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ABSTRACT
Real-world procurement transactions often involve multiple attributes and multiple vendors. Successful procurement involves vendor selection through appropriate market mechanisms. The advancement of information technologies has enabled different mechanisms to be applied to similar procurement situations. However, advantages and disadvantages of using such mechanisms remain unclear. The presented research compares two types of mechanisms: multi-attribute reverse auctions and multi-attribute multi-bilateral negotiations in e-procurement. Both laboratory and online experiments were carried out to examine their effects on the process, outcomes, and suppliers’ assessment. The results show that in procurement, reverse auctions were more efficient than negotiations in terms of the process. Auctions also led to greater gains for the buyers than negotiations, but the suppliers’ profit was lower in auctions. The buyer and the winning supplier jointly reached more efficient and balanced contracts in negotiations than in auctions. The results also show that the suppliers’ assessment was affected by their outcomes: the winning suppliers had a more positive assessment toward the process, outcomes, and the system. The findings are consistent in both the laboratory and the online settings. Finally, the implications of this study for practitioners and researchers are discussed.
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Notes on contributors
ShiKui Wu
ShiKui Wu is an assistant professor in Information Systems and Operations Management in the Faculty of Business Administration at Lakehead University. He holds a Ph.D. degree in Management Information Systems from Concordia University and an M.Sc. degree in Systems Science from the University of Ottawa. His research interests include e-commerce, e-negotiations, multi-attribute auctions, design science research, business innovations, and supply chain management. His work has been funded by the Canadian government agencies such as NSERC, SSHRC, FedDev Ontario Prosperity Initiative, and the Ontario Centers of Excellence. His research has been published in the Journal of Strategic Information Systems and the Journal of Business Research. Professor Wu’s work has also been presented at prominent conferences, including the Hawaii International Conference on Systems Sciences, the annual Americas Conference on Information Systems, the Pacific Asia Conference on Information Systems, the International Conference on Electronic Commerce, the International Conference on Group Decision and Negotiation, and the Conference of the Administrative Sciences Association of Canada. He has written a book about a data-driven approach for designing and implementing e-negotiation systems. Further, he has received a patent from the U.S. Patent and Trademark Office on multi-attribute auction models and systems.
Gregory E. Kersten
Gregory E. Kersten is a professor and the Senior Concordia Research Chair in Decision and Negotiation Systems in the John Molson School of Business at Concordia University. He holds a Ph.D. degree in Economic Sciences and an M.Sc. degree in Econometrics from the Warsaw School of Economics (Poland). He is a co-author and editor of eight books and numerous journal articles and book chapters. Dr. Kersten’s research contributions have appeared, among others, in Decision Support Systems; Group Decision and Negotiation; Electronic Commerce Research and Applications; Electronic Markets; IEEE Expert; IEEE SMC; Information and Management; Management Science; Naval Research Logistics; EJOR; and Theory and Decision. He is a vice president of the INFORMS GDN Section, the Editor-in-Chief of the Group Decision and Negotiation journal, associate editor and member of the board of several other journals and book series, and a reviewer and assessor for national and international research councils. He has received grants from the Australian Research Council, NSERC, SSHRC, HDRC, Humboldt Foundation (Germany), and Max Bell Foundation, among others. He has supervised research at the post-doctoral level and graduate thesis work at doctoral and master’s levels in Canada, Germany, Italy, and Poland.