Choosing between Auctions and Negotiations in Online B2B Markets for IT Services: The Effect of Prior Relationships and Performance

The choice of contract allocation mechanism in procurement affects such aspects of transactions as information exchange between buyer and supplier, supplier competition, pricing and, eventually, performance. In this study we investigate the buyer’s choice between reverse auctions and bilateral negotiations as an allocation mechanism for IT services contracts. Prior studies into allocation mechanism choice focused on factors pertaining to discrete exchange situation, such as con-tract complexity or availability of suppliers. We broaden the research by focusing on buyers’ past exchange relationships with vendors. Based on the literature on the economics of contracting and agency theory, we hypothesize that prior re-peat interaction with vendors favors the use of negotiations over auctions in the next transaction, while the need to explore the marketplace due to buyer’s inexperience or dissatisfaction with vendor’s performance in the most recent project leads to the use of auctions instead of negotiations. We find support for these hypotheses in a longitudinal dataset of 2,081 IT projects realized by 91 repeat buyers at a leading online services marketplace over a period of eight years. Taken together, the results show that analyzing B2B auctions and negotiations should move beyond analyzing discrete instances and instead analyze them in the context of the individual firm’s history and supplier strategy.outsourcing;IT services;online marketplace;reverse auctions

Functional Data Analysis in Electronic Commerce Research

This paper describes opportunities and challenges of using functional data analysis (FDA) for the exploration and analysis of data originating from electronic commerce (eCommerce). We discuss the special data structures that arise in the online environment and why FDA is a natural approach for representing and analyzing such data. The paper reviews several FDA methods and motivates their usefulness in eCommerce research by providing a glimpse into new domain insights that they allow. We argue that the wedding of eCommerce with FDA leads to innovations both in statistical methodology, due to the challenges and complications that arise in eCommerce data, and in online research, by being able to ask (and subsequently answer) new research questions that classical statistical methods are not able to address, and also by expanding on research questions beyond the ones traditionally asked in the offline environment. We describe several applications originating from online transactions which are new to the statistics literature, and point out statistical challenges accompanied by some solutions. We also discuss some promising future directions for joint research efforts between researchers in eCommerce and statistics.Comment: Published at http://dx.doi.org/10.1214/088342306000000132 in the Statistical Science (http://www.imstat.org/sts/) by the Institute of Mathematical Statistics (http://www.imstat.org

Trust and Experience in Online Auctions

This paper aims to shed light on the complexities and difficulties in predicting the effects of trust and the experience of online auction participants on bid levels in online auctions. To provide some insights into learning by bidders, a field study was conducted first to examine auction and bidder characteristics from eBay auctions of rare coins. We proposed that such learning is partly because of institutional-based trust. Data were then gathered from 453 participants in an online experiment and survey, and a structural equation model was used to analyze the results. This paper reveals that experience has a nonmonotonic effect on the levels of online auction bids. Contrary to previous research on traditional auctions, as online auction bidders gain more experience, their level of institutional-based trust increases and leads to higher bid levels. Data also show that both a bidder’s selling and bidding experiences increase bid levels, with the selling experience having a somewhat stronger effect. This paper offers an in-depth study that examines the effects of experience and learning and bid levels in online auctions. We postulate this learning is because of institutional-based trust. Although personal trust in sellers has received a significant amount of research attention, this paper addresses an important gap in the literature by focusing on institutional-based trust

An Empirical Analysis of User Participation on Crowdsourcing Platform: A Two-sided Network Market Perspective

Crowdsourcing has recently emerged as a new platform for matching the demand and supply between professionals and businesses who seek external expertise for business task execution. Driven by the unique features of the two-sided crowdsourcing markets (such as auction-style competition on quality by professionals), this study seeks to examine how the dynamics of the two-sided crowdsourcing platform affect customers and professionals’ strategic behaviors and market outcomes. Using longitudinal transaction data from a crowdsourcing websites, we plan to empirically examine how the participation of professionals and customers, task reward and task completion rate are affected by the characteristics of the professionals such as distribution of the winning professionals and their reputation. The results of our study are expected to contribute to the growing literature on crowdsourcing and provide important insights on the design and assessment of the sustainability and profitability of the crowdsourcing business model

Choosing between Auctions and Negotiations in Online B2B Markets for IT Services: The Effect of Prior Relationships and Performance

The choice of contract allocation mechanism in procurement affects such aspects of transactions as information exchange between buyer and supplier, supplier competition, pricing and, eventually, performance. In this study we investigate the buyer’s choice between reverse auctions and bilateral negotiations as an allocation mechanism for IT services contracts. Prior studies into allocation mechanism choice focused on factors pertaining to discrete exchange situation, such as con-tract complexity or availability of suppliers. We broaden the research by focusing on buyers’ past exchange relationships with vendors. Based on the literature on the economics of contracting and agency theory, we hypothesize that prior re-peat interaction with vendors favors the use of negotiations over auctions in the next transaction, while the need to explore the marketplace due to buyer’s inexperience or dissatisfaction with vendor’s performance in the most recent project leads to the use of auctions instead of negotiations. We find support for these hypotheses in a longitudinal dataset of 2,081 IT projects realized by 91 repeat buyers at a leading online services marketplace over a period of eight years. Taken together, the results show that analyzing B2B auctions and negotiations should move beyond analyzing discrete instances and instead analyze them in the context of the individual firm’s history and supplier strategy

Interacting Like Humans? Understanding the Effect of Anthropomorphism on Consumer’s Willingness to Pay in Online Auctions

Most research examining individuals’ bidding behavior in online auctions has used the lens of a rational decision making process. However, bidding behavior is also influenced by non-rational factors. Anthropomorphism, attributing human characteristics to a non-human object, has been studied in many disciplines, but has not been investigated in online auctions. This study aims to identify whether auditory and visual design factors for a non-human product would induce anthropomorphism and impact individuals' bidding decision. Results show that visual design induces individuals’ anthropomorphism and also impacts bidding decisions

Factors Influencing Online Consumers' Intention to Purchase in an Online Auction and Shopping Website in Thailand

Online sales method is significantly becoming a fast business. Specially, online auction and shopping website have also become rapidly growth and more and more suppliers and consumers are entering this market. Therefore, the factors influencing online consumers’ intention to purchase is the key factor determining how attractive them to purchase good and products with on online auction and shopping website. The study examines the factors influencing between online information system quality, online auction price, and online service quality toward online consumers’ intention to purchase in an online auction and shopping website in Thailand. The questionnaires were developed from many previous researches. The data was collected from 397 online consumers of Sanook.com. Pearson’s Correlation Coefficient Analysis and Multiple Regressions were used to test the hypotheses. The results of this study show that online information system quality has positive relationship to online consumers’ intention to purchase as hypothesized. Online auction price and online service quality also have the significant and positive relationship with online consumers’ intention to purchase. This study shows that the perception of online consumer about online information system quality, online auction price, and online service quality are almost equally important to influence their attraction. Moreover, among the three factors, online auction price is the most significant influence toward online consumers’ intention to purchase

Bidding on a “biddie”: Social Exchange and Online Dating

The emergence of dime dating, while relatively new, has received a good deal of attention from the popular press. With the new process of dime dating, more individuals seeking and initiating romantic relationships are becoming curious of the cost-benefits of dime dating. Despite the increased popularity of dime dating, little is known concerning the processes by which individuals communicate rewards and costs, and how the principles of social exchange apply as individuals maximize mutual relationship rewards. This study provides a starting point for understanding the dime dating process. A sample of 212 participants was divided into not-for-profit dating participants (196) and for-profit dating participants (16). The participants responded to sets of structured survey questions that focused on the rewards, costs, satisfaction, commitment, alternatives, investment, and communication within online dating. The data from the surveys were analyzed for each hypothesis and research question using for-profit dating participants, not-for-profit dating participants, and the combined total of all participants. Hypothesis 1-5 were tested through the correlation between satisfaction and (a) costs/rewards difference, (b) rewards/alternatives difference, (c) costs/alternatives difference, (d) investments/costs difference, and (e) investments/alternatives difference. For research question 1, a multiple regression (using the predictors of alternatives, investments, and satisfaction) analyzed the investment model after removing the influence of demographics [biological sex, income, education level, relational status, sexual identity]. Lastly, for research question 2, a hierarchical multiple regression evaluated the predictors of costs, rewards, alternatives, investments, commitment and communication to analyze the best estimators of relational satisfaction. Results indicated that the processes by which individuals communicate rewards and costs in for-profit and not-for-profit relationships are governed by social exchange theoretical principals and the investment model, which depicts a clear correlation among cost-benefit scale factors including communication, commitment, investment, rewards, satisfaction, costs, and alternatives. The correlations contribute to the understanding of the cost-benefit prospects of dime dating, relative to traditional online dating

Toward an Understanding of Online Lending Intentions: Evidence from a Survey in China

The online peer-to-peer lending marketplace has experienced rapid growth since its inception in 2005. It has played a significant role in helping small and micro-enterprises resolve financing problems. However, this marketplace is still in its infant stage. To better understand the lending activities associated with peer-to-peer lending, we need theoretically grounded empirical research. In this study, we investigate the perceptual drivers of online lending from the perspective of lenders. We empirically test our research model with survey data collected from 217 lenders in a major online peer-to-peer lending website in China. Our results reveal that trust was the most critical determinant of willingness to lend. Perceived information quality was important in mitigating perceived risk and enhancing trust, and perceived social capital impacted trust in borrowers. Furthermore, perceived risk did not significantly influence lending willingness, but had a negative impact on trust. These findings indicate that transaction behaviors in the peer-to-peer market may not be the same as that in the purchase-oriented e-commerce settings. We conclude by discussing the study’s implications for research and practice along with the its limitations