Reverse auctions for relationship marketers

Reverse auctions in logistics and procurement have grown dramatically since the advent of widespread Internet usage in the late 1990s. A literature review indicates that scholars and practitioners are reaching a consensus around a trade-off between the value and benefits of gaining lower prices versus losing long-term relationships with suppliers. Yet at the same time, a quiet evolution has come about in the economics and management literature, opening the way for new, more relationship-friendly auction designs. Based on this new work, a series of guidelines and principles are developed which describe how managers may collect the economic pricing advantage of reverse auctions—yet retain the long-term benefits of relationship marketing.     

Building commitment in buyer-seller relationships: A tie strength perspective

The strength of inter firm buyer-seller ties is vital to understanding the formation of commitment. Drawing upon the tie strength sociology and embeddedness literature, this study conceptualizes four dimensions of tie strength and examines their effects on the buyer firm's commitment to the selling firm, as well as the impact of commitment on favorable buyer behavior. A survey of 119 buyer organizations reveals that three of the four identified properties of tie strength (reciprocal services, mutual confiding and emotional intensity) are positively related to buyer commitment to the selling organization. Interestingly, the strongest relationship was found between emotional intensity and commitment — an understudied dimension of buyer-seller relationships. This study contributes to the B2B relationship marketing literature by increasing our understanding of the differential effects of behavioral and emotional aspects of ties on commitment. The study suggests to managers in manufacturing firms to develop strong behavioral and emotional ties with buyer firms in their relationship marketing strategy.     

Till death do us part…but not always: Six antecedents to a customer's relational preference in buyer-seller exchanges

Since its emergence in the early 1990s as marketing's newest paradigm or school of thought, research in the area of relationship marketing has been proliferating. From the customer's perspective, initial attempts to become lifelong partners with key sellers or suppliers were appealing. However, as these propositions multiply in number and carry with them increasing burdens in terms of time and commitment, customers are reticent to enter into long-lasting relationships with all sellers. In this paper, we consider relationship formation from the customers' perspective and examine the antecedents to a customer's preference for a relational exchange orientation versus a transactional exchange orientation. Our belief is that, depending upon a set of contextual factors surrounding the exchange, customers will opt for a relational orientation with suppliers in some cases and for a more transactional orientation in others.     

Making the transition to collaborative buyer-seller relationships: An emerging framework

In recent years, many business-to-business marketers have been influenced by the concepts put forth in the area of relationship marketing, with its emphasis on long-term collaborative relationships among trading partners. However, buyers and sellers alike have found it difficult to make the transition from an arm's length, “invisible hand of the market” relationship to one of collaboration, for a variety of reasons. We propose a framework, still emerging, that captures the elements critical to the transition process. We do not advocate collaborative relationships in all buyer-seller relationships; however, where they make sense we demonstrate how to overcome barriers to collaboration. Explicitly recognizing the elements of the framework and their relationship to one another would help potential collaborators better manage the transition process and thereby increase the likelihood of reaping the benefits of a truly more collaborative relationship.     

Diverging expectations in buyer-seller relationships: Institutional contexts and relationship norms

Many firms assume that outsourcing partnerships may allow them to strengthen their overall competitiveness. Lured by its intuitive appeal, several enter into such partnerships, only to realize that they represent a marginal rather than a magical solution to their quest for increasing market performance. An important reason for this is the diverging beliefs and expectations held by both parties in the buyer-seller dyad. The purpose of this contribution is to develop a framework for understanding the divergences in expectations and relationship norms in cross-cultural business relationships among SMEs. We discuss four relational expectations derived from the B2B literature on relational norms for addressing these divergences: Quality, frequency and scope of communication, role specifications and coordination of work nature of planning horizons, and trustworthiness and link these to relationship performance. We explore the proposed impact of diverging relationship norms on relationship expectations using data from an ongoing field study of Danish buyers and Chinese suppliers. We link these diverging expectations to the business practices of Danish buyers and Chinese and their institutional contexts. In the concluding part of the paper, we discuss our findings and outline implications for management and academia.     

Improving firm positioning through enhanced offerings and buyer-seller relationships

We analyze the strategic repositioning of firms through changes in their market offerings and buyer-seller relationships. Based on literature from strategy, marketing, economics, and information systems, we formulate a two-by-two matrix to examine alternatives for positioning. We evaluate the framework with four case studies of companies that have recently moved toward more complete product/service offerings and stronger relational linkages with customers. These moves followed two different paths. The product/service path initially focused on the development of new and related products, product bundles, and the addition of product-related services. The relational path first focused on establishing closer relationships with customers including closer operational linkages, enhanced information sharing, more fully articulated legal and contractual obligations, and enhanced cooperation. In all the cases, the strategic repositioning was influenced by customer needs and enabled by information technology and the acquisition of new competencies through networking.     

Capturing value creation in business relationships: A customer perspective

Collaborative relationships in business markets are of growing importance to customers and suppliers alike. Customers need to decide whether to invest in a new supplier relationship, to maintain and develop a valued relationship, or to divest from a low-value relationship. Suppliers, in turn, face growing commoditization of products and seek to differentiate themselves through relationships. The measurement of value creation in buyer-seller relationships is still in its infancy, and a sound understanding of how firms create and deliver value in business relationships is needed. Emerging studies investigate relationship value based on dimensions derived from theory and lack a managerial perspective. Therefore, the present research explored relationship value from a grounded theory perspective. In-depth interviews with purchasing managers identified eight value drivers in manufacturer-supplier relationships. Implications for the measurement of the concept are discussed, and directions for further research are suggested.     

Information,branding, certification,and consumer willingness to pay for high-iron pearl millet: Evidence from experimental auctions in Maharashtra,India

In this paper we use hedonic testing methods adopted from food science literature and the Becker-DeGroot-Marschak mechanism adopted from economic valuation literature to estimate consumer demand for biofortified high-iron pearl millet (HIPM) in Maharashtra, India. Unlike biofortification with provitamin A, biofortification with minerals, such as iron and zinc, does not change the color or the appearance of the biofortified crop. Therefore, we test the impact of both nutrition information, and branding and certification, as well as the nature of the brand and of the certifying authority (state level versus international), on consumer demand for HIPM. We find that even in the absence of nutrition information, consumers assign a small but significant premium to the HIPM variety relative to the local variety. This is consistent with consumers’ more favorable rating of the sensory characteristics of the high-iron variety. Nutrition information on the health benefits of HIPM increases this premium substantially, and regression analysis reveals that consumers prefer international branding and international certification authority to their state-level counterparts.     

Emotions, trust and relationship development in business relationships: A conceptual model for buyer-seller dyads

Existing research on buyer-seller relationships has focused on the role played by trust in shaping the dynamics of interpersonal interaction between the buyer and the seller. While this is undoubtedly an important variable in governing the interactional dynamics it is by no means the only variable. The paper begins by reviewing the existing literature on buyer-seller relationships. The role played by emotions is articulated. Finally, it is recognized that the emotions that emerge in a buyer-seller relationship do so at multiple levels. A model and propositions highlighting the impact of emotions on interpersonal relationships are developed. Illustrative cases are used to ground the propositions empirically.     

Combining participatory crop trials and experimental auctions to estimate farmer preferences for improved common bean in Rwanda

Participatory crop improvement raises the prospects for developing seed varieties that meet the needs of subsistence farmers but may face challenges regarding preference elicitation, particularly in complicated policy environments. We integrate binding experimental auctions with participatory variety selection to elicit farmers’ preferences for improved common bean varieties in Rwanda. We find that auctions reveal farmer preferences more accurately than stated nonbinding rankings in this context and that participatory on-farm crop research is essential to understanding how farmers evaluate tradeoffs between multiple crop attributes. We also find that farmers highly value intercrop yield despite government policy that encourages farmers to monocrop.     

Encouraging extra-role behavior in a channel context: The role of economic-, social-, and justice-based sharedness mechanisms

In export businesses where overseas agents enjoy much better knowledge of customers, competitors and institutional environments, a major challenge facing export channel management is encouraging extra-role behavior in forms of agents' spontaneous, cooperative, and innovative actions when formulating and executing strategic decisions for export markets. This study addressed this major challenge by developing an integrated model of agents' extra-role behavior which proposed that the exercise of economic, social, and justice related sharedness mechanisms when making and executing strategic decisions of channel partnerships can be expected to have a positive effect on channel relationship performance. The model was tested by a sample of 353 exporting manufacturers. The empirical evidence showed that channel relationship performance was strongly and positively affected by exporters' perception over agents' extra-role behavior over strategy formulation and execution. Exporting firms are advised to enhance likelihood of agents' extra-role behavior over strategy formulation and execution by expanding inter-organizational sharedness mechanisms in the forms of agents' contract inclusiveness, agents' relationship trust, and agents' decision-making procedural justice.     

A Law of Large Numbers: Bidding and Compulsory Competitive Tendering for Refuse Collection Contracts

In this paper we investigate the relationship betweencosts and number of bidders for U.K. local authorities'refuse collection contracts. We find that a highernumber of bids is associated with a lower cost ofservice. This finding, as well as being an importantempirical verification of standard proposition inauction theory, has important policy implications. TheU.K. Labour government elected in 1997 has abolishedCompulsory Competitive Tendering (CCT). Our findingsindicate that this would increase local authorities'expenditure in refuse collection.     

Applying knowledge management to project marketing in a demanding technology transfer project: Convincing the industrial customer over the knowledge gap

Literature in project and knowledge management has examined knowledge management in projects, but the utilization of knowledge management in project marketing is still largely unexplored. This study examines the links between knowledge management and project marketing activities in a project where the seller wants to convince the potential buyer about a demanding investment project. An in-depth case study illustrates this in a situation hampered by a technical knowledge gap between the parties. The buyer is committed when they can trust the seller's capability to successfully accomplish the project. The seller must criticize and communicate its core and project specific knowledge of technologies and customer needs through project marketing. A framework and implications on knowledge management and project marketing activities in different project phases is presented. It is proposed that knowledge management is a pertinent tool for project marketing as it helps to understand the roles of different knowledge types.     

Marketing of competence-based solutions to buyers in exploratory relationships: Perspective of OEM suppliers

In face of mounting challenges from delocalized production, commoditized products, and escalated demand from professional buyers, providing solutions rather than selling products has been put forward in the normative literature as a promising business model for creating high-value differentiated offerings. Nonetheless, empirical survey research into the processes whereby traditional suppliers of “basic products, spare parts and services” migrate towards marketing of “integrated solutions” is still sparse. Grounded in a competence-based marketing view, the current research addressed the research problem of how OEM suppliers upgrade their value offerings via competence-based solutions. The research model was tested by a sample of 403 contract/OEM manufacturers located in China. This resultant findings revealed the processes undertaken by OEM suppliers during the development of competence-based solutions, found out the internal coordination and innovation capabilities required to support competence-based solutions, and uncovered the external communication/disclosure of competence needed to strengthen the link between competence-based solutions and upgraded relationship value.     

Conceptualization and measurement of relationship quality: Linking relationship quality to actual sales and recommendation intention

Following over a decade of relationship marketing, this paper re-visits the notion of relationship quality to determine relational drivers of account profitability. Customer executives from multiple industries are interviewed to identify critical success factors in buyer-seller relationships. Based on their responses, a “back-to-the-basics,” grass roots approach to the measurement of relationship quality is offered. To further demonstrate its value for marketing practice, this measure of relationship quality is administered to a nationwide sample of key customer decision-makers to determine its link to profitable outcomes. The results support this measure as a driver of actual sales and recommendation intention.     

Business relationships on different waves: Paradigm shift and marketing orientation revisited

Relationships with customers, also referred to as inter-organizational relationships, are a growing theme in marketing. The increased interest in these concepts has triggered views that a paradigm shift from mass marketing toward relationship marketing has taken place over the last 20 years and that only a relationship orientation secures firms' success. In this paper, we promote the idea that relationships exist along different orientations and paradigms. We identify five different orientations and the logic of a buyer-supplier relationship in each of these waves. Furthermore, we argue for a dyadic view of orientation, i.e., the supplier orientation must match the buyer orientation in order to allow smooth interactions.     

Asian contexts and the search for general theory in management research: A rejoinder

“Asian Management Research Needs More Self-confidence” (Meyer, 2006) generated a surprisingly extended and diverse set of responses from Asia and beyond. In this rejoinder, I draw together a few lines of arguments that have emerged in that debate with the aim of moving the debate—and thus Asian management research agendas—forward. In particular, I argue that context is a crucial variable to explain management behavior, yet for practical reasons, it has been neglected in research published in top journals. Thus, I challenge management scholars in Asia and beyond to devise new research strategies to enhance our understanding of the contextual boundaries of our knowledge.

Trust over time in exchange relationships: Meta‐analysis and theory

A common premise in prior research is that trust increases over time in relationships. Through a meta‐analysis of 39 studies, we find that the bivariate correlation between trust and relationship duration (1) is on average positive and small, and (2) varies significantly across studies indicating the presence of unobserved moderators. We therefore build a theoretical framework to specify four different mechanisms—initial bias correction, change in relationship value, identification, and trust‐based selection—that may affect the development of trust. We then argue that the relative strength of these mechanisms should influence whether trust increases, remains constant, or decreases over time. © 2013 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.     

Exploring and exploiting network relationships to commercialize technology: A biofuel case

We seek to understand how ambidexterity of exploring and exploiting is managed in an innovation context. We contribute to the literature by elaborating exploring and exploiting as three processes shared between actors in a dynamic business network. An innovator firm needs to (1) explore the current business network to find partners and gain access to resources, (2) develop business relationships for exploiting the emerging network, and (3) explore and find a network-technology fit inside a future business network. The final process is essential to innovation and commercialization. Further, the quality of the network-technology fit will affect the speed and success of the other two processes. Our contribution provides an understanding of the way in which managers are exploring and exploiting the business network to adapt and commercialize a breakthrough technology. A longitudinal case study of biofuel development and commercialization exemplifies the conceptual issues. Final sections address managerial and research implications.