Open Universiteit

Please use this identifier to cite or link to this item: http://hdl.handle.net/1820/5525
Title: The impact op power and dependence in Buyer-Supplier Relationships on the use of electronic reverse auctions. En empirical study among public an private sector procurement professionals in the Netherlands
Authors: Nagel, B.W.
Keywords: Power
dependence
electronic reverse auctions
buyer-seller relationships
Issue Date: 11-Jul-2014
Publisher: Open Universiteit Nederland
Abstract: Electronic reverse auctions (ERAs) are globally used to reduce costs. Buyers praised ERAs for bringing significant direct savings. However, ERA benefits were exaggerated, ERAs can negatively impact buyer-supplier relationships, and ERAs challenge suppliers’ trust in buyers. Therefore, authors suggest empirical research into the determinants of ERA use and suggest studying the impact of buyer and supplier power on ERA use. This study aims at a new perspective on determinants of perceived ERA appropriateness (PEA), by answering the problem statement: “What is the impact of power and dependence in buyer-supplier relationships on procurement professionals’ perceived ERA appropriateness?”. This is done by testing a conceptual framework and six hypotheses, based on an extensive literature review of transaction cost economics, governance, and power and dependence. The hypothesis are empirically tested by an electronic survey questionnaire among business-to-business procurement professionals in a sampling frame of 1,702 Dutch organisations in the public and private sectors. Through LinkedIn, procurement professionals are randomly contacted, and are questioned on their experiences, perceptions and opinions concerning ERAs. A total of 1,039 questionnaire invitations were sent and 243 usable responses were received. A multiple regression analysis was performed with a 95% reliability level, which showed that just 5.4% of the variance in the dependent variable PEA can be explained by the independent variables asset specificity, non-contractibility, contractual governance, relational governance, buyer net dependence and total interdependence in the statistically significant conceptual model. Only the variable buyer net dependence has a statistically significant unique contribution in predicting the dependent variable PEA. Firstly, in regard to the expectation that asset specificity has a negative impact on PEA no supporting results were found. Similarly, in regard to the expectation that non-contractibility has a negative impact on PEA no supporting results were found. Thirdly, no supporting results were found for the expectation that contractual governance has a positive impact on PEA. Fourthly and likewise, no supporting results were found for the expectation that relational governance has a negative impact on PEA. Fifthly, supporting results were found for the expectation that buyer net dependence has a positive impact on PEA. This study, therefore, confirms that a buyer’s dependence on a supplier is a potential supplier power source and that the least dependent party dominates the exchange. Therefore, in a supplier dominance situation, the option for using an ERA is less likely. This significant explanatory power of buyer net dependence on PEA is the core result of this study. It shows that procurement professionals will favour ERAs in situations where they have less dependency on suppliers than vice versa and shows that procurement professionals will try to avoid ERAs or will prefer other sourcing methods than ERAs in circumstances where they have more dependency on suppliers than vice versa. Finally, no supporting results were found for the expectation that total interdependence has a negative impact on PEA. The study findings seem to underline that ERAs tend to be used by buyers with supplier leverage in order to utilise their power position. This study’s findings can help practitioners use ERAs more effectively. Supporting empirical results showed that buyer net dependence has a positive impact on PEA. The practical operationalisation of buyer and supplier dependence enables procurement professionals to assess buyer net dependence. Another relevant empirical finding is that no support was found for a positive impact on PEA of contractual governance, or a negative impact on PEA of relational governance. For practitioners this could mean that even in a situation that is characterised by a relational approach of the buyer-supplier relationship, the option of using an ERA does not have to be excluded automatically.
URI: http://hdl.handle.net/1820/5525
Appears in Collections:MSc Management Science

Files in This Item:
File Description SizeFormat 
Nagel BW scriptie (definitieve versie voor 20140711).pdf901.03 kBAdobe PDFView/Open


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.