The effect of cost information on buyer-supplier negotiations in different power settings
Van den Abbeele, Alexandra Roodhooft, Filip Warlop, Luk
Van den Abbeele, Alexandra
Roodhooft, Filip
Warlop, Luk
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Publication Type
Journal article with impact factor
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Supervisor
Publication Year
2009
Journal
Accounting Organizations and Society
Book
Publication Volume
34
Publication Issue
2
Publication Begin page
245
Publication End page
266
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Abstract
We investigate the influence of total cost of ownership (TCO) information on buyer–supplier negotiations in different power settings. Based on social exchange theory and recent literature on information processing, we expect that buyers with detailed TCO information and less power than their negotiation partners may try to (re)gain control over their own outcomes by sharing information. The results of our experiment indicate that the performance disadvantage of less powerful buyers is less pronounced when the buyer has detailed TCO information, whereas more powerful buyers do not seem to be able to profit from TCO information. These somewhat counterintuitive findings are explained through detailed analysis of the buyer’s negotiation behavior, which shows that less powerful buyers who have access to TCO data use problem solving techniques more frequently than powerful buyers, who tend to rely on distributive bargaining techniques instead. We conclude that power can motivate a failure to share TCO information, resulting in less effective interfirm negotiation outcomes.
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Management Accounting & Control