Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangements

We use the metaphor of the mutual assurance game to develop the notion that overseas suppliers may proactively manage uncertainty by making customized investments to serve their buyers. Using this game-theoretic conceptualization as a complement to the transactions cost analysis notion of credible c...

Full description

Saved in:
Bibliographic Details
Published in:Journal of international business studies 1999-06, Vol.30 (2), p.297-316
Main Authors: Celly, Kirti Sawhney, Spekman, Robert E., Kamauff, John W.
Format: Article
Language:English
Subjects:
Business and Management
Business Strategy/Leadership
Buyers
Cooperation
Cost analysis
Game theory
Games
Hypotheses
Information sharing
International
International Business
International cooperation
Investment strategies
Management
Marketing
Opportunistic behavior
Organization
Prisoners
Purchasing
Return on investment
Studies
Suppliers
Supply
Technology
Uncertainty
Unilateralism
Vendor supplier relations
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We use the metaphor of the mutual assurance game to develop the notion that overseas suppliers may proactively manage uncertainty by making customized investments to serve their buyers. Using this game-theoretic conceptualization as a complement to the transactions cost analysis notion of credible commitments, we argue that such investments serve as assurances of commitment to the international buyer. The hypotheses are tested using data collected in a survey of U.S. purchasing managers regarding their relationships with their Pacific Rim suppliers. Consistent with our hypotheses, our primary results indicate that suppliers' relationship-specific investments are greater when technological uncertainty is high and buyers value supplier responsiveness. Further, our results suggest that relationship stability and buyer information sharing are greater when supplier relationship-specific investments are greater. These results provide some support for our argument that in the face of technological uncertainty, overseas suppliers may unilaterally commit to their buyers in attempts to obtain reciprocal benefits that help them manage external uncertainty.
ISSN:0047-2506
1478-6990
DOI:10.1057/palgrave.jibs.8490071