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Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangements


We use the metaphor of the mutual assurance game to develop the notion that overseas suppliers may proactively manage uncertainty by making customized investments to serve their buyers. Using this game-theoretic conceptualization as a complement to the transactions cost analysis notion of credible commitments, we argue that such investments serve as assurances of commitment to the international buyer. The hypotheses are tested using data collected in a survey of U.S. purchasing managers regarding their relationships with their Pacific Rim suppliers. Consistent with our hypotheses, our primary results indicate that suppliers' relationship-specific investments are greater when technological uncertainty is high and buyers value supplier responsiveness. Further, our results suggest that relationship stability and buyer information sharing are greater when supplier relationship-specific investments are greater. These results provide some support for our argument that in the face of technological uncertainty, overseas suppliers may unilaterally commit to their buyers in attempts to obtain reciprocal benefits that help them manage external uncertainty.

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*Kirti Sawhney Celly is on the faculty at the Graduate School of Management at the University of California, Irvine. She will be an Associate Professor of Marketing at the College of Business Administration, California State University, Long Beach in the Fall of 1999. Her research interests are in international interorganizational relations and corporate citizenship issues.

**Robert E. Spekman is the Taylor Murphy Professor of Business at the Darden Graduate School of Business, University of Virginia. His research interests range from business-to-business marketing strategy, to alliance and partnership management, to procurement strategy and supply chain management.

***John Kamauff is a partner with PriceWaterhouse Coopers, where he is part of their supply chain management practice. His interests include supply chain management, procurement strategy, and the impact of early supplier involvement on the new product development process.

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Celly, K., Spekman, R. & Kamauff, J. Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangements. J Int Bus Stud 30, 297–316 (1999).

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