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Buyer Intention To Use Internet-Enabled Reverse Auctions: The Role Of Asset Specificity, Product Specialization, And Non-Contractibility

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Executive Summary

Information technology enabled exchanges in electronic markets have significant implications for buyer - supplier relationships. Building on studies that emphasize the role of intangible assets in interorganizational relationships, this paper argues that buyers are less likely to use reverse auctions for supplier relationships involving a high degree of non-contractibility. The argument complements traditional transaction cost economics arguments that focus on the impact of asset specificity and product specialization. The authors identify six dimensions of non-contractibility - quality, supplier technological investments, information exchange, responsiveness, trust, and flexibility - which encompass taskbased and interaction-based non-contractibility. The paper also reveals that, together with product specialization, these noncontractible elements of interorganizational relationships have greater explanatory power for reverse auction use than asset specificity.

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