Sustainable integrity: how reverse auctions can benefit suppliers in emerging markets

Abstract

Purpose – The growth of international business persists, particularly in emerging economies. Business in these developing nations is heavily influenced by national culture. In the Middle East and North Africa (MENA) region, buyer-supplier relationships are often negatively influenced by “wasta” – a term associated with power, influence, connection and corruption. Technology-enhanced business processes diffuse as globalization increases. The purpose of this research was to explore whether and, if so, how electronic reverse auction (e-RA) use might be effective in a MENA national culture. Design/methodology/approach – The authors use a case study method based on data collected from 13 interviews with supply chain members extending beyond the dyad to explain: why Middle Eastern bidders participated in an e-RA; the nature of a unique phenomenon in Middle Eastern culture called wasta; and (3) how wasta, e-RA use, and procurement integrity interact in a sustainable way. Findings – This case study extends knowledge in the area of global supply chain management by identifying new opportunities and providing a mechanism to ameliorate risks. It demonstrated that e-RAs can ameliorate some of the deleterious effects of wasta by increasing transparency and procedural fairness associated with MENA-based buyer-supplier relationships. Originality/value – E-RAs have been criticized as being unfair to suppliers. This study unveils cultural idiosyncrasies where e-RAs overcome a moral hazard associated with MENA buyer-supplier relationships and become a supplier's favored sourcing medium. As economic growth in MENA is expected to outpace all other regions, this study has implications for understanding how regionally specific cultural variables impact B2B sourcing strategy adoption and outcomes.

An empirical study of electronic reverse auction project outcomes

“…Finally, a promising direction for future research is the examination of the relationships of satisfaction with continued ERA use intention and actual ERA use from both the buyer and supplier perspective (Bhattacherjee 2001, Emiliani 2005, Hawkins et al 2010, 2014, which would further increase our understanding of ERA project satisfaction.…”

Challenges of Electronic Reverse Auctions in Construction Industry—A Review

“…Kumar and Maher (2008) claim that eRA provides benefits to both buyers and sellers; however, buyers can benefit more. Apart from price savings, time savings and enhanced transparency of the purchasing process (Hawkins et al 2014;Standaert et al 2015; are generally considered as the other main benefits. On the other hand, the unwillingness of suppliers to participate, harm of Business-to-business (B2B) relationships, acquisition costs as well as IT requirements and skills, e.g., e-readiness, are the most often mentioned barriers for implementing eRA (Amelinckx et al 2008;Caniëls and Raaij 2009;Wamuziri 2009;Mora Cortez and Johnston 2019).…”

“…To not get the impression that eRA contributes just to the buyers, some benefits for suppliers should also be mentioned. These benefits can be summed up in time savings, equal conditions to getting into the business (crucial in countries with a higher level of corruption), and discovering the real market price for items being purchased (Schoenherr and Mabert 2007;Hawkins et al 2014;Standaert et al 2015).…”

Electronic Reverse Auctions: Spawning Procurement Innovation in the Context of Arab Culture

“…Based upon our experiences in Kuwait, an eRA can be an appropriate sourcing tool in the MENA region since suppliers were highly satisfied by the eRA's inherent transparency and procedural fairness (Hawkins, et al, 2014). Procedural fairness afforded suppliers the ability to compete on the merits of their quality and price (i.e., efficiency) rather than on social influence, power, and connections (i.e., wasta).…”