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Do auction parameters affect buyer surplus in e-auctions for procurement? Production Oper
- Management
, 2007
"... Although the initial euphoria about Internet-enabled reverse auctions has given way to a cautious but widespread use of reverse auctions in business-to-business (B2B) procurement, there is a limited understanding of the effect of auction design parameters on buyer surplus. In this paper, we study th ..."
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Although the initial euphoria about Internet-enabled reverse auctions has given way to a cautious but widespread use of reverse auctions in business-to-business (B2B) procurement, there is a limited understanding of the effect of auction design parameters on buyer surplus. In this paper, we study the effect of bidding competition, information asymmetry, reserve price, bid decrement, auction duration, and bidder type on buyer surplus. We collected field data on more than 700 online procurement auctions conducted by a leading auctioneer and involving procurement items worth millions of dollars. Consistent with the predictions of auction theory, the results indicate that bidding competition, reserve price, and information sharing affect buyer surplus. Unlike previous findings in the consumerto-consumer context, we find that bid decrement and auction duration have no effect in B2B procurement auctions. Our results suggest that use of the rank-bidding format increases buyer surplus when incumbent suppliers participate in the auction. We discuss the theoretical and managerial implications of these findings for future research and for optimal design of online procurement auctions. Key words: business value of information technology; supply chain management; buyer surplus; reverse auctions; internet-enabled procurement auctions
2009. From association to causation via a potential outcomes approach
- Informat. Systems Res
"... doi 10.1287/isre.1080.0184 ..."
Ushering Buyers into Electronic Channels: An Empirical Analysis
"... Despite many success stories, B2B e-commerce penetration remains low. Many firms introduce electronic channels in addition to their traditional sales channels, but find that buyer usage of the e-channel over time does not keep up with initial expectations. Firms must understand the underlying factor ..."
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Despite many success stories, B2B e-commerce penetration remains low. Many firms introduce electronic channels in addition to their traditional sales channels, but find that buyer usage of the e-channel over time does not keep up with initial expectations. Firms must understand the underlying factors that drive channel usage and how these factors change over time and across buyers. Using panel data pertaining to the purchase histories of 683 buyers over a 43-month period, we estimate a dynamic discrete choice model in a B2B setting that (i) recognizes how price, channel inertia, and inventory change over time, (ii) allows buyers to dynamically trade off these factors when making e-channel adoption decisions, and (iii) takes into account buyer heterogeneity. We find that channel usage is both heterogeneous and dynamic across buyers. Our findings reveal the dynamic tradeoff between channel inertia and the adverse price effect, which interact in opposing directions as the e-channel grows more popular over time: price increases resulting from more bids deter buyers, whereas channel inertia built from sampling experience helps retain repeat buyers for the new channel. Second, we find that the buyers ’ size and diversity influence purchase decisions, and the e-channel appears more attractive to small and/or diversified buyers. Based on our analysis, we postulate that the seller’s allocation decisions of products across channels, if not aligned with buyer behavior, can alienate some buyers. Based on the parameter estimates from the buyer response model, we propose an improved channel allocation
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"... A conceptual model of RFID’s impact on relational value cocreation and appropriation ..."
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A conceptual model of RFID’s impact on relational value cocreation and appropriation
CURRENT RESEARCH ON REVERSE AUCTIONS: PART I -UNDERSTANDING THE NATURE OF REVERSE AUCTIONS AND THE PRICE AND PROCESS SAVINGS ASSOCIATED WITH COMPETITIVE BIDDING
"... ABSTRACT This article serves as the first part of a two-part series that will provide an overview of the reverse auction concept, building on the best research in the field of supply chain management. In this instalment, we examine the growth of reverse auctions in both private and public sector pr ..."
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ABSTRACT This article serves as the first part of a two-part series that will provide an overview of the reverse auction concept, building on the best research in the field of supply chain management. In this instalment, we examine the growth of reverse auctions in both private and public sector procurement. We then provide a differentiation between the more readily understood forward auction concept and the emerging practice of reverse auctioning. We then examine the two-sides of the reverse auction savings equation, looking at the "first order" savings to be derived from the use of competitive bidding to secure lower purchase prices, as well as the "second order" savings that can be achieved through making the procurement process more efficient.
Do Electronic Linkages Reduce the Bullwhip Effect? An Empirical Analysis of the U.S. Manufacturing Supply Chains
"... The bullwhip effect is a major source of supply chain inefficiency. Whereas prior literature has identified a number of potential contributing factors and recommended such remedies as information sharing enabled by information technology (IT) or electronic linkage (EL), few studies have provided emp ..."
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The bullwhip effect is a major source of supply chain inefficiency. Whereas prior literature has identified a number of potential contributing factors and recommended such remedies as information sharing enabled by information technology (IT) or electronic linkage (EL), few studies have provided empirical support. We use industry-level data to examine whether EL use with buyer and supplier industries helps reduce the bullwhip effect as measured by inventory–demand variance ratio. Our major findings are that (1) EL use with supplier industries reduces the bullwhip effect, whereas (2), surprisingly, EL use with buyer industries increases it, but (3) this adverse effect tends to be mitigated by IT use. These findings point to the possible asymmetric effects of EL use in supply chains and provide a different perspective to the existing conclusions in the literature that EL use improves performance. Combining the above results, we have learned that the use of EL tends to behave differently depending on whether it is used upstream or downstream in the supply chain. This also sheds light on the conditions under which such investment may be more (or less) beneficial. Key words: supply chain management; bullwhip effect; information technology; electronic markets; empirical operations; econometrics
RESEARCH NOTE INFORMATION TECHNOLOGY OUTSOURCING AND NON-IT OPERATING COSTS: AN EMPIRICAL INVESTIGATION 1
"... Does information technology outsourcing reduce non-IT operating costs? This study examines this question and also asks whether internal IT investments moderate the relationship between IT outsourcing and non-IT operating costs. Using a panel data set of approximately 300 U.S. firms from 1999 to 2003 ..."
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Does information technology outsourcing reduce non-IT operating costs? This study examines this question and also asks whether internal IT investments moderate the relationship between IT outsourcing and non-IT operating costs. Using a panel data set of approximately 300 U.S. firms from 1999 to 2003, we find that IT outsourcing has a significant negative association with firms ’ non-IT operating costs. However, this finding does not imply that firms should completely outsource their entire IT function. Our results suggest that firms benefit more in terms of reduction in non-IT operating costs when they also have higher levels of complementary investments in internal IT, especially IT labor. Investments in internal IT systems can make business processes more amenable to outsourcing, and complementary investments in internal IT staff can facilitate monitoring of vendor performance and coordination with vendors. We discuss the implications of these findings for further research and for practice.
© 2013 INFORMS The Effect of Information Technology–Enabled Flexibility on Formation and Market Value of Alliances
"... This study investigates the effect of information technology (IT) architecture flexibility on strategic alliance formation and firm value. We first examine the effect of three dimensions of IT architecture flexibility (open communication standards, cross-functional transparency, and modularity) on f ..."
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This study investigates the effect of information technology (IT) architecture flexibility on strategic alliance formation and firm value. We first examine the effect of three dimensions of IT architecture flexibility (open communication standards, cross-functional transparency, and modularity) on formation of three types of alliances (arm’s-length, collaborative, and joint-venture alliances, respectively). Then, we examine how capabilities in IT flexibility can enhance the value derived from alliances. Our sample includes data from 169 firms that are publicly listed in the United States and that span multiple industries. We find that adoption of open communication standards is associated with the formation of arm’s-length alliances, and modularity of IT architecture is associated with the formation of joint ventures. We also find that IT architecture flexibility enhances the value of arm’s-length, collaborative, and joint-venture alliances. The contribution of IT flexibility to value is greater in the case of collaborative alliances than in arm’s-length alliances. Taken together, these findings suggest that appropriate investments in IT can help to facilitate reconfiguration of resources and modification of processes in collaboration-intensive alliances.
Journal of Public Administration Research and Theory Advance Access published April 26, 2010 Misplaced Trust? Exploring the Structure of the E-Government-Citizen Trust Relationship
"... A growing body of research focuses on the relationship between e-government, the relatively new mode of citizen-to-government contact founded in information and communications technologies, and citizen trust in government. For many, including both academics and policy makers, e-government is seen as ..."
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A growing body of research focuses on the relationship between e-government, the relatively new mode of citizen-to-government contact founded in information and communications technologies, and citizen trust in government. For many, including both academics and policy makers, e-government is seen as a potentially transformational medium, a mode of contact that could dramatically improve citizen perceptions of government service delivery and possibly reverse the long-running decline in citizen trust in government. To date, however, the literature has left significant gaps in our understanding of the e-government-citizen trust relationship. This study intends to fill some of these gaps. Using a cross-sectional sample of 787 end users of US federal government services, data from the American Customer Satisfaction Index study, and structural equation modeling statistical techniques, this study explores the structure of the e-government-citizen trust relationship. Included in the model are factors influencing the decision to adopt e-government, as well as prior expectations, overall satisfaction, and outcomes including both confidence in the particular agency experienced and trust in the federal government overall. The findings suggest that although e-government
CENTRALITY ON BUSINESS INNOVATIVENESS IN BUYER-SUPPLIER NETWORKS
"... Several studies in the social networks literature suggest that more central firms in a given network will be more innovative, but the literature not considered how variation in network density might affect any innovative benefits of centrality. This paper draws from evolutionary economics arguments ..."
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Several studies in the social networks literature suggest that more central firms in a given network will be more innovative, but the literature not considered how variation in network density might affect any innovative benefits of centrality. This paper draws from evolutionary economics arguments to suggest that any benefits of centrality will decline as network density increases, because greater density creates tendencies toward local search that in turn limits firms ’ access to resources that arise outside a network. We use patenting data from almost 2,000 affiliates of more than 260 Taiwanese business groups operating from 1980 to 2000 to test the idea the firm operating centrality will have fewer innovative benefits as network operating density increases. Firms throughout the world maintain ties within networks of other organizations, with substantial variation both in the position of individual firms within a network and in the overall density of ties in different networks. Several studies in the social networks literature have found that firms with more central positions in a given network tend to be more innovative (Ahuja, 2000; Baum, Calabrese, and Silverman, 2000; Tsai, 2001), presumably because central positions offer opportunities to integrate resources from multiple sources in order to create novel goods and services. However, existing studies of how a firm’s network position affects its activities typically focus on single inter-firm networks (Provan,
