Managing Digital Bonds in the Buyer-Supplier Relationships

Managing Digital Bonds in the Buyer-Supplier Relationships

Jari Salo (Oulu Business School, Finland), Giuseppe Pedeliento (University of Bergamo, Italy) and Robert Wendelin (Scania, Sweden)
Copyright: © 2015 |Pages: 22
DOI: 10.4018/978-1-4666-8459-1.ch006
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Abstract

Among the multiple forms of bonding which can help companies to build and maintain buyer-supplier relationships, digital bonds, i.e. ties between an industrial buyers and suppliers formed when the IT systems of the parties are shared and integrated, are increasingly recognized as a strategic mean of customer retention. Despite several studies have unveiled which factors enable and constrain the companies' adoption of IT systems, we still have limited knowledge of how different types of digital bonds can be strategically managed. In this chapter we first provide a digital bond matrix in which four different types of digital bonds are identified. Then the proposed matrix is empirically validated by analyzing four different case studies representative of each digital bond identified. Finally, the matrix is applied as a device to inform strategic actions and decisions that can/should be undertaken to improve firms' digital bonds portfolio.
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Introduction

Buyer-supplier relationships are a quasi-exchange mode between markets and hierarchies (Williamson, 1975) which are generally assumed to be cooperative and long-lasting (Morgan & Hunt, 1994). This research adopts an interactive perspective of buyer-supplier relationships where different types of bonds and bonding behavior have been identified and studied ((Hammarkvist, Håkansson, & Mattsson, 1982; Wilson & Mummalaneni, 1986; Johanson & Mattsson, 1987; Möller & Wilson 1995; Liljander & Strandvik, 1995; Wendelin, 2004; Salo & Wendelin 2013).

Bonding in industrial marketing is generally described as a gradually evolving process were two firms are tied together overtime (Geiger, Durand, Saab, Kleinaltenkamp, Baxter, & Lee, 2012). The degree of the tie is dependent on parties involved, relationship characteristics, existing bonds and contextual elements (Wendelin, 2011).

Among the multiple forms of bonding which can help companies in building, maintaining and developing buyer-supplier relationships, this research focuses on digital bonds (Salo & Wendelin, 2013), i.e. ties between an industrial buyer and an industrial supplier which are formed when the internal IT systems of the parties in a relationship are shared and integrated to form an inter-organizational system that enables and/or improves information exchange and transactions. In order for a digital bond to be formed in buyer-supplier relationships, a mutual investment of both parties involved to crate a shared IT architecture is required, as well as the usage of the IT system for business purposes.

Although the role that IT plays in business relationships is attracting an increasing scholar attention in multiple disciplines, such as industrial marketing (Reid & Plank, 2000; Sheth, 2007; Schubert &

Legner, 2011; Janita & Miranda, 2013; Makkonen & Vuori, 2014), information systems (Rai & Tang, 2010; Rai, Pavlou, Im, & Du, 2012), operation research (Golicic, Davis, McCarthy, & Mentzer, 2002; Devaraj, Krajewski, & Wei, 2007; Sodero, Rabinovich, & Sinha, 2013) and supply chain management (Barua, Konana, Whinston, & Yin, 2004; Kärkkäinen, Laukkanen, Sarpola, & Kemppainen, 2007; Kim, Cavusgil, & Calantone, 2006) the major part of the entries available to date are mostly aimed at evaluating the impact of single isolated technologies on buyer-supplier relationships (Salo, 2006). Exemplars of such are electronic data interchange (EDI) (Stern & Kaufmann, 1985; Naudé, Holland, & Sudbury, 2000), internet based EDI (Angeles, 2000), websites (Leong, Ewing, & Pitt, 2002; Perry & Bodkin, 2002), electronic marketplaces (Grewal, Chakravarty, & Saini, 2010; Janita & Miranda, 2013), electronic auctions (Jap, 2002; Jap & Haruvy, 2008), extranets (Vlosky, Fontenot, & Blalock, 2000) and – just recently - mobile technologies (Yang & Järvenpää, 2005; Salo, 2012; Pan, Nam, Ogara, & Lee, 2013) and social media (Salo et al., 2013).

As a result, most of these studies are generally aimed at identifying which factors (endogenous and/or exogenous) enable and constrain the companies’ adoption of the technology investigated.

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