The Use of Procedural Fairness in Electronic Reverse Auctions to Enhance Relationship Quality

Abstract

In this study, the use of procedural fairness by a buying organization in an electronic reverse auction (ERA) is examined. Drawing on the literature, a conceptual model is developed that relates procedural fairness to two key ERA outcomes: relationship quality and quality of the offering. The hypothesized relationships between procedural fairness and quality outcomes are empirically tested through a global field study with 179 procurement professionals in multinational companies, and explored through a supporting field study with 31 sales professionals from supplier firms. The results show that the use of procedural fairness by a buying organization is positively related to relationship quality and quality of the offering, without jeopardizing price savings. In addition, the positive association between procedural fairness and relationship quality is found to increase in the case of a repeat auction. This study contributes to the relationship marketing literature by examining how procedural fairness can mitigate relationship quality concerns in ERA use by buying organizations.