This CAREER proposal will investigate how companies use Internet-based digital infrastructure to transform the way they do business, with a focus on two related isseus: adoption and value creation of Internet-based e-business at the firm level. Instead of focusing on the direct relationship betweeen information technology and firm performance, we propose that actual usage may be the missing link in explaining the impact of technology on firm performance. The study will use quantitative and qualitative methods, including surveys, statistical analysis, and case studies. The longitudinal research will be conducted over five years and will focus on three industry sectors, manufacturing, retailing, and financial services. The study will draw managerial implications about the transformation process in which the Internet is used and value is created. The project will study the role of government regulation and competition on e-business transformation and will offer implications for public policies. The project will involve graduate and undergraduate students in the research process. New curriculum and courses on digital business will be developed for undergraduates and MBA students.