Tensions in buyer-supplier relationships in the public sector

Bourbita, Becem (2017) Tensions in buyer-supplier relationships in the public sector.

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Abstract:Social exchange theory suggest that when firms repeatedly interact with each other with the expectation that their interactions will result in a reward. However, social exchange mechanisms in a public procurement environment seem to be limited as public organizations have to deal with European public procurement legislation. As relational norms in public procurement are difficult to establish, it can be argued that low relational norms form a source for opportunistic behaviour between public organizations and their suppliers. In addition, literature on public procurement suggests that decisions made by procurers have a significant influence on buyer-supplier relationships. Indeed, when these decisions affect the business of suppliers, it may negatively influence the buyer-supplier relationship, which can eventually have an impact on buyer performance. From a strategic perspective, buyers and suppliers cooperate to create value, while at the same time compete in order to appropriate the largest part of the value share, which may also be a potential driver of tension. These mechanisms together suggest that buyer-supplier relationship are highly difficult to manage and may form potential sources of tensions in buyer-supplier relationships in the public sector. This study focusses on the identification of drivers of tensions between public procurers and suppliers by conducting an in-depth case study of a buyer-supplier relationship in the public sector. This study’s contributions are threefold. First, it contributes to social exchange theory by examining the development of relational norms and mutual expectations in a buyer-supplier relationship in the public sector. Second, this study contributes to public procurement literature by focussing on the influence of decisions in public procurement procedures on the relationship between public organizations and their suppliers. Third, as buyer-supplier relationships in the public sector consist of both cooperative and competitive elements, this study is approached from a vertical coopetition perspective. Moreover, this provides new perspectives on vertical coopetition by approaching buyer-supplier relationships in the public sector from a coopetition perspective. Results indicate that the public procurement environment is characterised by low relational norms, which form a driver for opportunistic behaviour and tensions in buyer-suppliers. In addition, decisions regarding the execution of tender procedures seem to have a significant influence on the development of tensions in buyer-supplier relationships. Finally, results suggest that when buyers and suppliers simultaneously engage in cooperative and competitive activities, it forms a source of tensions that can negatively influence the buyer-supplier relationship if proper management is absent.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/71910
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