AN EMPIRICAL EXAMINATION OF REVERSE AUCTION APPROPRIATENESS IN B2B SOURCE SELECTION

Abstract

Electronic reverse auctions (e‐RAs) are receiving attention as an effective strategy for reducing the price of purchased goods and services. To optimize their use, sourcing professionals will need to match firm requirements to market characteristics and supplier capabilities through the application of optimal sourcing strategies. To date, explanations of why sourcing managers decide to utilize an e‐RA strategy are incomplete. This study relies upon strategic sourcing concepts coupled with extant research on e‐RA use to develop a conceptual model of antecedents to the perceived appropriateness of e‐RA usage. The model is tested and supported via structural equation modeling. Findings demonstrate that a sourcing professional's perception as to the appropriateness of using an e‐RA for sourcing a particular requirement is influenced by (1) the specifiability of the requirement (2) supplier competition, (3) leadership influence, and (4) a price‐based selection criterion. Further, a requirement with higher specifiability was found to increase competition in an e‐RA bidding event. Contributions to theory, practice, and future research directions are identified.

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