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The influencing factors on preferential resource allocation in a natural factor market characterized by scarcity

Dermann, D.A.C. (2017) The influencing factors on preferential resource allocation in a natural factor market characterized by scarcity.

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Abstract:The field of strategic supply chain management has shown that buying firms can obtain a competitive advantage on a scarce factor market by convincing the suppliers to sell their scarce resources to them. If the buying firm receives more of the input materials, then its competitors receive less and therefore the buying firm’s output is larger allowing them to sell more products. It is not known to literature yet on what basis the suppliers decide to whom they sell in a scarce market. Therefore, purchasers lack a set of factors that they can use to convince the supplier to sell the scarce resources to them. Factor market literature lacks an explanation of why buying firms perform heterogeneously even though they have the same supplier base. Previous work has failed to address the problem from the suppliers’ point of view. This study takes the framework of supplier value theory to understand what suppliers value in buyers and what makes them decide which of the buyers to sell to. To determine those factors, this article reports the results of a multiple case study on the Austrian timber market. The Austrian timber market is a scarce natural factor market, where suppliers have a choice who to sell to. The multiple case study was conducted as seven semi-structured interviews. The interview questions are based on previous research on supplier value factors. The study reveals that there are differences between firm sizes in the decision making process. It also shows that measurement accuracy and market price stability build trust, which evolves into long-term relationships with suppliers. Suppliers sell their scarce resources more willingly to buyers with long-term relationships. Hence, this study contributes to literature by showing that supplier value theory is a better explanation for the decision making process on a scarce market than factor market theory. Furthermore, it impacts strategic purchasing by giving purchasing managers a set of factors that are important to suppliers that need to be satisfied in order to obtain scarce resources.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:70 social sciences in general, 83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/72103
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