Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangeme
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Supplier
and
Examination
Uncertainty,
of
Pacific
Assurances:
Rim
Buyer
An
Purchasing Arrangemrents KirtiSawhneyCelly*
UNIVERSITY OF CALIFORNIA-IRVINE
RobertE. Spekman** UNIVERSITY OF VIRGINIA
JohnW. Kamauf?** PPICEWATERHOUSE COOPERS CONSULTING
We use the metaphor of the mutual assurance game to develop the notion that overseas suppliers may proactively manage uncertainty by making customized investments to serve their buyers. this game-theoretic Using conceptualization as a complement to the transactions cost analysis notion of credible commitments, we argue that such investments serve as assurances of commitment to the international buyer. The hypotheses are tested using data collected in a survey of U.S. purchasing managers regarding their relationships with their Pacific Rim suppliers. Consistent with our hypotheses, BACKGROUND
T he rapid proliferation
of interna1 tional sourcing arrangements as companies search for cost and technical
our primary results indicate that suppliers' relationship-specific investments are greater when technological uncertainty is high and buyers value supplier responsiveness. Further, our results suggest that relationship stability and buyer information sharing are greater when supplier relationinvestments are ship-specific greater. These results provide some support for our argument that in the face of technological uncertainty, overseas suppliers may unilaterally commit to their buyers in attempts to obtain reciprocal benefits that help them manage external uncertainty.
advantages in the Pacific Rim countries has captured the interest of both the academic literature and the business press. Research focused on reasons for
JOURNAL OF INTERNATIONAL BUSINESS STUDIES, 30, 2 (SECONDQUARTER1999): 297-316.
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TECHNOLOGY UNCERTAINTY, BUYER PREFERENCES AND SUPPLIER ASSURANCES
global sourcing (James and Weidenbaum, 1993; Moxon, 1975; Swamidass,
1993) suggests that mature U.S. multinationals use foreign affiliates for technology development (Mansfield and Romeo, 1984), and source from multiple locations (Kotabe, 1990). Research on the organizational contribution of sourcing strategies (e.g., Spekman, Kamauff and Salmond, 1994) has demonstrated a positive relationship between international sourcing and performance (Kotabe,1990; Kotabe and Swan, 1994). Besides its increasing incidence, substantial anecdotal evidence attests to the changing scope of international buyersupplier relationships. Many companies have reduced their supplier base, shifting from a purchasing philosophy of multiple, arms-length, price-based transactional supply relationships to a few, relational, strategic supply relationships in which suppliers are integral to the firm's overall competitive posture (Spekman, 1988; Watts, Kim and Hahn, 1992). The scope has changed to reflect enhanced supplier involvement in all phases of the production process
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