Competi- tion among stock exchanges: Global strategy of NASDAQ and Japan). Tokyo: Diamond Corp. Osaki, S. (2001). New PTS (Proprietary Trad- ing System) Regulation on Japan. Shihon Shijo Quartlerly, 4(3), 66-75. Osaki, S. (2005). Progress in borderless transac- tions on securities exchanges and market regula- tions. In K. Egashira & Y. Masui (Eds.), Tokeru sakai koeru ho 3 shijo to soshiki (Market and Organization)0HOWLQJERUGHUDQGÀRZLQJRXWRI 1305 Laws and Regulations on Proprietary Trading System (PTS) in Japan laws No.3). (pp. 85-203). Tokyo: Tokyo Daigaku ShuppanKai. Osaki, S. (2006). PTS for night trading of stocks LQ-DSDQ6LJQL¿FDQFHDQGLVVXHVNomura Capital Market Review, 9(4), 16-24. Osaki, S., & Kozuka, S. (2001). Electronic secu- rities trading and issues on legal system. Jurist, 1195, 98-103. Shimizu, Y. (1997). Proprietary trading system (PTS) in US and competition among markets. Shoken Keizai Kenkyu, 7, 121-140. Shimizu Y. (2000). Alternative trading system (ATS) in US and SEC regulations. Shoken Keizai Gakkai Nenpou, 35, 83-88. Yanaga, M. (2006). PTS regulations in European countries. Shoji Homu, 1781, 4-19. Yoshino, I. (2001). Current situation and issues concerning establishment of proprietary trading system (PTS) in Japan. Gekkan Shihon Shijo, 188, 57-70. Yukizawa, K. (2004). Obligation of best execu- tion in the Securities and Exchange Act. Shoji Homu, 1709, 4-23. ADDITIONAL READINGS Amaro, R. J. (2002). European Union Regulation RIHOHFWURQLFFRPPXQLFDWLRQQHWZRUNV6WLÀLQJ global integration of securities markets. Wisconsin International Law Journal, 20, 397-414. Avgouleas, E. (2005). A critical evaluation of WKHQHZ(&¿QDQFLDOPDUNHWUHJXODWLRQ3HDNV troughs, and the road ahead. The Transnational Lawyer 8QLYHUVLW\ RI WKH 3DFL¿F 0F*HRUJH School of Law), 18, 179-229. Badway, E. E., & Busch, J. M. (2005). Ending securities industry self-regulation as we know it. Rutgers Law Review, 57, 1351-1376. Beny, L. N. (2002). U.S. secondary stock markets: A survey of current regulatory and structural issues and a reform proposal to enhance com- petition. Columbia Business Law Review, 2002, 399-473. Borrelli, M. (2001). Market making in the elec- tronic age. Loyola University Chicago Law Journal, 32, 815-908. Bronfman, C., Lehn, K., & Schwartz, R. A. (1994). SYMPOSIUM: MARKET 2000: The SEC’s Market 2000 Report. The Journal of Corporation Law (University of Iowa), 19, 523-551. Chtaneva, A. (2002). Alternative trading sys- tems: Impact of technology on securities market structure. Banking & Finance Law Review,17(3), 342-378. Cohen, P. D. (1999). Securities trading via the Internet. Stanford Journal of Law, Business & Finance, 4, 1-38. Collins, A. L. (2002). Regulation of alternative trading systems: Evolving regulatory models and prospects for increased regulatory coordination and convergence. Law and Policy in International Business, 33, 481-506. Dombalagian, O. H. (2005). Demythologizing the stock exchange: Reconciling self-regulation and the national market system. University of Richmond Law Review, 39, 1069-1154. Fleckner, A. M. (2006). Stock exchanges at the crossroads. Fordham Law Review, 74, 2541- 2620. Frase, D., & Parry, H. (2001). Exchanges and alternative trading systems. Sweet & Maxwell. Gallagher, D. M. (1998). Move over tickertape, here comes the cyber-exchange: The rise of inte- grated-based securities trading systems. Catholic University Law Review, 47, 1009-1056. Karmel, R. S. (2002). Turning seats into shares: Causes and implications of demutualization of 1306 Laws and Regulations on Proprietary Trading System (PTS) in Japan stock and future exchanges. Hastings Law Jour- nal, 53, 367-430. Klock, M. (1999). The SEC’s new regulation ATS: placing the myth of market fragmentation ahead of economic theory and evidence. University of Florida Law Review, 51, 753-797. Macey, J. R., & O’Hara, M. (1999). Regulating exchanges and alternative trading systems: A law and economics perspective. The Journal of Legal Studies, 28, 17-54. Macy, J. R., & O’Hara, M. (2005). From markets to venues: Securities regulation in an evolving world. Stanford Law Review, 58, 563-599. Matus, G. (2001). The regulation of alternative trading systems: Market fragmentation and the new market structure. New York Law School Law Review, 44, 583-604. 0D\QDUG7+:KDWLVDQ³H[FKDQJH"´ Proprietary electronic securities trading systems DQGWKHVWDWXWRU\GH¿QLWLRQRIDQH[FKDQJHWash- ington and Lee Law Review, 49(3), 833-912. McCarroll, E. (2000). Regulation of electronic communications networks: An examination of Tradepoint Financial Network’s SEC approval WREHFRPHWKH¿UVWQRQ$PHULFDQH[FKDQJHWR operate in the United States. Cornell International Law Journal, 33, 211-262. Nyquist, P. (1995). Failure to engage: The regula- tion of proprietary trading systems. Yale Law & Policy Review, 13, 281-337. Poser, N. S. (2001). The stock exchanges of the United States and Europe: Automation, globaliza- tion, and consolidation. University of Pennsyl- vania Journal of International Economic Law, 22, 497-540. Rubin L. (1998). What is an exchange? Oxford University Press. Thompson, A. R. (1999). Taming the frontier?: An evolution of the SEC’s regulation of internet securities trading systems. Columbia Business Law Review, 1999, 165-205. ENDNOTES 1 ‘Multilateral trading facility (MTF)’ means a multilateral system, operated by an invest- PHQW¿UPRUDPDUNHWRSHUDWRUZKLFKEULQJV together multiple third-party buying and VHOOLQJLQWHUHVWVLQ¿QDQFLDOLQVWUXPHQWV²LQ the system and in accordance with non-dis- cretionary rules—in a way that results in a contract in accordance with the provisions of Title II of MiFID. 2 See, SHIMIZU (1997) pp.121-140, SHI- MIZU (2000) pp.83-88, OSAKI (1999) pp.49-61, KONISHI (2000) pp. 326-360, YANAGA (2006) pp.4-19. 3 For detailed comparison and analysis, KA- WASHIMA (2001) pp. 31-73. 4 Brief descriptions of this revision are ex- plained in: http://www.fsa.go.jp/en/policy/ ¿HOSGI 5 http://www.fsa.go.jp/p_mof/singikai/sho- ken/top.htm This site page is Japanese text only. 6 No off-exchange trade rule is provided as a rule under the Securities and Exchange Act but was implemented through (a) the provisions of articles of association of stock exchanges and (b) provisions of the regula- tions by the Ministry of Finance concerning business method of securities companies. These provisions of the articles of associa- tion and the regulations on business method were abolished in December 1998. 7 See, supra note (5). 8 For example, large block trades and basket WUDGHVRILQVWLWXWLRQDOLQYHVWRUVKDYHGLI¿FXO- W\LQHI¿FLHQWO\H[HFXWLQJWUDGHVGHSHQGLQJ on the auction method under conventional principles of price priority and time priority. 1307 Laws and Regulations on Proprietary Trading System (PTS) in Japan The auction method requires much time for execution of large block orders and basket orders and has a problem that bulk execution of orders is impossible. Economic analysis on this matter shows the same result. See, Bessembinder & Venkataraman (2003) p. 27. 9 $V DUHVXOW RI VLJQL¿FDQW GHYHORSPHQW RI telecommunications and information tech- nologies, as it became necessary to prepare such market infrastructure for a new trading system as ATS in the United States, it is necessary to take measures for the no off- exchange trade rule not being an obstacle to market infrastructure improvements. 10 As globalization of securities trading has continued to develop, trades that prove dif- ¿FXOWWRH[HFXWHLQ-DSDQZLOOHDVLO\ÀRZRXW abroad to seek an opportunity to execute abroad. In order to maintain the vitality of the securities market in Japan, it is neces- sary for the Japanese securities market to be attractive and convenient for investors. No off-exchange trade rule imposes restrictions on trades executed by market intermediar- ies (securities companies) and it should be U H Y LH Z H G IR U S U HYH QW LR Q RI RX W ÀR Z RI W U D GL QJ overseas. 11 See, Osaki (2000) pp. 173-198, Fuchita (1999) pp. 185-191. 12 SEA Art. 37. 13 See, KINYU HO IINKAI (2002) pp. 38- 50. 14 See, Yukizawa (2005) pp. 14-23, Nakanishi, & Ogura (2005) pp. 31-37. 15 SEA Art. 37 was deleted by Act No. 97 of 2004 concerning Amendment of the Secu- rities and Exchange Act, which came into force in April 2005. 16 See, infra note (21) and note (23). 17 SEA Art. 2(8)(vii)(a). 18 See, Nikko Shoken Homubu (1999) pp. 33- 34. 19 SEA Art.2(8)(vii)(b)&(c). 20 SEA Art.2(8)(vii)(d). 21 6($$UWYLLH&DELQHW2I¿FH2UGL- QDQFHFRQFHUQLQJ'H¿QLWLRQVSUHVFULEHGE\ Article 2 of Securities and Exchange Act (Ordinance of Ministry of Finance No.14 of 1993) Art.8-2 (i). 22 The order book prior to the start of the ses- sion is often complicated with offers (sell) at lower prices than bids (buy) and bids at higher prices than offers, as well as a mixture of market offers and bids. Under the Itayose method all orders reaching the order book are treated as simultaneous orders, in other words there is no time priority. Bids and of- fers are matched at a single price according to the principle of price priority. 23 6($$UWYLLH&DELQHW2I¿FH2UGL- QDQFHFRQFHUQLQJGH¿QLWLRQVSUHVFULEHGE\ Article 2 of Securities and Exchange Act (Ordinance of Ministry of Finance No.14 of 1993) Art.8-2 (ii). 24 JSDA had operated the market for the Over- The-Counter traded securities known as JASDAQ since 1998. In 2004, JASDAQ market became a market for exchange-listed securities instead of a market for Over-The- Counter traded securities; Jasdaq Securities Exchange was created and all securities listed on the JASDAQ became the securi- ties listed on Jasdaq Securities Exchange. At present JSDA does not operate an OTC market. 25 SEA Art.2(8)(vii)(a). 26 Act concerning Amendment of the Securities and Exchange Act (Act No. 98 of 2004). 27 See, supra note 24. 28 See, Nakanishi, supra note (14) pp. 36-37. 29 6HHWKH)LQDQFLDO6HUYLFHV$JHQF\³*XLGH- lines for Comprehensive Supervising for Securities Companies” III—2—2—1 (3)3. 30 See, Osaki (2001) pp. 66-75, Yoshino (2001) pp. 57-70. 31 1RZLWLVUHQDPHGDVWKH&DELQHW2I¿FH2U- GLQDQFHFRQFHUQLQJ'H¿QLWLRQVSUHVFULEHG 1308 Laws and Regulations on Proprietary Trading System (PTS) in Japan by Article 2 of the Securities and Exchange Act (Ordinance of Ministry of Finance No.14 of 1993). 32 )LQDQFLDO 6HUYLFHV $JHQF\ ³$GPLQLVWUD- tive Guidelines: On the matters to be noted in supervising securities companies, in- vestment trust companies and investment corporations and securities investment advisers, and so forth. (Part I) Supervision of Securities Companies.” As stated in the text, these Administrative Guidelines were entirely abolished as of July 15, 2005 when ³*XLGHOLQHVIRU&RPSUHKHQVLYH6XSHUYLVLRQ for Securities Companies” was developed. 33 6HHWKH)LQDQFLDO6HUYLFHV$JHQF\³*XLGH- lines for Comprehensive Supervision for Securities Companies” III—2—2—1 (3)a. 34 http://www.pts-info.jp/ 35 'HWDLOHGUXOHVFDQEHIRXQGLQ-6'$³5HJX- lations concerning Off-Exchange Purchase and Sale, and so forth, of Exchange-Traded Securities, including Listed Stocks” (Fair Business Practice Regulations, No. 5) (estab- l i s h e d o n N ov e m b e r 18 , 19 98) , A r t . 7- A r t. 10 , -6'$³'HWDLOHG5XOHVUHODWLQJWRWKH5HJX- lations concerning Off-exchange Purchase and Sale, and so forth, of Exchange-Traded Securities, including Listed Stocks.” (estab- lished on November 18, 1998), and JSDA ³2Q +DQGOLQJ RI 5HSRUW DQG 3XEOLFDWLRQ through Proprietary Trading System Price Information Publication System” (Resolu- tion of the Board of Directors as of April 23, 2002). See, JSDA (2002) pp.6-13. 36 6HHWKH)LQDQFLDO6HUYLFHV$JHQF\³*XLGH- lines for Comprehensive Supervision for Se- curities Companies” III—2—2—1 (3)3b. 37 7K LVLVWKHFX UUHQW³* XLGHO L QHVIRU& RPSUH - hensive Supervision for Securities Compa- nies” III—2—2—1 (3)3. 38 General Administrative Agency of the Cabi- net and Ministry of Finance Ordinance No. 32 of 1998. As the General Administrative Agency of the Cabinet was reorganized to &DELQHW2I¿FHLQ-DQXDU\WKHQDPH RIWKHRUGLQDQFHLVFXUUHQWO\WKH³&DELQHW 2I¿FH 2UGLQDQFH FRQFHUQLQJ 6HFXULWLHV Companies.” 39 These are the measures for preventing acts ZLWKFRQÀLFWRILQWHUHVWVLQFOXGLQJLQWHQ- tional crossing when securities companies perform simultaneously purchase and sale as brokerage and trading having positions as dealers. For example, if the order placed with PTS has arrived via the dealing depart- ment of the securities company, by looking at the order of the customer, it is possible for the securities company to intentionally match the position of the securities company or the orders of other customers, while the FRPSDQ\ ¿QGV RXW WKH SULFH RI WKH VWRFN exchange is favorable to the customer. The system intends as practicable as possible to exclude the room for occurrence of acts disturbing fairness of trade by establishing appropriate wall in the securities company for the trading information of customers related to PTS business. 40 These nine securities companies are Japan Bond Trading Co., Ltd., ICAP Totan Secu- rities Co., Ltd., Central Tanshi Securities Co., Ltd., Bloomberg Tradebook Japan Ltd., Yensai.com Co., Ltd., JBond Securities Co., Ltd., Japan Securities Agents, Ltd., BGC Shoken Kaisha Limited, and TradeWeb Europe Limited. 41 See, Osaki (2006) pp. 16-24. 42 6WRFNWUDGLQJÀRRUVLQ-DSDQZHUHDEROLVKHG in December 1997 at Osaka Securities Ex- change and in April 1999 at Tokyo Stock Exchange. 43 See, Miyoshi (2000) pp. 135-138. 44 See, Mühlberger (2005) pp. 8-9. 45 See, Osaki (2005) pp. 185-203. 46 See, Osaki & Kozuka (2001) pp. 98-103. This work was previously published in Cyberlaw for Global E-business: Finance, Payments, and Dispute Resolution, edited by T. Kubota, pp. 67-87, copyright 2008 by Information Science Reference (an imprint of IGI Global). 1309 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 4.20 Sensis.Com.Au: An Uprising Star of E-Innovation and E-Entrepreneurship Fang Zhao RMIT University, Australia ABSTRACT Sensis Search, a young entrepreneurial dot-com ODXQFKHGLQLVWKH¿UVWPRYHULQUHGH¿Q- ing the Australian search market and creates a new paradigm for Internet searches that delivers relevant, quality local, and global results. This chapter focuses on exploring the experiences of Sensis Search and identifying key issues of its operation. Data for this qualitative case study was collected mainly from two primary sources: (i) a documentary research into Sensis’ business reports, online newsletters, memos, agendas, and RWKHU RI¿FLDO SXEOLFDWLRQV DQGLLDQ LQGHSWK interview with a senior manager of sensis.com. au. The case study illustrates how Sensis has been managed, how it has succeeded, and what lessons can be learned from its experience. INTRODUCTION In 2002, Sensis Pty Ltd was launched as a new corporate brand and company name to replace WKH 3DFL¿F $FFHVV 3W\ /WG D ZKROO\RZQHG subsidiary of Telstra Corporation, Australia’s largest telecommunication company. According to the CEO of Sensis, the name of the company 6HQVLV UHÀHFWV WKH HVVHQFH RI WRGD\¶V EXVLQHVV — keeping people in touch through appealing to the key human senses of sight, sound, and touch, using different media — print, voice, online, and wireless (Sensis, 2002). To strengthen the strategic position of Sensis in online advertising busi- ness, the company acquired CitySearch Online and BMC Media Ad Sales, adding new lines of advertising business to Sensis. After two years’ operation driven by an aggressive growth strat- egy, Sensis has developed into one of Australia’s leading advertising and search companies, offer- ing a suite of print, online, voice, and wireless 1310 Sensis.Com.Au products designed to bring buyers and sellers together any time, anywhere. Sensis Pty Ltd has a team of over 3,100 employees, among whom 2,300 are directly employed by Sensis and 800 by its wholly-owned subsidiary the Trading Post Group of companies. Sensis’ products and solutions include: • Sensis Search (www.sensis.com.au) — an Internet search engine that utilises some of the most comprehensive and up-to-date product and service listings in Australia, with a much greater emphasis on local and national businesses. The Web site was launched in July 2004 and used by 59% of Australians with more than 5 million visitors every month, according to a recent Neilsen/NetRatings (Sensis, 2004a). • Ye l l o w P a g e s ® — w i t h m o r e t h a n 14 m i l l i o n copies in circulation, the Yellow Pages® print directories are found in virtually every home and business in Australia. • White Pages® — print and online business directories. • City Search® — Australia’s leading online culture and lifestyle guide, offers tailored Internet solutions. • Whereis® — Whereis® products and ser - vices are the location (digital mapping) and navigation brand of Sensis Search. • Sensis1234 — With sensis®1234, callers FDQ¿QGDEXVLQHVVDQGUHVLGHQWLDOOLVWLQJV through a single number, whether they know the business name or not. • MediaSmart® — Provides consulting services on the best sites and advertising formats to reach your target market. • Trading Post® — a print and online private DQGFODVVL¿HGDGYHUWLVHPHQWVGLUHFWRU\IRU goods and services. • JustListed.com.au — a new commercial and residential online real estate portal currently based in Sydney, where its inventory includes over 42,000 rental and sale properties and 1,670 real estate agents. Due to the very successful performance of the portal, Sensis plans to develop it into a national, online real estate portal. As shown, Sensis Search (sensis.com.au) is a key component of Sensis multiple dimensions of business and plays a central hub role in the interfaces between online and print searches of information. This chapter focuses on exploring the experiences of sensis.com.au and identifying key issues of its operation. Data for this qualitative case study was collected mainly from two primary sources: (i) a documentary research into Sensis’ business reports, online newsletters, memos, D J H Q G D V D QG R W KH URI ¿F L D OS X EO LF D W LR Q V D QG L L D Q in-depth interview with a senior manager of sensis. com.au. The case study focuses on how Sensis has been managed, how it has succeeded, and what lessons can be learned from its experience. SENSIS SEARCH: CREATING A NEW PARADIGM FOR INTERNET SEARCH IN AUSTRALIA Sensis Pty Ltd launched its search engine Sen- sis Search (sensis.com.au) in July 2004, which constitutes all the online/electronic portfolio of Sensis Pty Ltd including www.whitepages.com. au, www.yellowpages.com.au, www.whereis.com, and www.CitySearch.com.au (Sensis, 2004c). By doing so, Sensis Search is able to provide Aus- tralians with fully blended search results across local proprietary and global Internet content. For H [ D PSO H $X VW U D O LD Q V F D QX VH V H QVL V F R P D X W R¿ QG DORFDOÀRULVWDQ\ZKHUHLQ$XVWUDOLDDQGDOVRWR locate and purchase a pair of shoes in New York. The search engine provides local, commercial, and global searches from which customers can get blended results from local Yellow Pages®, White Pages®, CitySearch®, and Whereis® data, com- bined with global Web content. Sensis Search is WKH¿UVWPRYHULQUHGH¿QLQJWKH$XVWUDOLDQVHDUFK 1311 Sensis.Com.Au market and creates a new paradigm for Internet searching that delivers relevant, quality local and JOREDOUHVXOWV6HQVLV6HDUFKUHSUHVHQWVD³ZRUOG ¿UVW´¶DPRQJVHDUFKHQJLQHVDVLWLQWHJUDWHV,Q- ternet Web page content and structured content HJWKH<HOORZ3DJHVGLUHFWRU\LQWRD³RQHVWRS shop” for searches, unlike other search engines such as Google, where these services are available but under different URLs. As such, searches can be performed locally, nationally, globally, and throughout the Sensis sites. The strategy to develop synergies among Sensis’ businesses contributes to the success of Sensis and Sensis Search. The focus on and pursuit of Sensis Search for relevant, local, and quality return results herald the maturity of online search services. The success of the online search is no longer measured by the volume or the size of the Internet index but by the extent of PHHWLQJVSHFL¿FXVHUV¶VHDUFKQHHGV0RUHRYHU Sensis Search provides Australian users with very easy access to commercial content through ,QWHUQHWDFFHVV&RPPHUFLDOFRQWHQWLVFODVVL¿HG under nine categories: products, services, people, SODFHVHYHQWVMREVFDUVKRXVHVDQG³FRQVXPHU FODVVL¿HGV´ZKLFKPLJKWLQFOXGHVHDUFKHVRI Sensis directories such as the Trading Post. Due to the initial success of Sensis Search in managing to provide the most innovative and comprehensive online search engine in Australia, Sensis management decided to expand the busi- ness further. In December 2004, Sensis acquired one of Australia’s most successful mapping and street directory businesses, Universal Publish- HUV3W\/WG7KHDFTXLVLWLRQKDVVLJQL¿FDQWO\ strengthened the market share and position of Sensis Search which now boasts the largest and most up-to-date database of navigable mapping content in Australia. Unlike its competitors, as one line of its business, Sensis Search provides nearly 100% geographic coverage of Australia DQG³LWVFRQWHQWVFRYHUVHYHU\WKLQJIURPXUEDQ streets, to points of interest, four-wheel drive tracks in the remote outback, and smaller roads you’d never see on a normal map” according to the CEO of Sensis Pty Ltd (Sensis, 2004a, p. 1). This aggressive growth strategy of Sensis through acquisition aims to accommodate the increasing demand of Australia’s local consumers for lo- FDOLVHGDGYHUWLVLQJDQGPDSEDVHGVHDUFKWR¿QG local businesses, products, and services. Sensis Search’s digital mapping business now serves more than 18 million digital maps online every month through its Whereis® brand on the www. sensis.com.au site (Sensis, 2004a). 7R V X U Y LYH D QG V XF F H HG LQ W R GD \¶V ¿ H U FH F RP SH - tition in the search engine industry, Sensis Search pursues two complementary lines of businesses — online advertising and online search. The market share of Sensis Search online advertis- ing has now exceeded 23% of online advertis- ing in Australia, and, meanwhile, it has seized approximately 70% of the combined search and directories market in Australia (Sensis, 2004b). According to the Online Advertising Expenditure 5H SR U WL VV XH G E\W K H$X G LW%X U HD XRI9H U L¿FD W LRQ Services, the revenues from online advertising g r ew by 58% to AU $30 0 m il l io n i n t he 20 03/ 20 0 4 ¿QDQFLDO\HDULQ$XVWUDOLD7KHVWHOODUJURZWKLQ online advertising is both an opportunity and a challenge to Sensis Search. The company devel- ops its corporate strategy and direction focusing on local online search within Australia, thus becoming the major player in local Australia’s search through providing relevant and complete localised business information. The success in providing relevant and quality search results to PHHWVSHFL¿FXVHUVHDUFKHVKHOSVERRVWWKHRQOLQH advertising business of Sensis Search as well as the entire business of Sensis Pty Ltd. Sensis Search, the online/electronic portfolio of Sensis Pty Ltd, recorded a 40.7% growth for the year 2004 and 34% online usage growth for the same year (Sensis, 2004b), while Sensis’ print business only grew by 5.6% compared with the SUHYLRXV¿QDQFLDO\HDU6HQVLVG 1312 Sensis.Com.Au KEY LESSONS LEARNED Sensis Search’s experience presents several fun- damental management lessons for the business operations and development of today’s dot-coms and e-businesses. This section examines and explores these lessons. First, the success of Sensis Search is one of combined innovation and entrepreneurship in the e-business world (thus called e-innovation and e-entrepreneurship). Today’s e-business operates in a highly competitive marketplace where sustain- able competitive advantage is almost impossible as there are minimal barriers to new entrants and competitors in the marketplace. Innovation faces constant challenges of imitation and erosion. There have been different views in the literature DERXWWKHEHQH¿WVRI¿UVWPRYHUVLQWKHHEXVLQHVV marketplace. Mellahi and Johnson (2000) asked WKHTXHVWLRQ³'RHVLWSD\WREH¿UVWWRPDUNHWRU VKRXOGHFRPPHUFH¿UPVZDLWIRU¿UVWPRYHUV to make an investment and then cannibalize the idea with lower entry cost?” The cause of the concerns are raised by a general belief that it is VDIHUDQGOHVVH[SHQVLYHWRLPLWDWHWKH¿UVWPRYHU in the e-business environment, where there is a higher level of technical uncertainties and rapid rate of technological innovation. For instance, many new dot-coms rushed to build an e-market- place and chose imitation as a business strategy rather than innovation. This author argues that it is the lack of a combination of innovation and entrepreneurship capacity that has caused the demise of many imitators in the dot-com industry. The essence of innovation and entrepreneurship is taking a new idea to market, not imitating a new idea without taking into account the special needs of local markets, and being innovatively and proactively responsive to environmental changes by introducing a new product, process, service, or implementing a distinctive business model. Sense Search’s success has clearly been FRQWULEXWHGE\WKH¿UVWPRYHUDGYDQWDJHEHLQJ WKH¿UVWFRPSDQ\LQWKHZRUOGWKDWWRRNLWVGLUHF- tory products online). Both empirical and theoretical studies show that innovation interacts with entrepreneurship to achieve business success (Zhao, 2005; Kanungo, 1999; Drucker, 1994). The key elements of entre- preneurship include risk-taking, proactivity, and innovation (Miller, 1983). However, Slevin and Covin (1990, p. 43) have argued that the three ele- PHQWVDUHQRWVXI¿FLHQWWRHQVXUHRUJDQLVDWLRQDO VXFFHVV7KH\PDLQWDLQHGWKDW³DVXFFHVVIXO¿UP not only engages in entrepreneurial managerial behaviour, but also has the appropriate culture and organisational structure to support such behaviour.” Thus, there is clearly overlapping and interdependence between entrepreneurship DQGLQQRYDWLRQ%RWKDUHQHHGHGIRU¿UPVWREH successful and sustainable. Furthermore, entre- preneurship is related to the development of new products and services. Innovation is sometimes not necessarily related to new products but concerns doing something differently and better. While entrepreneurship is related to working with new products and services, it is not necessarily about doing things better. Innovation, however, is about doing something better by doing it differently. As V X F K H Q W U H S UH Q H X U V K LS F D U U LH V H [ W U D ¿Q D Q F L D O D QG risk issues because of the newness of the venture. According to the experience of the company’s senior manager interviewed for the study, there are no conceptual and/or practical differences in terms of online and off-line entrepreneurship and innovation. The approach is the same, regardless of the online or off-line environment, although the skill set required is obviously different. The company believes that entrepreneurship and in- novation are crucial to their success and innova- tion should be inculcated into the organisational culture and is developed internally. It includes encouraging staff to interact with customers and undertake research and development. Sensis Search is not only an entrepreneurial company in terms of its aggressive growth strategy but also a 1313 Sensis.Com.Au pioneer of innovation. Sensis has claimed to be WKH¿UVWFRPSDQ\LQWKHZRUOGWKDWWRRNLWVGLUHF- WRU\SURGXFWVRQOLQH6HQVLV6HDUFKKDVLGHQWL¿HG seven factors which it believes drive innovation and which it has subsequently applied to all new product areas: 1. Clear vision communicated throughout the company 2. Development of a culture of innovation — through rewarding people and taking calculated risks 3. An organic organisational structure — rather than having a central group of IT managers, producers, and product managers, each prod- uct unit employs their own staff with their own responsibilities and P&L statements 4. Job role clarity 5. Accountability and responsibility 6. Clear key performance indicators (KPIs) 6X I ¿F L H Q W I X QG L Q J U H DO LV W LF UH YH QX HH [ S HF W D - tions, and people positively motivated The entrepreneurship strategy that Sensis Pty has taken is actually that of an intrapreneurship, that is, entrepreneurship within an organization. Sensis’ story indicates that development of entre- preneurship and innovation should be dependent on the size of the company. For instance, the Sensis group includes large, established companies such as Yellow Pages®, and the much younger and relatively smaller Sensis Search. Yellow Pages® is built on an established, traditional business model, while the Sensis Search approach is entirely different. As such, there is a need to separate the companies and to allow new business units ZLWKLQ WKH JURXSWR ³TXDUDQWLQH VSDFH´ZKHUH they can grow (within set time frames), using GLIIHUHQWSHRSOHZLWKGLIIHUHQWUHZDUGV¿QDQFHV DQGVRIRUWKUDWKHUWKDQWU\LQJWR¿WLQZLWKWKH old models. Second, Sensis Search can be viewed as a suc- cessful start-up of a new generation of dot-coms which are more mature in terms of business models and information technologies, focusing more on MXVWL¿FDWLRQDQGDFFRXQWDELOLW\RIEXVLQHVVSUR- FH V VH V D QGRX W FRPH V W K D Q RQ D³FD QG R´P H QW D O LW \ only. The post-2000 e-business successes gener- DOO\WHQGHGWREHWKRVHWKDWZHUH¿UVWWRPDUNHW DQGZKLFKZHUHVXI¿FLHQWO\IXQGHGWRZHDWKHUWKH crash. These companies also managed to main- WDLQWKHLUSHRSOHDQGVWD\VXI¿FLHQWO\IRFXVHGRQ their core strategies, rather than diversifying too greatly. Therefore, they have distinctive features from their counterparts in the earlier days of e- commerce. In hindsight, e-commerce failures WHQGHGWREHWKH³Me2” brands (see Endnote), which were merely copying existing, successful HFRPPHUFHPRGHOVXQGHUWKHSUHPLVHRI³EXLOG it and customers will come,” wholly failing to recognise the power of established branding. Sensis Search is Australian-based but com- petes against global giants such as Microsoft, <DKRRDQG*RRJOH$VVXFKWKH\KDYHLGHQWL¿HG two ways by which they can be competitive. The ¿UVWLVE\SURYLGLQJDKLJKHUDPRXQWRIEXVLQHVV and commercial content, and the second is by having good relationships with global partners in RUGHUWRGHOLYHUWKHLUVROXWLRQVLQWKHPRVWHI¿FLHQW and cost-effective manner. For instance, Sensis Search has partnered with Fast, a Norwegian company specialising in algorithmic search tech- nology which powers the Sensis Search engine. It has continued to achieve strong growth and to develop leading edge online search solutions for Australians. It offers its advertisers the opportu- nity to put their companies’ existing print content online at little or no additional cost. For example, businesses do not need to have a Web site to be found on sensis.com.au but simply be listed on the Sensis’ Yellow Pages® online site. 7KLUGVXFFHVVIXOGRWFRPVUHTXLUHVXI¿FLHQW funds and people skills, as well as adherence to the seven-step innovation model. Sensis Pty has PDGH VLJQL¿FDQW LQYHVWPHQW LQ GHYHORSLQJ LWV online/electronic dimension of its business as a long-term corporate strategy. Generally speak- . priority and time priority. 1307 Laws and Regulations on Proprietary Trading System (PTS) in Japan The auction method requires much time for execution of large block orders and basket orders and. comprehensive and up-to-date product and service listings in Australia, with a much greater emphasis on local and national businesses. The Web site was launched in July 2004 and used by 59%. operations and development of today’s dot-coms and e-businesses. This section examines and explores these lessons. First, the success of Sensis Search is one of combined innovation and entrepreneurship