Supplier‐Switching Inertia and Competitive Asymmetry: A Demand‐Side Perspective*

Abstract

Building on strategic management, operations strategy, and supplier management literatures, this article presents a framework for supplier selection from the demand-side perspective. We highlight the role of a purchasing firm's switching inertia in the supplierselection process and demonstrate the usefulness of our framework for the industrial automation industry. Empirical data for this study was collected from 171 corporate and plant-level executives in pharmaceutical, chemical, and paper-and-pulp manufacturing industries in the United States. A series of Web-based individually customized discrete choice experiments asked the respondents to either switch to the new supplier or stay with the existing supplier. Based on the results of these experiments, we demonstrate the existence of switching inertia in the supplier-selection process and discuss the managerial implications for incumbent and challenger supplier firms.

Issues in the use of ratings-based versus choice-based conjoint analysis in operations management research

“…This research method also shed light on issues related to the timing of the next generation of high technology products (Kim and Srinivasan, 2006). Additionally, conjoint analysis has been used to assess tradeoffs and switching inertia associated with supplier selection (Verma and Pullman, 1998;Li et al, 2006). Other applications have focused on optimal service design considering operational difficulty (Verma et al, 2001) and operations capacity (Pullman and Moore, 1999;Goodale et al, 2003).…”

Factors influencing Japanese auto suppliers’ predictions about the future of new technologies – An exploratory study of electric vehicles

“…This leads to a strong affinity for existing relationships predicated on internal combustion vehicles and a tendency to resist the discontinuation of the existing relationships with automakers (Kim et al, 2006;Li et al, 2006). These tendencies counter the development of predictions favouring the uptake of emerging technologies.…”

Considering Technological Impacts When Selecting Food Suppliers: Comparing Retailers' Buying Behavior in the United States and Europe

“…Reliability on the part of the vendor in providing a more consistent supply is an important factor in a food retailer's assessment of which suppliers to use. As research findings consistently show, product quality (performance criterion), price (economic criterion), delivery reliability (adaptive criterion), and customer preference (integrative criterion) are the most important attributes considered in the comparative evaluation and choice of a supplier (Braglia and Petroni 2000;Li et al 2006;Narasimhan, Talluri, and Mahapatra 2006).…”

“…For example, Braglia and Petroni (2000) suggested that in selecting suppliers, evaluations of predetermined choice criteria and comparisons among qualifying suppliers should be examined. Thus, the supplier selection process involves multi-attribute levels (Li et al 2006). Fundamental concepts like establishing mutual trust (Dawson and Shaw 1989); enhancing service quality (de Ruyter, Wetzels, and Lemmink 1996); pricing (Johan and Gripsrud 1981); and reducing risk (McGoldrik and Douglas 1983) are important in retailers' vendor selection decisions.…”