Search for Alternatives and Collaboration with Incumbents: Two-Sided Sourcing Behavior in Business Markets

Sourcing strategies in business markets have been considered separately and the practice of two-sided sourcing behavior—engaging in search for alternative suppliers and collaboration with an incumbent supplier—has not been examined. To fill that gap, we first identify boundary conditions under which the poor performance of an incumbent supplier intensifies an original equipment manufacturer's (OEM) search and collaboration. Then, we examine how an OEM's two-sided sourcing behavior influences one of the critical elements of sourcing performance: the responsiveness of the incumbent supplier. Our proposed hypotheses were tested with data from a national survey of 539 OEM purchasing managers in the Japanese electronics industry. The analysis results indicate three main findings. First, two environmental conditions—pace of technological change and volume uncertainty—have contrasting influences on the link between incumbent supplier performance and an OEM's search and collaboration. While uncertainty from the upstream channel (pace of technological change) enhances an OEM's search and collaboration, uncertainty from the downstream channel (volume uncertainty) lowers an OEM's search and collaboration. Second, an OEM's dependence on its incumbent supplier has differential effects: an OEM reduces search as its dependence on incumbent supplier increases, while it enhances collaboration as its dependence on incumbent supplier increases. Third, while search alone has a negative effect on responsiveness of an incumbent supplier, engaging in two-sided sourcing behavior (i.e., combining search with collaboration) has a positive effect on responsiveness of the incumbent supplier.

[1]  Wesley J. Johnston,et al.  An Empirical Investigation of the Formation and Implications of the Organizational Buyer's Strategic and Tactical Roles , 1996 .

[2]  John R. Nevin,et al.  Performance Outcomes of Purchasing Arrangements in Industrial Buyer-Vendor Relationships , 1990 .

[3]  Allen M. Weiss,et al.  Vendor Consideration and Switching Behavior for Buyers in High-Technology Markets , 1995 .

[4]  O. Williamson.  The economic institutions of capitalism , 1985 .

[5]  Daniel R. Krause.  The antecedents of buying firms' efforts to improve suppliers , 1999 .

[6]  Gary L. Lilien,et al.  Do Trade Shows Pay Off? , 1995 .

[7]  Scott B. MacKenzie,et al.  Common method biases in behavioral research: a critical review of the literature and recommended remedies. , 2003, The Journal of applied psychology.

[8]  Allen M. Weiss,et al.  Reputation Management as a Motivation for Sales Structure Decisions , 1999 .

[9]  C. Hill,et al.  The Performance of Incumbent firms in the Face of Radical Technological Innovation , 2003 .

[10]  David J. Teece,et al.  Competition and Cooperation: Striking the Right Balance , 1989 .

[11]  R. Ping.  The effects of satisfaction and structural constraints on retailer exiting, voice, loyalty, opportunism, and neglect , 1993 .

[12]  Caryl E. Rusbult,et al.  Determinants and Consequences of Exit, Voice, Loyalty, and Neglect: Responses to Dissatisfaction in Adult Romantic Involvements , 1986 .

[13]  Christian Homburg,et al.  Applications of structural equation modeling in marketing and consumer research: A review , 1996 .

[14]  R. M. Monczka,et al.  Supply Base Strategies to Maximize Supplier Performance , 1993 .

[15]  Allen M. Weiss,et al.  The Nature of Organizational Search in High Technology Markets , 1993 .

[16]  Barbara C. Perdue.  The size and composition of the buying firm’s negotiation team in rebuys of component parts , 1989 .

[17]  Sandy D. Jap.  Pie-Expansion Efforts: Collaboration Processes in Buyer–Supplier Relationships , 1999 .

[18]  Y. Wind,et al.  Industrial buying and creative marketing , 1967 .

[19]  Daniel R. Krause,et al.  An empirical investigation of supplier development: reactive and strategic processes , 1998 .

[20]  Rohit Verma,et al.  Supplier-Switching Inertia and Competitive Asymmetry: A Demand-Side Perspective , 2006, Decis. Sci..

[21]  John F. Tanner,et al.  Organizational Buying Theories , 1999 .

[22]  W. Johnston,et al.  Organizational buying behavior: Toward an integrative framework , 1996 .

[23]  L. Stern,et al.  Environmental Determinants of Decision-Making Uncertainty in Marketing Channels , 1988 .

[24]  Jan B. Heide,et al.  Do Norms Matter in Marketing Relationships? , 1992 .

[25]  Jan B. Heide,et al.  ALLIANCES IN INDUSTRIAL PURCHASING - THE DETERMINANTS OF JOINT ACTION IN BUYER-SUPPLIER RELATIONSHIPS , 1990 .

[26]  M. Tushman,et al.  The ambidextrous organization. , 2004, Harvard business review.

[27]  J. Pfeffer,et al.  The External Control of Organizations. , 1978 .

[28]  Jan B. Heide,et al.  The Role of Dependence Balancing in Safeguarding Transaction-Specific Assets in Conventional Channels , 1988 .

[29]  J. Birkinshaw,et al.  Building Ambidexterity Into an Organization , 2004 .

[30]  Ven Sriram,et al.  Antecedents to buyer-seller collaboration: An analysis from the buyer's perspective , 1992 .

[31]  R. Handfield,et al.  The role of trust and relationship structure in improving supply chain responsiveness , 2002 .

[32]  Y. Wind,et al.  A General Model for Understanding Organizational Buying Behavior , 1972 .

[33]  G. Walker,et al.  A Transaction Cost Approach to Make-or-Buy Decisions , 1984 .

[34]  James A. Narus,et al.  A Model of Distributor Firm and Manufacturer Firm Working Partnerships , 1990 .

[35]  A. Rao,et al.  No Pain, No Gain: A Critical Review of the Literature on Signaling Unobservable Product Quality , 2000 .

[36]  F. Dwyer,et al.  Developing Buyer-Seller Relationships: , 1987 .

[37]  J. Sinacore.  Multiple regression: Testing and interpreting interactions , 1993 .

[38]  Timothy A. Salthouse,et al.  Decision Making and Problem Solving , 1982 .

[39]  David E. Kaun,et al.  Marketing Signaling: Informational Transfer in Hiring and Related Screening Processes. , 1974 .

[40]  Paul D. Larson,et al.  Single Sourcing and Supplier Certification: Performance and Relationship Implications , 1998 .

[41]  F. Rothaermel.  Complementary Assets, Strategic Alliances, and the Incumbent's Advantage: An Empirical Study of Industry and Firm Effects in the Biopharmaceutical Industry , 2001 .

[42]  Allen M. Weiss,et al.  Converting from Independent to Employee Salesforces: The Role of Perceived Switching Costs , 1992 .

[43]  R. Ping.  Voice in business-to-business relationships: Cost-of-exit and demographic antecedents , 1997 .

[44]  D G Spencer.  Employee voice and employee retention. , 1986, Academy of Management journal. Academy of Management.

[45]  Barton A. Weitz,et al.  The Use of Pledges to Build and Sustain Commitment in , 1992 .

[46]  R. Ping,et al.  Unexplored antecedents of exiting in a marketing channel , 1999 .

[47]  Barton A. Weitz,et al.  Determinants of Continuity in Conventional Industrial Channel Dyads , 1989 .

[48]  Terry S. Overton,et al.  Estimating Nonresponse Bias in Mail Surveys , 1977 .

[49]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[50]  Jagdip Singh,et al.  A typology of consumer dissatisfaction response styles , 1990 .

[51]  J. Sheth.  A Model of Industrial Buyer Behavior , 1973 .

[52]  Albert O. Hirschman,et al.  Exit, Voice, and Loyalty , 1970 .

[53]  J. Steenkamp,et al.  The Effects of Perceived Interdependence on Dealer Attitudes , 1995 .

[54]  R. M. Monczka,et al.  Purchasing and Supply Management: Trends and Changes Throughout the 1990s , 1998 .

[55]  James R. Brown,et al.  Interdependency, Contracting, and Relational Behavior in Marketing Channels , 1996 .

[56]  Joseph P. Cannon,et al.  Buyer–Seller Relationships in Business Markets , 1999 .

[57]  Caryl E. Rusbult,et al.  Exit, voice, loyalty, and neglect: Responses to dissatisfaction in romantic involvements. , 1982 .

[58]  Jan B. Heide.  Plural Governance in Industrial Purchasing , 2003 .

[59]  S. Helper,et al.  Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States , 1998 .

[60]  Gary L. Frazier.  On the Measurement of Interfirm Power in Channels of Distribution , 1983 .

[61]  S. Hunt,et al.  The Commitment-Trust Theory of Relationship Marketing , 1994 .

[62]  Peter John,et al.  Exit, voice and loyalty: Analytic and empirical developments , 2000 .

[63]  J. H. Dyer.  Does Governance Matter? Keiretsu Alliances and Asset Specificity as Sources of Japanese Competitive Advantage , 1996 .

[64]  Jennifer L. Steele,et al.  The Collaborative Advantage , 2008 .

[65]  Michael Kublin,et al.  The Relative Importance of Supplier Selection Criteria: The Case of Electronic Components Procurement in Japan , 1998 .

[66]  Jan B. Heide.  Interorganizational Governance in Marketing Channels , 1994 .