Diffusion of Online Reverse Auctions for B2B Procurement : An Exploratory Study

Purpose – To investigate the diffusion of online reverse auctions by exploring differences between their early, late and lagging adopters. More specifically, adopter categories are compared against organizational characteristics and auction behavior as a result of learning. Organizational characteristics include number of employees and purchasing authority structure. Differences in learning are investigated by behavioral manifestations, consisting of the savings achieved, as well as the use of bundles in reverse auctions. Design/methodology/approach – Four hypotheses were developed based on academic and trade literature. Data were collected with a large-scale online survey among members of the Institute for Supply Management (ISM), receiving 363 complete and useable responses. Records were split into three adopter categories based on whether the respondent's firm adopted reverse auctions early (before April 2002) or late (after April 2002), or whether the adoption was merely planned. Differences related to the time of adoption were explored via nonparametric chi-squared contingency table analyses. The chi-square statistic was used to determine whether a hypothesis is supported or rejected. Findings – Adopter categories differ in regards to number of employees, the savings achieved, and their use of bundles. No differences were detected in terms of purchasing authority structure. Explanations for these findings are provided.Practical implications – The results support the diffusion of online reverse auctions, provide encouragement for their adoption especially also by smaller firms, and suggest that late adopters are not disadvantaged when compared to their early-adopting counterparts. Originality/value – No published studies have investigated the diffusion of online reverse auctions for B2B procurement, or explored potential differences between early adopters, late adopters and laggards