Understanding Online Reverse Auction Determinants of Use: A Multi-Stakeholder Case Study

Various interorganizational systems (IOS) such as Electronic Data Interchange (EDI) and Supply Chain Management Systems (SCMS) have attracted significant attention among information system (IS) researchers. However, IS scholars have taken less interest in Online Reverse Auctions (ORAs), a widely used IOS in online business-to-business transactions. This study examines the factors that enable and/or inhibit ORA use from the perspective of buyers and suppliers, as well as the potential role of the institutional context based on a case study of a French retailer. Building on 122 semi-structured interviews collected in two stages with various stakeholders from the interorganizational community (buyers, suppliers and technology initiators), we demonstrate the extent to which the determinants of ORA use differ between buyers and suppliers (e.g. perceived outcomes, capabilities required to use ORAs). We then show how a change in the institutional context not only failed to redress distrust between buyers and suppliers, but also created new barriers to ORA use by introducing controls and sanctions that outweighed the economic benefits of ORA use among buyers. We contribute to the IS literature by demonstrating the role of strategic capabilities in shaping use. While the IS literature acknowledges the institutional context as a determinant of use, little is known about the extent to which a change in the institutional context may affect ORA use. Our research shows the extent to which legislation can trigger IT discontinuance because of the perceived risk introduced.