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Spotlight: How Supplier Economies of Scale Drive Supplier Selection Decisions

In this weeks spotlight we talk to Kai Hoberg about the paper he co-authored with Florian Badorf, Stephan M. Wagner  and Felix Papier entitled “How Supplier Economies of Scale Drive Supplier Selection Decisions” This article in full will appear in an upcoming JSCM Issue.


”Supplier selections are complex but nonetheless strategically important decisions that are influenced by numerous factors. Drawing on the resource‐based and relational view of the firm, we investigate how suppliers’ economies of scale influence the buyer's selection decision, and we illustrate how the influence of scale is contingent upon important economic, buyer, and relationship characteristics. We test the model with a large secondary dataset of actual supplier selection decisions from the automotive industry and show that economies of scale have a strongly positive but diminishing effect on the buying firm's supplier selection decision. These effects are reinforced or extenuated by economic, buyer, and relationship characteristics, with characteristics that are more specific to the buyer‐supplier situation (e.g., relationship duration and power balance) having a stronger moderating effect than do characteristics that are more global (e.g., economic cycle). Our research helps suppliers to better understand how to manage selection probabilities with buyers and provides buying firms with a better understanding of how contextual factors affect the benefit of supplier‐provided economies of scale.”

The full Article can be found here: https://onlinelibrary.wiley.com/doi/full/10.1111/jscm.12203

DOI: https://doi.org/10.1111/jscm.12203

Jacqueline Jago