Purchasing Auctions - A Synthesis of Current Research
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Purchasing Auctions – A Synthesis of Current Research
by
Thomas Germer
Ph.D. Student and Research Associate
WHU Otto Beisheim Graduate School of Management
Herbert Quandt Endowed Chair for International Management
Burgplatz 2, Vallendar 56179, Germany
Phone ++ 49.261.650.9323
Fax ++ 49.261.650.9329
tgermer@whu.edu
Craig R. Carter, Ph.D.
Assistant Professor of Supply Chain Management
University of Nevada
College of Business Administration
Reno 89557-0206, U.S.A.
Phone ++ 1.775.784.6993, Ext. 321
Fax ++ 1.775.201.1754
crcarter@unr.edu
Lutz Kaufmann, Ph.D.
Professor and The Herbert Quandt Endowed Chair in International Management
WHU Otto Beisheim Graduate School of Management
Burgplatz 2, Vallendar 56179, Germany
Phone ++ 49.261.650.9320
Fax ++ 49.261.650.9329
kaufmann@whu.edu
Published in:
Proceedings of The 15th Annual North American Research
Symposium on Purchasing and Supply Management, Tempe,
AZ, USA, 2004, pp. 119-1391. Introduction
This paper contributes to the current research on online reverse auctions in industrial
purchasing by presenting a detailed literature review on purchasing auctions. To the best of our
knowledge, such an extensive literature review has not yet been published.
Despite some minor semantic differences, auctions are commonly defined as ‘a market
institution with an explicit set of rules determining resource allocation and prices on the basis of
bids from market participants’ (McAfee and McMillan (1987) p. 701). Only a few earlier
publications limit the auction use to portable goods (see Niessen (1974) p. 11, and Rathgen
(1911) p. 278) or require the physical presence of the auction item (see Niessen (1974) p. 11).
Consequently, electronic (or online) auctions can be considered as a market institution with an
explicit set of rules determining resource allocation and prices on the basis of electronically
submitted bids from market participants. As some researchers narrow the definition of online
reverse auctions to a downward price format (e.g. Emiliani and Stec (2002a) p. 12) or to bids
submitted only via the Internet (e.g. Pearcy, Giunipero and Dandeo (2002) p. 328), we
determined that a broader definition was appropriate, in order to also encompass purchasing
auctions in a dutch format (where prices rise) and auctions where bids are submitted
electronically, but not via the Internet (e.g. via an EDI access, see Bichler (2001) pp. 15, and
Amor (2000) pp. 29).
Auctions are widely used as a purchasing tool in industrial, governmental and personal
environments. Since auctions are among the oldest transaction mechanisms dating back to 500
B.C. (see Milgrom and Weber (1982) p. 1089), an impressive amount of articles on auctions has
been published to date. Already in 1980, Engelbrecht-Wiggans ((1980) p. 119) reported more
than 500 papers on auctions. In the summer of 2003, the EbscoHost database listed more than
17,400 non-refereed and about 1,400 refereed articles on auctions. Much of the auction research
is fragmentary and varies widely in scope (see Riley and Samuelson (1981) p. 381). As auctions
initially became popular in microeconomic theory, especially in the form of the invisible
‘Walrasian Auctioneer’ ensuring a market equilibrium, auction research was and still is
predominantly limited to issues in economics. If covered at all, purchasing as a managerial task
is usually only a side-issue in these papers.
Consequently, the literature on auctions published to date is in need of a critical review.
A review provides a basis for both theoretical and empirical research on purchasing auctions.
This paper provides such a review, and is organized as follows: Section 2 gives an introduction
to the methodology for literature reviews. Section 3 shows our specific search criteria to find
relevant articles on auctions in purchasing. These relevant papers are then thoroughly analyzed in
terms of content (section 4) and methodology (section 5). The paper concludes in section 6 with
a summary and an agenda to help guide future research.2. Methodology for Literature Reviews
A literature review in general can be seen as a ‘systematic, explicit, and reproducible
method for identifying, evaluating, and interpreting the existing body of recorded work produced
by researchers, scholars, and practitioners’ (Fink (1998) p. 3). Reproducibility is an important
feature because different search techniques lead to different samples of studies (see Cooper
(1998) p. 41).
According to Cooper, scientific information can be gathered from primary and secondary
channels (see Cooper (1998) pp. 42-77). Primary channels offer direct access to research results,
whereas secondary channels only provide information about research results. Primary channels
can contain both informal sources (like personal contacts, the world-wide-web, etc.) and
particularly formal sources, like electronic journals or reference lists of published studies.
Secondary channels are established and administered by third parties in order to provide an
extensive body of relevant publications to researchers – this clear mission is a major difference
from the world-wide-web. Research bibliographies, prospective research registers (e.g. in
medical science), citation indexes, and reference databases are the most important secondary
channels. In consideration of reproducibility as an important feature of a literature review,
publicly accessible reference databases and research registers form the backbone of any
comprehensive literature search (see Cooper (1998) p. 74, and Fink (1998) p. 18).
When using reference databases, two important limitations have to be considered. First,
the time lag between publication and appearance in the database can be quite long. Second, each
database usually employs certain rules of acceptance in terms of content and quality (see Cooper
(1998) pp. 60-61). Publications, in particular, which cover research on two commonly separated
disciplines (e.g. economics and psychology) are likely to be kept in the databases of only one
discipline. Thus database queries can provide incomplete results. This is why Cooper suggests to
additionally incorporate articles to the literature review that were found randomly /
unsystematically (see Cooper (1998) p. 75). For Fink, the use of additional channels comes with
certain strings attached (see Fink (1998) p. 34):
• The topic is new and its associated concepts have not yet been incorporated into official
subjects’ headings (likewise Cooper (1998) p. 61).
• Search terms are used inconsistently because definitions in the field are not uniform.
• There is reason to believe that many important studies are in progress or completed but
not published.
• Access to on-line databases is limited.
Besides the last aspect, the strings formulated by Fink result directly or indirectly from
the novelty of a topic which applies to the research of online reverse auctions, too: Both the
practical use and the scientific discussion on online reverse auctions in purchasing are in an early
stage. Therefore it is justifiable to include further references in the literature review that were not
found systematically.3. Search Terms and Data Sources
In order to present the current state of research on purchasing auctions, we conducted an
extensive literature review covering peer-reviewed articles and monographs in the English and
German languages. The search was limited to those two languages due to language restrictions of
the authors as well as a matter of research efficiency. To expand upon this current state of
research on purchasing auctions, two approaches are suitable. The research can be focused on
either the specific application of auctions for purchasing purposes or the electronic handling of
the auction mechanism. From our point of view, the specific application of auctions to
purchasing is the dominating feature, because it is the prerequisite for the discussion about the
electronic support of an auction. This distinction is by no means philosophical, but relevant for
the literature search. After an initial examination of the literature, we realized that articles on
electronic auctions in purchasing are basically a sub-category of the extensive body of literature
on electronic commerce, not of the literature on purchasing management. In order to avoid any
undesigned exclusion of relevant literature, we therefore included ‘electronic’ in our set of search
terms.
This paper adopts the view of the purchasing organization. Nevertheless, we decided not
to limit our search for relevant literature to this perspective for three reasons. First, terms like
‘selling auction’ or ‘purchasing auction’ do not give a clear and unique description of the type of
auction they refer to, because every auction has by definition buyer(s) and seller(s). Hence, there
is a purchasing perspective in every auction. Second, the distinction between selling auctions and
purchasing auctions is increasingly neglected. Even though auctions were historically interpreted
from a selling perspective (see Milgrom and Weber (1982) p. 1090 as an example), in many
recent publications the term auction is also used to describe ‘both bidding to buy and offering to
sell’ (Wei (1997) p. 65, and McAfee and McMillan (1987) p. 701). Third, an auction designed to
purchase a good or service can also be interpreted as an auction intended to sell the right to
supply a certain good or service to the demanding institution.
We included only articles and monographs in the English or German languages that were
listed in publicly accessible databases (see Fink (1998) pp. 52-55). We did not exclude any
particular journal up-front, but examined only articles published in peer-reviewed journals (for
monographs, a peer review is not common). A peer review is an important quality indication for
scientific research (see Cooper (1998) p. 79, and Schlinghoff and Backes-Gellner (2002) p. 347).
Some of the articles found unsystematically were not peer-reviewed.
We used EBSCOhost® database to search for English articles. EBSCOhost® belongs to
Ipswich-based EBSCO Publishing, ‘the world’s most prolific aggregator of full text journals,
magazines and other sources’ (EBSCO (2003)). We employed the ‘standard search’ mask with
the search terms ‘electronic auction’, ‘reverse auction’, ‘procurement auction’ and ‘purchasing
auction’ to find peer reviewed articles. All available data sources (Business Source Premier,
Econlit and Regional Business News) were included in the search without time restrictions. The
search was completed on July 20, 2003 and resulted in 43 publications.For German publications, we used the ‘WISO-Net Wiwi’ database that keeps more than
1.9 million references to German and international scientific journals, books and ‘grey literature’
(e.g. working papers) in economics, management, the financial service sector, and ergonomics
(see WISO (2003)). As with the English references, we employed the analogue German search
terms ‘Auktion’, ‘Elektronische Auktion’ and ‘Online Auktion’ and the two search term
combinations ‘Auktion’ plus ‘Beschaffung’ (= purchasing) and ‘Auktion’ plus ‘Einkauf’ (=
procurement) (‘plus’ in the sense of an intersection, not in the sense of a set union) without any
time limits. The search was completed September 15, 2003 and resulted in five German and two
additional English publications. Obviously irrelevant articles, e.g. book reviews or reports on
stamp auctions were eliminated from the gross results and not included in our review. In addition
to the articles we found systematically with the search techniques described above (marked with
a ‘s’ in Figures 1 and 2), we included 13 papers that were published in conference proceedings
and in non-reviewed journals in our literature review (marked with an ‘u’ for ‘unsystematically
found’). We regarded these articles to be relevant for the status quo of the topic due to the title of
the publication. Over all, we analyzed 63 publications.
4. Key Findings regarding Content
All publications were analyzed in terms of content and methodology (see Croom et al.
(2000) pp. 71). Regarding content, we first examined the parties participating in the auction
(companies, government or individuals) and their specific role. Next, we looked at whether the
publication deals predominantly with either the auction process or the conducting institutions.
We further considered whether the article was written from a purchasing or a selling perspective.
Finally, we thoroughly reviewed all references to see if managerial aspects in purchasing were
covered.
Remarkably, auctions in purchasing are a relatively new topic in academia – regardless of
the Internet hype. The first paper by Luton and McAfee dates back to 1986 and covers sequential
procurement auctions from a governmental perspective. As of the year 2000, only 14 papers on
auctions in purchasing were published. But since 2000, 49 publications were released: seven in
2000, nine in 2001, 22 in 2002, 10 in 2003, and one in 2004 (at the deadline of this review).
These numbers emphasise the growing practical and scientific relevance of auctions in
purchasing, obviously amplified by the enormous popularity of Internet auctions.
This paper deals with auctions between companies. Our review in terms of content starts
with the parties participating in an auction as buyer(s) and supplier(s). If both buyer(s) and
supplier(s) are companies, we use the term B-2-B auction (Business to Business). If
governmental or public institutions acts as a buyer and companies as supplier(s), we term these
auctions B-2-G (Business to Government). Auctions on private platforms like eBay take place
between two private individuals (C-2-C – Consumer to Consumer) or between companies as
sellers and private individuals as buyers (B-2-C – Business to Consumer). Our review of the
articles indicates that auctions in an industrial environment (B-2-B) were basically not covered
before 2000. Besides the articles by Hallwood (1996), Wolfram (1998) and Teich, Wallenius andWallenius (1999), all articles published until 2000 dealt with auctions in a governmental
environment or covered no institutional aspects at all (purely conceptual). Over all, only 51% (32
of 63) of the literature reviewed covered procurement auctions in a B-2-B context. About 29%
(18 of 63 publications) covered auctions in a governmental environment; roughly 16% (10 of 63)
do not cover any or at least no significant institutional aspects. The remaining 4% covered
auctions with private consumers.
As this paper addresses both the auction process and the participating institutions, we
analyzed to what extent both aspects are covered in the current literature (see also Jap (2003) p.
98). Process-related in this context means that those papers predominantly deal with the design,
influencing factors and optimization of an auction process. Wolfstetter (1998) for example
analyzes the design of the auction process in the case where the value of the auction item is
correlated among buyers and sellers. Oh (2002) compares the likelihood of a ‘winner’s curse’ in
a B-2-C and a C-2-C auction. We found that more than 52% (33 of 63) of the articles primarily
discuss such process-related issues. Only 35% (22 of 63 publications) cover both process-related
and institutional aspects. Institutional aspects are all intraorganizational issues that occur within
one or more participant’s organization in connection with an auction event. Beckmann (1999) for
example discusses the relation between auctioneer and seller as well as the relation between
auctioneer and bidder. Wilcox (2000) and Elgart (2001) do indeed cover institutional aspects, but
only for private consumer and public institutions. Emiliani (2000), Hong and Hartley (2001), Jap
(2002), and Smeltzer and Carr (2002) are among the first authors explicitly covering the
purchasing company’s perspective. Generally, the articles on auctions are predominantly
process-related.
Next, we surveyed the perspective from which the purchasing auction was analyzed. We
found seven publications mainly analyzing auctions from the view of the selling institution; 11
articles adopt more or less a neutral position. These results strongly support our earlier assertion
that literature on purchasing auctions cannot automatically be considered as purchasing
literature. These findings further underline the fact that the coverage of auctions in purchasing is
actually significantly lower than the number of publications found initially indicated.
Finally, we examined all publications to determine whether managerial aspects of
purchasing were analyzed. As opposed to interorganizational aspects in the previous question,
these aspects refer to intraorganizational issues, such as the integration of auctions into the
purchasing toolset or the impact of auctions on purchasing processes. Kinney (co-founder of
FreeMarkets.com) and Emiliani annotated selected issues from a purchasing perspective in a
more or less anecdotal manner already in 2000 (see Kinney (2000) pp. 41 and Emiliani (2000)
pp. 181). Emiliani and Stec (2001, 2002a and 2002b), Hong and Hartley (2001), Jap (2002), and
Pearcy, Giunipero and Dandeo (2002) were among the first authors who integrated managerial
issues related to the use of auctions in purchasing.
Jap (2002) is one of the first authors who explicitly included the effects of purchasing
strategy on auction design and the financial and non-financial benefits of the use of an auction
(see Jap (2002) pp. 513). In addition to these two issues, Beall et al. (2003) extensively furtheraddress managerial issues, including the cross-functional formation of auction teams (see Beall
et al. (2003) pp. 44). Analyzing the food company Mars Inc. as an example, Hohner et al. (2003)
examine the internal problems of purchasing management and their implications for the specific
design of auctions and the auction process. The publication by Luedtke (2003) is one of the first
holistic discussions on purchasing auctions in German speaking countries from a managerial
perspective. Based upon case studies and expert interviews, Luedtke reveals influencing factors
on the degree of utilization of auctions in purchasing, discusses design parameters, and proposes
a set of five auction modules. Furthermore, the phenomenon has so far not been examined in
cross-national contexts (exceptions are Beall et al. (2003) and Kaufmann and Carter (2003)).
Figure 1 provides a brief summary of the content of all of the articles reviewed in our paper.
5. Key Findings regarding Methodology
Our review of the research methodology employed in the existing literature specifically
focused on the degree of empirical support for the papers’ findings and assertions. Over all, the
status quo of empirical research on electronic auctions in purchasing is significantly low. Only
43% (27 of 63) of all publications contain some empirical data at all. The articles only
reproducing existing case studies (e.g. Bajari and Summers (2002)), quoting company examples
without rigorous analysis of data (e.g. Kannan and Kopalle (2001)) or announcing a forthcoming
survey (e.g. Hong and Hartley (2001)) were not considered ‘empirical’.
Looking at the data collection process, close to 50% of all empirically supported
literature (13 of 27) was based on secondary data. For example, three articles employ databases
from several Departments of Transportation (see Porter and Zona (1993), Gupta (2002), and
Hong and Shum (2002)). Another three papers made use of eBay’s database (see Wilcox (2000),
MacDonald and Slawson (2002), and Ottaway, Brunneau and Evans (2003)). A strong advantage
of the use of secondary data to test hypotheses is that a large amount of data is often available for
statistical analysis. Besides Sareen (1999), all authors working with secondary data use samples
larger than 100. Not surprisingly, then, all 13 publications working with secondary data employ
multivariate data analysis.
Empirical evidence for B-2-B auctions was provided in only 16 publications, with four
based upon secondary data (Wolfram (1998), Koppius and van Heck (2002), Smart and Harrison
(2002), and Bajari, McMillan and Tadelis (2003)) and 12 upon primary data. To the best of our
knowledge, the study by Jap (2002) is the first to gather primary empirical data by a large-scale
survey and provide multivariate data analysis (exploratory factor analysis). In addition to the
work by Jap (2002 and 2003), only Pearcy, Giunipero and Dandeo (2003) gather empirical data
on online reverse auctions with a large-scale survey. All other empirically supported publications
employ case studies to gain empirical insights.
The case study method can be used for several purposes, including building theories (see
Eisenhardt (1989), Glaser and Strauss (1967)), deepening the insights from a large-scale survey
(see Ellram (1996) p. 97), and providing teaching material (see Yin (2003)). Compared to alarge-scale survey, case studies are preferable if the status quo of (empirical) research in a
specific area is in a very early stage (see Yin (2003) pp. 3). This is the case for the research on
auctions in purchasing. With this in mind, the current status of empirical studies in purchasing
auctions is a logical consequence of the novelty of this research area. We assume that the amount
of large-scale surveys on auctions in purchasing will rise significantly in the near future. Figure
2 abstracts the methodology of all reviewed publications.
6. Summary and Agenda for Future Research
We analyzed 63 different articles and monographs in our literature review dealing with
purchasing auctions in some way and examined these articles in terms of content and
methodology. In a nutshell, the reviewed articles predominantly cover transactional aspects and
their mathematical optimization (how to auction). Issues regarding the appropriate use of
auctions in purchasing (when to auction) and the integration of auctions into the purchasing tool
set are not discussed in most articles.
The reviewed articles seldom focus on purely industrial transactions (B-2-B) but mainly
on transactions between companies and the government (B-2-G), between companies and private
consumers (B-2-C) or on purely private auctions (C-2-C) (see Hong and Hartley (2001) p. 83).
Regarding methodology, the majority of the articles employ highly formalized mathematical
optimization terms and are presumably not plausible/directly applicable for purchasing
managers. Empirical support of theoretical concepts is rarely provided. If so, empirical data is
predominantly derived from secondary channels or only one or more case studies and not from a
large-scale survey. Figure 3 provides a synopsis of the current literature on auctions in
purchasing in terms of content and methodology.
Future research should concentrate more on managerial issues. The auction process itself
is already heavily researched by theoretical literature in economics (see Jap (2003) p. 98).
Several other issues emerge:
• Additional research is needed to gain evidence on the proposed long-term benefits and
concerns of auctions in purchasing (e.g., cycle time reductions, savings or sourcing
performance).
• Furthermore, the question of how to integrate auctions appropriately in the purchasing
toolset and in an auction-integrated sourcing process will be of vital interest for both
academia and practice.
• As auctions are a world-wide phenomenon, regional and cross-national/cross-cultural
studies examining similarities and differences might be of keen interest especially for
those companies employing an international and decentralized purchasing organization.
Beall et al. (2003) and Kaufmann and Carter (2003) conducted such research with the
only cross-national comparisons of auction practices published so far. The qualitative
research carried out on auctions so far has laid the groundwork for further research
particularly with large-scale surveys and multivariate statistics.Bibliography Content
Covered
Year of Focus on process managerial
Source Author(s) Participants Perspective Abstract
Publication and/or institution aspects in
purchasing?
Formulation and discussion of a formal model about sequential
s 1986 Luton / McAfee B-2-G process purchasing no
procurement auctions with the government as the purchasing institution.
Presents an auction model that allows participating companies to vary
quantities and technical specifications of the auction item. In addition to
s 1989 Dasgupto / Spulber B-2-G process purchasing no
the common model with fixed quantities and qualities, demand now
depends on the costs of the lowest bidder.
Analyses and discusses a 'winner takes all'- market compared to 'split
s 1992 Anton / Yao B-2-G process purchasing no award'-auctions with complete and incomplete information in terms of
price.
Formulation and empirical test of a model to identify collusive behavior
s 1993 Porter / Zona B-2-G process purchasing no
in governmental auctions for road construction work in the U.S.
Discusses the reason to chose an 'invited tender-bid procurement
auction' instead of a regular face-to-face negotiation for oil companies.
s 1996 Hallwood B-2-B process purchasing no
Additionally, implications of nondisclosure of prices after an auction for
current and future contracts are analyzed.
Develops a model to explain the relevance of purchasing company's
s 1996 Snyder n/a process purchasing no
characteristics on the likelihood for collusive behavior among suppliers.
Discusses auction design when suppliers decide to invest in cost-
reductions before bidding. This investment may rise the likelihood of
s 1997 Bag n/a process purchasing no
winning the auction, but do not automatically improve the competitive
situation of a supplier in an auction.
Designs a two-stage bidding process for multi-dimensional auctions
s 1997 Branco n/a process purchasing no
when costs are correlated among suppliers.
Rodrígez-Aguilar et Modifies an agent-based electronic auction system towards a 'test-bed'
s 1998 n/a process n/a no
al. for electronic trading agents in internet auctions.
Formulates and tests a model to test 'strategic bidding' and its
s 1998 Wolfram B-2-B process sales no
implications for daily electricity auctions in England and Wales.
Gives an overview on auctions and their relevance in the economy and
presents basics on auction theory. The impact of mutual dependencies
s 1998 Wolfstetter n/a process sales no
of private quality signals between sellers and buyers - known as the
'linkage-principle' - is discussed in brief.
Researches the organization of the German market for auctioneers and
institution and auction service provider supported by a large-scale survey. Especially
s 1999 Beckmann n/a n/a no
process the relation between auctioneer and seller and between auctioneer and
buyer is analyzed.
Considering 37 auctions of the public Indian oil company IOC as
example, this article investigates whether the common value or the
s 1999 Sareen B-2-G process purchasing no
independent value paradigm better explains the use of a sealed-bid
format for the procurement of oil by employing a 'posterior odds ratio'.
Describes different algorithms for multidimensional auctions and
Teich / Wallenius /
s 1999 B-2-B/C process n/a no markets and exemplifies those algorithms for the electronic stock
Wallenius
trading program 'OptiMark'.
Describes auction processes for direct materials in B-2-B relationships
institution and purchasing
u 2000 Emiliani B-2-B no and presents benefits and concerns of auction use for both buyer and
process and sales
seller.
institution and Brief description of a research project on online reverse auctions
s 2000 Jap B-2-B purchasing no
process carried out by Sandy D. Jap.
Anecdotal comparison of the Internet marketplaces 'Bid-Ask Neutral
Marketplaces', 'Seller-Bidding Reverse Auctions' and 'Buyer-Bidding
s 2000 Kinney B-2-B n/a purchasing no
Reverse Auctions' and description of a seller-bidding reverse auction
process.
Discusses the impact of a variable number of bidders on the outcome
s 2000 Kjerstad / Vagstad B-2-G process purchasing no of an auction. Special focus on the role of entry investments for
participating suppliers.
Short introduction on the web portal www.cfoweb.com which can be
s 2000 Marshall B-2-B institution purchasing no
used to buy different financial products.
Analyzes the market equilibrium and social welfare for auctions with a
s 2000 Wang B-2-G process purchasing no renegotiations after the actual auction event (comparison to the model
by Bulow / Klemperer).
institution and Examines the role of experience on bidding strategies for auctions for
s 2000 Wilcox B-2-C n/a no
process four different product categories at eBay.
Figure 1: Summary in Terms of Content (1/3)Bibliography Content
Covered
Year of Focus on process managerial
Source Author(s) Participants Perspective Abstract
Publication and/or institution aspects in
purchasing?
Studies a model for competitive bidding in purchasing auctions with
asymmetric bidders. More realistic models have to consider asymmetric
s 2001 Bajari n/a process n/a no
bidders and bids because in reality, different locations, different
management skills and collusive behavior leads to asymmetries.
Analyses the impact of modern IT technologies, esp. the Internet, on
s 2001 Buchwalter B-2-B process purchasing no
purchasing processes (purely conceptual).
Anecdotal report on the introduction and the usability of electronic
institution and
s 2001 Elgart B-2-G purchasing no reverse auctions for US Army's CECOM (Communications-Electronics
process
Command).
Presents and discusses common contract conditions in industrial
u 2001 Emiliani / Stec B-2-B institution purchasing yes
reverse auction purchasing processes.
Starts with a brief introduction on reverse auctions and their specific
institution and
u 2001 Hong / Hartley B-2-B purchasing yes pros and cons. Presents a conceptual model to research buyer's
process
satisfaction with online reverse auctions.
Illustrates dynamic prices on the Internet and their use. Focuses on 'e-
s 2001 Kannan / Kopalle B-2-C process sales no tailers' and perishable goods (airline tickets, hotel accommodations
etc.).
Anecdotal report on opportunities and concerns from online reverse
s 2001 Oliva B-2-B process sales no auctions from a seller's perspective under reference to the Harvard
Business Review paper by S. D. Jap (2000).
Discusses whether two companies should cooperate due to
institution and
u 2001 Rosenkranz B-2-B sales no externalities and whether they should bid in an auction as partners or
process
competitors.
Presents an agent-based auction system which is able to employ
s 2001 Sim / Wong n/a process n/a no
market-driven negotiation strategies and a contract-optimization tool.
Describes a two-stage test from Bajari and Ye to detect collusive
behavior among bidders. If bids in sealed-bid auctions are neither
s 2002 Bajari / Summers B-2-G n/a purchasing no
'conditional independent' nor 'exchangeable', they are most likely to be
collusive and not competitive.
Analyzes the change in social welfare when additional bidders bid in
second price sealed bid auctions and in english auctions. Hypothesises
s 2002 Compte / Jehiel n/a process n/a no
that bidder's valuation of the auction item is influenced by both the
common value model and the independent private value model.
Examines the correlation between cost structure, communication and
s 2002 Davis / Wilson B-2-G n/a purchasing yes (B-2-G)
conspirative behavior for both fixed and endogenous cost structures.
Discovers several discrepancies between the 'Caux Round Table
institution and
u 2002 Emiliani / Stec B-2-B purchasing yes Principles for Business' and the use of online reverse auctions in
process
purchasing.
Discusses different kinds of savings resulting from the use of auctions
institution and in purchasing. Especially distinguishes between gross and net savings
u 2002 Emiliani / Stec B-2-B purchasing yes
process and explores reasons for systematic overestimations of expected
savings.
Presents and tests a model to survey the impact of additional bidders
s 2002 Gupta B-2-G process purchasing no on price and auction outcome for road construction auctions of the
Florida Department of Transportation.
Tests a model in which bidder's evaluation of the auction item is
influenced by both the independent private value model and the
s 2002 Hong / Shum B-2-G process purchasing no
common value model based upon 1,018 auctions from the New Jersey
Department of Transportation (NJDOT).
Based upon a systematic comparison of electronic reverse auctions in
institution and
s 2002 Jap B-2-B purchasing yes contrast to classic auctions, conditions and structures and effects of
process
electronic reverse auctions in purchasing are intensely evaluated.
Develops a matrix on how exchange types (relational vs. transactional)
institution and
u 2002 Jap / Mohr B-2-B purchasing no are related to web-based efficiencies. The excessive use of price-only
process
auctions can indeed jeopardize buyer-supplier-relationships.
Empirical analysis whether bidding behavior differs among physically
s 2002 Koppius / van Heck B-2-B institution n/a no present bidders, online bidders, and online bidders having physical
access to the bidding room.
Figure 1: Summary in Terms of Content (2/3)Bibliography Content
Covered
Year of Focus on process managerial
Source Author(s) Participants Perspective Abstract
Publication and/or institution aspects in
purchasing?
Compares the likelihood and the extent of a 'Winner's Curse' in C-2-C
s 2002 Oh B/C-2-C process sales no
and B-2-C auctions.
Develops a conceptual model to research the impact of purchase type
Pearcy / Giunipero / institution and on the reverse auction process. Furthermore, the impact of auctions on
u 2002 B-2-B purchasing yes
Dandeo process savings, employee's productivity and buyer-supplier-cooperation is
analyzed.
Starts with a brief introduction on current developments in purchasing
management and online reverse auctions. Conducts six case studies
s 2002 Smart / Harrison B-2-B process purchasing no
and researches prices and savings in auctions as well as buyer-supplier-
relationships.
Case-based elaboration of the reasons, the pros and the cons of
institution and
s 2002 Smeltzer / Carr B-2-B purchasing yes (limited) auction use in purchasing and sales. Presents four conditions for an
process
appropriate use of auctions.
Starts with a brief overview over the general trade-offs of auction use in
institution and terms of strategy, participants and supplier location. Discusses the
s 2002 van Tulder / Mol B-2-B purchasing no
process impact of auctions on prices and buyer-supplier-relations for auctions of
cabinets for X-ray machines at Philips Medical Systems.
Wurman / Wellman / Describes auction rules in terms of bidding, clearing and information for
s 2002 B-2-B/C process n/a no
Walsh the use of electronic software agents in auctions.
Analyzes the benefits of auctions compared to face to face negotiations
Bajari / McMillan /
s 2003 B-2-B process purchasing no for private construction contracts in California based upon 4,100
Tadelis
awarding procedures held between 1995 and 2000.
Comprehensive and sophisticated analyses of use, design, success
institution and purchasing factors and future trends for online reverse auctions in purchasing
u 2003 Beall et al. B-2-B yes
process and sales based upon interviews with auction users, non-users, suppliers and
auction service providers.
Considering Mars as example, this articles presents two types of
s 2003 Hohner et al. B-2-B process purchasing yes auctions ('combinatorial' and 'volume discount') that meet Mars'
requirements for auctions in a complex environment.
Researches the impact of auction type (open vs. sealed bid) on buyer-
institution and purchasing
u 2003 Jap B-2-B no supplier-relationship. Among other insights, auctions can indeed
process and sales
confirm suppliers' concern that buyers may act opportunistically.
Based upon several case studies, this articles highlights that purchasing
processes employing electronic reverse auctions are usually not purely
institution and
u 2003 Kaufmann / Carter B-2-B purchasing yes electronically, but auction-integrated. Furthermore, conditions and
process
benefits of such an auction-integrated purchasing process in terms of
product, market and participants are evaluated.
Comprehensive work on the use of auctions in purchasing. Discusses
influencing factors and design parameters for reverse auctions in
institution and
s 2003 Luedtke B-2-B purchasing yes purchasing based upon interviews and case studies and concludes with
process
a set of five auction modules that are recommendable for a specific
situation.
Describes four different strategies how suppliers can participate in
purchasing auctions and how purchasing managers perceive those
s 2003 Oliva B-2-B process sales no strategies. Highlights that suppliers should promote not only the product
itself, but also all kinds of options in order to differentiate from
competitors.
Researches the impact of available pictures of the auction item, buyers'
Ottaway / Bruneau /
s 2003 C-2-C process purchasing no experiences and sellers' reputation on auction prices (based upon 120
Evans
coin auctions at eBay).
Empirically tests the relation between corporate strategy and the use of
Pearcy / Giunipero / online reverse auctions. Among other insights, this study does not
u 2003 B-2-B institution purchasing no
Dandeo confirm the relationship between a company pursuing a low cost
strategy and the use of 'bid and buy' online reverse auctions.
Discusses a model about the impacts of subsidizing discriminated
Rothkopf / Harstadt / bidders (e.g. small or minority-owned companies) in an electronic
s 2003 B-2-G process purchasing no
Fu reverse auction. Focuses on the trade-off between allocation efficiency
and bidding dynamics in an auction.
Comprehensive analysis of design, use and trends of online reverse
institution and
u 2004 Carter et al. B-2-B purchasing yes auctions in purchasing based upon 46 case studies with auction users,
process
suppliers, and auction service providers.
Figure 1: Summary in Terms of Content (3/3)Bibliography Empirical Support
Year of Statistical
Source Author(s) Sample Size Data Collection Process Auction Item Informants
Publication Analysis
s 1986 Luton / McAfee no empirical support
s 1989 Dasgupto / Spulber no empirical support
s 1992 Anton / Yao no empirical support
secondary data from the Department
road
s 1993 Porter / Zona 575 bids of Transportation of Nassau und suppliers multivariate
construction
Suffolk County
s 1996 Hallwood no empirical support
s 1996 Snyder no empirical support
s 1997 Bag no empirical support
s 1997 Branco no empirical support
s 1998 Rodrígez-Aguilar et al. no empirical support
National Power &
s 1998 Wolfram > 500 company database (secondary data) electricity multivariate
PowerGen
s 1998 Wolfstetter no empirical support
conventional auction descriptive
s 1999 Beckmann 159 survey n/a service providers and and
auctioneers multivariate
descriptive
database of Indian Oil Corporation
s 1999 Sareen 37 crude oil suppliers and
(secondary data)
multivariate
Teich / Wallenius /
s 1999 no empirical support
Wallenius
u 2000 Emiliani no empirical support
s 2000 Jap 6 n/a purchased parts suppliers none
s 2000 Kinney no empirical support
s 2000 Kjerstad / Vagstad no empirical support
s 2000 Marshall no empirical support
s 2000 Wang no empirical support
descriptive
s 2000 Wilcox 535 eBay database (secondary data) miscellaneous eBay user and
multivariate
s 2001 Bajari no empirical support
s 2001 Buchwalter no empirical support
s 2001 Elgart no empirical support
u 2001 Emiliani / Stec no empirical support
u 2001 Hong / Hartley no empirical support
s 2001 Kannan / Kopalle no empirical support
s 2001 Oliva no empirical support
u 2001 Rosenkranz no empirical support
s 2001 Sim / Wong no empirical support
s 2002 Bajari / Summers brief reproduction of two existing case studies
s 2002 Compte / Jehiel no empirical support
s 2002 Davis / Wilson no empirical support
u 2002 Emiliani / Stec no empirical support
u 2002 Emiliani / Stec no empirical support
Figure 2: Summary in Terms of Methodology (1/2)Bibliography Empirical Support
Year of Statistical
Source Author(s) Sample Size Data Collection Process Auction Item Informants
Publication Analysis
database of the Florida Department road
s 2002 Gupta 1.937 suppliers multivariate
of Transportation (secondary data) construction
database of the New Jersey 3 types of descriptive
s 2002 Hong / Shum 1.018 Department of Transportation construction suppliers and
(secondary data) work multivariate
s 2002 Jap 38 survey (online) miscellaneous purchasing manager multivariate
u 2002 Jap / Mohr no empirical support
database of KOA initiative (secondary
s 2002 Koppius / van Heck 81.803 flowers purchasing manager multivariate
data)
s 2002 Kwak no empirical support
s 2002 Mabert / Skeels case study Fortune 100 company (anonymous)
database of the United States
MacDonald / Handy /
s 2002 25.000 Department of Agriculture (secondary staple foods suppliers multivariate
Plato
data)
Harley
descriptive
Davidson
s 2002 McDonald / Slawson Jr. 460 eBay database (secondary data) eBay user and
collector's barby
multivariate
doll
s 2002 Naegelen no empirical support
s 2002 Niemeier analyses the German UMTS auction
descriptive
software-agent ('Price Collecting computer
s 2002 Oh 600 suppliers and
Software Agent') accessories
multivariate
Pearcy / Giunipero /
u 2002 no empirical support
Dandeo
exploratory case studies (secondary
s 2002 Smart / Harrison 6 miscellaneous purchasing manager none
data)
s 2002 Smeltzer / Carr 41 interview miscellaneous purchasing manager none
s 2002 van Tulder / Mol case study 'Philips Medical Systems'
Wurman / Wellman /
s 2002 no empirical support
Walsh
private
descriptive
Bajari / McMillan / data purchased from Construction construction
s 2003 4.100 suppliers and
Tadelis Market Data Group (se) work in northern
multivariate
California
purchasing manager,
u 2003 Beall et al. 50 interview miscellaneous supplier, non-user, descriptive
auction service provider
s 2003 Hohner et al. case study 'Mars'
descriptive
u 2003 Jap 68 survey miscellaneous suppliers and
multivariate
purchasing manager,
u 2003 Kaufmann / Carter 73 32 interviews and 41 case studies miscellaneous supplier, non-user, descriptive
auction service provider
s 2003 Luedtke 35 25 interviews and 10 case studies miscellaneous purchasing manager descriptive
s 2003 Oliva no empirical support
descriptive
Ottaway / Bruneau /
s 2003 120 eBay database (secondary data) coins eBay user and
Evans
multivariate
descriptive
Pearcy / Giunipero /
u 2003 142 survey n/a ISM members and
Dandeo
multivariate
s 2003 Rothkopf / Harstadt / Fu no empirical support
purchasing manager,
u 2004 Carter et al. 46 15 interviews und 31 case studies miscellaneous supplier, auction service descriptive
provider
Figure 2: Summary in Terms of Methodology (2/2)• Hallwood (1996) • Jap (2000) • Wolfram (1998) • Jap (2002 and 2003)
• Teich/Wallenius/ Wallenius • Mabert/Skeels (2002) • Koppius/van Heck (2002) • Pearcy/Giunipero/Dandeo
(1999) • Smart/Harrison (2002) • Bajari/McMillan/Tadelis (2003)
• Emiliani (2000) • Smeltzer/Carr (2002) (2003)
• Kinney (2000) • van Tulder/Mol (2002)
• Marshall (2000) • Beall et al. (2003)
• Buchwalter (2001) • Hohner et al. (2003)
• Emiliani (2001, 2002 a,b) • Kaufmann/Carter (2003)
B-2-B • Hong/Hartley (2001) • Lüdtke (2003)
• Oliva (2001) • Carter et al. (2004)
• Rosenkranz (2001)
• Jap/Mohr (2002)
• Kwak (2002)
• Pearcy/Giunipero/Dandeo
(2002)
• Wurman/Wellman/Walsh
(2002)
• Oliva (2003)
• Luton/McAfee (1986) • Niemeier (2002) • Porter/Zona (1993)
• Dasgupto/Spulber (1989) • Sareen (1999)
• Anton/Yao (1992) • Gupta (2002)
• Kjerstad/Vagstad (2000) • Hong/Shum (2002)
B-2-G • Wang (2000) • MacDonald/Handy/Plato
• Elgart (2001) (2002)
• Bajari/Summers (2002)
• Davis/Wilson (2002)
• Rothkopf/Harstadt/Fu (2003)
• Kannan/Kopalle (2001) • Wilcox (2000) • Oh (2002)
• Wurman/Wellman/Walsh • McDonald/Slawson Jr.
B/C-2-C (2002) (2002)
• Ottaway/Bruneau/Evans
(2003)
• Snyder (1996) • Beckmann (1999)
• Bag (1997)
no • Branco (1997)
• Rodrigez-Aguilar et al. (1998)
institutional • Wolfstetter (1998)
aspect • Bajari (2001)
• Sim/Wong (2001)
• Compte/Jehiel (2002)
• Naegelen (2002)
conceptual empirical empirical empirical
(case studies) (large scale, (large scale,
secondary data) primary data)
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