18/09/06: Ulad Radkevitch: Portfolios of Exchange Relationships

Firms face distinct problems and opportunities when procuring IT resources. Whereas previous work focused at the firm level or the buyer-supplier dyad, the present study addresses the portfolios of the buyer's exchange relationships with suppliers at an online marketplace for IT services. We draw on social network theory to measure portfolios as buyer's ego network. Using clustering techniques, we empirically derive a taxonomy of portfolios of small firms' buying IT services and analyze cluster antecedents and outcomes.

Our investigation reveals four clusters of buyer's ego networks: transactional buyers, relational buyers, small diversifiers and large diversifiers. Each of these clusters has a distinct and different mix of long-term and short-term relationships with selected suppliers. Although reverse auctions are found to be associated with a short-term relationships and negotiations support long-term relationships, buyers in different clusters use the two mechanisms in combination to a different extent. Buyers in relational cluster enjoy marginally higher satisfaction with supplier performance than buyer in other clusters.