The impact of electronic reverse auctions on purchase price reduction and governance structure: an empirical investigation

Published on Jun 12, 2006in International Journal of Services Technology and Management
· DOI :10.1504/IJSTM.2006.010048
Dawn H. Pearcy7
Estimated H-index: 7
(EMU: Eastern Michigan University),
Larry C. Giunipero30
Estimated H-index: 30
(FSU: Florida State University)
The availability of various electronic services (e-services) has changed the buying experience for many purchasing professionals. An increasingly popular e-service, the electronic reverse auction has generated substantial interest due to its purported ability to provide lower purchase prices to buying firms even though it has the potential to negatively impact the buyer–supplier relationships. Due to the emerging nature of the reverse auction process, empirical research in the aforementioned areas is relatively sparse. The purpose of this research is to address these gaps in the academic literature. A survey of 142 purchasing professionals employed in diverse industries in the USA revealed that the electronic reverse auction use was significantly related to the purchase price reductions for the buying firm when purchasing standardised direct materials and MRO, but not for customised direct materials. The data also suggests that the buying firms develop different types of governance structure (short-term or relational) with the suppliers depending on the purchase category.
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