EMPLOYING INFORMATION TECHNOLOGY IN PURCHASING - BUYER-SUPPLIER RELATIONSHIPS AND SIZE OF THE SUPPLIER BASE

Despite the fact that U.S. companies have made substantial investments in information technology (IT), relatively little empirical research has focused on the impact of IT investments used to support purchasing functions. Such a phenomenon deserves greater attention by industrial marketers in light of two widely recognized trends, the shift away fr om arms-length exchange relationships and the shift toward supplier ba se reductions. In this article we present a series of propositions rel ated to how the extent of IT investments and their degree of use in pu rchasing may alter the nature of buyer-supplier relationships, that is , foster the development of closer relationships overall, and also con tribute to the reduction of the number of vendors being used. The resu lts of an empirical test of our propositions suggest that IT investmen ts enhance buyer-supplier relationships indirectly, mediated by the de gree of IT use in transaction processing, while also directly contribu ting to the reduction of supplier bases. Implications and directions f or future research are also discussed. (C) Elsevier Science Inc. 1996.