Purchasing professional services: A transaction cost view of the antecedents and consequences of purchasing formalization

Pemer, Frida; Werr, Andreas; Bianchi, Mattia

doi:10.1016/j.indmarman.2014.04.009

Cited by 41 publications

(37 citation statements)

References 77 publications

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“…Management consultants also play an increasingly central role in organizations, providing strategically important knowledge and innovation, and large sums are spent on their services each year (FEACO, ). Skillful purchasing of management consulting services has therefore become important in relation to organizations' competitive advantage (Pemer et al., ). However, the procurement of management consulting services has traditionally been performed by senior client managers without the involvement of purchasing professionals (Sieweke et al., ).…”

Section: Methodsmentioning

confidence: 99%

“…Existing research has shown that, although using formalized PSM practices is relatively well established for goods and simpler services such as cleaning and catering, the purchasing of complex and knowledge‐intensive services proves more difficult (Pemer, Werr & Bianchi, ). One explanation for this is that indirect spend, of which knowledge‐intensive services are particularly illuminating examples (Eisenhardt & Graebner, ), is characterized by fragmentation, maverick buying, and long‐term relations (Cox et al., ).…”

Section: Introductionmentioning

confidence: 99%

“…Traditionally, purchases of knowledge‐intensive services have been made by individual managers, using decentralized and relational purchasing practices (Axelsson & Wynstra, ) to hire professionals they know well and trust (David, Sine & Haveman, ). Recently, however, a trend toward increased formalization (e.g., implementing preferred suppliers, frame agreements, standardized purchasing procedures) of these purchases has emerged (Cox et al., ; Pemer et al., ; Sieweke, Birkner & Mohe, ). The background to this trend is the stronger focus in organizations on short‐term shareholder values, transparency, and cost control (Bergh & Gibbons, ).…”

Section: Introductionmentioning

confidence: 99%

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Purchasing Policy or Purchasing Police? The Influence of Institutional Logics and Power on Responses to Purchasing Formalization

Pemer

Skjølsvik

2016

J Supply Chain Manag

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Seeking to benefit from higher levels of purchasing maturity, many organizations strive to formalize their purchasing practices. Why these practices are not adopted by certain organizations or for certain types of purchases is less well understood, however. It has been argued that the purchasing of knowledge-intensive services is particularly difficult to formalize, but an in-depth understanding of the inter-and intra-organizational dynamics influencing this process is lacking. This study contributes to the purchasing and supply management literature by providing a finegrained understanding of how actors respond to formalization initiatives. Building on an exploratory interview methodology and using institutional logic and power theory as foundations, we show that formalization initiatives lead to institutional complexity and conflicts. Sets of strategies and counterstrategies for how to deal with the complexity and conflicts are identified, and relational power is found to moderate which strategy is used by the actors. Based on the empirical findings, a conceptual model is developed to describe the response process.Initiatives to formalize relational purchases break the flow of stability (Weick, 1995) in organizations, because they challenge well-established practices and norms. The actors involved need to make sense of the new situation and decide on an appropriate response. As previous research has illustrated, perceptions of

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Purchasing Policy or Purchasing Police? The Influence of Institutional Logics and Power on Responses to Purchasing Formalization

Pemer

Skjølsvik

2016

J Supply Chain Manag

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“…The focus on relationship‐building as an object of analysis has also been established beyond doubt, a unit of analysis that is much more comprehensive and detailed and in stark contrast with the notion of a mere transaction as the unit of analysis in B2B interactions. However, transaction research is still being conducted, especially from the perspective on how more transactions impact relationships (Pemer et al., ; Wallman, ).…”

Section: From Transactions To Relationships: a Paradigm Shiftmentioning

confidence: 99%

B2B: A Paradigm Shift from Economic Exchange to Behavioral Theory: A Quest for Better Explanations and Predictions

LaPlaca¹,

Silva

2016

Psychology and Marketing

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The development of industrial marketing theory has been largely characterized by descriptive approaches in the scrutiny of B2B marketing phenomena. In its pursuit for scientific legitimacy and credibility to academics and practitioners alike, research into B2B relationships as a subject of scientific enquiry will need to seriously engage into what can be termed a true paradigm shift, one that advances discovery in this area from sheer descriptive analysis and reporting to the development of explanatory schemata and theoretical frameworks of a kind that allow for more accurate prediction of underlying B2B phenomena. In doing so, theoreticians and practitioners alike will be better equipped to understand both current and emerging issues at hand as well as their implications to organizations across any geography, cultural context, or business situation. Should this be attained with some degree of success, it will mean a reduction in ambiguity accruing to the decision making of individuals in organizations, and thus a significant contribution to the overriding objective of corporate strategic planning and correspondent resource allocation.

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“…An important precursor to the formation of interfirm relationships is the selection of transaction partners. In the case of buyer–supplier relationships, partner selection may be centralized (e.g., with business units required to buy from company‐designated suppliers), or decentralized (e.g., with business units given the autonomy to select a supplier) (McCabe ; Sieweke, Birkner, and Mohe ; Pemer, Werr, and Bianchi ) . We use motivated reasoning theory (Kunda ) to hypothesize that having the autonomy to select suppliers will have a positive effect on the buyer's initial trust, all else equal.…”

Section: Introductionmentioning

confidence: 99%

Getting to Know You: Trust Formation in New Interfirm Relationships and the Consequences for Investments in Management Control and the Collaboration

Anderson

Chang

Cheng

et al. 2017

Contemporary Accting Res

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Trust is often posited to substitute for management control in interfirm transactions. However, this raises questions of how trust arises in new relationships, and whether trust that is not based on prior experience transacting together is sufficient to persuade managers to forgo investments in management controls. We use an experiment to test whether two features of the early stage of an interfirm relationship influence a buyer's initial trust in a supplier and have consequences for subsequent investments in management controls and in the collaboration. These two features are the autonomy of the buyer's manager to choose a supplier (i.e., delegation of decision-making authority) and the supplier's willingness to share information with the buyer. We find that the buyer manager's initial trust in the supplier is associated positively with both the autonomy to choose the supplier and the supplier's willingness to share information. Information content and supplier characteristics are held constant, so these results are novel and distinct from prior studies of the antecedents of trust. We find that higher initial trust is associated with reduced expenditures for management controls and increased investments in the collaboration. Thus, we conclude that delegation of decisionmaking authority and supplier information-sharing behavior in the early stages of a relationship influence the formation of initial trust, which has real consequences for investments in management control and in the collaboration. *Accepted by Alan Webb. We thank Alan Webb, the two anonymous referees, exp erience visant a d eterminer si deux caract eristiques des pr emices d'une relation intersoci et es influent sur la confiance initiale d'un acheteur dans un fournisseur et ont des r epercussions sur l'investissement ult erieur dans les contrôles de gestion et la collaboration. Ces deux caract eristiques sont l'autonomie du gestionnaire de l'acheteur dans le choix d'un fournisseur (c'est-a-dire la d el egation du pouvoir d ecisionnel) et la volont e du fournisseur de partager l'information. Les auteures constatent que la confiance initiale du gestionnaire de l'acheteur a l'endroit du fournisseur affiche un lien positif avec l'autonomie dans le choix du fournisseur de même qu'avec la volont e du fournisseur de partager l'information. Le contenu en information et les caract eristiques du fournisseur sont maintenus constants, de sorte que ces r esultats sont in edits et distincts de ceux des etudes ant erieures sur les pr ealables a la confiance. Les auteures constatent qu'une plus grande confiance initiale est associ ee a une r eduction des d epenses aff erentes aux contrôles de gestion et a une hausse de l'investissement dans la collaboration. Elles en concluent que la d el egation du pouvoir d ecisionnel et le comportement de partage de l'information du fournisseur aux premiers stades de la relation influent sur la formation initiale de liens de confiance, ce qui a de v eritables retomb ees sur l'investissement dans les contrôles de gestion et dan...

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Purchasing professional services: A transaction cost view of the antecedents and consequences of purchasing formalization

Cited by 41 publications

References 77 publications

Purchasing Policy or Purchasing Police? The Influence of Institutional Logics and Power on Responses to Purchasing Formalization

Purchasing Policy or Purchasing Police? The Influence of Institutional Logics and Power on Responses to Purchasing Formalization

B2B: A Paradigm Shift from Economic Exchange to Behavioral Theory: A Quest for Better Explanations and Predictions

Getting to Know You: Trust Formation in New Interfirm Relationships and the Consequences for Investments in Management Control and the Collaboration

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