Purchasing as market-shaping: The case of component-based software engineering

The efforts to address markets as socio-technical orders have hitherto focused on the role of marketing in shaping demand. However, in many markets the role of purchasing is just as important. This paper uses a case study to examine how a single buying company can attempt to shape an emerging market through its purchasing practices. As a result, the study identifies five types of market-shaping actions. Within each action type, the market-shaping behavior of a buyer in an emerging market can be very diverse and include internal actions as well as actions aimed at influencing other market actors. While agency on the purchasing side is often associated with large size organizations, namely government and public sector agencies, our case study shows that agencies on the purchasing sides can be deployed in a variety of ways rather than merely through raw bargaining power. The findings indicate that buying firms do not simply adjust their own purchasing processes according to existing offerings, but actively attempt to drive market evolution in particular directions.