1934
The Purchasing Agent’s View of Online Reverse Auctions
RESULTS
The initial analysis involved determining whether
a correlation exists between a purchasing agent’s
years of experience as a buyer and his or her
perception of the impact of ORA on trust in the
supplier relationship. The Pearson correlation
ZDV VLJQL¿FDQW DW WKH  OHYHO VHH 7DEOH 
7KLVFRQ¿UPHGP\EHOLHIWKDWWKHUHLVDQHJDWLYH
relationship between trust in a relationship and
years of experience. The longer a purchasing agent
has been a buyer, the less likely that he or she will
believe that ORAs will have a positive impact on
trust within the relationship with suppliers. This
¿ QG L Q JL V VX S S R U WH GE\ R W K HU U H V HD UF K HU VZK R ZD U Q 
that initiating an online reverse auction has the
potential to damage a long ter m relationship with
the supplier (Jap, 2000, 2007; Kwak, 2001).
Table 2. Correlation matrix—Buyer experience, supplier trust
SUPPLIER
TRUST BUYER EXPERIENCE
SUPPLIER TRUST
Pearson
Correlation
1 223(**)
Sig. (2-tailed)
. .007
N
144 144
BUYER

EXPERIENCE
Pearson
Correlation
223(**) 1
Sig. (2-tailed)
.007 .
N
144 144
&RUUHODWLRQLVVLJQL¿FDQWDWWKHOHYHOWDLOHG
Table 3. Correlation matrix—Buyer experience, supplier viability and cooperation
Buyer Experience
Pearson Correlation
1 130 202(*)
Sig. (2-tailed)
.119 .015
N
144 144 144
Supplier Viability
Pearson Correlation
130 1 .425(**)
Sig. (2-tailed)
.119 .000
N
144 144 144
Supplier
Cooperation
Pearson Correlation
202(*) .425(**) 1
Sig. (2-tailed)
.015 .000

N
144 144 144
&RUUHODWLRQLVVLJQL¿FDQWDWWKHOHYHOWDLOHG
&RUUHODWLRQLVVLJQL¿FDQWDWWKHOHYHOWDLOHG
1935
The Purchasing Agent’s View of Online Reverse Auctions
Next, I looked to see whether there was a re-
lationship between the purchasing agents’ years
of buying experience and the impact of ORAs on
cooperation in the supplier relationships and long
term supplier viability. The Pearson Correlation
FRHI¿FLHQWVDUHLQFOXGHGLQ7DEOH
Again, as the purchasing agents’ experience
increases, his or her perception of the impact of
the online reverse auction on cooperation becomes
negative, as indicated by the negative correlation
FRHI¿FLHQW7KLV UHVXOW LVVLJQL¿FDQW DW WKH 
level. The correlation between long term supplier
YLDELOLW\DQGEX\HUH[SHULHQFHLVQRWVLJQL¿FDQW
There is a slight relationship between these vari-
ables, in a negative direction, meaning that as
the buying experience increases, the purchasing
agents’ perceptions of the impact of online reverse
auctions on trust, cooperation and supplier’s long
term viability decreases. We found these results to
EHVLJQL¿FDQWDWWKHDQGOHYHOVIRUWUXVW
and cooperation, respectively. The rationale for
this may be that as a buyer gains experience in
strategic sourcing, online reverse auctions become
MXVWRQHPRUHPHWKRGXVHGLQWKH¿UP¶VVRXUFLQJ

strategy. Therefore the impact of this sourcing
method alone is perceived to be less.
In order to determine whether there was a
VLJQL¿FDQWGLIIHUHQFHEHWZHHQSXUFKDVLQJDJHQWV
with low and high experience levels, Richins and
Dawson’s methodology (1992) was followed to
create three groups for buyer experience based
on the buyers’ self-report of years of experience
as a buyer. Three groups seemed appropriate,
given the frequency distribution across years
of experience. To create a clear separation be-
tween groups following the Richins and Dawson
methodology (1992), we chose Group 1 (N=53)
to represent buyers with a low experience level
(mean experience level of 1.5 years) and Group
3 (N=50) to represent buyers with a high experi-
ence level (mean experience level of 12.58 years).
In this manner, the original sample was reduced
from 144 to 103 through eliminating the medium
experience level group (n = 41). The high and low
groups were then compared using t tests to assess
VLJQL¿FDQWGLIIHUHQFHVEHWZHHQWKHWZRJURXSV
regarding the impact of online reverse auctions
on trust in the supplier relationship; cooperation
in the supplier relationship; and the long term
viability of suppliers. The means and standard
deviations for trust, cooperation and long term
viability of suppliers for the two groups are in-
cluded in Table 4.
The average values for high experience buy-

ers on all variables tend toward the impact being
negative, which supports the hypotheses. Thus, the
Buyer Experience
terciles N
Std.
Deviation
Std. Error
Mean
SUPPLIER TRUST
1.00 (low experience)
53 4.17 1.638 .225
3.00 (high experience)
50 3.56 1.752 .248
SUPPLIER
COOPERATION
1.00 (low experience)
53 4.36 1.360 .187
3.00 (high experience)
50 3.74 1.688 .239
SUPPLIER VIABILITY
1.00 (low experience)
53 4.09 1.290 .177
3.00 (high experience)
50 3.84 1.462 .207
Table 4. Group statistics
1936
The Purchasing Agent’s View of Online Reverse Auctions
h ig h expe r ie nce buye rs t end to believe that OR As
have a negative impact on trust, cooperation and
long term viability of their suppliers.

The independent samples t-test was conducted
WRGHWHUPLQHLIWKHUHZDVDVLJQL¿FDQWGLIIHUHQFH
between the groups on these three variables. The
results are in Table 5.
These results are decidedly mixed. The dif-
ference between the high experience and low
experience purchasing agents on supplier trust and
VXSSOLHUFRRSHUDWLRQLVVLJQL¿FDQWDWWKHDQG
0.05 levels, respectively. This might be because
all of the purchasing agents work for the same
company. Even though they are a very diverse
group, representing a broad range of industries,
geographical locations and cultures, the fact that
WKH¿UPKDVEHHQWKHEX\LQJFRPSDQ\LQPLOOLRQV
of online reverse auction transactions may mean
that there would be less difference between newer
purchasing agents and those with more experi-
ence. It is interesting to note that the difference
between the two groups on supplier cooperation is
WKHPRVWVLJQL¿FDQW7KLVLVSHUKDSVEHFDXVHWKH
high experience buyers have worked on building
supplier relationships longer than the low experi-
ence buyers, so see the ORA as a threat to those
relationships. All of our hypotheses were sup-
ported except H3a: Experienced buyers will per-
ceive that online reverse auctions will negatively
impact long term viability of the suppliers.
DISCUSSION
The purpose of this study was to extend the re-
search in online reverse auctions to include the

purchasing agents’ perceptions of online reverse
auctions. In particular, I wanted to determine
their perceptions of how ORAs impact trust and
cooperation with suppliers and suppliers’ long
t e r m v i a b i l i t y. T h e m o r e e x p e r i e n c e d b u y e r s v i e w
ORAs as having a negative impact on trust and
cooperation with suppliers, but not supplier long
term viability. A possible explanation could be
that the high-experience purchasing agents were
trained to develop supplier relationships and alli-
ances which were built on trust and cooperation
with their suppliers. These purchasing agents
might see ORAs as going back to the past when
the relationships between buyers and sellers were
transactional, sometimes adversarial, and based
on a contractual arm’s length relationship. Na-
tional purchasing associations (for example, the
Institute for Supply Management and APICS)
have worked to promote the purchasing function
such that it is now recognized as a competitive
weapon and value adding function within orga-
nizations. Purchasing agents are no longer order
takers, but develop long term partnerships with
their suppliers. Relationships take time to build.
The high experience purchasing agents might see
the online auction as a threat to strategic sourcing
Table 5. Independent samples test results
tdf
Sig. (2-
tailed)

Mean
Difference
Std. Error
Difference
Supplier
Trust
Equal variances
assumed
1.826 101 .071 .610 .334
Supplier
Viability
Equal variances
assumed
.938 101 .351 .254 .271
Supplier
Cooperation
Equal variances
assumed
2.053 101 .043 .618 .301
1937
The Purchasing Agent’s View of Online Reverse Auctions
and alliance building. The high experience pur-
chasing agents may also view ORAs as just one
more tool in the strategic sourcing tool box, and
will only use ORAs when they deem them to be
appropriate. Therefore, they would not rate one
VSHFL¿FVRXUFLQJPHWKRGRORJ\DVEHLQJDJUHDWHU
FRQWULEXWRUWR¿UPSHUIRUPDQFHWKDQDQRWKHU
On the other hand, the low experience buyers
PLJKWYLHZ25$VDVD³TXLFN¿[´WRUHGXFLQJ

costs. Since they have less experience as buyers
they may not have had a chance to build relation-
ships with suppliers. Reducing spend, while im-
proving quality, can be a way for a low experience
purchasing agent to make a positive impact on the
¿UP¶VSHUIRUPDQFHHVSHFLDOO\LQWKHVKRUWWHUP
Purchasing agents with low experience may see
more opportunity to gain cost advantages from
auctions than the purchasing agents with higher
experience levels.
Executives and supply managers should not
take these results to mean that high experience
purchasing agents are against online reverse auc-
WLRQV7KH¿QGLQJVOHDGXVWRFRQFOXGHWKDWZH
should use ORAs when appropriate and structure
them such that the potentially negative impact of
DQ25$RQWKHEX\HUVXSSOLHUUHODWLRQVKLSLV¿UVW
understood; and then minimized. The implemen-
tation of ORAs can send mixed messages to the
purchasing agents. On the one hand, they are to
develop long-term relationships with suppliers,
IR F X V L Q J RQ W U X V W  G HOL YH U \ ÀH[ LEL O LW \ D Q GS U RG X FW 
quality as well as cost (i.e., relational purchas-
ing transactions). On the other hand, an online
reverse auction can be implemented in a fairly
short time frame and the purchasing agent may
never interact with the winner of the bid. These
two types of procurement activities are likely to
UHTXLUHGLIIHUHQWVNLOOVVHWV,ID¿UPLQWHQGVWR
use both sourcing methods on a routine basis,

then the training received by purchasing agents
should include the structure of ORAs, when they
are appropriate, how to select suppliers for inclu-
sion and the management of incumbent suppliers
in the auction.
From a supplier relationship perspective,
LQFXPEHQW VXSSOLHUV VKRXOG EH QRWL¿HG RI WKH
impending ORA, preferably by the purchasing
agent. This communication, if not done correctly,
could cause a rift in the relationship with a valuable
supplier; especially if it is a Tier 1 supplier. Thus, it
should probably be handled at the executive level.
Although all of the hypotheses except H3a were
VXSSRUWHGWKHVHUHVXOWVDUHQRWGH¿QLWLYHVLQFH,
have simply shown that there is a difference be-
tween the perceptions of purchasing agents with
low experience levels as buyers and those with
high experience levels as buyers. The next step
would be to determine why this difference exists
using more sophisticated statistical methods. In
DGGLWLRQIXUWKHUVWXG\RI25$VLQGLIIHUHQW¿UPV
and industries would be instructive.
LIMITATIONS AND FUTURE
RESEARCH
As with any research effort, this study has limita-
tions. Although the respondents come from a very
broad range of industries, product categories, geo-
graphical areas and cultures, they are all from one
multinational organization. Consequently, there
are not enough individuals from each industry,

product category, geographical area, etc. to be
able to generalize about each category. Future
research should explore, at more depth, whether
WKHVH ¿QGLQJV ZRXOG GLIIHU E\ LQGXVWU\ YDOXH
of products and services purchased, corporate
culture, type of products and services purchased,
culture, and/or geography. A further limitation
is how trust, cooperation and long term viability
RIWKHVXSSOLHUVDUHGH¿QHG,WLVOLNHO\WKDWWKH
SHUFHSWLRQVDQGGH¿QLWLRQVRIWKHVHWHUPVYDU\
among the respondents. Future work should use
validated scales for trust and cooperation and
multiple questions to determine long term sup-
plier viability.
The purpose of this chapter was to take the
purchasing agent’s perspective and look at online
1938
The Purchasing Agent’s View of Online Reverse Auctions
reverse auctions in the context of supplier selection
and strategic sourcing. We found, as hypothesized,
that high experience purchasing agents view on-
line reverse auctions as having a negative impact
on trust and cooperation in supplier relationships;
but they do not view ORAs as having a negative
impact on the long term viability of suppliers.
Although I have only scratched the surface in
exploring the perceptions of purchasing agents
DERXW RQOLQH UHYHUVH DXFWLRQV WKHVH ¿QGLQJV
have implications for managing and structuring
o n l i n e r e v e r s e a u c t i o n s a s w el l a s l o n g t e r m b u ye r-

supplier relationships. The training received by
purchasing agents and managers must address
WKHSRWHQWLDOFRQÀLFWLQJJRDOVRIRQOLQHUHYHUVH
auctions and building a long term relationship
with suppliers. The training should also address
when online reverse auctions are (and are not)
appropriate, how to address incumbent suppliers’
concerns, and how to structure an auction such
that opportunism is not the unintended result.
FUTURE RESEARCH DIRECTIONS
Given the lack of previous work in the buyer-sup-
plier relationships and strategic sourcing areas
that take the purchasing agents point of view,
future research in this area is only limited by the
researcher’s imagination and resources. Future
UHVHDUFKVKRXOGH[SORUHZKHWKHUWKHVH¿QGLQJV
would differ by industry, value of products and
services purchased, corporate culture, type of
products and services purchased, demographic
culture and/or geography. The concepts of trust
DQGFRRSHUDWLRQQHHGIXUWKHUGH¿QLWLRQDQGUH-
¿QHPHQW7KHUHIRUHDGGLWLRQDOUHVHDUFKVKRXOG
use established scales on trust and cooperation
to explicitly measure trust and cooperation rather
WKDQUHO\LQJRQWKHUHVSRQGHQW¶VGH¿QLWLRQRIWUXVW
DQGFRRSHUDWLRQ0XOWLSOHDQGPRUHVSHFL¿FTXHV-
tions designed to measure the long term supplier
viability construct should also be conducted. The
GH¿QLWLRQRIHDFKRIWKHVHYDULDEOHVLVRSHQWR
interpretation by the respondent. Further studies

should remove this potential for bias in the study.
An additional contribution to this body of work
would be to study buyer-supplier dyads who have
participated in an online auction and a traditional
procurement process. Looking at dyads over a
period of time (i.e., longitudinal study analyses)
would shed light on the issue of supplier long
term viability. Ethnographic studies, case stud-
ies of successful and unsuccessful auctions, and
other research methodologies would also provide
a rich area for further research efforts. Finally, an
effort geared toward looking at the link between
purchasing agent perceptions, online reverse auc-
WLRQVDQG¿UPSHUIRUPDQFHRIERWKWKHEX\LQJ
D QG V XS SO \L QJ ¿ U PZRX OGV L J Q L ¿FD QW O \ FR Q W U L EXW H
to the discourse in this area.
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IMPLICATIONS FOR MANAGERS
Title: The Purchasing Agent’s View of Online
Reverse Auctions
Description of Manuscript
A survey was administered to purchasing agents
of a multinational corporation, which has been the
EX\LQJ¿UPLQPLOOLRQVRIRQOLQHUHYHUVHDXFWLRQ
transactions. The purchasing agents represent
P DQ \ L Q GX V W U L HV  L Q FOXG L Q JP D Q X ID FW X U L Q J¿ Q D Q -
cial services, aerospace technologies, health care,
and transportation. The respondents were a very
diverse group, representing a wide range of en-
vironments within which procurement decisions
are made. They were asked about the impact of
online reverse auctions on trust and cooperation
in relationships with suppliers and the long term
viability of suppliers.
Findings
• The longer a purchasing agent has been a
buyer, the less likely that he or she will be-
lieve that ORAs will have a positive impact
on trust and cooperation with suppliers.
• 7KHUHLVDVLJQL¿FDQWGLIIHUHQFHEHWZHHQ

the perceptions of purchasing agents with
low buying experience and those with high
buying experience with respect to trust in
the buyer-supplier relationship.
• 7KHUHLVDVLJQL¿FDQWGLIIHUHQFHEHWZHHQ
the perceptions of purchasing agents with
1942
The Purchasing Agent’s View of Online Reverse Auctions
This work was previously published in Best Practices for Online Procurement Auctions, edited by D. Parente, pp. 28-42, copy-
right 2008 by Information Science Reference (an imprint of IGI Global).
low buying experience and those with high
buying experience with respect to coopera-
tion in the buyer-supplier relationship.
• 7KHUHZDVQRVLJQL¿FDQWGLIIHUHQFHEHWZHHQ
the perceptions of purchasing agents with
low buying experience and those with high
buy i ng exp er ienc e w it h res pe ct to lo ng t er m
viability of their suppliers.
• Experienced buyers perceive that ORAs have
a negative impact on trust and cooperation
with suppliers.
• Experienced buyers do not perceive that
ORAs have a negative impact on the long
term viability of suppliers.
RECOMMENDATIONS
7KHVH¿QGLQJVVKRXOGEHXVHGE\SUDFWLWLRQHUVLQ
the following manner:
• To develop appropriate training programs
for purchasing agents which stress that there
should be a mix of sourcing strategies and

supplier selection methods.
• The training should include the critical
factors for a successful online reverse auc-
tion, how it should be implemented, and
more importantly, how incumbent supplier
relationships should be handled.
• Managers should recognize that the deci-
sion to use ORAs will require a different
purchasing skill set than other supplier
selection and strategic sourcing initiatives,
which stress relationship building.
• Managers should also recognize that the
cooperation (or lack of cooperation) of a
purchasing agent in the ORA might be be-
cause of their perception that it will have a
negative impact on his or her relationships
with suppliers.
LIMITATIONS
Although these results are indicative of the need
for further research in this area, managers should
be cautioned that this is one study with 144 pur-
chasing agents’ perceptions. Before wholesale
changes are made in purchasing organizations,
managers are urged to discuss these issues with
the purchasing agents in their companies to de-
termine the proper role for ORAs in the supplier
selection and strategic sourcing processes.
1943
Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited.
Chapter 6.15

Exploring Decision Rules
for Sellers in
Business-to-Consumer (B2C)
Internet Auctions
Jeff Baker
Texas Tech University, USA
Jaeki Song
Texas Tech University, USA
ABSTRACT
T h e r e c e n t g r o w t h o f b u s i n e s s - t o - c o n s u m e r ( B 2 C )
Internet auctions challenges researchers to develop
empirically-sound explanations of critical factors
that allow merchants to earn price premiums in
these auctions. The absence of a comprehensive
model of Internet auctions leads us to conduct an
exploratory study to elucidate and rank critical
factors that lead to price premiums in Internet
DXFWLRQV:HHPSOR\&ODVVL¿FDWLRQDQG5HJUHV-
sion Trees (CART), a decision-tree induction
WHFKQLTXH WR DQDO\]H GDWD FROOHFWHG LQ D ¿HOG
study of eBay auctions. Our analysis yields deci-
sion trees that visually depict noteworthy factors
that may lead to price premiums and that indicate
WKHUHODWLYHLPSRUWDQFHRIWKHVHIDFWRUV:H¿QG
shipping cost, reputation, initial bid price, and
auction ending time as the factors most predictive
of price premiums in B2C Internet auctions.
INTRODUCTION
Over the past decade, Internet auctions have grown
from a mere curiosity to a major focus of both

researchers and businesses. In their early days,
Internet auctions were dominated by individuals
selling collectibles such as antiques, celebrity
memorabilia, stamps, toys, coins, and trading
cards; the vast majority of transactions were
consumer-to-consumer (C2C) (Lucking-Reiley,
2000a). More recently, researchers have noted
the growth of business-to-business (B2B) and