Academic journal article Journal of Managerial Issues

The Role of Agent Negotiation Behaviors in Buyer-Supplier Relationships

Academic journal article Journal of Managerial Issues

The Role of Agent Negotiation Behaviors in Buyer-Supplier Relationships

Article excerpt

Opportunism and relationship continuance are behaviors that express themselves in several different buyer-supplier contexts (Conner and Prahalad, 1996; Morgan et al., 2007; Morgan and Hunt, 1994). How firms manage supplier relationships (e.g., choosing and monitoring suppliers, developing and dissolving relationships) is increasingly critical to firms' operational efficiency, product development, profitability and long-term prosperity, and is becoming a strategic issue in today's business landscape (Chatain and Zemsky, 2007; Dwyer et al., 1987; Good and Evans, 2001; Lee et al., 2007; McIvor et al., 2006). Over the last decade and a half, there have been a number of studies investigating the phenomena of opportunism and relationship continuance (e.g., Heide and John, 1992; Noordewier et al., 1990), but the vast majority of them view the issue from the perspective of the firms, the buyer-supplier dyad (e.g., Morgan et al., 2007; Paulraj and Chen, 2005). To our knowledge, very little work has been done to investigate what role the actual decision-making agents play in influencing opportunism and relationship continuance decisions in the buyer-supplier contexts. These agents may engage in dynamic processes embedded in their exchange relationships such as information exchange and conflict resolutions. Therefore, the agents' behaviors in these processes could make or break the relationships between firms whom the agents represent.

This study departs from the extant buyer-supplier relationship literature by empirically investigating the effects of agents' negotiation characteristics on opportunism and relationship continuance decisions in buyer-supplier relationships. The specific purpose of the study investigates the question, "How do agents' assertiveness and cooperativeness influence the opportunism and the tendency to continue in a buyer-supplier relationship, after controlling for firm-level factors including dependence and relational norms?"

This article is structured as follows. The next section entails a survey of the literature and develops corresponding hypotheses, followed by a description of the experimental design and reporting of the results. The Discussion section contains both general and managerial implications based on our results, and the article concludes with the Limitations and Conclusion section.

LITERATURE REVIEW AND HYPOTHESES

Relational Norms and Dependence

Relational norms may be described as the values shared among exchange partners regarding what is deemed appropriate behavior in a relationship (e.g., Heide and John, 1992).. When buyer-supplier relationships are characterized by high relational norms, exchange parties are more committed (Gundlach et al., 1995) and exhibit a long-term orientation (Ganesan, 1994), thus lowering future negotiation costs (Artz and Norman, 2002). Over the last two decades, closer supply chain relationships exhibited by high relational norms such as trust, collaboration, long-term relationship, and increased information-sharing have evolved in many industries to help firms respond to changes (Droge and Germain, 2000; Hoetker et al., 2007; Monczka et al., 1998; Sengun and Wasti, 2007; Whipple and Frankel, 2000). Relationships with low relational norms are characterized by distributive (Walton and McKersie, 1965) or aggressive (Ganesan, 1993) bargaining behaviors. The use of legal contracts governs these relationships, and aggressive bargaining tactics are used to resolve disagreements. In short, high relational norm relationships may be characterized as partnerial or cooperative, while low relational norm relationships tend to be "arm's length" or competitive.

In the socio-economic literature, Hirschman (1970) and Helper and Sako (1995) use a continuum of firm relationship styles to explain differences between adversarial and partnerial firm relations. The adversarial form of buyer-supplier relationship is called an exit relationship since in the presence of relationship stressors, the tendency to exit the relationship agreement is high. …

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