Authors: Aino Halinen; Noémi Piricz; Päivi Jokela
In this study we examine how suppliers and customers perceive fairness in competitive bidding and contract drafting process, as well as assess their effects on relationship continuity in the chosen context of the Finnish and Hungarian metal, machinery, and automotive industry. The study draws on the IMP view on relationships and relationship marketing as well as grounding the fairness concept in the equity theory. The study methodology is qualitative and both customer and supplier views are examined. The key findings of the study indicate that the relationship parties’ perceptions of fairness differ concerning the processes that are examined, and suppliers tend to seek for more distributive and procedural fairness. In competitive bidding, the emphasis on low price leads lacking distributive fairness. Conducting a dialogue on the value offered by the supplier contributes to its perceptions of procedural fairness. Competitive bidding that takes place at high frequency interrupts the relationship continuity. However, for the customers, the recurring rounds of bidding are vital to ensure their competitiveness, whereas suppliers see that it obstructs their future-oriented development and the scope of cooperation. In contracts, product guarantees and payment terms in contracts prompt perceptions of distributive fairness. Procedural fairness, which is manifested through the possibilities of the suppliers to influence the contractual terms are often limited but not completely missing. Although the relationships are seldom a clear continuum, the breaks in cooperation may be temporary and even the varying level of fairness does not stop companies from participating in new rounds of bidding. However, even when relationships parties have previous history, benefits associated with long-term relationships are not always realized.
Journal: n.a. (n.a. – n.a.)
Web Address: n.a.
Publish Year: 2016
Conference: Poznan, Poland (2016)