TY - JOUR
T1 - Electronic reverse auction configuration and its impact on buyer price and supplier perceptions of opportunism
T2 - A laboratory experiment
AU - Carter, Craig R.
AU - Stevens, Cynthia Kay
N1 - Funding Information:
We gratefully acknowledge the assistance of four anonymous reviewers and in particular the special issue editors, whose insightful comments significantly improved the paper. An earlier version of this paper was presented at the 2005 Academy of Management convention in Honolulu, HI. This research was partially funded by the Center for Electronic Markets and Enterprises at the University of Maryland, and by a summer research grant from the University of Nevada.
PY - 2007/8/31
Y1 - 2007/8/31
N2 - Buying organizations are increasingly using electronic reverse auctions (eRAs) to source from suppliers. However, recent quasi-experimental and field research has suggested that the use of this sourcing technique can create perceptions of opportunism among participating suppliers. Yet from the buyer's perspective, online reverse auctions can yield lower purchase prices. Given the many ways in which to configure on-line auctions, we extend existing research by using a laboratory experiment to investigate how different reverse auction configurations jointly influence bid price and suppliers' perceptions of buyer opportunism. Our findings suggest that supplier bid prices decrease over time as they participate in more eRAs, regardless of the configuration of auction parameters. However, the combination of rank (versus price) visibility, high (versus low) supplier need to win a contract, and six (versus three) competitors was significantly more effective than other combinations of variables in immediately reducing bid prices. The data also indicated that when suppliers' bids dropped substantially across auctions, their perceptions of opportunism increased. Notably, auction parameter combinations such as price visibility, three competitors, and low need for the contract yielded comparably low bids by the third auction, without any increases in perceived buyer opportunism.
AB - Buying organizations are increasingly using electronic reverse auctions (eRAs) to source from suppliers. However, recent quasi-experimental and field research has suggested that the use of this sourcing technique can create perceptions of opportunism among participating suppliers. Yet from the buyer's perspective, online reverse auctions can yield lower purchase prices. Given the many ways in which to configure on-line auctions, we extend existing research by using a laboratory experiment to investigate how different reverse auction configurations jointly influence bid price and suppliers' perceptions of buyer opportunism. Our findings suggest that supplier bid prices decrease over time as they participate in more eRAs, regardless of the configuration of auction parameters. However, the combination of rank (versus price) visibility, high (versus low) supplier need to win a contract, and six (versus three) competitors was significantly more effective than other combinations of variables in immediately reducing bid prices. The data also indicated that when suppliers' bids dropped substantially across auctions, their perceptions of opportunism increased. Notably, auction parameter combinations such as price visibility, three competitors, and low need for the contract yielded comparably low bids by the third auction, without any increases in perceived buyer opportunism.
KW - E-commerce
KW - Electronic reverse auctions
KW - Laboratory experiments
KW - Opportunism
KW - Supply management
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U2 - 10.1016/j.jom.2006.10.005
DO - 10.1016/j.jom.2006.10.005
M3 - Article
AN - SCOPUS:34548024893
VL - 25
SP - 1035
EP - 1054
JO - Journal of Operations Management
JF - Journal of Operations Management
SN - 0272-6963
IS - 5
ER -