An Examination of Embedded Supplier Information Utilization in Pre-Decision Phase Procurement and Opportunism in Sales Management
Abstract
AbstractIn this paper, we will address the question of why and how information from embedded suppliers is used during the solution development phase of organizational purchasing. We also will introduce a potential moderator of... [ view full abstract ]
Abstract
In this paper, we will address the question of why and how information from embedded suppliers is used during the solution development phase of organizational purchasing. We also will introduce a potential moderator of problem conceptualization between embedded suppliers and members of the buying center. Drawing on the strength of ties (and strength of weak ties) literature in the social network domain and the problem solving literature, we will develop a model of information utilization in the pre-decision stage of organizational buying. We will close with a profound discussion on ethical theory and social responsibility related to opportunism and ethical behavior in sales management.
Keywords: Supplier Embeddedness, Information Utilization, Organizational Buying, Problem Solving, Social Network Theory, Strength of Ties Theory, Ethics, Social Responsibility
An Examination of Embedded Supplier Information Utilization in Pre-Decision Phase Procurement and Opportunism in Sales Management
1.0 Supplier Embeddedness
The concept of relational embeddedness is derived from research in economics. For many years, economists assumed away the idea that individuals are influenced by social relationships in economic decision making. One school of economists began to point out that experience gained in transacting with certain parties explained a great deal more about future transaction behavior than the explanations provided by classic market mechanisms, such as price (Granovetter 1985). As parties begin to build a transaction history with each other, they are more likely to rely on each other for future transactions due to “trust and the abstention from opportunism” (Granovetter 1985, p.490). Parties who build these experience-based relationships are said to become embedded with one another.
2.0 Information Utilization
Defining information utilization seems like an intuitive task at first glance. However, as Menon and Varadarajan (1992) point out, information utilization is a multifaceted construct. Two key dimensions of information utilization seem inherently related to organizational buying; the extent of information utilization and types of information utilization. The extent of information utilization is fairly straightforward and has been conceptualized as the level or amount of information utilized by information recipients. The types of information utilization are slightly more complicated and have been conceptualized as instrumental and conceptual utilization (Caplan, Morrison, and Stambaugh 1975; Rich 1977). A more thorough review of these two types of information utilization is found below.
2.1 Instrumental Use
Research on information use in public policy making provides a detailed definition of instrumental use of information. Instrumental utilization of information refers to the use of information for specific tasks (Deshpande and Zaltman 1982; Menon and Varadarajan 1992; Moorman 1995; Rich 1977). An example of this type of use would be a buying center using information to create exact specifications for new assembly line equipment or using information to figure out how, exactly, a particular idea could be implemented in the firm. This perspective of information utilization is the most common in the marketing literature.
2.2 Conceptual Use
Conceptual use is typically defined as information used for general enlightenment (Beyer and Trice 1982; Deshpande and Zaltman 1982; Menon and Varadarajan 1992; Moorman 1995; Rich 1977). The buying center’s use of information in the pre-decision stage to gain an understanding of trends in the industry or to increase its general understanding of the latest technologies related to assembly line equipment would be an example of conceptual utilization. This definition of information use is widely overlooked in studies focusing on information use in marketing.
3.0 Supplier Embeddedness and Information Utilization
Relational embeddedness is synonymous with the idea of strong ties found in the social network literature. As researchers have sought to delineate strong and weak ties, they have often characterized strong ties as linkages between two or more nodes in a cluster that have strong levels of trust, reciprocity and indebtedness (Rindfleisch and Moorman 2001). Antecedents of these strong ties include frequency of interaction, stability of the relationship and cluster centrality (Brass 1995; Marsden and Campbell 1984). Based on these two streams of research, we define an embedded supplier as a supplier that frequently interacts with the buying center, has interacted with the buying center for an extended period of time, and that has many connections with different members of the buying center.
More specifically, the strength of ties theory has been used to explain information sharing among individuals found within a particular network (Rindfleisch and Moorman 2001). Essentially, information utilization is a function of perceived information quality and usefulness which is in turn derived from trust in the sender (Maltz and Kohli 1996; Moorman, Zaltman, and Deshpande 1992). Likewise, the closeness of the embedded supplier allows for much greater information flow which logically leads to higher levels of information utilization on the part of the buying center. Intuitively, individuals with strong ties are more likely to share information due to their frequent interactions and close interpersonal relationships (Frenzen and Nakamoto 1993; Hansen 1999; Uzzi 1996). As shown in Figure 1, members of the buying center are more likely to utilize information received from embedded suppliers due to higher levels of trust created by frequent interactions and relationship stability. Thus, a supplier’s embeddedness has a positive impact on the extent to which the buying center utilizes information received from that supplier in the pre-decision stage of organizational buying.
The Problem with Ethics
Ethical decision making plays a critical role for every individual in today’s business environment. The constant barrage of U.S. corruption in business, politics, and general society has led Americans to question the status of ethics and morality in the U.S. In fact, a 2011 Gallup poll revealed the dismal state of the public’s view of business people; the poll exposed that this group has been coined as one of the least trustworthy professions (Hartman, DesJardins, & MacDonald, 2018). Consequently, in the present post-trust era of business, leaders and employees alike face societal pressure for increased levels of transparency, harsher legal penalties, and higher codes of ethical expectations. Due to the plethora of corporate debacles, such as the 2013 JPMorgan Chase’s $13 billion settlement for suspicious mortgage transactions, that have plagued and impacted companies, employees, communities, and countless other stakeholders, it is incumbent upon business leaders to foster ethical, socially responsible work environments (McAdams, Dosanjh Zucker, Neslund, & Neslund, 2015). The challenge of navigating ethical behavior is important; yet, for those individuals working in intensely competitive professions, like the business arena, this challenge may be even more daunting.
Opportunism and Unethical Behavior in Sales Management
Business ethics emphasizes an objective set of ethical decision making standards for those working and operating within professional environments (Hartman, et al., 2018). Ethical behavior in businesses with a focus on sales management is imperative because the seller makes countless decisions, principally within problem frame and problem urgency contexts, that impact stakeholders in embedded supplier relationships. It is well-known that a strong connection within the buyer-seller relationship is paramount for and predictive of further growth and development of said relationships. Therein, the growth and development of the buyer-seller relationship may continue or halt based on opportunism and unethical behavior as well as calculative commitment and affective commitment.
For the purposes of this paper, opportunism is defined as “transgressions of the norms of a specific business relationship” while unethical behavior is determined as “transgressions of relational or societal norms of fairness and honesty” (Ganesan, Brown, Mariadoss, & Ho, 2010). Calculative commitment is founded on the desire of buyers and sellers to maintain their existing relationship. Indeed, it “ … is grounded on an ‘instrumental realization of the benefits of staying and the costs of leaving” (Ganesan, et al., 2010). In comparison, affective commitment is founded on emotions, or based on an emotive state and perceptions of “identification, loyalty, and affiliation” (Ganesan, etc, 2010). Highlighting the desired affective and calculative commitment, the following example depicts an optimal buyer-seller relationship between two parties at difference companies.
Authors
- Yvette Holmes (Alabama State University)
- Roscoe Hightower (Florida A&M University)
- DeShannon McDonald (Alabama A&M University)
- Phylicia Taylor (Jackson State University)
Topic Area
Topics: Public Sector, Social, and Ethical Issues - click here when done
Session
PS1 » Public Sector Issues (08:00 - Thursday, 5th October, West C)
Paper
EmbeddedSupplier_-_Paper_Proposal_for_Holmes__Hightower___McDonald_revised.pdf
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