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Organizational buyers and conflict: The impact of conflict on ongoing and new purchasing situations

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Organizational buyers and conflict: The impact of conflict on ongoing and new purchasing situations
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  Journal of Purchasing & Supply Management 12 (2006) 2–13 Organizational buyers and conflict: The impact of conflict on ongoingand new purchasing situations Richard E. Plank a , Stephen J. Newell b,  , David A. Reid c a Cotsakos College of Business, William Paterson University of New Jersey, Wayne, NJ 07047, USA b Department of Marketing, Haworth College of Business, Western Michigan University, MS 5430, Kalamazoo, MI 49008, USA c Department of Sales, Cotsakos College of Business, William Patterson University of New Jersey, Wayne, NJ 07047, USA Received 21 October 2004; received in revised form 7 February 2006; accepted 15 February 2006 Abstract Social conflict is endemic to all human activity. In this study, we examine how conflict, as perceived by professional buyers, impactstheir ongoing relationships with current suppliers as well as its effect on developing new supplier relations. The results indicate thataffective (personality) conflict between the parties has a negative impact on both the buyer’s decisions in choosing a new supplier andtheir decision to continue an existing relationship with a supplier. The impact of cognitive (idea) conflict seems to be mixed. In ongoingrelationships, there is no impact, but in new choice purchase situations, higher levels of cognitive conflict are related to lower probabilityof getting a sale. The findings also reveal that having an approved supplier list lessens the negative effects of cognitive conflict in ongoingsupplier relations. r 2006 Elsevier Ltd. All rights reserved. Keywords:  Conflict; Relationships; Loyalty; Purchasing 1. Introduction Conflict has been studied extensively in the businessresearch literature. Research has been both qualitative andquantitative and has focused primarily on the antecedentsof conflict, the process of conflict, and how conflict isresolved (Thomas, 1992). One area of this research that hasnot been investigated is conflict’s influence on individualbuyer and seller interactions. Only Emiliani (2003) andVaaland and Ha ¨kansson (2003) have discussed buyer–sellerconflict from a theoretical and managerial perspective andonly two other recent studies have examined it in relationto business-to-business partnerships or transactional rela-tionships (Duarte and Davies, 2003; Reid et al., 2004). The Duarte and Davies study examined conflict betweencompanies, not between individuals. Reid et al. (2004)was primarily a scale testing exercise done in the context of suppliers choosing between two or more suppliers in a newtask purchase (Robinson et al., 1967).Consequently, the purpose of this paper is to examineconflict from the perspective of how it impacts buyerdecisions of two types, selection of a supplier and thedecision to remain with an existing supplier. The resultsfrom two quantitative studies will be discussed. The firststudy looks at the significance of perceived conflict onbuyer’s choice. The second investigates the significance of conflict and its relationship to perceptions of supplierloyalty. In addition, the impact of other related variableson conflict is also examined. Thus, this work extendsprevious work by examining what is referred to as ‘‘socialconflict’’ among buyers and sellers in two differentcontexts. 2. Literature review How buyers make decisions about suppliers is of criticalimportance to both the buying and selling firms. Buyingfirms want to ensure that purchase decisions are in theirbest interests and selling firms are focused on securing and ARTICLE IN PRESS www.elsevier.com/locate/pursup1478-4092/$-see front matter r 2006 Elsevier Ltd. All rights reserved.doi:10.1016/j.pursup.2006.02.004  Corresponding author. Tel.: +12693876166; fax: +12693875710. E-mail addresses:  plankr@wpunj.edu (R.E. Plank),steve.newell@wmich.edu (S.J. Newell).  maintaining business that is profitable and that helps themto meet their corporate goals. Buyers make a number of decisions in regards to the status of their current relation-ships with a supplier. In order to do this effectively, buyersmust conduct ongoing (both formal and informal) evalua-tions of their suppliers (Brooks, 1998; Purdy and Safayeni, 2000; Akarte et al., 2001; Parsons, 2002; Tulluri and Sarkis, 2002). These evaluations often lead to perceptions of loyalty by a buyer to a supplier (Wind, 1970; Morris and Homan, 1988; Sririam and Mummalaeni, 1990). Not surprisingly, maintaining existing relationships is difficult(Landeros et al., 1995). The ultimate outcomes of theseevaluations involve whether to maintain or terminate arelationship with a supplier. The ramifications of thesedecisions can have significant effects on both parties.The concept of supplier choice then has a number of perspectives. At a very basic level, it is the fundamental rolethat buyers play in their firms, they make decisions onwhich suppliers to use. They evaluate suppliers and basedon their evaluation models, select the supplier or supplierswhom they believe is likely to meet their needs.The classic models of organizational buying behaviorsuch as Robinson et al. (1967) all examine the process of this choice. That particular model defined three distinctchoice situations, straight rebuy, modified rebuy, and newtask purchase, all from the perspective of the buyer. Duringthe process and regardless of the situation, the possibilityof conflict between the buyer and seller exist.  2.1. The role of conflict Missing from the literature is a thorough understandingof the impact of conflict on buyers’ perceptions of suppliers.This is somewhat surprising considering that conflict is partof human interaction and certainly influences buyer–sellerrelationships (Emiliani, 2003). As Jehn (1995, p. 257) notes, conflict has been broadly defined as actual or perceivedincompatibilities. Much of the past research in this areaanalyzes the process of resolving conflict (Thomas, 1992)and has been studied mostly in relation to conflict betweencountries, organizations, and ideas.There are a number of perspectives that can be used toexamine conflict. One of the most popular paradigms is toexamine conflict from the perspective of its impact. Theseoutcomes are often categorized as constructive, disruptive,or dysfunctional. This notion of the consequences of conflict dates at least to Deutsch (1973) and has beenreferred to, in more recent literature, as either functional ordysfunctional conflict (Amason, 1996). One viewpointfocuses on the underlying sources of conflict. These typesof conflict have been have referred to as role conflict(Walker et al., 1975), goal conflict (Cosar, 1956), and ethical conflict (Schwepker et al., 1997). Another perspec-tive, which has been adopted in this study, is referred to associal conflict (Cosar, 1956).Two of the first researchers to investigate conflict inorganizations from a social conflict theory perspective wereGuetzkow and Gyr (1954). Though the terms for differentforms of conflict have varied based on the researcher (Jehnand Mannix, 2001), in essence, researchers describe twotypes of conflict—affective (personality)-based conflict andcognitive (idea)-based conflict. An example of affectiveconflict would be a disagreement based on ones dislike of another based on their style of communication. Anexample of cognitive conflict would be a disagreementover specific details of a cost/benefit analysis that has beenpresented by the seller to the buyer.Conflict, in general, is thought to be something thatshould be avoided in relationships, and not surprisingly, anumber of studies seem to back this assumption. Pastsocial conflict literature has continually demonstrated thataffective or personality conflict has negative repercussionson a number of relationship-focused variables includingperformance (Guetzkow and Gyr, 1954; Jehn, 1994, 1995; Amason, 1996; Amason and Sapienza, 1997). In contrast, some past literature indicates that cognitiveconflict can have a positive impact on social relationships(Jehn, 1995; Locke et al., 1994). Specifically, in certain circumstances cognitive conflict leads to more discussionbetween parties that then results in changes that actuallystrengthens the relationship (Emiliani, 2003; Jehn and Mannix, 2001; Jehn, 1995). In addition, the stronger the relationship, the more likely there will be perceived loyaltyon the part of the parties to each other.  2.2. Role of loyalty Loyalty represents the notion of faithfulness of parties toeach other. The idea of customer loyalty is considered animportant issue of managerial marketing (Reichheld,1993). The concept of relationship loyalty stems from theconcept of   source loyalty  first examined by Wind (1970)and further defined by Morris and Homan (1988). It is alsorelated to the concept of   relationship value  (Wilson andJantrania, 1993, 1994; Ravald and Gro ¨nroos, 1996;Gummesson, 1999; Payne and Holt, 2001).  Relationshipvalue management  focuses on developing loyal relationshipswith customers, employees and other outside stakeholdersthrough perceptions of value. Specifically, if customersperceive that value is inherent in the supplier’s offering,they are likely to continue to be loyal to that supplier. Mostrecently, Ulaga (2001, 2003) and Ulaga and Chacour (2001) have addressed the issue of creating value inbusiness markets and explicating the value of a businessrelationship. In addition, loyalty is also related to percep-tions of   relationship quality  as discussed at length byParsons (2002) and Naude ´ and Buttle (2000). Theseresearch streams have been useful in identifying antece-dents that eventually lead to loyalty in a relationship.Overall, it seems clear that the supplier plays a key role indeveloping buyer’s perceptions of loyalty.A reasonable question to ask is how does the constructof relationship loyalty differ from similar constructs thathave been studied in the buyer–seller domain such as ARTICLE IN PRESS R.E. Plank et al. / Journal of Purchasing & Supply Management 12 (2006) 2–13  3  organizational commitment? Theoretically, we definerelationship loyalty as a tendency for the purchasingmanager to perceive the received benefits from the supplierand the suppliers’ personnel in such a manner as to believeit is in their best interest to continue buying from thatsupplier. This definition suggests that relationship loyalty isa summary measure of the buyer’s perception of thecurrent relationship they have with the supplier company,the sales rep, and any other support people who areresponsible for developing and maintaining that company-to-company relationship.Organizational commitment as defined by Mowday et al.(1979) was presented as the affective and cognitivedimensions of an employee’s perception and their will-ingness to maintain a relationship with the organizationthey work for. There has been significant work in the salesliterature on the relationship of selling performance or salesmanagement outcome performance to perceptions of commitment of salespeople and sales managers to theirfirm (Jaramillo et al., 2003; Flaherty and Pappas, 2000). However, no work has been undertaken on commitment toother firms within a buyer–seller framework. Therefore,our construct relationship loyalty, differs in context and inapproach, as it is a general single construct rather then amore complex multidimensional construct.In summary, there has been relatively little empiricalresearch focusing on conflict in buyer–seller relationships.Only Reid et al. (2004) have explored social conflict inbuyer–seller relationships, though that research wasprimarily a scale testing exercise done in a single context,that of buyer–seller choice between two suppliers in a newtask purchase. Consequently, further study is needed tobetter understand the role of conflict in business relation-ships. 3. Research questions The current research investigates a number of issues.These include:(1) How do buyer perceptions of social conflict impact thechoice of a supplier in a new task situation where thebuyer has several choices?(2) How does social conflict influence buyer evaluations of the supplier within a longer-term continuous relation-ship?(3) Is affective or cognitive conflict more important indriving buyer decision-making?In addition to the research questions outlined above, theimpact of four other variables on these relationships willalso be investigated. These variables have a long history of research in the buyer–seller literature and have shown tohave impacts on buyer–seller decision processes in pastresearch, hence their selection as moderating variables forthis research.What the effect of having an approved supplier list hason purchase decisions is the first issue that this study willaddress. An approved supplier list is the outcome of aformal process whereby the buyer first establishes whetheror not the supplier can even compete for business (Plankand Kijewski, 1991). What Plank and Kijewski found wasthat this pre-purchase criteria was used by the majority of firms. Firms that utilized this purchasing process, divideconflict opportunities into two distinct purchasing activ-ities, deciding whether the product/service can be pur-chased and actually buying the product or service asopposed to other products or services that have also beenapproved. Thus, we would expect lower degrees of overallconflict in those purchasing situations where the product/service has already been approved, and less impact on therelationship of conflict to choice.The next issue of interest concerns whether theimportance of ‘‘service after the’’ sale plays a role in thedecision-making process. Service is becoming more im-portant in business-to-business buyer–seller relations (Neuand Brown, 2005; Woo and Ennew, 2005). What is obvious is that research has indicated that poor service can lead toconflict between the buyer and seller of various sorts andless opportunity for that supplier for future business.The impact of the use of single vs. multiple suppliers forpurchases (Treleven and Bergman, 1988; Swift, 1995) will also be examined. Past research has suggested that thenumber of suppliers utilized by organizations has beendecreasing (Carter and Narasimhan, 1996; Swinder and Srivatsa, 2001). This may indicate that firms think that it ismore advantageous to work though conflicts in order tomaintain long-term relationships with a limited number of suppliers than it is to have many alternative suppliers thatcan be utilized when significant conflicts between partiesarise.Finally, the question of whether the gender of thesalesperson being evaluated plays a role in the evaluationof the relationship is investigated. Though few recentstudies have looked at this issue, some past research hasindicated the presence of gender bias in situations wherenegotiation has taken place (Stuhlmacher and Walters,1999; Stoddard and Fern, 1999). In order to examine these additional moderating variables as well as the generalimpact of perceived conflict on purchasing choice pro-cesses, two studies were developed and executed. They aredescribed below. 4. Study methods and measures Two separate data sets were collected for use in twoindependent studies. The studies were done approximately18 months apart. This research was separated into twostudies, as the methodologies employed were slightlydifferent. In the first study, the dependent variable, supplierchoice from two or more potential suppliers, was oper-ationalized by mailing two sets of questionnaires that wereidentical except that the respondent was asked to comment ARTICLE IN PRESS R.E. Plank et al. / Journal of Purchasing & Supply Management 12 (2006) 2–13 4  on a successful salesperson, one they gave the order to, oran unsuccessful salesperson. In the second study, thedependent variable was a multiple indicator scale of relationship quality in an ongoing buyer–supplier relation-ship. In Study 1, we were interested in differences in socialconflict in a choice situation where a buyer had to choosefrom more then one potential supplier. In Study 2, we wereinterested in the impact of social conflict on existingrelationships at least 1 year in length, a very differentsupply management situation. In both studies, we utilizedthe same moderating variables measured in the same way.In each study, a mailing list was procured from the Institute for Supply Management  (ISM) and consisted of 5000 randomly selected members. This list was purged of all names that did not have a company affiliation. This wasbased on the assumption that most of these people wereeither retired or were students and therefore would not beable to adequately answer the questions posed. Each studyused a cross-sectional design. A random sample of themembership list of the ISM was used as a cross-section of their membership and these respondents were asked toanswer a series of questions to a mail survey at a particularpoint in time. Each study will be described in detail below.Fig. 1 provides a graph representing the hypothesizedmodels. 4.1. Study 1: supplier choice situation Eighteen hundred names were randomly selected fromthe initial list of 5000 names provided by the ISM. Twoquestionnaires were developed. Both were identical withrespect to the questions asked, the only difference beingthat one questionnaire asked the buyer to evaluate asalesperson from a recent negotiation who made the sale.The other questionnaire asked the buyer to rate asalesperson who did not make the sale. An equal numberof both types were sent out by randomly dividing thesample.Given the study’s budget, a single wave mailing with nopre-notification or second reminder was used. Of the totalmailings, only 12 were returned un-opened, making the list99.5% deliverable. Of those 1788 actual deliveries, a totalof 481 completed usable questionnaires for a response rateof 26.8%. Out of the 481 questionnaires returned, 251(52.2%) concerned situations in which salespeople madethe sale and 230 (47.8%) were responses about salespeoplewho did not make the sale. Thus, the study operationalizedthe dependent variable through the design of the studyrather than a specific measure.In order to explore possible non-response bias, acomparison was made of early (first quartile) and late (lastquartile) respondents in terms of their demographic profileand on responses to the behavioral items, in this case meanconflict scores (Armstrong and Overton, 1977). Theresulting  w 2 and ANOVA tests showed no significantdifferences, suggesting non-response bias is not an issue.A number of demographic variables were measured inorder to properly categorize the respondents and providesome notion of external validity. These included size of thecompany, gender of the buyer, and several other relatedvariables. A measure of social conflict srcinally developedby Jehn (1992) and modified slightly by Amason (1996) was utilized in this study and is in the appendix. The measurehas demonstrated good validity and reliability (Pearsonet al., 2002; Reid et al., 2004) and has the additional value of being parsimonious in that only seven items are used tomeasure the construct. Measures of situational variableswere all single-item simple measures developed for thisstudy and are provided in the appendix. 4.2. Study 2: ongoing supplier evaluation Similar to the procedure in Study 1, the mailing list thatwas utilized was a random sample of the 5000 namesrepresenting members of the ISM. From the remaining list,after purging names without company affiliation, wemailed a questionnaire to a randomly selected set of 2000potential respondents in a single wave with no follow-up.There were no return deliveries. After 6 weeks, a total of  ARTICLE IN PRESS V1V2V3AFFECTIVE CONFLICTANTECEDENTVARIABLESBUYER CHOICE COGNITIVE CONFLICTV4 V5 V6 V1V2V3AFFECTIVE CONFLICTANTECEDENTVARIABLESRELATIONSHIP LOYALTYCOGNITIVE CONFLICTV4 V5 V6 V7V8 V9 V10 (A)Study 1Study 2(B) Fig. 1. Structural equation models. (A) Study 1, (B) Study 2. R.E. Plank et al. / Journal of Purchasing & Supply Management 12 (2006) 2–13  5  433 completed usable responses were received for a returnrate of 21.65%.In this case, we were interested in the relationship of perceived social conflict to the perception of loyalty. Werequested the respondent to self-select a relationship of atleast 1 year in length.Once again, to assess non-respondent bias, we used thetechnique suggested by Armstrong and Overton (1977)and analyzed the first quartile of responses (108) againstthe last quartile of responses (108). Comparison of demographic responses indicated no differences in thesample. Once again, no indication of non-response biaswas found.As in Study 1, a number of demographic variables weremeasured in order to properly categorize the respondentsand provide some notion of external validity of the findingsof this research to possible other samples. In addition tothe measures noted above, a measure of relationshiployalty was developed for this study. We began with atheoretical definition of relationship loyalty as  a tendency for the purchasing manager to perceive the received benefits from the supplier and the suppliers ’  personnel in such amanner as to believe it is in their best interest to continuebuying from that supplier .Based on the above definition and research in relatedliterature, six items were developed to represent the conceptof relationship loyalty. We did not follow the usualparadigm as suggested by Churchill (1979) whose metho-dology usually involves developing a large number of indicators and uses pretests and the results of statisticalanalysis to pare down the number of indicators. Rather, wefollowed the work of  Rossiter (2002) who provides detailedinstructions for developing content valid measures usingqualitative methods. The rationale for this is that it isrelatively easy to achieve good measures using manyindicators with large samples; however, those measuresmay be spurious as small correlations can lead toacceptable values of coefficient alpha (Cortina, 1993).Our philosophy is that one should be able to develop astrong multiple indicator reflective measure with a max-imum of 4–6 items, thus, providing a statistically validmeasure following confirmatory factor analysis practice aswell as a parsimonious measure. We began the measure-ment development process by examining the literature andconstructing 15 questions, which the three authors felt,constituted the elements of our theoretical definition. Wethen convened a small group of five of our colleagues andasked them to review those questions and ranking the fivebest indicators. We then computed the rankings as a groupand discussed the findings. The result was the five questionsshown in the appendix. The subsequent analysis of theconstruct, as reported below, indicates appropriate validityand reliability of the construct. A total of four of the fiveitems loaded onto a single factor.As in Study 1, we utilized the Jehn (1995) measure of social conflict in a slightly modified form. In addition, themeasures for conflict were identical across both studies. 5. Results 5.1. Study 1 In order to analyze the data, several types of statisticalprocedures were used. Reliability and validity of the multi-item measures were examined using confirmatory factoranalysis. Demographics and situational variables wereanalyzed. Research problems were addressed by using logisticregression of the conflict variable to the nominal dependentperformance variable. Analysis of variance was used to assessthe relationship of situational variables conflict. 5.1.1. Reliability and validity of the construct measures Since the dependent variable, supplier choice wasoperationalized by study design and situational variableswere single-item measures, only the conflict measure couldbe assessed for validity and reliability other than facevalidity. Using Proc Calis in SAS as a structural equation-modeling program, a confirmatory factor analysis (CFA)on the variable was run (Anderson and Gerbing, 1988).CFA fits the data to an expected model for fit. The CFA(see Table 1) provided evidence of a solid and reliablemeasure of affective and cognitive conflict.The AGFI was 0.9591, with an RMR of 0.03, a  w 2 of 9.61Pr 4 w 2 of 0.293, a CFI of 0.9975, and a NNFI of 0.9953.There were no residuals over 2.58. This suggests a very strongfit for a six-item model of conflict. All results are in line withgenerally accepted criteria for fit statistics (Hair et al., 2001).These findings demonstrate that the two types of conflict aredistinct and that the items measuring each indicator provide areliable indictor as indicated by the composite reliability of 0.840. The indicator that was dropped was done so, as itcreated a number of unacceptable residuals in the model. 5.1.2. Demographics Demographic variables were collected on gender of therespondent, type of business, company size in employees, ARTICLE IN PRESS Table 1Study 1: confirmatory factor analysis of conflict scaleItem Mean StandarddeviationParameterestimateAffective conflict 5.00 2.615AffCon2 1.63 0.997 0.8240AffCon3 1.72 0.995 0.9387AffCon4 1.65 1.000 0.7900Composite reliability 0.902Variance extracted 0.758Cognitive conflict 7.12 2.643CogCon1 2.30 1.023 0.7702CogCon2 2.38 1.025 0.8159CogCon3 2.44 0.991 0.8072Composite reliability 0.840Variance extracted 0.637All estimates significant  p o 0.01. AGFI ¼ 0 : 9591; CFI ¼ 0 : 9975; NNFI ¼ 0 : 9953; RMR ¼ 0 : 031;  w 2 ¼ 9 : 611; DOF ¼ 8;  p o 0.293. R.E. Plank et al. / Journal of Purchasing & Supply Management 12 (2006) 2–13 6

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