Description
Negotiation is the key decision-making approach used to reach consensus whenever partners cannot achieve their goals. Advanced technologies such as e-procurement can facilitate effective solutions for negotiation between trading partners.
FACTORS INFLUENCING NEGOTIATION IN THE SOURCING
PROCESS BETWEEN PARTNERS IN E-PROCUREMENT: A
FOCUS ON ACTORS
Noraizah Abu Bakar, School of Business IT and Logistics, RMIT University, Melbourne,
Victoria, Australia, [email protected]
Konrad Peszynski, School of Business IT and Logistics, RMIT University, Melbourne,
Victoria, Australia, [email protected]
Abstract
Negotiation is an essential business activity for establishing trade relationships between partners
(Yuan and Turel 2004). As the business environment becomes more dynamic in this global setting,
negotiation between partners is required more often. Negotiation is the key decision-making
approach used to reach consensus whenever partners cannot achieve their goals (Thompson 2000).
Advanced technologies such as e-procurement can facilitate effective solutions for negotiation
between trading partners (Bichler et al 2003). With the shift from traditional procurement to
electronic procurement, there is a need to explore the social issues in the negotiation process and in
the electronic procurement environment in particular. Actor Network Theory (ANT) will be used as
guidance. Through a case study at an Australian University, factors influencing negotiation in the
sourcing process between partners in their e-procurement environment were identified. The
significance of this research is to provide knowledge to practitioners on the importance of the
negotiation process between partners in an e-procurement network. Furthermore, identifying and
understanding the social issues that influence the negotiation process will improve the value chain
between partners. As such, it is hoped that greater success with e-procurement will be achieved.
Keywords: Negotiation, E-procurement, Case study, Social Issues, Actor Network Theory
1184
1 INTRODUCTION
Negotiation is an essential business process for establishing trade relationship between partners (Yuan
and Turel 2004). Negotiations between partners are required frequently with the use of Internet-based
technologies to procure goods and services that usually involves complex negotiation (Cerquides et al
2007). With advanced web-based technology such as the Internet and extranets, the negotiation
process has become a prominent issue in the literature and in particular is notified in the area of e-
procurement (Aguiler et al 2008, Bui et al 2006, Bajari et al 2008). Kurtzberg and Medvec (1999)
stated that there are many elements of a relationship that can be impacted by negotiation such as the
relationship between parties, communication and their level of trust. With the involvement of many
actors in the negotiation process such as the procurer and supplier, issues influencing negotiation, this
research will explore the factors influencing negotiation in the sourcing process between partners in
an e-procurement network. By identifying factors influencing negotiation in an e-procurement
network, this will help answer the research question: how does the actor in an e-procurement network
influence the negotiation process?
The significance of this research is to provide knowledge to practitioners on the importance of the
negotiation process between partners in an e-procurement network. By identifying and understanding
the factors that influence the negotiation process, the value chain between partners will be improved
in the e-procurement network. By improving the negotiation process, it is hoped that greater success
with e-procurement will be achieved.
The structure of this paper is as follows: the next section will discuss the relevant literature and
explore the use of Actor Network Theory (ANT) as a theoretical background. The subsequent section
will discuss the research method used for data collection and analysis. The final section will provide
a discussion of the findings of the factors influencing negotiation in an e-procurement environment
between procurers and suppliers as well as provide a conclusion.
2 LITERATURE REVIEW
Procurement is a core activity in a business (Turban et al 2008) and sourcing is one of the critical
steps in buying goods and services, where individuals or groups analyze, assess and select a vendor
and their goods and services based on certain specifications and requirements (United Parcel Service
of America 2005). Aguiler et al (2008) claimed that the sourcing process for multiple goods or
services usually involves complex negotiations that include a discussion of a products features as well
as quality, services and availability issues. As such, there is a need for negotiation to be integrated
into the strategic sourcing process. Furthermore, managerial teams, such as supply managers and
purchasing managers, need to understand the importance of negotiation in strategic sourcing
(Smeltzer et al 2003). Negotiation is one of the elements in the sourcing process (Puschman and Alt
2005) and it is one of the factors that have a large influence in the implementation of Internet sourcing
strategies (Smeltzer et al 2003). When electronic commerce moves into a business-to-business (B2B)
market place, negotiation becomes more complex, the contracts can be done electronically with
communication among trading partners occurs throughout the system, which includes negotiating a
supply contract between manufacturers and suppliers. Schoop et al (2008) claim that to support
business negotiations with electronic tools effectively, a deep understanding of real life business
negotiation is required.
E-procurement is the process of utilizing web-based technologies to support the identification,
evaluation, negotiation and configuration of optimal groupings of trading partners into the supply
chain network, which can then meet demands with greater efficiency (Minahan 2001). E-procurement
is not one single application (Knudsen 2003). Rather, e-procurement consists of many different tools.
De Boer et al (2002) identified six forms of e-procurement: e-sourcing, e-reverse auctioning, e-
tendering, and e-informing, e-MRO and web-based ERP. Puschman and Alts (2005) claim that most
companies operate multiple e-procurement solutions. In explaining negotiation in the e-procurement
environment, Actor Network Theory will be used as a lens for this research. The next section will
1185
discuss the use of Actor Network Theory (ANT) for understanding the negotiation process in an e-
procurement environment.
3 ACTOR NETWORK THEORY AS LENS
Actor Network Theory (ANT) is a social theory of technology (Hanseth et al 2004). Latour (1992)
states that ANT deals with the socio-technical by denying that purely technical or purely social
relations are possible, and considers the world to be full of hybrid entities. As such ANT proposes a
socio-technical account in which neither social nor technical positions are privileged (Latour 1992).
ANT is used to investigate issues in the negotiation process that incorporate human actors such as
buyers and suppliers and how the interaction between these actors affects the negotiation process as
well as identifying the factors that influence the negotiation process. One concept in ANT will be
used to explain the relationship of factors influencing negotiation in the e-procurement environment -
the actors. This concept is applicable because of the identification of actors, both human and non-
human actors in the negotiation process in e-procurement are critical to effective negotiation.
The concept of the actor in ANT is defined as “any element which bends space around itself, makes
other elements dependent upon itself and translates their will into the language of its own” (Callon
and Latour 1981, p. 286). Actors in ANT consist of human actors and non-human actors. Common
examples of actors include humans, collectivities of humans, texts, graphical representations and
technical artifacts and computers. Latour (2005) provides the analogy of an ‘actor’ in the theatre. The
‘actor’ constantly suggests that the source of inspiration of the action is somewhere else; perhaps the
audience, backstage, the crew, the props, the playwright or the character. Latour (1992), in viewing
non-human actors as actors, highlighted the issue how can non-human actors have interest? The
interests of non-human actors can be equated to the interest that has been inscribed to it. For instance,
it may be argued that a car’s seat belt has the interest of passenger safety that was inscribed in it by
the designer.
As this research is about negotiation in e-procurement at an Australian University, there are human
and non-human actors involved. The procurer from the Australian University and the suppliers of the
university will be the human actors in the e-procurement environment. The remaining actors will be
considered as non-human actors and include web-based technologies that have been used via the
Internet, which enables actors to communicate in negotiating and exchanging goods and services
(Schoop 2008). Each actor has their own responsibilities and roles in ensuring the success of the
negotiation process in the e-procurement environment. The relationship amongst actors plays an
important role in e-procurement practices. Reunis et al (2008) identified the actors involved in their
research on the intra-organizational spread of e-procurement adoption from one actor to another in
purchasing organizations from two categories: experts and industry practitioners. In addition, Hardy
and William (2008) in their study on governmental e-procurement policies provided examples of
actors as consultants, IT providers, buyers and suppliers. By using Actor Network Theory (ANT) as a
lens or guide for this research, it is believed that there will be actors both human and non-human that
will influence negotiation in the e-procurement environment identified through this research.
4 METHODOLOGY
The qualitative method is used to enable the researcher to answer the research question. Furthermore,
this study will be driven by the interpretive paradigm (Denzin and Lincoln 2000) as interpretive
research attempts to understand a phenomenon through accessing the meanings that participants
assign to them (Klein and Myers 1999). This research adopts the case study research method as this is
an exploratory study and the researcher needs to obtain in-depth data on negotiation in the e-
procurement environment. The case study was conducted at an Australian University in Victoria
between two parties: the Australian University as a buyer and two companies that are the major
suppliers to the university. Two representatives from the Purchasing Department of the university are
Director of Purchasing Department and the Procurement Manager and one representative from each
supply company were interviewed via semi-structured interviews. The interviewer recorded the
1186
interviews with permission of the interviewees and made use of written notes during the interviews.
The one-on-one interviews took approximately 45-60 minutes.
The data collected from the face-to-face interviews was analyzed using content analysis. Before the
content analysis technique was used to analyze the data, all interviews were transcribed. After the
interviews were transcribed, the researcher used the eight-steps proposed by Tesch (1990) for coding
the collected data. After completing the coding process, categories were generated. The various
codes were then compared based on differences and similarities and sorted into sub-categories and
categories, which constitute the manifest content (Graneheim and Lundman 2004). Thirdly, the
underlying meaning, or the content of the categories were formulated into specific themes (Creswell
2003, Graneheim and Lundman 2004). Finally, the researcher interpreted the data, based on the
question “what were the lessons learned”. These lessons were based on the researcher’s personal
interpretation and the meanings derived from a comparison of the findings with information from the
literature review (Creswell 2003). The findings from the case study will be discussed in the next
section.
5 FINDINGS
This section will discuss the factors influencing negotiation in an e-procurement environment from
two different perspectives, the procurer and suppliers at an Australian University. Categories
emerged from an analysis of the interview on factors influencing negotiation in the e-procurement
environment at the Australian University on behalf of the procurer and suppliers and are discussed
below.
5.1 Buyer Perspectives
• Background of the procurer organization
The Australian University is organized into three academic faculties and eight service departments.
One of the service departments is Resources. The purpose of the Resources Department in the
university is to ensure effective and rigorous planning, measurement and reporting of financial
outcomes to achieve university strategies in a controlled manner. There are seven groups organized
under the Resources department: Accounting Unit, IT Unit, Human Resource Unit, Treasury Unit,
Law Unit, Management and Property Unit, and Information and Web Unit. One of the departments
provided under the Accounting Unit is the Purchasing Department. The Purchasing Department
provides services to the entire university. The role of this unit is to achieve substantial savings
through the review of sourcing and procurement options across the university based on $140 million
expenditure in goods and services. The contract manager in the Purchasing Department at the
Australian University is the person that has sole responsibility in handling all procurement activities.
There are four specific activities that assist the university to acquire the best products and services at
an effective cost to the university: strategic sourcing and procurement services; university approved
supplier; tenders; and fair-trade.
E-procurement was introduced to the university in 2004. Currently, the university has improved the
system by having full end-to-end system support for the entire procurement cycle from e-tendering
through to contract management facilities via software called “wide windows” (name changed to
provide anonymity). The e-tendering system assists the Purchasing Department in processing the
tender from documentation until posting the tender to the website. The submission of the tender from
potential suppliers’ to the university is done electronically and this expedites the supplier selection
process. Besides the e-tendering system, the university uses another system called ‘MayaExpress’
(name changed to provide anonymity). MayaExpress is an online ordering system for the purchase of
approved standards of furniture, office supplies and merchandise. Approved staff throughout the
university can use this system to order goods. Approved staff log in to MayaExpress to view the
products offered by Maya and enable staff to order on-line. The order will immediately go to the
Maya warehousing system via a paperless transaction. The order can then be delivered directly, on
time, to the university.
• Factors influencing the negotiation in an e-procurement from procurer perspectives
1187
Nine categories emerged from an analysis of the interviews and the descriptions for each category are
based on the interviews with representatives from the Australian University: the director of Strategic
Sourcing and Procurement Department and the Procurement Manager from the Strategic Sourcing and
Procurement unit at RMIT University. A summary of the categories is provided in Table 1.
No. Categories Description
1 Relationship
with supplier
A relationship with suppliers needs to be built, managed and maintained by one
person. The contract manager in the university is responsible to manage face-to-face
relationships with current suppliers. If the Purchasing Department decides to change
suppliers, the contract manager will help to create a contract with the new supplier.The
relationship that the procurer has with the market is a way the procurer’s organization
maintains the relationship with trading partners. The way procurers treat the market
will influence the negotiation process. For instance, maintaining a good relationship
with past supplier’s means that the procurer’s organization also maintains the market
relationship in a positive manner and the way organizations treat the market can
improve the service through negotiating a better price.
2 Trust Trust needs to be earned with the trading partner. The trust earned will take several
steps. Trust needs to be built through conversations, providing information,
developing relationships, sharing knowledge and working together with common goals
and the ability to solve problems together. Trust can be built through having a long
term relationship with suppliers. For instance, according to the contract manager at the
Australian University “you may set-up a contract in Australia with e-procurement
through sending an e-mail on the contract details and say, ‘we can do this and do that
and I will protect your IP’, however, there is no guarantee they will follow the contract
unless you have a relationship with that company.”
3 Skills of
negotiator
The skills negotiators undertake in e-procurement become important. The contract
manager is responsible in handling negotiation at the Australian University. The
negotiator needs to be able to build the relationship by being friendly, understanding
and thinking about win-win outcomes for both parties. Negotiation with suppliers
might be harsh and tough, thus communication skills are essential for the contract
manager to build the relationship with supplier in the Australian University.
4 Culture The cultural issue needs to be acknowledged, addressed, incorporated and understood
by the organization. As stated by contract manager “you can’t change culture,
thousands of years of cultural background wouldn’t change because of the system”.
For instance, in Asia, the relationship is so important and might build the relationship
over two years before you actually do a deal to create a contract.
5 Sustainability
Issues
Sustainability refers to working together to find the best solution for both parties based
on the limited resources that occur. Partners must strive for the best decision not only
based on one factor in decision making. However, taking into consideration all factors,
either social, such as the relationship and collaboration, or economic, such as price and
quality of goods and services procured that influence negotiation in the e-procurement
environment. For instance, there is high demand on fair-trade products by users in the
university, which Maya cannot fulfill. Thus, the contract manager from the Purchasing
Department will negotiate by working together with Maya to ensure they will be able
to supply enough without compromising the quality of products and future plans.
1188
6 Collaboration E-procurement allows many stakeholders involved in negotiation to collaborate either
through inter-organizational and intra-organizational systems. Mutual benefits for all
stakeholders involved will be the greatest concern amongst all stakeholders involved in
the negotiation process. For instance, for the Australian University to be recognized as
a Fair-trade organization (through certification provided by the Fair-trade Association
in Australia), there are many parties involved in the negotiation process such as: Maya
as the appropriate supplier to provide fair-trade products such as coffee; the Fair-trade
Association that will acknowledge the university as a fair-trade organization; and the
Australian University as a supporter of the fair-trade organization. These are the
examples of the stakeholders that collaborate to ensure the negotiation process
succeeds.
7 Win-win
outcome
Each party involved in negotiation will obtain the best result out of the negotiation
process for themselves. For instance, for the university to be recognised as a Fair-trade
organization, there are many parties involved that will have their own vision of gaining
benefits based on the collaboration. Maya will gain benefits by earning a profit for
selling fair-trade products as a supplier. The University will gain benefits in terms of
the recognition by the public as a supporter of the fair-trade organization.
8 Corporate
social
responsibility
With similar responsibilities the corporate social responsibility that each organization
is involved with can be achieved without difficulty. For instance, when working with
the contract manager to create the scope of services, one particular aspect that was
discussed was corporate social responsibility. For example when you want to purchase
paper, you know that lots of companies promise they will provide [environmentally]
green paper, however when looking at the details, the green paper was recycled paper
that came from Europe and was transported on a plane the emits large amounts of
carbon. When you create the scope to purchase paper, you need to specify certain
minimum standard environmental requirements.
9 Value for
money
The value discussed throughout negotiation is concerned with the complexity of
products and services procured. Value is not just about price. For instance, if it is
simply a pen and every pen is considered the same, then price becomes a priority factor
in negotiations between trading partners because there are less switching costs
involved. However, if high value complex services and products are being traded, then
social factors such as the relationship with the supplier and win-win outcomes need to
be considered rather than just price. As stated by the contract manager at the
Australian University is that “the principal you work for is value for money, however,
value is not just about price, it is about other things, too.”
Table 1: Summary of categories influencing the negotiation in e-procurement from the procurer
perspective
All nine factors influence negotiation in the e-procurement environment at the Australian University,
and are related to each other. For negotiation in e-procurement to succeed, the relationship with
suppliers needs to be built, managed and maintained. By maintaining the relationship with the current
suppliers or market, trust can be built. Trust can be built through sharing knowledge and working
together with common goals and the ability to solve problems together. By having trust in the
business relationship, the negotiation process can run smoothly. The negotiation process can also run
smoothly through win-win outcomes, where each party will obtain the best result for them out of the
negotiation process. The collaboration amongst stakeholders to achieve win-win outcomes can be
achieved through the understanding of the partner’s culture and the skills of the negotiators. The
understanding of value for money is not only concerned about the price as the sole determinant but
1189
also how sustainability can be maintained. Thus, all issues identified above are needed in the
negotiation process in the e-procurement environment.
These issues need to be addressed in different stages of the negotiation process by the procurer. This
is to ensure that the negotiation process will run smoothly throughout the entire negotiation process.
For instance, the skill of the negotiators in terms of communication skills is essential before the
negotiation begins and continues throughout the negotiation process. The skills need to be maintained
even after negotiation finishes. This is due to the market relationship that still needs to be maintained
to obtain future benefits out of the relationship, such as getting better prices in the negotiation process
in the future. The next section will discuss the factors influencing negotiation in the e-procurement
environment at the Australian University from the suppliers’ perspective.
5.2 Seller Perspectives
• Background of suppliers companies
The university has thousands of suppliers due to their wide variety of needs. Due to this, the
university aggregates and centralizes contracts for key commodities including goods and services
such as property and building management-related suppliers, ICT suppliers, stationary and others.
For this research, the goods and services procured by the Australian University comes from two major
suppliers: Prima and Maya (alias provided in order to keep anonymity). Both companies are publicly
listed companies. Table 2 below represents typical products and services procured from Prima and
Maya respectively.
Companies Products Services
Maya Office supplies, furniture,
merchandise
Prima
Photocopies
Printing
• Brochures
• Envelopes
• Business card and etc.
Printing
• Examination printing
• Examination submission
• Job submission
Table 2 Products and services procured by the Australian University from Prima and Maya.
Prima and Maya were recognized as major suppliers of the university and have a long term trading
relationship with the Australian University. Maya has been a supplier with the Australian University
for approximately 20 years and Prima has been a supplier for nearly 30 years.
• Factors influencing the negotiation in an e-procurement from the supplier perspective
Six categories emerged from an analysis of the interviews and the descriptions for each category are
based on the interviews with the representatives from Prima and Maya. A summary of the categories
is provided in Table 3.
No. Categories Description
1 Communication
Issues
Open communication is needed when dealing with trading partners. Open
communication means that both parties can openly discuss any problems
concerning products or services but the communication between trading partners
still needs to be conducted through face-to-face negotiation. For instance, the
negotiator from Prima can openly discuss with the contract manager from the
Australian University on issues of print copy technologies. Prima provides
suggestions about the best solutions for print copy use for the benefits of the
university in terms of the cost and the effectiveness of the print copy product.
2 Trust Trust means both parties need to respect each other and understand their needs in
the transaction. Both organizations need to understand what they are trying to
1190
achieve throughout the negotiation process. Trust also refers to the person’s
ability to perform (deliver goods and services) based on promises made. For
instance, the negotiator from Prima has promised to the Australian University
that they will provide equipment that will support printing services.
In the instance that the company cannot fulfill the promise there will be no loss
of business because of the relationship and trust Prima has with the Australian
University.
3 Culture Culture is about dealing with lots of different behaviors of people in business
transactions from different countries. You need to have people that understand
the culture of the people that you negotiate with. For instance, Prima is a
Japanese company that operates in Australia, the way the company works and
thinks is influenced by the Japanese management style culture. However,
western companies such as Australia follow an individualistic approach
(Hofstede, 1980) and think of themselves when involved in the negotiation
process.
4 Goodwill/
Reputation
Maintaining the good name of the organization based on the products and
services sold to the client. The negotiation processes relies on the reputation of
the business that the procurer is dealing with. For instance, Prima not only sells
services, the company also sells the good name of the company.
5 Relationship with
client
Relationships with the client refers to a partnership where there is a need for
open and honest communication between trading partners at the initial stage of
negotiation to build the transparency between trading partners. Relationships
also refer to how you structure your thoughts about trading partners and
collaborate technically and strategically in the marketplace. For instance, Maya
set-up an on-line ordering system for the Australian University. The on-line
ordering system helps the approved staff throughout the university to make an
order on-line. The order will immediately go to the Maya warehousing system
via a paperless transaction. The order can then be delivered directly, on time to
the university.
6 Instability of
market value
The instability of market value is due to high competition of products and
services sold in the market. So, as a supply company, to compete with other
suppliers, there is a need to have a strategic plan in handling negotiations. For
instance, Prima diversified its services through selling products such as printing
devices and printing services to the Australian University.
Table 3: Summary of categories influence negotiation in an e-procurement from supplier perspectives
Six factors influence negotiation in the e-procurement environment at the Australian University from
the supplier’s perspective. The relationship with the clients can be strengthened through open
communication with clients. Through open communication, trust can be built. This can be done if
the suppliers are able to keep promises made. By having trust between trading partners, issues such as
the instability of the market can be resolved through negotiation with trading partners. The instability
of the market value through higher competition with other suppliers in the market will potentially
cause the supplier to lose business with trading partners easily. However, with trust built between
them and the goodwill of the supplier’s business with trading partners, negotiation can run smoothly.
1191
6 ANALYSIS USING ACTOR NETWORK THEORY AS A LENS IN
NEGOTIATION IN AN E-PROCUREMENT ENVIRONMENT
The involvement of human actors in the negotiation process in an e-procurement network is solely
between procurers and suppliers. However, there are many non-human actors involved rather than
just human actors in the negotiation process. The use of electronic procurement to assist the procurer
and suppliers in the Australian University e-procurement environment includes: e-tendering, e-reverse
auctions, and e-mail that influence the negotiation process. By using e-procurement systems, the
procurement process can be expedited to procure goods and services more effectively. The process of
documenting the tender, setting-up the tender, posting the tender and submitting the tender is done
electronically by the Australian University. The submission of the tender from potential suppliers’ to
the university is also done electronically and this expedites the supplier selection process. In addition,
the ordering system for the purchase of goods is done electronically, which assists in the order being
delivered directly on time to the university. Based on the interaction amongst the actors either human
or non-human, several networks can be formed in negotiation in the e-procurement environment. A
new network would consist of electronic networks, social networks and supply networks. The
electronic network can be identified from the use of e-procurement devices such as e-tendering, e-
mail and ordering systems used by the Australian University and suppliers. The social network can be
identified through the factors that influence negotiation in e-procurement by both parties; and the
supply network can be identified through the interaction among the procurer, supplier and other inter-
organisational and intra-organisational parties. Each network can be integrated from and with each
other to form a new network for negotiation to occur in the e-procurement environment. As such, the
value chain among the actors involved in negotiation can be improved.
The concept of the actor is about implying that each actor can be defined and understood only in
relation to other actors. Negotiation in the e-procurement environment between trading partners can
be successful if each actor influencing negotiation is defined as an essential element in the e-
procurement network. Each of the human and non-human actors is related to each other in creating a
new network. With a new network structure for the negotiation in the e-procurement environment,
the negotiation process can be conducted more effectively than before e-procurement was
implemented. In ensuring that the effectiveness of negotiation between trading partners occurs, the
Australian University and their suppliers need to have a mutual understanding on the factors that
influence negotiation in that e-procurement environment. This can be seen from the similarities and
differences in factors influencing negotiation in e-procurement. Factors such as the relationship with
suppliers or clients, trust and culture are similar factors that are identified by the researcher through
the interviews with the procurer and suppliers at the Australian University. The relationship between
two trading partners needs to be maintained to ensure that the negotiation process can succeed. The
relationship can be maintained through the mutual understanding that both parties will earn win-win
outcomes through the negotiation process. Through the mutual understanding of both parties, trust
between the two trading partners will be maintained. Trust is about understanding the other parties’
needs (according to the Contract Manager at the Australian University). Through the trust that is
being developed between trading partners, and the relationship that has to be maintained, cultural
issues can be resolved. Culture is about understanding how other people work (according to the
Manager at Prima). Through the understanding of the way people work in different environments
then the negotiation process can operate more effectively.
7 CONCLUSION
Through this case study, the researcher discovered the role of non-human actors playing important
roles in the negotiation process in an e-procurement environment. Each non-human actor has its own
roles and interests in making the negotiation process in the e-procurement environment successful.
One of the roles includes the social issues that become essential factors in decision making to ensure
successful negotiation in the e-procurement environment. Through the integration of social issues, a
strategy to assist negotiation in e-procurement will help negotiators in making decisions effectively.
The role of e-procurement devices such as e-tendering, e-mail and ordering systems as devices help
1192
the procurer and suppliers expedite the negotiation process. By identifying the roles and interests of
each of human and non-human actors involved in negotiation in the e-procurement environment, a
new network can be formed. By having a stable network, the value chain among all parties involved
in the negotiation process can be improved.
Through the use of Actor Network Theory (ANT) as a lens, in particular the concept of the actors, the
researcher can identify the important values from the procurer and supplier’s perspective in
negotiation in the e-procurement environment effectively. In addition, ANT theory can be used as a
strategy to analyse and understand the issues that occur in an organization. By knowing the values
influencing the negotiation process between trading partners, it is hoped that greater success with e-
procurement will be achieved.
The limitation of this case study is that not all concepts of ANT are applied to explain the phenomena.
This is because some concepts are not directly related to the phenomena being explored. In addition,
this case study is only conducted at one university. Other similar case studies should be conducted in
other universities internationally. Future work may first deepen the existing analysis on
distinguishing the roles of actors in suppliers then other cases may be analysed if possible to replicate
or compare the findings.
Finally to conclude this research, negotiation in e-procurement is a complex network that relates to
the involvement of human and non-human actors. Negotiation in e-procurement is essential in
procuring goods and services between trading partners. Negotiators need to understand and be alert
of the importance of factors influencing negotiation in the e-procurement environment. In addition,
the use of e-procurement can enhance the collaboration among stakeholders involved in business
trading.
REFERENCES
Aguilar, A.S. and Reis, A.P.D. (2008). Why Do Firms Adopt E-procurement Systems? Using
Logistic Regression to Empirically Test a Conceptual Framework. IEEE Transactions on
Engineering Management, 55(1), 120-133.
Bajari, P., Mc millan, R. and Tadelis, S. (2008). Auctions Versus Negotiations in procurement: An
Empirical Analysis. Journal of Law, Economics, and Organization. May, 1-28.
Bichler, M. Kersten, G. Strocker, S. (2003). Towards a Structured Design of Electronic
Negotiations. Group Decision and Negotiation, 12, 311-335.
Bui, T., Gachet, A. and Sebastian, H.J. (2006). Web Service for Negotiation and Bargaining in
Electronic Markets: Design Requirements, Proof-of-Concepts, and Potential Applications to E-
Procurement. Group Decision and Negotiation, 15, 469-490.
Callon, M. and Latour, B. (1981). Unscrewing the Big Leviathan: How Actors Macro-Structure
Reality and How Sociologist Help them Do So. In K. Knorr-Cetina and A. Cicourel (eds)
Advances in Social Theory and Methodology. London:Routledge & Kegan Paul, 277-30.
Cerquides, J. and Sanchez, M.L (2007). Enabling assisted Strategic Negotiation in Actual-World
Procurement Scenario. Electronic Commerce, 7, 189-220.
Creswell, J.W. (2003). Research Design: Qualitative and Quantitative Approaches, Sage Publication
London.
DeBoer, L. Harink, J. et al. (2002). A Conceptual Model for Assessing the Impact of Electronic
Procurement. European Journal of Purchasing and Supply management 8(1), 25-33.
Denzin, N. K. and Lincoln, Y. S. (2000). Handbook of Qualitative Research.
Graneheim, U.H. and Lundman, B. (2004). Qualitative content analysis in nursing research:concepts,
procedures and measures to achieve trustworthiness. Nurse Education Today, 24, 105-112.
Hanseth, O. Aanestad, M. Berg,M. (2004). Actor Network Theory and Information Systems. What’s
So Special?. Information Technology and People, 17(2) 116-123.
Hardy, C.A and Williams, S.P. (2008). E-Government Policy and Practice: A Theoretical and
Empirical Exploration of Public E-Procurement. Government Information Quarterly, 25, 155-180.
Klein, H., Z. and Myers, M., D. (1999). A Set of Principles for Conducting and Evaluating
Interpretive Field Studies in Information Systems. MIS Quarterly 23(1), 67-93.
1193
Knudsen, D. (2003). Aligning Corporate Strategy and E-Procurement Tools. International Journal of
Physical Distributional Logistics Management, 33 (8), 720.
Kurtzberg, T and Medvec, V.H. (1999). Can We Negotiate and Still Be Friends? Negotiation Journal,
Oct, 355-361.
Latour, B. (1992). On Actor-Network Theory.http://www.nettime.org/List-Archives/nettime-1-
9801/msg00019.htm.l
Latour, B. (2005). Reassembling the Social. An Introduction to Actor Network Theory. Oxford
University Press.
Minahan, T. (2001). Strategic E-Sourcing: A Framework for Negotiating Advantage. – A white paper
from the Aberdeen Group. Retrieved December 2001, from
www.aberdeen.com/ab/hottopics/esourcing/.
Puschman, T. and Alt, R. (2005). Successful Use of E-Procurement in Supply Chains. Supply Chain
Management: An International Journal, 10(2), 122-133.
Reunis M.R.B and Santema, S.C, (2008). Extending the Network Approach in an Organization: The
Key Towards E-Procurement Adoption, 1-20.
Schoop, M. Kohne, F. and Ostertag, K. (2008). Communication Quality in Business Negotiation.
Group Decision and Negotiation.
Smeltzer, R.L, Manship, J.A, Rosseti, C.L (2003). An Analysis of the Integration of Strategic
Sourcing and Negotiation Planning. The Journal of Supply Chain Management, Fall, 16-25.
Tesch, R. (1990). Qualitative research: Analysis Types and Software Tools. New York: Falmer.
Thompson, L.L. (2000). Cross Cultural Negotiation. The Mind and Heart of the Negotiation, 2
nd
Edition, Prentice Hall.
Turban, E. King, D. McKay, J. Marshall, P. Lee, J. Viehland, D. (2008). Electronic Commerce A
Managerial Perspective. Pearson International Edition.
United Parcel Services of America (2005). Startegic Sourcing: Building a foundation for success-
understanding the difference between sourcing and strategic sourcing and its impact. A UPS
Supply Chain Solutions White Paper.
Yuan, Y., and Turel, O. (2004). A Business Model for E-Negotiation in Electronic Commerce.
InterNeg Working Paper INR2/04, John Molson School of Business, Concordia University,
Montreal Quebec Canada.
1194
doc_446764195.pdf
Negotiation is the key decision-making approach used to reach consensus whenever partners cannot achieve their goals. Advanced technologies such as e-procurement can facilitate effective solutions for negotiation between trading partners.
FACTORS INFLUENCING NEGOTIATION IN THE SOURCING
PROCESS BETWEEN PARTNERS IN E-PROCUREMENT: A
FOCUS ON ACTORS
Noraizah Abu Bakar, School of Business IT and Logistics, RMIT University, Melbourne,
Victoria, Australia, [email protected]
Konrad Peszynski, School of Business IT and Logistics, RMIT University, Melbourne,
Victoria, Australia, [email protected]
Abstract
Negotiation is an essential business activity for establishing trade relationships between partners
(Yuan and Turel 2004). As the business environment becomes more dynamic in this global setting,
negotiation between partners is required more often. Negotiation is the key decision-making
approach used to reach consensus whenever partners cannot achieve their goals (Thompson 2000).
Advanced technologies such as e-procurement can facilitate effective solutions for negotiation
between trading partners (Bichler et al 2003). With the shift from traditional procurement to
electronic procurement, there is a need to explore the social issues in the negotiation process and in
the electronic procurement environment in particular. Actor Network Theory (ANT) will be used as
guidance. Through a case study at an Australian University, factors influencing negotiation in the
sourcing process between partners in their e-procurement environment were identified. The
significance of this research is to provide knowledge to practitioners on the importance of the
negotiation process between partners in an e-procurement network. Furthermore, identifying and
understanding the social issues that influence the negotiation process will improve the value chain
between partners. As such, it is hoped that greater success with e-procurement will be achieved.
Keywords: Negotiation, E-procurement, Case study, Social Issues, Actor Network Theory
1184
1 INTRODUCTION
Negotiation is an essential business process for establishing trade relationship between partners (Yuan
and Turel 2004). Negotiations between partners are required frequently with the use of Internet-based
technologies to procure goods and services that usually involves complex negotiation (Cerquides et al
2007). With advanced web-based technology such as the Internet and extranets, the negotiation
process has become a prominent issue in the literature and in particular is notified in the area of e-
procurement (Aguiler et al 2008, Bui et al 2006, Bajari et al 2008). Kurtzberg and Medvec (1999)
stated that there are many elements of a relationship that can be impacted by negotiation such as the
relationship between parties, communication and their level of trust. With the involvement of many
actors in the negotiation process such as the procurer and supplier, issues influencing negotiation, this
research will explore the factors influencing negotiation in the sourcing process between partners in
an e-procurement network. By identifying factors influencing negotiation in an e-procurement
network, this will help answer the research question: how does the actor in an e-procurement network
influence the negotiation process?
The significance of this research is to provide knowledge to practitioners on the importance of the
negotiation process between partners in an e-procurement network. By identifying and understanding
the factors that influence the negotiation process, the value chain between partners will be improved
in the e-procurement network. By improving the negotiation process, it is hoped that greater success
with e-procurement will be achieved.
The structure of this paper is as follows: the next section will discuss the relevant literature and
explore the use of Actor Network Theory (ANT) as a theoretical background. The subsequent section
will discuss the research method used for data collection and analysis. The final section will provide
a discussion of the findings of the factors influencing negotiation in an e-procurement environment
between procurers and suppliers as well as provide a conclusion.
2 LITERATURE REVIEW
Procurement is a core activity in a business (Turban et al 2008) and sourcing is one of the critical
steps in buying goods and services, where individuals or groups analyze, assess and select a vendor
and their goods and services based on certain specifications and requirements (United Parcel Service
of America 2005). Aguiler et al (2008) claimed that the sourcing process for multiple goods or
services usually involves complex negotiations that include a discussion of a products features as well
as quality, services and availability issues. As such, there is a need for negotiation to be integrated
into the strategic sourcing process. Furthermore, managerial teams, such as supply managers and
purchasing managers, need to understand the importance of negotiation in strategic sourcing
(Smeltzer et al 2003). Negotiation is one of the elements in the sourcing process (Puschman and Alt
2005) and it is one of the factors that have a large influence in the implementation of Internet sourcing
strategies (Smeltzer et al 2003). When electronic commerce moves into a business-to-business (B2B)
market place, negotiation becomes more complex, the contracts can be done electronically with
communication among trading partners occurs throughout the system, which includes negotiating a
supply contract between manufacturers and suppliers. Schoop et al (2008) claim that to support
business negotiations with electronic tools effectively, a deep understanding of real life business
negotiation is required.
E-procurement is the process of utilizing web-based technologies to support the identification,
evaluation, negotiation and configuration of optimal groupings of trading partners into the supply
chain network, which can then meet demands with greater efficiency (Minahan 2001). E-procurement
is not one single application (Knudsen 2003). Rather, e-procurement consists of many different tools.
De Boer et al (2002) identified six forms of e-procurement: e-sourcing, e-reverse auctioning, e-
tendering, and e-informing, e-MRO and web-based ERP. Puschman and Alts (2005) claim that most
companies operate multiple e-procurement solutions. In explaining negotiation in the e-procurement
environment, Actor Network Theory will be used as a lens for this research. The next section will
1185
discuss the use of Actor Network Theory (ANT) for understanding the negotiation process in an e-
procurement environment.
3 ACTOR NETWORK THEORY AS LENS
Actor Network Theory (ANT) is a social theory of technology (Hanseth et al 2004). Latour (1992)
states that ANT deals with the socio-technical by denying that purely technical or purely social
relations are possible, and considers the world to be full of hybrid entities. As such ANT proposes a
socio-technical account in which neither social nor technical positions are privileged (Latour 1992).
ANT is used to investigate issues in the negotiation process that incorporate human actors such as
buyers and suppliers and how the interaction between these actors affects the negotiation process as
well as identifying the factors that influence the negotiation process. One concept in ANT will be
used to explain the relationship of factors influencing negotiation in the e-procurement environment -
the actors. This concept is applicable because of the identification of actors, both human and non-
human actors in the negotiation process in e-procurement are critical to effective negotiation.
The concept of the actor in ANT is defined as “any element which bends space around itself, makes
other elements dependent upon itself and translates their will into the language of its own” (Callon
and Latour 1981, p. 286). Actors in ANT consist of human actors and non-human actors. Common
examples of actors include humans, collectivities of humans, texts, graphical representations and
technical artifacts and computers. Latour (2005) provides the analogy of an ‘actor’ in the theatre. The
‘actor’ constantly suggests that the source of inspiration of the action is somewhere else; perhaps the
audience, backstage, the crew, the props, the playwright or the character. Latour (1992), in viewing
non-human actors as actors, highlighted the issue how can non-human actors have interest? The
interests of non-human actors can be equated to the interest that has been inscribed to it. For instance,
it may be argued that a car’s seat belt has the interest of passenger safety that was inscribed in it by
the designer.
As this research is about negotiation in e-procurement at an Australian University, there are human
and non-human actors involved. The procurer from the Australian University and the suppliers of the
university will be the human actors in the e-procurement environment. The remaining actors will be
considered as non-human actors and include web-based technologies that have been used via the
Internet, which enables actors to communicate in negotiating and exchanging goods and services
(Schoop 2008). Each actor has their own responsibilities and roles in ensuring the success of the
negotiation process in the e-procurement environment. The relationship amongst actors plays an
important role in e-procurement practices. Reunis et al (2008) identified the actors involved in their
research on the intra-organizational spread of e-procurement adoption from one actor to another in
purchasing organizations from two categories: experts and industry practitioners. In addition, Hardy
and William (2008) in their study on governmental e-procurement policies provided examples of
actors as consultants, IT providers, buyers and suppliers. By using Actor Network Theory (ANT) as a
lens or guide for this research, it is believed that there will be actors both human and non-human that
will influence negotiation in the e-procurement environment identified through this research.
4 METHODOLOGY
The qualitative method is used to enable the researcher to answer the research question. Furthermore,
this study will be driven by the interpretive paradigm (Denzin and Lincoln 2000) as interpretive
research attempts to understand a phenomenon through accessing the meanings that participants
assign to them (Klein and Myers 1999). This research adopts the case study research method as this is
an exploratory study and the researcher needs to obtain in-depth data on negotiation in the e-
procurement environment. The case study was conducted at an Australian University in Victoria
between two parties: the Australian University as a buyer and two companies that are the major
suppliers to the university. Two representatives from the Purchasing Department of the university are
Director of Purchasing Department and the Procurement Manager and one representative from each
supply company were interviewed via semi-structured interviews. The interviewer recorded the
1186
interviews with permission of the interviewees and made use of written notes during the interviews.
The one-on-one interviews took approximately 45-60 minutes.
The data collected from the face-to-face interviews was analyzed using content analysis. Before the
content analysis technique was used to analyze the data, all interviews were transcribed. After the
interviews were transcribed, the researcher used the eight-steps proposed by Tesch (1990) for coding
the collected data. After completing the coding process, categories were generated. The various
codes were then compared based on differences and similarities and sorted into sub-categories and
categories, which constitute the manifest content (Graneheim and Lundman 2004). Thirdly, the
underlying meaning, or the content of the categories were formulated into specific themes (Creswell
2003, Graneheim and Lundman 2004). Finally, the researcher interpreted the data, based on the
question “what were the lessons learned”. These lessons were based on the researcher’s personal
interpretation and the meanings derived from a comparison of the findings with information from the
literature review (Creswell 2003). The findings from the case study will be discussed in the next
section.
5 FINDINGS
This section will discuss the factors influencing negotiation in an e-procurement environment from
two different perspectives, the procurer and suppliers at an Australian University. Categories
emerged from an analysis of the interview on factors influencing negotiation in the e-procurement
environment at the Australian University on behalf of the procurer and suppliers and are discussed
below.
5.1 Buyer Perspectives
• Background of the procurer organization
The Australian University is organized into three academic faculties and eight service departments.
One of the service departments is Resources. The purpose of the Resources Department in the
university is to ensure effective and rigorous planning, measurement and reporting of financial
outcomes to achieve university strategies in a controlled manner. There are seven groups organized
under the Resources department: Accounting Unit, IT Unit, Human Resource Unit, Treasury Unit,
Law Unit, Management and Property Unit, and Information and Web Unit. One of the departments
provided under the Accounting Unit is the Purchasing Department. The Purchasing Department
provides services to the entire university. The role of this unit is to achieve substantial savings
through the review of sourcing and procurement options across the university based on $140 million
expenditure in goods and services. The contract manager in the Purchasing Department at the
Australian University is the person that has sole responsibility in handling all procurement activities.
There are four specific activities that assist the university to acquire the best products and services at
an effective cost to the university: strategic sourcing and procurement services; university approved
supplier; tenders; and fair-trade.
E-procurement was introduced to the university in 2004. Currently, the university has improved the
system by having full end-to-end system support for the entire procurement cycle from e-tendering
through to contract management facilities via software called “wide windows” (name changed to
provide anonymity). The e-tendering system assists the Purchasing Department in processing the
tender from documentation until posting the tender to the website. The submission of the tender from
potential suppliers’ to the university is done electronically and this expedites the supplier selection
process. Besides the e-tendering system, the university uses another system called ‘MayaExpress’
(name changed to provide anonymity). MayaExpress is an online ordering system for the purchase of
approved standards of furniture, office supplies and merchandise. Approved staff throughout the
university can use this system to order goods. Approved staff log in to MayaExpress to view the
products offered by Maya and enable staff to order on-line. The order will immediately go to the
Maya warehousing system via a paperless transaction. The order can then be delivered directly, on
time, to the university.
• Factors influencing the negotiation in an e-procurement from procurer perspectives
1187
Nine categories emerged from an analysis of the interviews and the descriptions for each category are
based on the interviews with representatives from the Australian University: the director of Strategic
Sourcing and Procurement Department and the Procurement Manager from the Strategic Sourcing and
Procurement unit at RMIT University. A summary of the categories is provided in Table 1.
No. Categories Description
1 Relationship
with supplier
A relationship with suppliers needs to be built, managed and maintained by one
person. The contract manager in the university is responsible to manage face-to-face
relationships with current suppliers. If the Purchasing Department decides to change
suppliers, the contract manager will help to create a contract with the new supplier.The
relationship that the procurer has with the market is a way the procurer’s organization
maintains the relationship with trading partners. The way procurers treat the market
will influence the negotiation process. For instance, maintaining a good relationship
with past supplier’s means that the procurer’s organization also maintains the market
relationship in a positive manner and the way organizations treat the market can
improve the service through negotiating a better price.
2 Trust Trust needs to be earned with the trading partner. The trust earned will take several
steps. Trust needs to be built through conversations, providing information,
developing relationships, sharing knowledge and working together with common goals
and the ability to solve problems together. Trust can be built through having a long
term relationship with suppliers. For instance, according to the contract manager at the
Australian University “you may set-up a contract in Australia with e-procurement
through sending an e-mail on the contract details and say, ‘we can do this and do that
and I will protect your IP’, however, there is no guarantee they will follow the contract
unless you have a relationship with that company.”
3 Skills of
negotiator
The skills negotiators undertake in e-procurement become important. The contract
manager is responsible in handling negotiation at the Australian University. The
negotiator needs to be able to build the relationship by being friendly, understanding
and thinking about win-win outcomes for both parties. Negotiation with suppliers
might be harsh and tough, thus communication skills are essential for the contract
manager to build the relationship with supplier in the Australian University.
4 Culture The cultural issue needs to be acknowledged, addressed, incorporated and understood
by the organization. As stated by contract manager “you can’t change culture,
thousands of years of cultural background wouldn’t change because of the system”.
For instance, in Asia, the relationship is so important and might build the relationship
over two years before you actually do a deal to create a contract.
5 Sustainability
Issues
Sustainability refers to working together to find the best solution for both parties based
on the limited resources that occur. Partners must strive for the best decision not only
based on one factor in decision making. However, taking into consideration all factors,
either social, such as the relationship and collaboration, or economic, such as price and
quality of goods and services procured that influence negotiation in the e-procurement
environment. For instance, there is high demand on fair-trade products by users in the
university, which Maya cannot fulfill. Thus, the contract manager from the Purchasing
Department will negotiate by working together with Maya to ensure they will be able
to supply enough without compromising the quality of products and future plans.
1188
6 Collaboration E-procurement allows many stakeholders involved in negotiation to collaborate either
through inter-organizational and intra-organizational systems. Mutual benefits for all
stakeholders involved will be the greatest concern amongst all stakeholders involved in
the negotiation process. For instance, for the Australian University to be recognized as
a Fair-trade organization (through certification provided by the Fair-trade Association
in Australia), there are many parties involved in the negotiation process such as: Maya
as the appropriate supplier to provide fair-trade products such as coffee; the Fair-trade
Association that will acknowledge the university as a fair-trade organization; and the
Australian University as a supporter of the fair-trade organization. These are the
examples of the stakeholders that collaborate to ensure the negotiation process
succeeds.
7 Win-win
outcome
Each party involved in negotiation will obtain the best result out of the negotiation
process for themselves. For instance, for the university to be recognised as a Fair-trade
organization, there are many parties involved that will have their own vision of gaining
benefits based on the collaboration. Maya will gain benefits by earning a profit for
selling fair-trade products as a supplier. The University will gain benefits in terms of
the recognition by the public as a supporter of the fair-trade organization.
8 Corporate
social
responsibility
With similar responsibilities the corporate social responsibility that each organization
is involved with can be achieved without difficulty. For instance, when working with
the contract manager to create the scope of services, one particular aspect that was
discussed was corporate social responsibility. For example when you want to purchase
paper, you know that lots of companies promise they will provide [environmentally]
green paper, however when looking at the details, the green paper was recycled paper
that came from Europe and was transported on a plane the emits large amounts of
carbon. When you create the scope to purchase paper, you need to specify certain
minimum standard environmental requirements.
9 Value for
money
The value discussed throughout negotiation is concerned with the complexity of
products and services procured. Value is not just about price. For instance, if it is
simply a pen and every pen is considered the same, then price becomes a priority factor
in negotiations between trading partners because there are less switching costs
involved. However, if high value complex services and products are being traded, then
social factors such as the relationship with the supplier and win-win outcomes need to
be considered rather than just price. As stated by the contract manager at the
Australian University is that “the principal you work for is value for money, however,
value is not just about price, it is about other things, too.”
Table 1: Summary of categories influencing the negotiation in e-procurement from the procurer
perspective
All nine factors influence negotiation in the e-procurement environment at the Australian University,
and are related to each other. For negotiation in e-procurement to succeed, the relationship with
suppliers needs to be built, managed and maintained. By maintaining the relationship with the current
suppliers or market, trust can be built. Trust can be built through sharing knowledge and working
together with common goals and the ability to solve problems together. By having trust in the
business relationship, the negotiation process can run smoothly. The negotiation process can also run
smoothly through win-win outcomes, where each party will obtain the best result for them out of the
negotiation process. The collaboration amongst stakeholders to achieve win-win outcomes can be
achieved through the understanding of the partner’s culture and the skills of the negotiators. The
understanding of value for money is not only concerned about the price as the sole determinant but
1189
also how sustainability can be maintained. Thus, all issues identified above are needed in the
negotiation process in the e-procurement environment.
These issues need to be addressed in different stages of the negotiation process by the procurer. This
is to ensure that the negotiation process will run smoothly throughout the entire negotiation process.
For instance, the skill of the negotiators in terms of communication skills is essential before the
negotiation begins and continues throughout the negotiation process. The skills need to be maintained
even after negotiation finishes. This is due to the market relationship that still needs to be maintained
to obtain future benefits out of the relationship, such as getting better prices in the negotiation process
in the future. The next section will discuss the factors influencing negotiation in the e-procurement
environment at the Australian University from the suppliers’ perspective.
5.2 Seller Perspectives
• Background of suppliers companies
The university has thousands of suppliers due to their wide variety of needs. Due to this, the
university aggregates and centralizes contracts for key commodities including goods and services
such as property and building management-related suppliers, ICT suppliers, stationary and others.
For this research, the goods and services procured by the Australian University comes from two major
suppliers: Prima and Maya (alias provided in order to keep anonymity). Both companies are publicly
listed companies. Table 2 below represents typical products and services procured from Prima and
Maya respectively.
Companies Products Services
Maya Office supplies, furniture,
merchandise
Prima
Photocopies
Printing
• Brochures
• Envelopes
• Business card and etc.
Printing
• Examination printing
• Examination submission
• Job submission
Table 2 Products and services procured by the Australian University from Prima and Maya.
Prima and Maya were recognized as major suppliers of the university and have a long term trading
relationship with the Australian University. Maya has been a supplier with the Australian University
for approximately 20 years and Prima has been a supplier for nearly 30 years.
• Factors influencing the negotiation in an e-procurement from the supplier perspective
Six categories emerged from an analysis of the interviews and the descriptions for each category are
based on the interviews with the representatives from Prima and Maya. A summary of the categories
is provided in Table 3.
No. Categories Description
1 Communication
Issues
Open communication is needed when dealing with trading partners. Open
communication means that both parties can openly discuss any problems
concerning products or services but the communication between trading partners
still needs to be conducted through face-to-face negotiation. For instance, the
negotiator from Prima can openly discuss with the contract manager from the
Australian University on issues of print copy technologies. Prima provides
suggestions about the best solutions for print copy use for the benefits of the
university in terms of the cost and the effectiveness of the print copy product.
2 Trust Trust means both parties need to respect each other and understand their needs in
the transaction. Both organizations need to understand what they are trying to
1190
achieve throughout the negotiation process. Trust also refers to the person’s
ability to perform (deliver goods and services) based on promises made. For
instance, the negotiator from Prima has promised to the Australian University
that they will provide equipment that will support printing services.
In the instance that the company cannot fulfill the promise there will be no loss
of business because of the relationship and trust Prima has with the Australian
University.
3 Culture Culture is about dealing with lots of different behaviors of people in business
transactions from different countries. You need to have people that understand
the culture of the people that you negotiate with. For instance, Prima is a
Japanese company that operates in Australia, the way the company works and
thinks is influenced by the Japanese management style culture. However,
western companies such as Australia follow an individualistic approach
(Hofstede, 1980) and think of themselves when involved in the negotiation
process.
4 Goodwill/
Reputation
Maintaining the good name of the organization based on the products and
services sold to the client. The negotiation processes relies on the reputation of
the business that the procurer is dealing with. For instance, Prima not only sells
services, the company also sells the good name of the company.
5 Relationship with
client
Relationships with the client refers to a partnership where there is a need for
open and honest communication between trading partners at the initial stage of
negotiation to build the transparency between trading partners. Relationships
also refer to how you structure your thoughts about trading partners and
collaborate technically and strategically in the marketplace. For instance, Maya
set-up an on-line ordering system for the Australian University. The on-line
ordering system helps the approved staff throughout the university to make an
order on-line. The order will immediately go to the Maya warehousing system
via a paperless transaction. The order can then be delivered directly, on time to
the university.
6 Instability of
market value
The instability of market value is due to high competition of products and
services sold in the market. So, as a supply company, to compete with other
suppliers, there is a need to have a strategic plan in handling negotiations. For
instance, Prima diversified its services through selling products such as printing
devices and printing services to the Australian University.
Table 3: Summary of categories influence negotiation in an e-procurement from supplier perspectives
Six factors influence negotiation in the e-procurement environment at the Australian University from
the supplier’s perspective. The relationship with the clients can be strengthened through open
communication with clients. Through open communication, trust can be built. This can be done if
the suppliers are able to keep promises made. By having trust between trading partners, issues such as
the instability of the market can be resolved through negotiation with trading partners. The instability
of the market value through higher competition with other suppliers in the market will potentially
cause the supplier to lose business with trading partners easily. However, with trust built between
them and the goodwill of the supplier’s business with trading partners, negotiation can run smoothly.
1191
6 ANALYSIS USING ACTOR NETWORK THEORY AS A LENS IN
NEGOTIATION IN AN E-PROCUREMENT ENVIRONMENT
The involvement of human actors in the negotiation process in an e-procurement network is solely
between procurers and suppliers. However, there are many non-human actors involved rather than
just human actors in the negotiation process. The use of electronic procurement to assist the procurer
and suppliers in the Australian University e-procurement environment includes: e-tendering, e-reverse
auctions, and e-mail that influence the negotiation process. By using e-procurement systems, the
procurement process can be expedited to procure goods and services more effectively. The process of
documenting the tender, setting-up the tender, posting the tender and submitting the tender is done
electronically by the Australian University. The submission of the tender from potential suppliers’ to
the university is also done electronically and this expedites the supplier selection process. In addition,
the ordering system for the purchase of goods is done electronically, which assists in the order being
delivered directly on time to the university. Based on the interaction amongst the actors either human
or non-human, several networks can be formed in negotiation in the e-procurement environment. A
new network would consist of electronic networks, social networks and supply networks. The
electronic network can be identified from the use of e-procurement devices such as e-tendering, e-
mail and ordering systems used by the Australian University and suppliers. The social network can be
identified through the factors that influence negotiation in e-procurement by both parties; and the
supply network can be identified through the interaction among the procurer, supplier and other inter-
organisational and intra-organisational parties. Each network can be integrated from and with each
other to form a new network for negotiation to occur in the e-procurement environment. As such, the
value chain among the actors involved in negotiation can be improved.
The concept of the actor is about implying that each actor can be defined and understood only in
relation to other actors. Negotiation in the e-procurement environment between trading partners can
be successful if each actor influencing negotiation is defined as an essential element in the e-
procurement network. Each of the human and non-human actors is related to each other in creating a
new network. With a new network structure for the negotiation in the e-procurement environment,
the negotiation process can be conducted more effectively than before e-procurement was
implemented. In ensuring that the effectiveness of negotiation between trading partners occurs, the
Australian University and their suppliers need to have a mutual understanding on the factors that
influence negotiation in that e-procurement environment. This can be seen from the similarities and
differences in factors influencing negotiation in e-procurement. Factors such as the relationship with
suppliers or clients, trust and culture are similar factors that are identified by the researcher through
the interviews with the procurer and suppliers at the Australian University. The relationship between
two trading partners needs to be maintained to ensure that the negotiation process can succeed. The
relationship can be maintained through the mutual understanding that both parties will earn win-win
outcomes through the negotiation process. Through the mutual understanding of both parties, trust
between the two trading partners will be maintained. Trust is about understanding the other parties’
needs (according to the Contract Manager at the Australian University). Through the trust that is
being developed between trading partners, and the relationship that has to be maintained, cultural
issues can be resolved. Culture is about understanding how other people work (according to the
Manager at Prima). Through the understanding of the way people work in different environments
then the negotiation process can operate more effectively.
7 CONCLUSION
Through this case study, the researcher discovered the role of non-human actors playing important
roles in the negotiation process in an e-procurement environment. Each non-human actor has its own
roles and interests in making the negotiation process in the e-procurement environment successful.
One of the roles includes the social issues that become essential factors in decision making to ensure
successful negotiation in the e-procurement environment. Through the integration of social issues, a
strategy to assist negotiation in e-procurement will help negotiators in making decisions effectively.
The role of e-procurement devices such as e-tendering, e-mail and ordering systems as devices help
1192
the procurer and suppliers expedite the negotiation process. By identifying the roles and interests of
each of human and non-human actors involved in negotiation in the e-procurement environment, a
new network can be formed. By having a stable network, the value chain among all parties involved
in the negotiation process can be improved.
Through the use of Actor Network Theory (ANT) as a lens, in particular the concept of the actors, the
researcher can identify the important values from the procurer and supplier’s perspective in
negotiation in the e-procurement environment effectively. In addition, ANT theory can be used as a
strategy to analyse and understand the issues that occur in an organization. By knowing the values
influencing the negotiation process between trading partners, it is hoped that greater success with e-
procurement will be achieved.
The limitation of this case study is that not all concepts of ANT are applied to explain the phenomena.
This is because some concepts are not directly related to the phenomena being explored. In addition,
this case study is only conducted at one university. Other similar case studies should be conducted in
other universities internationally. Future work may first deepen the existing analysis on
distinguishing the roles of actors in suppliers then other cases may be analysed if possible to replicate
or compare the findings.
Finally to conclude this research, negotiation in e-procurement is a complex network that relates to
the involvement of human and non-human actors. Negotiation in e-procurement is essential in
procuring goods and services between trading partners. Negotiators need to understand and be alert
of the importance of factors influencing negotiation in the e-procurement environment. In addition,
the use of e-procurement can enhance the collaboration among stakeholders involved in business
trading.
REFERENCES
Aguilar, A.S. and Reis, A.P.D. (2008). Why Do Firms Adopt E-procurement Systems? Using
Logistic Regression to Empirically Test a Conceptual Framework. IEEE Transactions on
Engineering Management, 55(1), 120-133.
Bajari, P., Mc millan, R. and Tadelis, S. (2008). Auctions Versus Negotiations in procurement: An
Empirical Analysis. Journal of Law, Economics, and Organization. May, 1-28.
Bichler, M. Kersten, G. Strocker, S. (2003). Towards a Structured Design of Electronic
Negotiations. Group Decision and Negotiation, 12, 311-335.
Bui, T., Gachet, A. and Sebastian, H.J. (2006). Web Service for Negotiation and Bargaining in
Electronic Markets: Design Requirements, Proof-of-Concepts, and Potential Applications to E-
Procurement. Group Decision and Negotiation, 15, 469-490.
Callon, M. and Latour, B. (1981). Unscrewing the Big Leviathan: How Actors Macro-Structure
Reality and How Sociologist Help them Do So. In K. Knorr-Cetina and A. Cicourel (eds)
Advances in Social Theory and Methodology. London:Routledge & Kegan Paul, 277-30.
Cerquides, J. and Sanchez, M.L (2007). Enabling assisted Strategic Negotiation in Actual-World
Procurement Scenario. Electronic Commerce, 7, 189-220.
Creswell, J.W. (2003). Research Design: Qualitative and Quantitative Approaches, Sage Publication
London.
DeBoer, L. Harink, J. et al. (2002). A Conceptual Model for Assessing the Impact of Electronic
Procurement. European Journal of Purchasing and Supply management 8(1), 25-33.
Denzin, N. K. and Lincoln, Y. S. (2000). Handbook of Qualitative Research.
Graneheim, U.H. and Lundman, B. (2004). Qualitative content analysis in nursing research:concepts,
procedures and measures to achieve trustworthiness. Nurse Education Today, 24, 105-112.
Hanseth, O. Aanestad, M. Berg,M. (2004). Actor Network Theory and Information Systems. What’s
So Special?. Information Technology and People, 17(2) 116-123.
Hardy, C.A and Williams, S.P. (2008). E-Government Policy and Practice: A Theoretical and
Empirical Exploration of Public E-Procurement. Government Information Quarterly, 25, 155-180.
Klein, H., Z. and Myers, M., D. (1999). A Set of Principles for Conducting and Evaluating
Interpretive Field Studies in Information Systems. MIS Quarterly 23(1), 67-93.
1193
Knudsen, D. (2003). Aligning Corporate Strategy and E-Procurement Tools. International Journal of
Physical Distributional Logistics Management, 33 (8), 720.
Kurtzberg, T and Medvec, V.H. (1999). Can We Negotiate and Still Be Friends? Negotiation Journal,
Oct, 355-361.
Latour, B. (1992). On Actor-Network Theory.http://www.nettime.org/List-Archives/nettime-1-
9801/msg00019.htm.l
Latour, B. (2005). Reassembling the Social. An Introduction to Actor Network Theory. Oxford
University Press.
Minahan, T. (2001). Strategic E-Sourcing: A Framework for Negotiating Advantage. – A white paper
from the Aberdeen Group. Retrieved December 2001, from
www.aberdeen.com/ab/hottopics/esourcing/.
Puschman, T. and Alt, R. (2005). Successful Use of E-Procurement in Supply Chains. Supply Chain
Management: An International Journal, 10(2), 122-133.
Reunis M.R.B and Santema, S.C, (2008). Extending the Network Approach in an Organization: The
Key Towards E-Procurement Adoption, 1-20.
Schoop, M. Kohne, F. and Ostertag, K. (2008). Communication Quality in Business Negotiation.
Group Decision and Negotiation.
Smeltzer, R.L, Manship, J.A, Rosseti, C.L (2003). An Analysis of the Integration of Strategic
Sourcing and Negotiation Planning. The Journal of Supply Chain Management, Fall, 16-25.
Tesch, R. (1990). Qualitative research: Analysis Types and Software Tools. New York: Falmer.
Thompson, L.L. (2000). Cross Cultural Negotiation. The Mind and Heart of the Negotiation, 2
nd
Edition, Prentice Hall.
Turban, E. King, D. McKay, J. Marshall, P. Lee, J. Viehland, D. (2008). Electronic Commerce A
Managerial Perspective. Pearson International Edition.
United Parcel Services of America (2005). Startegic Sourcing: Building a foundation for success-
understanding the difference between sourcing and strategic sourcing and its impact. A UPS
Supply Chain Solutions White Paper.
Yuan, Y., and Turel, O. (2004). A Business Model for E-Negotiation in Electronic Commerce.
InterNeg Working Paper INR2/04, John Molson School of Business, Concordia University,
Montreal Quebec Canada.
1194
doc_446764195.pdf