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.
Keywords
Acknowledgements
The researchers would like to thank the Acquisition Research Program for their financial support of this research. Received 19 February 2013 Revised 10 June 2013 8 October 2013 9 December 2013 9 January 2013 Accepted 13 January 2014
Citation
G. Hawkins, T., S. Randall, W., V. Coyne, A. and H. Baitalmal, M. (2014), "Sustainable integrity: how reverse auctions can benefit suppliers in emerging markets", Supply Chain Management, Vol. 19 No. 2, pp. 126-141. https://doi.org/10.1108/SCM-06-2013-0184
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited