Academic journal article International Journal of Purchasing and Materials Management

Is There Such a Thing as a Free Lunch?

Academic journal article International Journal of Purchasing and Materials Management

Is There Such a Thing as a Free Lunch?

Article excerpt

BACKGROUND FOR THE STUDY

The practice of a salesperson treating a purchaser to a "business lunch" is and always has been a common business practice. Research has indicated that both purchasing and marketing people believe that the practice is a generally acceptable form of business conduct.[1] Specifically, recent studies[2] have indicated that among purchasing personnel, lunches were the most frequently offered and accepted supplier favor.

Business practices involving close semi-social relationships, such as the business lunch, appear to be important to the conduct of effective buyer-seller relationships.[3] Underlying the concepts of close buyer-supplier relationships and strategic alliances between firms is the implication that relationships between firms will extend beyond arm's-length business exchanges to ties based on personal trust and respect.[4] However, an underlying principle of purchasing practice, advocated by the National Association of Purchasing Management (NAPM), is the avoidance of situations that might influence, or even appear to influence, purchasing decisions. This is particularly emphasized where gratuities are involved.[5]

In practice, purchasing personnel believe that allowing personalities to influence the buying/selling transaction is one of eight problem situations that can be particularly troublesome.[6] The offer or acceptance of free gifts, meals, and trips is also placed in this problem category by purchasing participants in the same study. Given the complexity of these concepts, the point at which relationship building crosses the line and becomes a conflict of interest has become more difficult to discern.[7]

The increasing conflict in perception of the business lunch as an ethical practice is indicated in a 1990 study, in which 83 percent of the buyers were offered lunches by suppliers, but only 68 percent of these buyers found this practice to be acceptable.[8] Sales representatives, on the other hand, have expressed less ethical concern about the practice of giving or accepting gifts and lunches than have purchasing professionals.[9] Moreover, many organizations restrict or prohibit their purchasing personnel from accepting a supplier's offer of lunch, but allow and even encourage their own sales personnel to take customers to lunch, leading to an almost schizophrenic attitude toward this practice within the same organization.[10]

Research indicates that in the future there will be increasing pressure for firms to demonstrate a sense of social responsibility and an awareness of ethical problems. Clearly, this suggests a need to review sales techniques including gift giving, business lunches, and entertainment.[11]

Given the differences in perceptions and inconsistent policies, coupled with the widespread participation in this practice, the authors undertook the present study to examine circumstances affecting the ethics-based attitudes toward and purposes served by the business lunch. The study attempts to determine the scenarios in which purchasing and sales personnel consider a free lunch to be ethically acceptable - and, conversely, whether there are conditions or circumstances that would create an ethical conflict. Finally, the study examines the business purposes accomplished by the business lunch, as perceived by both purchasers and suppliers.

HOW THE STUDY WAS CONDUCTED

Five hundred purchasing professionals and 500 sales representatives were selected randomly from a nationwide professional mailing list (for industrial purchasing and sales people) obtained from a major firm in this business. These potential participants were each sent a copy of the survey instrument, along with a cover letter explaining the research project, defining the terms used in the study; and requesting their participation in the study.

A preaddressed postcard was included so respondents could request an executive summary of the results of the survey. …

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