Purchasing Managers' Perceived Bias in Supplier‐Selected Referrals

Abstract

In evaluating suppliers in complex purchasing decisions involving customized solutions, purchasing managers must judge the capabilities suppliers have to provide the solutions, a judgment that often includes considerable uncertainty. To reduce this uncertainty, suppliers often ask their existing customers to be reference customers and give a referral to purchasing managers — that is, suppliers and purchasing managers consider a supplier‐selected referral as a source of information. However, in contrast to other information sources, reference customers are selected by suppliers, not by purchasing managers; thus, purchasing managers may perceive a bias in the supplier‐selected referral. We study the antecedents of purchasing managers' perceived bias with a mixed‐design experiment with purchasing managers as respondents. We find that the greater the experience of purchasing managers, the less the bias in the referral they perceive. We also find that reference customers can reduce purchasing managers' perceived bias in the supplier‐selected referral by giving a referral that has some negative information in an otherwise positive referral.

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