Date of Award

12-1-2010

Degree Name

Doctor of Philosophy

Department

Business Administration

First Advisor

Tadisina, Suresh

Second Advisor

White, Gregory

Abstract

Industrial online-reverse-auctions have become a common procurement strategy used by many firms to reduce the cost of purchased goods and services. The advantages of online-reverse-auctions include significant price reductions, increased purchasing and selling efficiencies, and access to new supply and purchasing markets. Despite these benefits, practitioners and academics alike have raised concerns with respect to the impact of online-reverse-auctions on the buyer-supplier relationship. Previous research suggests that the parameters and characteristics of an online-reverse-auction can influence the perceptions of online-reverse-auction participants. This dissertation investigates this phenomenon by examining how the design of an online-reverse-auction influences the supplier's perception of the buyer-supplier relationship. Specifically, this research considers the effects of online-reverse-auction design in terms of the independent variables of auction control, auction bid visibility, and auction award rules and the dependent variables of supplier commitment to the buyer and supplier trust in the buyer. Using a 2 x 2 x 2 quasi-experimental design and the statistical technique of MANCOVA, this study tests hypotheses related to how different online-reverse-auction design characteristics influence supplier commitment to the buyer and supplier trust in the buyer. The results of the study suggest that the type of online-reverse-auctions buyers utilize can have an impact on supplier perceptions of the buyer supplier relationship. Overall, the result suggest that supplier trust is influenced by the type of auction design buyers utilize, however, supplier commitment is not. Auctions utilizing third party auction providers, partial bid visibility, and post auction negotiations tended to result in higher levels of trust on the part of suppliers. This study makes a contribution to the literature in the following areas. First, this study is one of only a handful of empirical studies examining the effects of online-reverse-auction designs on the buyer-supplier relationship. While a considerable debate exists within the literature concerning the pros and cons of online-reverse-auctions, little empirical work exists. This study makes a contribution by providing insight with respect to how online-reverse-auction designs influence supplier perceptions of the buyer-supplier relationships. Secondly, this analysis considers the buyer-supplier relationship in terms of commitment and trust. Previous studies have largely neglected these constructs despite their prominence in the buyer-supplier relationship literature. Finally, given that the use of online-reverse-auctions seems well entrenched in the purchasing strategies of many buying organizations; this study provides guidance for the design of online-reverse-auctions such that buyers can potentially reduce the negative aspects of the process.

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