Buyer control in domestic and international supplier-buyer relationships

Abstract

Purpose

The aim of this paper is to investigate the effect of the prior relationship length and employments of supplier specific investments on buyers' control, and compare this effect across international and domestic business-to-business relationships.

Design/methodology/approach

The sampling frame consisted of members of a National Association Purchasing and Logistics, and the respondents were asked to select one major supplier that would serve as a referent in answering the questions. In total, 156 purchasing firms responded to the questionnaire, and multiple regression analysis was used to test the hypotheses.

Findings

Under condition with substantial supplier specific investments, buyers' control relaxes significantly as the length of the relationship increases in international supplier-buyer relationships, while such change in governance pattern is completely absent in domestic relationships.

Research limitations/implications

This study is based on a cross-sectional design and does not fully capture the dynamics of business-to-business relationships. Future research should use different methodologies such as longitudinal studies to examine dynamic relationships among the constructs in the study.

Practical implications

When strong inter-firm dependency is present, the level of buyer control in relationships with foreign suppliers is typically high in the early stage of the relationships in order to handle the problems of information asymmetry and prospective opportunistic behavior, and decline as the buyer's experiential knowledge with the foreign supplier increases with successive lower performance ambiguity. This governance pattern is less evident in domestic business-to-business relationships due to the potential effect of stronger reputation effects and stronger familiarity with current standards of trade.

Originality/value

The paper contributes to the understanding that the changes in governance form over time will be highly contingent on the level of information asymmetry and inter-firm dependency in the early stage of the exchange relationship.

Citation

Buvik, A., Andersen, O. and Gronhaug, K. (2014), "Buyer control in domestic and international supplier-buyer relationships", European Journal of Marketing, Vol. 48 No. 3/4, pp. 722-741. https://doi.org/10.1108/EJM-03-2011-0181