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Electronic reverse auctions (ERAs) are a controversial sourcing tool. While it is said to have many advantages to buyers, and even some to suppliers as well, it is also heavily criticised for damaging cooperative buyer–supplier relationships. It is often suggested that suppliers experience more disadvantages than advantages from the use of this tool and therefore many, if not all suppliers dislike ERAs. In this paper, we investigate whether all suppliers indeed dislike ERAs and we explore the relationships between supplier characteristics and supplier opinions of ERAs. We find that a small group of suppliers is actually positive about ERAs and that by far the strongest predictor of ERA opinions of a supplier representative is the supplier country.

The electronic reverse auction (ERA) first appeared in the mid-1990s and has established itself since as a standard item in the sourcing toolkit of many organisations (Beall et al., 2003; Jap, 2003). Despite its widespread use, the tool is not without controversy (Emiliani, 2005). Those who are in support of the tool have hailed it as a means for buyers to obtain lower prices, reduce sourcing cycle time, and make the sourcing process repeatable. Benefits for suppliers are said to include lower selling and customer acquisition costs, access to new markets and new customers, and increased market transparency (see e.g., Smart and Harrison, 2003; Smeltzer and Carr, 2003). Critics have argued that ERAs are detrimental for trust-based buyer–supplier relationships, and induce abuse and opportunistic behaviour by buyers. Furthermore, they are said to lead to long-term additional costs which offset much of the savings gained from an auction (e.g., Emiliani, 2005). While much of the literature about ERAs has emphasised the buyer perspective, there is a small but growing number of empirical studies that addresses the suppliers’ view on this tool (e.g., Carter et al., 2004; Emiliani and Stec, 2004; Jap, 2003). While some studies suggest that suppliers see ERAs as an opportunity for new business and a more transparent way of bidding than the traditional sealed bid (e.g., Smart and Harrison, 2003; Smeltzer and Carr, 2003), other studies find that suppliers generally view ERAs as a tool that increases buyer opportunism and damages buyer–supplier relationships (e.g., Emiliani and Stec, 2005; Tassabehji et al., 2006). All in all, there is evidence that some suppliers may value the transparency created in ERAs and the opportunities they represent, while others may see it as a threat, and as a tool that buyers use to increase and exploit a position of power in the relationship. The question that will be addressed in this paper is to what extent supplier opinions of ERAs vary, and if so, how such opinions are related to characteristics of the supply market, the supplier, and the individual. Specifically, we investigate whether opinions vary with factors such as supply market capacity, supplier country of origin, supplier size, supplier strategy, as well as factors such as respondent age, education, tenure, and position. The specific novel contribution of this paper is the focus on suppliers’ opinions on ERAs, a perspective that hitherto has solicited scant attention in empirical ERA research and has a crucial impact on ERA success. Evidence on the above issues will yield managerial insights for buying firms about when the use of an ERA is likely to meet resistance. When an ERA is used on a supplier base with unfavourable characteristics, this might be a waste of time and effort for a buying firm. Competitive and good-quality suppliers might not want to participate in the ERA because of their negative opinions about ERAs. In an analysis of over 14,000 ERAs organised by one buyer, Millet et al. (2004) show that supplier acceptance rates of ERA invitations can be as low as 11% (with a mean of 71.5%) and subsequent rates of attending the auction and bidding in the auction are on average 94% and 65.7%, respectively. Supplier participation is crucial for the success of an ERA (Hartley et al., 2006), and therefore it is instructive to understand the characteristics of suppliers that have an (un)favourable view on ERA's. Besides the managerial implications generated by this study, our research contributes to e-business research in general by clearly showing which characteristics of the supply market, the supplier, and the individual weigh profoundly in the supplier's perception about ERAs. Furthermore, our research gives impetus to further research and it shows which factors should be taken into account in the data sampling in future studies on ERAs. In the remainder of this paper we review the literature on supplier views on ERAs and we develop propositions about the relationship between supplier characteristics and ERA opinions. Subsequently, we present the methodology used in our paper, as well as sample characteristics. The data analysis is reported on three levels. First, we present descriptive information on the dependent and independent variables. Second, we perform bivariate analysis on the variables. Third, we investigate multivariate relationships between supplier characteristics and ERA opinions. We conclude the paper with a discussion of our findings.

Our paper sheds light on the seemingly conflicting contributions to the literature about the advantages and disadvantages of ERAs for suppliers. Papers that outline the advantages of ERAs for suppliers are mainly conceptual papers, while most empirical studies show that suppliers are very critical about ERAs. E-sourcing tools are part of the broader mix of communication media involved in e-procurement, which also includes e-coordination technologies, like for example online catalogues and electronic purchase-order systems and e-communities, such as e-marketplaces (Johnson and Klassen, 2005; Chang, 2007). It is notable that empirical studies on e-procurement focus either on developed countries (Davila et al., 2003; Batenburg, 2007) or on less developed economies (Oyelaran-Oyeyinka and Kaushalesh, 2006; Tatsis et al., 2006; Gunasekaran and Ngai, 2008). The latter research is inspired by the attention that was raised by global institutions such as UNCTAD and WIA on the digital divide that might be faced by developing countries in terms of internet usage and e-commerce adoption (UNCTAD, 2008; Howard, 2008). Our study, however, is not designed such that it can conclude anything on the presence or impact of such a digital divide, as all respondents in our survey (which was administered as an online survey) were e-enabled. Suppliers in developing economies which may suffer from a digital divide would have been excluded from our sample and response set. To our knowledge, there are no studies that systematically investigate and contrast perceptions on e-procurement tools across countries in different stages of economic development. With regard to supplier perceptions about ERAs, existing studies have almost exclusively surveyed suppliers from developed economies. Our survey results stem from a global sample of suppliers and clearly show that the country origin of a supplying firm is related to suppliers’ opinion about ERAs. This key finding suggests that existing studies, which are often based on respondents from one country, may be limited in possibilities for generalisation to suppliers from other countries, especially developing economies. Although the global sample of suppliers underlying this study represents a unique strength of the paper, a limitation lies in the fact that our sample firms were not selected at random. The supplier names and addresses come from one multinational's e-sourcing database, which may induce a bias towards particular types of suppliers in terms of quality, size, or geographic regions of interest to the buying firm. However, our sample does not only include suppliers with whom the buying firm has conducted ERAs, but also consists of companies identified by the buying firm as potential new sources. Replications of this study with different samples of suppliers are needed. This type of study could be enriched further by including measurement of the supplier's recent experiences with ERAs and their effect on supplier opinions. Future research could for instance measure the extent to which the supplier has experienced unethical ERA practices, opaque contract awarding processes at the end of an ERA, and changing product specifications after the business was won. Despite its limitations, this study has revealed a valuable set of factors that influence ERA opinions, with supplier country being a key factor of importance. Purchasing research as well as practice will need to adopt a more nuanced view towards the issue whether ERAs are to be seen purely as a threat or perhaps also an opportunity for suppliers. The findings with respect to characteristics on the individual level have important managerial implications. Buyers that want to employ an ERA as a sourcing tool, can take these insights into account when they target this initiative to the supplier organisation. Most resistance is to be expected from tenured, and presumably more traditional, sales representatives. Also supplying firms can use the insights generated by this study by making sure that the right people take care of ERA participation if that is desirable from a management point of view. An important implication for future research is that the function of the person filling out the survey form appears to matter for ERA opinions and attitudes. Future research should therefore control for respondent demographics including education, tenure, and function. Furthermore, our study shows that it is important to control for supplier country as well as for the competitive differentiation of a supplier.