Industrial Marketing Management 39 (2010) 605–615

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Industrial Marketing Management

Relational and transactional factors as hybrid criteria for buyer project selection
(BPS): An exploratory study from industrial suppliers' perspective
Wangen Lee a,⁎, Tom M. Y. Lin a, Wenshu Lee b, Ji-Ren Lee c
a
Graduate Institute of Management, National Taiwan University of Science and Technology, #43, Keelung Rd. Section 4, Taipei, 106, Taiwan, ROC
b
Department of Communication Studies, College of Communication & Fine Arts, Loyola Marymount University, #1, LMU Drive, Los Angeles, CA 90045, USA
c
Department of International Business, National Taiwan University, #50, Lane 144, Keelung Rd. Section 4, Taipei, 106, Taiwan, ROC

a r t i c l e i n f o a b s t r a c t

Article history: Working off the literature in selection studies, evolving from supplier selection, to buyer selection, to
Received 1 January 2008 selection as transaction embedded in relationality, this study asks how industrial suppliers actually engage in
Received in revised form 8 March 2009 buyer project selection (abbreviated as “BPS”). Semi-structured interviews and focus group discussions were
Accepted 22 May 2009
used to construct and pilot-test a new BPS instrument among electronics executives in Taiwan. A mail survey
Available online 21 June 2009
using the new BPS instrument subsequently resulted in three significant research findings. First, the five BPS
Keywords:
factors uncovered a hybridity thesis: factors from the transactional paradigm and the relational paradigm co-
Selection studies existed side by side. Second, even though suppliers engaged in project selection, the majority of the
Buyer project selection (BPS) respondents' firms lacked clearly articulated formal BPS criteria. Third, relational satisfaction, more than
Satisfaction perceived power, significantly impacted project selection; and project economic contribution, more than the
Power other four BPS factors, played a substantive role in assessing relationality. Our research hopefully will help
Formalization practitioners to recognize the need of BPS formalization, making a rich literature related to the co-existence/
Hybridity thesis hybridity of transactional and relational approaches in project marketing and management relevant to
Taiwan, China and the broader Asian business world in the future.
© 2009 Elsevier Inc. All rights reserved.

1. Introduction and literature review
Selecting business partners involves highly complex processes.
Selection studies, thus, can be reviewed from a few distinctive
perspectives in the literature. An early line of research focused on the
perspective of industrial buyers, exploring buyers' selection criteria of
vendors/suppliers (Dickson, 1966; Weber, Current, & Benton, 1991). A
decade later, another line of research began to focus on the perspective
of the understudied partner, i.e., industrial suppliers, urging manage-
ment and marketing professionals to consider the “bargaining power of
suppliers” as one of the key competitive forces (Campbell, 1988; Porter,
1980). These two lines of selection studies, though different in their
respective emphasis (i.e., one on buyers and another on suppliers), had
two conceptual similarities: monadic and transactional. “Monadic”
because they envisioned the buyer or the supplier as an isolated business
agent; and “transactional” because they featured business as competi-
tion through net price, quality of goods and delivery efficiency (Porter,
1980; Weber et al., 1991).
As both lines of selection studies matured, what became palpable
was a paradigm shift into the dyadic and relational. The research in
supplier selection studies by Hsu, Kannan, Leong, and Tan (2006) serves
⁎ Corresponding author. Tel.: + 886 2 28941202 3203; fax: + 886 2 28941206.
E-mail addresses: adamlee@txc.com.tw (W. Lee), tomlin@ba.ntust.edu.tw
(T.M.Y. Lin), womanglobal@gmail.com (W. Lee), jiren@ntu.edu.tw (J.-R. Lee).
as an excellent example. Advancing beyond conceptual and inductive
methods, they provided an empirically tested three-construct model of
supplier selection: “supplier quality, supplier service, and the strategic/
management fit between buyer and seller” (p. 217). Marking the
emergence of a relational construct “fit” rather than “net price,” they
noted a gradual shift from the earlier transactional approach which
assumes an “adversarial buyer–supplier relationships” to a joint value-
creation approach which assumes “mutually beneficial partnership
relationships” (p. 216), particularly with suppliers who are strategically
important for a firm's sourcing decisions. The research in buyer selection
studies by Slywotzky and Shapiro (1993) is another excellent example.
They suggested that “paying attention to the ‘Four Ps’ is no longer
enough to ensure competitiveness” (p. 98). Marketing, in their view, is
better envisioned as a long-term investment rather than as short-term
expenses. Specifically, they suggested developing “right” customer base
by conducting a customer-base audit, and targeting three groups of
buyers that create maximum value: low cost switchables, highly
profitable ones, and market share-determiners.
This trend towards the relational suggests that cultivating business
partners metaphorically resembles a courting and/or marriage process
(Alajoutsijärvi, Eriksson, & Tikkanen, 2001; Wilkinson, Young, & Freytag,
2005). Potentially time consuming and spanning multiple years, this
courtship process may not offer immediate benefits. Still, it may pay off in
the long run, so a business player hopes. This view is echoed in Ford's
(1980a) emphasis on “buyer–seller relationships taking place between

0019-8501/$ – see front matter © 2009 Elsevier Inc. All rights reserved.
doi:10.1016/j.indmarman.2009.05.003
606 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615
two active parties” (p. 339) and recently in Vargo and Lusch (2004), who
argue that a “fundamental shift in worldview” from a traditional goods-
dominant (G-D) logic to a new service-dominant (S-D) logic in marketing
is taking place. This shift is embodied in their heuristic statement,
“resources are not; they become” (p. 2). Vargo and Lusch (2004) succinctly
summarize this shift from operand resources to operant resources:
The focus is shifting away from tangibles and toward intangibles,
such as skills, information, and knowledge, and toward interactivity
and connectivity and ongoing relationships… The appropriate unit of
exchange is no longer the static and discrete tangible goods… A more
appropriate unit of exchange is perhaps the application of compe-
tences, or specialized human knowledge and skills, for and to the
benefit of the receiver (p. 15).
To theorize further the trend with a heightened emphasis on the
relational dimensions, we find Gadde and Håkansson's (2008) work
illuminating. Marking “the central role of business relationships in ac-
cessing, designing, and using resources” (p. 32), they suggest that relation-
ships play a “connecting role” in resource combining between companies
and among companies in the network, specifically in the use of physical
resources (such as facilities and products exchanged) and organizational
resources (such as business units' capabilities). Gadde and Håkansson
conclude, “Any business relationship is thus an indicator of ongoing value
generation processes across the boundaries of the two firms” (p. 37).
Finally in a recent essay, Arnould (2008) suggests the same view that
relationships can be treated as resources that “affect their [firm's] learning
abilities, innovation outcomes, and ultimate success” (p. 22).
2. Research focus
Working off the above review of literature in selection studies,
evolving from supplier selection, to buyer selection, to selection as
transaction embedded in relationality, one is ideally in a position to
explore business attitudes and practices from a dyadic perspective of
buyers and suppliers (John & Reve,1982; Leek, Turnbull, & Naudé, 2006).
Research of modest scale emphasizing an understudied partner of a
business dyad, in our case, the supplier, however, is not uncommon
(Duffy, 2008; Johnsen & Ford, 2008; Lee, Jeong, Lee, & Sung, 2008;
Stanko, Bonner, & Calantone, 2007; Yilmaz, Sezen, & Ozdemir, 2005).
Duffy (2008) offers a compelling explanation for this limited scope:
…while many researchers advocate collecting information about
the same relationship from both sides of the dyad, most
acknowledge that in practice this is very difficult due to the
operational difficulty of getting responses from both sides and an
adequate sample size. In addition, researchers of buyer–supplier
relationships often collect data on very sensitive issues. Suppliers
may therefore be unwilling to identify the customer who they are
talking about for fear of commercial reprisals. For these reasons
future empirical research is likely to continue collecting informa-
tion from just one side of the buyer–supplier dyad (p. 239).
Because of the above constraints, we choose to conduct a multi-
method empirical study from the perspective of suppliers, examining
the selection criteria they actually deploy to select industrial buyers'
projects. Furthermore, to explore the potential impact of relationships
on selection criteria, which is in line with the emerging paradigm
shift, we include “satisfaction” as a value-creation relational construct
and “power” as a value-claiming construct (Ivens & Pardo, 2007).
Satisfaction, in this study, offers a positive and overall indicator of
relationship atmosphere with a specific buyer. Power is included
because it is often mentioned in the business literature, but systematic
exploration of power still receives relatively negative and limited
empirical attention (Caniëls & Gelderman, 2007; Cox, 1999; Harker,
2002; Provan, Beyer, & Kruytbosch, 1980; Williamson, 1995). In
particular, we agree with Hingley's (2005) criticism:
Given the scant and mostly negative treatment of the context of
power in business relationships and the predominance of study of
what are viewed as positive relational factors: trust, commitment
and cooperation, there appears to be a gap in business relationship
literature concerning the role of power and the ability of organiza-
tions to manage power imbalance (p. 849).
Another research decision we made has to do with the focus on
“buyers' projects” rather than “buyers.” The reasoning is guided by the
first author's decades of business experience in dealing with various
industrial buyers. A supplier often cannot accept all business projects
requested by industrial buyers because of limited resources, inadequate
production capabilities, or the lack of fit in core capabilities. Still, a
supplier is unlikely to reject a buyer outright, especially if it is of strategic
importance to the future (Sengupta, Krapfel, & Pusateri, 2000). Put
another way, a supplier may distance itself from a buyer's proposed
projects while skillfully maintaining a viable long-term relationship to
engage in future projects. What we propose here is not a dualistic view of
“projects” vs. “buyers.” Rather, we favor a holistic viewpoint, treating
“project” as a more concrete and organic way for suppliers to work with
buyers. Therefore, if we ask supplier practitioners to focus on a business
project of significant magnitude completed in the past three years as their
point of reference, they may be in a better position to recall systematic
evaluation of their selection criteria with existing or new buyers.
Working off the above literature review on selection studies, while
remaining consistent with our holistic perspective, we propose to
conduct an empirical study of choices that industrial suppliers actually
make to select buyer's projects. For the ease of communication, we
will use BPS throughout this essay to denote “buyer project selection.”
The guiding research questions are as follows:
Q 1. What is the factor-structure for BPS from industrial suppliers'
perspective?
Q 2. Do practitioner companies establish their BPS criteria? If so,
how are they communicated?
Q 3. What are the connections between BPS factors, once articu-
lated, and the two relational constructs—supplier power and
satisfaction with the buyer?
3. Methods
To answer the three research questions, we focus on the electronics
industry in Taiwan. Three considerations serve to justify this choice.
First, the business model of Taiwan's electronics industry is OEM/ODM
dominated (see Table 1). With marginal profits, the practitioners are
pressed to identify appropriate business buyers in order to utilize
limited resources to maximize profit. Second, companies in Taiwan's
Table 1
Basic information about Taiwan's electronics industry in 2006.
Product category OEM/ODM (%)a OBM (%)b Private label (%)c
Notebook PC 95.8 4.2 –
Desktop PC 94.9 5.1 –
PC motherboard 54.2 45.8 –
Server system 93.6 1.8 4.7
Server motherboard 80.4 6.0 13.6
Average 83.8 12.6 3.7
Source: Market Intelligence Center, 2007/08/01.
Market Intelligence Center (MIC) is Taiwan's premier ICT industry and market research
firm, providing Asia–Pacific regional intelligence, in-depth analyses, and strategic
consulting services. For more information about MIC, go to http://mic.iii.org.tw/english/
default.asp.
a
Original equipment manufacturer/original design manufacturer.
b
Own branding and manufacturing.
c
Local brands or regional distributors.
 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615 607

Table 2 extraneous sources of variance (Bradley, Meyer, & Gao, 2006; Coote,
Global rankings of Taiwan's electronics industry in 2006. Forrest, & Tam, 2003), enabling us to better understand empirically
Product Shipment value Annual quantities Global market Global suppliers' criteria for buyer project selection (BPS).
category (US $ million) (thousand) share (%) ranking
Notebook PC 36,940 63,459 86.2 1 3.1. Developing a new BPS instrument through semi-structured interviews
Desktop PC 9726 41,342 30.3 2
PC 7704 147,343 99.0 1
Because supplier-oriented research reports are predominantly con-
motherboard
Server system 2223 2724 34.8 2 ceptual and reliant on qualitative case study methods, a project such as
Server 844 4069 52.0 1 ours focusing on BPS criteria lacks a well tested instrument. Our first step,
motherboard then, is to develop a new BPS instrument. Using concepts derived from
CRT monitor 1310 17,105 51.9 1 selection studies and the researchers' practitioner experiences, we first
LCD monitor 17,773 98,137 76.5 1
DSC 3595 41,294 41.9 2
conducted semi-structured face-to-face interviews to identify inductively
ODD (optical 2618 93,355 33.1 2 industrial suppliers' criteria for buyer project selection.
disk device) The snowball sampling technique was chosen to locate Taiwanese
Source: Market Intelligence Center, 2007/08/01. electronic corporate executives, a group of subjects who were hard to
Please refer to Table 1 for detailed information about the research firm, Market Intelligence access due to their high positions and company security concerns. The
Center. interviews were semi-structured because each interviewee held his/her
high position in a company of varying size with different histories of
electronics industry have earned undeniably large global market business experiences. The interviews were conducted in Mandarin
shares over the past two decades (Chang & Yu, 2001). In the year of Chinese from November 2005 through January 2006. They lasted from
2006, as an illustration, Taiwan's electronic companies were ranked 30 min to 2 h. Using grounded theory, at about the time when 10 upper-
number one in notebooks, PC motherboards, server motherboards, level electronics sales/marketing executives at publicly traded firms
CRT monitors, and LCD monitors globally (see Table 2). Third, were interviewed, the researchers decided that the point of saturation
confining the scope of research to one industry (electronics) and was reached (see Table 3). To protect confidentiality, pseudonyms were
one country (Taiwan), this exploratory study can best minimize chosen. Of the participants, 9 were male and 1 was female. Their average

Table 3
Profile of semi-structured interviewees (n = 10).

Name of participant Product Firm size Age of firm Yrs. since listed
Robert/Chief Function Head Notebook Sales: US 4767.44 M 7 5
22 years working experience Employees: 2500
18 years in sales/marketing field
Age: 45
Steve/Head of Mobile Computing BU Desktop PC Sales: US 6306.40 M 32 12
18 years working experience Employees: 5300
13 years in sales/marketing field
Age: 42
Samuel/Senior Vice President PC motherboard Sales: US 709.56 M 21 14
30 years working experience Employees: 1,350
28 years in sales/marketing field
Age: 53
Linda/Assistant Vice President Mobile phone Sales: 12,403.21 M 20 9
23 years working experience Employees: 4000
17 years in sales/marketing field
Age: 45
Jerome/Director Notebook Sales: US 6797.00 M 24 16
25 years working experience Employees: 2000
22 years in sales/marketing field
Age: 48
Johnson/Assistant Vice President Server board Sales: US 5001.67 M 33 12
32 years working experience Employees: 2000
18 years in sales/marketing field
Age: 55
Michael/General Manager Optical drive Sales: US 1539.12 M 9 4
27 years working experience Employees: 980
23 years in sales/marketing field
Age: 48
Jeffrey/Executive Vice President IC component Sales: US 1,058.40 M 21 14
30 years working experience Employees: 220
27 years in sales/marketing field
Age: 53
Jimmy/Executive Vice President Bluetooth device Sales: US 95.21 M 20 5
26 years working experience Employees: 800
20 years in sales/marketing field
Age: 49
Dawson/Assistant Vice President Crystal oscillator Sales: US 105.81 M 25 6
13 years working experience Employees: 800
13 years in sales/marketing field
Age: 38

All interviewees held key decision-making positions in sales/marketing at their companies. Sales figures were based on public information provided by the Taiwanese government site,
Market Observation Post System (www.mops.tse.com.tw). The remaining data were reported by the interviewees. Pseudonyms are used in this essay to protect personal and corporate
confidentiality.
608 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615
age was 47.6 with 24.6 years of working experiences. With the
permission of the interviewees, each interview session was tape-
recorded and subsequently transcribed verbatim by a researcher
unfamiliar with the research in selection studies (Bansal, 2005). A
second researcher was invited to double check transcription accuracy.
The researchers then read through the transcripts, using index cards to
write down key words/concepts/phrases that might qualify as a
potential selection criterion. We systematically coded and analyzed
the interview transcripts following the qualitative principles spelled out
by Strauss and Corbin's (1990) grounded theory. As a result, 12 coded
themes emerged. They were: capacity utilization, profit contribution,
learning effects, business logics, marketing support, trading terms, sales
effects, financial impact, risk sharing, system linkage, structural impact,
and relationship. The authors then went through another round of
review, collapsing the 12 themes into 5 industrial BPS themes:
economics, transaction cost, decision flexibility, learning, and status/
relationship. We then used the five emergent themes from the semi-
structured interviews to construct a draft instrument for exploratory
factor analysis. Two fellow researchers reviewed and revised this draft
instrument through another three rounds of wording negotiation and
accuracy check. Since the draft instrument reflected the thinking of
industrial practitioners in charge of key business strategies at various
companies, it could be reasonably assumed that a satisfactory degree of
topical salience existed among the approached universe (Berghman,
Matthyssens, & Vandenbempt, 2006).
3.2. Pilot testing the BPS instrument through focus group discussions
The researchers piloted the draft BPS instrument with 19 senior
managers who were EMBA students taking a qualitative methods class
at National Taiwan University of Science and Technology. Focus group
discussions followed and the participants made invaluable sugges-
tions, especially by thickening the nuances of words. This helped the
researchers to revise and ultimately create a 70-item Chinese survey
questionnaire ready to go out to industrial respondents.
For this study, the researchers utilized portions of data from the
survey questionnaire directly related to BPS. There were four sections
relevant to this study. Section 1 (5 statements) was about the
characteristics of the business project on which each survey respon-
dent's answers were based. One of the five items was used to measure
supplier power in relation to the chosen project. Section 2 (28
statements, see Appendix A) tapped into the five BPS themes that
grew out of the semi-structured interviews with the executives in the
electronics industry. Section 3 (8 statements) measured the current
status of the respondent's company. One of the eight items was used to
measure relational satisfaction. Finally, Section 4 (15 statements) asked
the respondents to provide basic information about themselves and
their companies. Where appropriate, the five-point Likert scale was
used, with 1 denoting strongly disagree and 5 strongly agree, which made
answering easier for all respondents (Bradley et al., 2006).
3.3. Collecting quantitative data through mail survey
From the 4300 companies in the Directory of Taiwan Electrical and
Electronic Manufacturers' Association (TEEMA), 2005–2006, the research-
ers selected the following industrial sectors: computers/peripherals,
communication devices, electronic measurement devices, electronic
SKUs, semi-conductors, optical devices, and electronic components. The
population approached consisted of 2460 companies. Questionnaires
were mailed to individuals in these companies who held CEO/President/
General Manager titles according to the TEEMA, the most comprehen-
sive list currently available in Taiwan for the electronics industry. The
database is updated annually. To increase the rate of participation and
return, along with an introduction letter and a self-stamped envelope, a
non-monetary incentive—a highly popular print magazine in sales/
marketing, “Master 60'”—was offered, a strategy recommended by
Diamantopoulos and Schlegelmilch (1996). The mail questionnaire was
professionally printed. It requested the respondents to focus on an actual
business project of substantial magnitude (zhong da in Mandarin
Chinese) their company completed with an existing or newly developed
buyer within the past three years. Our choice to focus on actual rather
than hypothetical transactions has the methodological merit of eliciting
data that “allow for the importance and interest of real and specific
situations” (Ford, 1980b, p. 48).
Friendly follow-up phone calls and original replacement follow-up
mailing were made to ensure a higher return rate (Erdogan & Baker,
2002). The researchers reviewed the returned 357 questionnaires and
eliminated the incomplete ones in relation to the 28-item BPS
instrument. The final data pool had 339 respondents, resulting in a
response rate of 13.78%. This rate falls within the range commonly
observed in mail survey studies among respondents of Chinese
ancestry/nationality. Carr, Leong, and Sheu (2000) considered the
return rate of 13% as adequate in their survey of Taiwanese executives'
purchasing practices (p. 1435). Wang, Wee, and Koh (1998) reported a
return rate of 17.6% and commented that this figure did not cause
concern because “The typical response rate [in Singapore and China]
ranged from 10% to 15% for surveys of such nature” (p. 358). In addition
to “nationality,” computer and electronics as an “industry” or “sector”
also yielded the lowest response rate in Harzing's (2000) article on
cross-national surveys (p. 246). A recent study of SME manufacturers in
Taiwan only reported the response rate at 10.9% (Chiu & Huang, 2007).
Hence, our response rate, though could have been higher, is considered
acceptable and should pose little empirical concern.
3.4. Non-response bias
Following the suggestion made by Tomaskovic-Devey, Leiter, and
Thompson (1994), the researchers sent the questionnaires to
respondents in charge of the activity relevant to our surveyed topics
in order to minimize the non-response bias. In addition, as suggested
by Armstrong and Overton (1977), the researchers further tested the
possibility of non-response bias by comparing the potential differ-
ences between early and late respondents on the same set of variables
(running capital, years established, number of employees, years of
working, and years in sales/marketing field). The t-tests computed by
comparing the above five variables of early and late respondents failed
to reveal any significant differences. Hence, non-response bias should
not pose any threat to our investigation.
4. Data analyses
The key descriptive statistics provided by the 339 respondents are
aggregated into three areas: the respondents, the projects and the
companies. First, holding the upper management positions (CEO/
President/General Manager titles), the respondents had on the average
24.6 years of work experiences, out of which 19.9 years were in the area
of sales/marketing (see Table 4a). Second, the business project that
served as the basis for the respondents' selection criteria had an average
amount of 1.21 million US dollars, and they lasted for roughly 2.05 years.
Moreover, 24.5% of the projects were OEM, 42.8% ODM, and 32.7% OBM.
In terms of product type, 50.7% of the projects focused on finished goods,
12.7% on half-finished goods, and 36.6% on components (see Table 4b).
Third, the majority of the respondents (82.9%) worked for small-
medium sized companies with 69.2% of the companies having less than
500 employees. The average history of the companies was 18.45 years
Table 4a
Key descriptive statistics of surveyed respondents (n = 339).
Mean Std. deviation
Working experience (year) 24.6 5.85
Sales/marketing experience (year) 19.9 5.17
 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615 609

Table 4b Table 5
Key descriptive statistics of surveyed projects (n = 339). Descriptive statistics for “if BPS criteria are established” (n = 339).

Frequency Percentage (%) Mean Std. deviation If BPS criteria are BPS criteria are communicated Frequency % for Total %
Project amount (US m) 1.21 0.96 established through breakdown sub-item
Project length (year) 2.05 2.73 Yes Oral instruction 29 131 8.55 38.64 37.17
Project type Broadly written rules 71 20.94
OEM 83 24.50 Detailed written rules 26 7.67
ODM 145 42.80 Fail to respond 5 1.47 62.83
OBM 111 32.70 No 173 51.03 61.36
Product type Fail to respond 35 10.33
Finished goods 172 50.70 Total 339 100
Half-finished goods 43 12.70
Components 124 36.60
Four items related to “project economic contribution” load on F3. Three
items related to “buyer's credit-worthiness and financial terms” on F4.
with an average capital of 48.7 million US dollars. Roughly half of the
Finally, two items related to “buyer's collaborativity and stature” load on
companies (43.6%) did business predominantly with Taiwanese
F5. Three of the five factors (F2, F3 and F4) are transactional, G-D and
companies and another half (48.7%) predominantly with non-Taiwa-
relatively short-term in nature, while the remaining two (F1 and F5) are
nese companies (see Table 4c). The researchers then conducted
relational, long-term and S-D oriented. The emerged five-factor structure
appropriate data analyses to answer the three research questions.
provided an empirical answer to the first research question. Furthermore,
They are described accordingly.
these selection factors appear to reflect the mixture or hybridity (in a
postmodern sense) as discussed in recent marketing and management
4.1. Principal component analysis of the BPS instrument
literature that business exchange “may involve both social and economic
outcomes” (Hawkins, Wittmann, & Beyerlein, 2008, p. 896).
The researchers conducted a principal component analysis on the
28-item “buyer project selection” instrument (Section 2 of the survey
4.2. Articulation of BPS criteria and chi-square analyses
questionnaire) to answer the first research question: What is the
factor-structure for BPS from industrial suppliers' perspective? We
The second research question asks if suppliers establish their BPS
retained the correlation matrix because Bartlette's test reached high
criteria and, if so, through what channels of communication. Our data
significance at 0.000 level. The researchers compiled the finalized
showed (see Table 5) that 38.64% indicated that their companies had BPS
factor solution, which resulted in the extractions of five factors with
criteria established. But the majority (61.36%) of the respondents either
the aid of three criteria: (1) the latent root criterion, which retains
said no (51.03%) or failed to respond (10.33%). Among those who said yes,
factors of eigenvalue equal to or greater than one, (2) the scree test
the breakdown of percentage (out of all of the respondents) from informal
(Cattell, 1965; Lumpkin & Dess, 1995), which retains factor loadings
to formal means of communication is as follows: 8.55% indicated that their
greater than 0.50 (Hair, Anderson, Tatham, & Black, 1998; Morgan &
established BPS criteria were taught to employees through “oral
Katsikeas, 1998), and (3) variable communalities greater than 0.50.
instruction,” 20.94% through “broad written guidelines,” and 7.67%
Worren, Moore, and Cardona (2002) and Schmitt (1996) suggested
through “detailed written guidelines.” Overall, the data revealed that
that relatively low alpha (i.e., 0.50) is still acceptable as long as the
BPS criteria were relatively absent in supplier firms. And quite unfortunately,
measurement covers meaningful content and reasonable unidimen-
among the few firms where BPS criteria did exist, they were commu-
sionality. In addition, Schmitt (1996) and Cortina (1993) argued for
nicated informally, thus, yet to be formalized through written “rules and
the inappropriateness of setting 0.70 as the threshold unless other
procedures” (Auh & Menguc, 2007, p. 1025).
types of information were considered at the same time. For this
To ascertain if there were differences between types of companies in
reason, Cronbach's alpha exceeding 0.50 (Churchill, 1979; Nunnally,
relation to the absence of BPS criteria, we ran five additional chi-square
1978) was kept in the analysis.
tests. Four of the five results suggested that no significant differences
Twenty items in the original BPS instrument were retained in the
were located among companies (a) who did business with Taiwanese
factor structure (see Appendix B). The main result shows that the total
firms or non-Taiwanese firms, (b) whose business was OEM, ODM, or
variance explained by the five extracted factors was quite substantial
OBM, (c) whose firm size was small or large, and (d) whose main
(61.7%). Six items related to “learning, publicity and compatibility” load on
production was finished products, half-finished products, or compo-
F1. Five items related to “adaptation in resources and standards” load on F2.
nents. However, quite encouragingly, significant difference (see Table 6)
was located in one particular variable: supplier firm's business emphasis
Table 4c
(Pearson chi-square b 0.05). Among the three groups within this
Key descriptive statistics of surveyed companies (n = 339).

Frequency Percentage (%) Mean Std. deviation

Size of company Table 6
Small-medium sized 272 82.93 2 × 3 cross-tabulation of “if BPS criteria are established” and “supplier firm's business
Larger sized 56 17.07 emphasis” (n = 304).
Number of employees 956.63 3383.69
Supplier firm's business emphasis
b 500 227 69.21
≥ 500 101 30.79 RD/ Manufacturing Sales- Total
History of the company (year) 18.45 8.40 design distribution
b 10 66 19.47 If BPS criteria are No Frequency 52 108 13 173
10 ~ 20 142 41.89 established % out of 17.1 35.5 4.3 56.9
≥ 20 131 38.64 total
Running capital (US M) 48.70 301.38 Yes Frequency 40 70 21 131
b 31.25 282 83.19 % out of 13.2 23.0 6.9 43.1
≥ 31.25 57 16.81 total
Major customers Total Frequency 92 178 34 304
Taiwanese companies 147 43.60 % out of 30.3 58.6 11.2 100.0
Non-Taiwanese companies 164 48.70 Total
Roughly equal 26 7.70
Pearson chi-square b 0.05.
610 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615

variable, we found no different propensity towards establishing BPS Table 7b

criteria in one group: R/D (design-oriented) firms. Yet there were Canonical cross-loading results.

noticeable differences in two groups: manufacturing firms and sales- Function 1 Function 2
distribution firms. More specifically, manufacturing firms were less Sig. f b 0.0001 Not significant
likely to establish BPS criteria, and sales-distribution firms were more Cross-loading between the independent variables and dependent canonical variate
likely to establish BPS criteria. X1 Perceived power to choose projects 0.1160 0.1902
X2 Satisfaction with past business relationships 0.3903 − 0.0413
4.3. Canonical correlations between BPS factors and relational constructs
Cross-loading between the dependent variables and independent canonical variate
F1 Learning, publicity and compatibility 0.2315 0.0652
The researchers used a data reduction procedure (summated scales) F2 Adaptation in resources and standards 0.0530 − 0.0210
to conduct canonical correlations to answer the third research question. F3 Project economic contribution 0.3333 − 0.0082
The dependent variables were the newly extracted five BPS factors and F4 Credit worthiness and financial terms 0.1769 0.1147
F5 Buyer's collaborativity and stature 0.2450 − 0.0832
the two independent variables were power and satisfaction. Following
El-Ansary and Stern (1972) who envisioned power as the “ability to
control the decision variables” (p. 47) related to business operations, we
operationalized “power” by asking a project specific question, “During represents substantially the independent variate (relational charac-
the business transaction, your company could decide to take or not to teristics) with a shared variance of 0.52. Furthermore, F3 (project
take the project.” The mean score for power was 3.8 on a five-point scale. economic contribution, canonical loading = 0.84), F5 (buyer's colla-
Specifically, 1.2% strongly disagreed, 6.2% disagreed, 18% remained borativity and stature, canonical loading = 0.61) and F1 (learning,
neutral, 61.0% agreed and 13.6% strongly agreed. In sum, 74.6% or three publicity and compatibility, canonical loading = 0.58) represent the
quarters of the respondents expressed that their company had the dependent variate (the BPS criteria) with a shared variance of 0.33.
power to select buyer's project. We chose “satisfaction” as a compre- A review of canonical cross-loadings N0.30 (Ramanujam & Venkatra-
hensive and long-term indicator for “the overall atmosphere of a man, 1987, p. 461) provided the information (bold-faced in Table 7b) that
relationship” rather than relationship based on a single episode (Ford, the variance of the dependent variate (BPS criteria) had most to do with
1980a, p. 340). Thus the item used to measure satisfaction reads: satisfaction (canonical cross-loading=0.39). In addition, the variance of
“Overall, your company and the buyer company have had satisfactory the independent variate (relational characteristics) had most to do with F3
collaborative experiences.” The mean score for satisfaction was 3.8 on a (project economic contribution, canonical cross-loading=0.33).
five-point scale. Specifically, 0.3% strongly disagreed, 1.2% disagreed, Responding to the third research question, we found that highly
29.2% remained neutral, 61.10% agreed and 8.3% strongly agreed. Even significant relationships did exist between BPS and the two relational
though power and satisfaction shared positive descriptive results, they constructs, power and satisfaction. Our multivariate data enabled us to
were not identical in that their Pearson correlation failed to reach further refine this relational claim. Specifically, project economic
significance (r = 0.09, two-tailed sig. N 0.05). contribution (F3), more than the other four BPS factors, was related to
In total, two canonical functions were extracted. The first function the two relational constructs. Satisfaction, more than power, was
reached a high level of fitness (f b 0.0001) and multivariate signifi- related to the five BPS factors.
cance (Wilks' lambda, Pillai's trace, Hotelling–Lawley trace, and Roy's
greatest root all b 0.0001) while the second failed to do so. To validate 5. Main research findings and discussion
this finding, the researchers followed the method of variable deletion
(Hair et al., 1998). There is a high level of stability in canonical loadings 5.1. Hybrid BPS factor structure reflecting the co-existence of two paradigms
across the relational variables. The researchers thus are confident in
the results obtained. The first research question found its answer in the principal
A review of canonical loadings N0.50 revealed specific items (bold- component factor analysis, extracting a 5-factor BPS solution from the
faced in Table 7a) that contributed highly to the two canonical 339 respondents who held upper-level managerial positions in
variates. Satisfaction with past relationship (canonical loading = 0.98) Taiwanese electronic supplier firms. This solution substantively
represents the 28-item instrument (61.7% of variance) and reflects
the hybridity/mixture of relational and transactional dimensions
identified in the literature review. In below, we will discuss each of the
Table 7a
Canonical loading results. five factors in greater detail.
F1 is named “learning, publicity and compatibility.” The first theme
Complete Result after deletion of of F1, “learning,” remains a tacit, albeit hidden motive in the buyer
variate X1 X2 selection process. Such learning may foster the growth of the supplier
Canonical correlation (R) 0.399039 0.3925 0.2228 organization in the areas of management knowledge (#22), market-
Canonical root (R2) 0.159232 0.1541 0.0496
ing strategies (#20) and product design (#21) as judged by the
Independent variate (relational characteristics) purveyors of corporate quality standards. For Taiwanese electronics
Canonical loadings suppliers, many of them are still OEM/ODM oriented. This situation
X1 Perceived power to choose projects 0.2906 Omitted 1.0000 means that suppliers may not have the needed skills yet to market the
X2 Satisfaction with past business relationships 0.9781 1.0000 Omitted products requested by buyers, especially those who belong to the tier-
Shared variance 0.5206 1.0000 1.0000
Redundancy 0.0829 0.1541 0.0496
one with international brand names (e.g., HP, IBM). Bidding for
projects usually involves an intricate “courting” process. However, if
Dependent variate (BPS factors) supplier organizations land the first deal successfully and gradually
Canonical loadings hone their skills, either through learning from the buyer or improving
F1 Learning, publicity and compatibility 0.5801 0.5423 0.582
their know-how by elevating employees' skill levels internally, they
F2 Adaptation in resources and standards 0.1329 0.1433 − 0.0212
F3 Project economic contribution 0.8352 0.8349 0.3996 become better positioned to select more established buyers and
F4 Credit worthiness and financial terms 0.4434 0.3802 0.7233 negotiate better projects/cases. These three highly loaded items on
F5 Buyer's collaborativity and stature 0.6140 0.6546 − 0.0377 “learning” reflect the theoretical transition into marketing as long-
Shared variance 0.3251 0.3169 0.2047 term relational investment rather than short-term expenses (Selnes &
Redundancy 0.0518 0.0488 0.0102
Sallis, 2003; Slywotzky & Shapiro, 1993). The second theme of F1,
 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615
“publicity (#23),” addresses the expected marketing effects of doing
business with the buyer. If the buyer carries high publicity or a
prestigious brand image, the supplier may gain a favorable image also
by establishing a relational linkage with the brand owner (Beverland,
Napoli, & Lindgreen, 2007, p. 1083). “Compatibility,” the third theme of
F1, refers to business logic (#24) and market focus (#25) between the
supplier and the buyer, echoing Hsu et al.'s relational notion of “fit”
(2006). If buyer and supplier share compatible visions and corporate
cultures, i.e., their business logic, it is more likely for them to work
well together. Market focus suggests that, if supplier and buyer have
compatible reading of market orientation, they may together, for
example, either stick to the current market focus or bet on the creation
of a new one with collective resources to gain positional advantages
(Hult & Ketchen, 2001, p. 905). In sum, learning, publicity and
compatibility belong to the intangible operant resources, echoing
what Vargo and Lusch (2004) famously pronounced, “resources are
not; they become” (p. 2). As the factor that contributed to the highest
amount of variance (19%), F1 connotes a palpable relational and long-
term emphasis as a paramount BPS dimension.
F2 is named “adaptation in resources and standards.” Resources at a
supplier's disposal are finite and resource decisions, once made,
become a gamble (i.e., a choice that does not necessarily guarantee
success) and investment of available resources may be dangerously
irreversible. Therefore, savvy calculation of the impact on resources,
particularly those that are valuable, rare, imperfectly imitable, and
non-substitutable (Barney, 1991), becomes an important dimension to
select buyer's projects. Unlike F1, resource impact in the case of F2 is
about the tangible, which in our study includes material/infrastruc-
ture issues related to the possible expansion of assembly lines (#8),
crowding out of production capacity (#5), readjustment of stock level
(#12), altering of the supplier's quality standards (#10) and the
crowding out of the potential profit margins generated by other
projects (#14). F2 is a potentially costly dimension because it involves
“adaptation” of existing patterns, necessitating often extra efforts
from the supplier. As the factor that contributed to the second highest
amount of variance (13%), F2 connotes a palpable goods-dominant
transactional emphasis in the overall BPS structure.
We name F3 “project economic contribution.” This factor touches
on a project's potential contribution in monetary terms, which, in this
study, include sales revenues contributed by the engaged project (#1),
the growth potential in sales as the project evolved (#2), the profit
margins considered for current stage (#6), and comparably higher
profit margin over the others (#7). This factor speaks to the reson
d'etre or reason for being of business and has been ubiquitously used
as the major index for marking “success” (Doyle, 1992, p. 102). Profit,
in other words, is a key issue when selecting new projects proposed by
the buyer. Solid sales, if accomplished, will have a positive impact on
future investment in both the supplier's and the buyer's companies.
Profit maximization is not necessarily the ultimate goal for a specific
project, but positive cash flow earned from all projects engaged is
paramount. More unambiguously than F2, as the factor that con-
tributed to the third highest amount of variance (11.59%), F3 belongs
to the G-D oriented, short-term, transactional dimension.
F4 is named “credit worthiness and financial terms.” A successful
business negotiation results in a legally binding contract between the
buyer and the supplier. It dictates mutual obligations and provides
“legal protection and assurances across the process of exchange”
(Gundlach, 1996, p. 195). This factor concerns the credit of the buyer
that reveals the history and pattern of the buying behaviors (#16), the
financial terms in a contract, including the payment terms of the
project under negotiation (#15), and the anticipated payback period
for specific investment made for the current project (#17). Together
with F2 and F3, F4 belongs to the older G-D oriented and transactional
emphasis of marketing and management.
The last factor, F5, is named “buyer's collaborativity and stature.”
This includes two items: buyer's market ranking (#26) and the quality
611
of past collaboration between two parties (#27). Given that the
buyer–supplier relation is through and through bilateral, a supplier is
more likely to favor buyers with acknowledged brand image and
company reputation based upon previous experiences (Cretu &
Brodie, 2007). Thus, previous relational experience also influences
future business cooperation. In addition, the stature or market ranking
of the buyer reflects the accumulation of all elements of brand equity.
Buyer stature seems to congregate with buyer collaborativity and,
together, they make up the fifth selection criterion used by the
supplier. This factor, like F1, is heavily relational. It touches on the
importance of cultivating a customer base that includes market share-
determiners as well as those that have proven their collaborativity.
In conclusion, our factor results have succeeded in providing
grounded and empirical evidence for the first research question. The
5-factor 20-item instrument refined from the original 28-item BPS
questionnaire that emerged from semi-structured interviews with
business executives and a large mail survey of electronics companies
in Taiwan may be considered as a meaningful and effective protocol to
tap into the complex selection criteria actually used by industrial
suppliers. The practitioners' complex selection criteria, quite cur-
iously, did not embrace an either-or dichotomy. The five BPS factors, in
other words, were neither completely transactional nor relational. The
complex co-existence of three transactional factors (contributing to
35% of the total variance) and two relational factors (contributing to
27% of the total variance) as documented in this study seems to lend
empirical support for the case of multiple paradigms in operation
rather than one paradigm replacing the other. Namely, our factor
results reflect the hybridity of two paradigms. Quite encouragingly,
our evidence is in line with what's argued by researchers from the
Contemporary Marketing Practices (CMP) group:
…TM [transactional marketing] was relevant and practiced
concurrently with various types of relational marketing. The
evidence therefore challenged the dichotomous transaction versus
relationship perspective as well as the notion of a “paradigm shift”
towards relationship marketing since the findings demonstrate
the co-existence of transactional and relational marketing (Brodie,
Coviello, & Winklhofer, 2008, p. 86).
5.2. The need to formalize and communicate BPS criteria
Our second research question asks if suppliers establish their BPS
criteria explicitly and, if yes, through what channels of communica-
tion. Our findings suggest that more supplier companies had not
established any BPS criteria than those who had. Among the minority
of suppliers who had BPS criteria established, their communication
remained either ephemeral through oral communication or vague
through “broadly written rules.” Our respondents held high level
management/marketing positions. If the knowledge about detailed
and formalized BPS criteria was restricted to few of them, it is
reasonable for us to conclude that the formalization of BPS factors was
not wide spread among Taiwanese electronics suppliers. We under-
stand one caveat: formalization should not hinder creativity, but we
think there is a glaring need for business practitioners to formalize
BPS criteria through clearer and more explicit rules and standards
(Auh & Menguc, 2007; Autry, 2005). We further suggest that there is
another obvious need for firms to communicate BPS standards
effectively throughout the chain of command, for example, in training
sessions and business strategy meetings.
Our study also discovered that manufacturing firms were less
likely to establish BPS criteria, and sales-distribution firms were more
likely to do so. The former might have to do with the fact that
Taiwanese manufacturing firms focus on cost competitive and quality-
met goods. Typically, they generate slim profits while facing stiff
competition and their margin of selection is thus reluctantly restricted
to areas like the size of order and quality requirement of product.
612 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615
Because beggars are less likely to be choosers, it makes sense that they
are not as likely to establish hybrid BPS criteria to select buyer
projects. In contrast, it is more likely for sales-distribution firms to
have project selection criteria established because their main business
domain lies in deal-making with suitable buyers rather than in
manufacturing goods. Such guidelines are more necessary for the
business to thrive because sales-distribution firms need to make on-
going savvy calculations to ship products out to buyers as soon as they
can. In sum, there is a need to formalize BPS criteria in all firms in
Taiwan, but it obviously lies more in manufacturing firms.
5.3. Hybrid connections between BPS factors and relational constructs
Our data suggest highly significant canonical correlations between
the five BPS factors (F1–F5) and the two important relational constructs
(power and satisfaction). Specifically, satisfaction among the indepen-
dent variables, and F3 (project economic contribution), F1 (learning,
publicity and compatibility), and F5 (collaborativity and buyer's stature)
among the dependent variables, contributed significantly to the
canonical variance. Our respondents felt that they had relatively high
power to choose the key project, but it was satisfaction with the buyer
in the past rather than power that contributed to the selection decision.
One might ask, “Why was this the case?” One plausible reason might be
that the more powerful firm in an imbalanced business relationship may
choose not to exercise its power even though it obviously is able to do so
(Cho & Chu, 1994; Hingley, 2005; Kumar, 2005; Ryu, Aydin, & Noh,
2008). One might also argue that the suppliers have power within a zone
of “limited freedom,” which is nestled in a larger supplier–buyer
relationship spanning multiple years. In other words, perceived
satisfaction with a business relationship trumps subjective power
(whether it is exercised or not) in making selection decisions. Our
empirical result supported the latter argument, singling out relationship
satisfaction over power as a higher order determining factor in business
decision making. Because we measured satisfaction by looking at the
overall relationship over time, which might reflect two sub-constructs,
economic satisfaction and social satisfaction discussed by Ivens and
Pardo (2007), satisfaction as a comprehensive and long-term indicator,
quite coincidentally, might dovetail nicely with the hybridity of the five
BPS factors discussed earlier.
One might further ask, “Why did F3 (project economic contribution)
rather than the other four BPS factors emerge as the most significant
contributor to power and satisfaction?” Empirically, this points to the
undeniable importance of economic contribution created by a project as a
correlating factor in the relational world. This lends support, in a way, to
the integration of transactional cost analysis theory and social exchange
theory in understanding how suppliers assess their business exchanges
(Hawkins et al., 2008). This further resonates with Zineldin's (1998) “co-
opetive” perspective, envisioning business organizations as ecologically
collaborative relationships for competition. Malcolm Cunningham
(2008), one of the founders of the IMP group, echoed this view of
hybridity and issued a warning. The IMP research habitat, he declared, is at
risk due to a uniform emphasis on cooperation (e.g., relationships,
interactions and markets as networks) at the expense of business
competition. It is important not to neglect Palmer's (2002) view that
cooperation may be more of an aberration and that motivation in business
exchange may be tilted in the direction of self-benefit and longer-term
self-preservation. Selfishness and competition, therefore, may not be
readily dismissed in the study of successful business relationships than
most relational researchers would choose to acknowledge.
6. Conclusion, implications and future directions
The main contribution of our empirical study rests not only on the
construction of a 5-factor 20-item BPS measurement instrument, but
also on what was uncovered by such an instrument. To recap, this
instrument reflects a hybridity thesis advanced by CMP researchers such
as O'Driscoll (2008), “While some firms may adopt a predominantly
transactional or relational approach, a significant number use a
transactional/relational hybrid” (p. 99). This hybridity, nevertheless,
needs to be approached with refinement in that relational satisfaction,
more so than power, seems to affect selection significantly; and project
economic contribution plays an important role in assessing relationality.
In what follows, we draw two implications of the current study and ways
in which project selection research may be deepened in the future.
6.1. Two research implications
We are now relatively certain that Taiwanese electronics suppliers'
buyer project selection criteria were highly complex and hybrid in
nature. Among the five factors for the suppliers, F1 and F5 are more
relational and long-term in nature, while F2, F3 and F4 are more
transactional and short-term in nature. F1 and F5, including learning,
publicity, compatibility and buyer's collaborativity and stature, require
much time and effort. F2, F3 and F4, including adaptation in resources
and standards, project economic contribution and credit worthiness and
financial terms, all belong to resource calculation of a specific business
project and its relatively immediate contribution to the supplier
company. Although a turn from a purely transaction-based, one-off
short-term view of business to a more relationally savvy, long-term
paradigm is empirically taking place, such a “turn” needs not lead to the
erasure of the old. What's relevant here, in light of our study, is that
Taiwanese electronics suppliers evidenced the co-existence of the earlier
transactional paradigm and a later relational one marked by researchers
such as Vargo and Lusch. Going beyond theoretical scholarship, our
results offer hard empirical evidence, both qualitative and quantitative,
supporting the claim that industrial suppliers occupy relatively complex
hybrid spaces offered by two paradigms in selecting buyers' projects.
Even though suppliers engaged in project selection, their judgment
and choice often remained “tacit,” which is analogous to the fact that
most people speak their native language but cannot provide meta-level
categories about their practices like a linguist. This explains a troubling
result of our study: the majority of the respondents' companies lacked
clearly articulated BPS criteria. Few companies communicated their BPS
criteria through detailed written guidelines. An urgent implication,
therefore, lies in using the factor structure that emerged in this study to
assist industrial practitioners in verbalizing hybrid BPS criteria more
explicitly and systematically, that is, in formalizing their selection rules
and standards. Our hope is that industrial suppliers can begin
constructing their selection criteria through more and more formal
venues of communication, moving beyond unstructured and informal
oral communication to detailed written guidelines.
6.2. Ways to deepen BPS research in the future
One of the obvious ways to deepen selection studies is to duplicate
our current research from a truly dyadic perspective, tapping into the
opinions and attitudes of the supplier and the buyer. In addition, we
could see more limitations of this study as we became acquainted with
the work of the European project marketing research, the INPM group
(which is loosely affiliated with the IMP group), specifically in relation to
their thicker conceptualization of “project” in three heuristic dimen-
sions: time, network and portfolio (Skaates & Tikkanen, 2003). First,
project involves connected time, i.e., business efforts rendered before,
during and after the delivery of a specific project. Second, project
involves broader networks of stakeholders rather than two companies
directly connected to the project. Third, project is best framed
intertextually in relation to multiple projects, i.e., project portfolios.
Once situated in the above project marketing framework, our study
clearly offers a much narrower definition of “project” in terms of time,
player and singularity. That is, we focused on an individual project's “here
and now” as time, isolated buyer and supplier as business players, and
isolated project as the singular focus. The merits of our research lie in its
 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615 613

operationalization of the BPS criteria based on supplier practitioners' Appendix A (continued )

lifeworld experiences, offering an empirically grounded factor structure Item no. BPS item description
to map out dimensions of project selection choices. Future BPS research, current project
however, can be substantially deepened by expanding the “project time” 23. Publicity gained from the current project
to include the pre-bid analysis (Cova, Salle, & Vincent, 2000) with specific 24. The compatibility in business logic between the buyer and the supplier
25. Compatibility in market focus between the buyer and the supplier
emphasis on the pre-qualifying process (Handfield & Lawson, 2007) and 26. Buyer's market ranking in its own industry
the work necessary during the discontinuity or sleeping period. Future 27. The quality of past collaboration between buyer and supplier
BPS studies can also be strengthened by moving beyond an isolated and 28. The magnitude of the buyer's commercial–political ties
singular focus on a one-time project between a supplier and a buyer to
take in the “depth and breadth” dimensions of the interaction between
the supplier and the buyer (Cova & Salle, 2007, p. 143). Even though the
relational variable, satisfaction, used in this study and the identification of Appendix B. Retained 20-item 5-factor BPS instrument with
hybrid factors constitute a positive propensity in this direction, future Varimax rotation (n = 339)
studies could take up Cova & Salle's (2008) suggestion to explore supplier
networks and customer networks in their value-co-creation interactions.
Such work would also benefit from the complex and systematic Item BPS item description F1 F2 F3 F4 F5
conceptualization offered by the four portfolios framework, the most no.
comprehensive model to date based on earlier project marketing 22. Learning of management/operational 0.791
literature (Tikkanen, Kujala, & Artto, 2007). Its holistic lens, we note, knowledge made possible by the
bears rich implications for future empirical studies because of its current project
21. Learning of product design made 0.751
simultaneous and dynamic focus on situation-specific interdependencies possible by the current project
among the four refined portfolios related to projects and relationships. 25 Compatibility in market focus 0.745
Finally, there is the matter of historical context. Our data were between the buyer and the supplier
gathered from November 2005 through July 2006. Retrospectively, it 24 Compatibility in business logic 0.739
between the buyer and the supplier
was a period of prosperity both locally in Taiwan and globally around
20 Learning of marketing information 0.735
the world. Does the current recession, an economic tsunami whose made possible by the current project
scale and reach rivals that of the Great Depression in the early 20th 23 Publicity gained from the current 0.697
century, affect the BPS factors identified in this study? Does it alter the project
hybridity thesis or change the weight given to transactional and 10 Whether the current project would 0.731
necessitate the altering of the
relational factors in project selection? These and more are empirically supplier's quality standards
important questions awaiting future research in selection studies. 8 Expansion of assembly lines 0.707
necessitated by the current project
14 Whether the current project may 0.701
crowd-out the potential profit
Appendix A. The 28-item BPS instrument, measuring buyer project margins generated by other projects
selection (BPS) criteria used by industrial suppliers 5 Production capacity crowded-out by 0.654
the current project
12 Readjustment of stock level 0.548
The instruction accompanying the survey reads: Each item below
necessitated by the current project
aims to measure what your company used to evaluate ways in which 6 The profit margins potentially 0.743
your company accepted a buyer's project. Please assess each item below generated by the current project
on a five-point scale based on the business practices in your company. 2 The sales growth potential generated 0.708
by the current project
1 The sales revenues contributed by the 0.690
current project
7 The higher profit margin over the 0.657
Item no. BPS item description others generated by the current
1. The sales revenues contributed by the current project project
2. The sales growth potential generated by the current project 16 Credit history of the buyer 0.775
3. Future business projects made possible by the current project 15 The payment terms of the current 0.762
4. Excess capacity in production utilized by the current project project
5. Production capacity crowded-out by the current project 17 Payback period anticipated for the 0.580
6. The profit margins potentially generated by the current project investment allotted for the current
7. The higher profit margin over the others generated by the current project project
8. Expansion of assembly lines necessitated by the current project 27 Quality of past collaboration between 0.740
9. Whether a risk-sharing mechanism is built into the contract buyer and supplier
10. Whether the current project would necessitate the altering of the supplier's 26 Buyer's market ranking in its own 0.666
quality standards industry
11. Whether the current project would involve additional product design Eigenvalue 3.755 2.601 2.317 2.07 1.6
12. Readjustment of stock level necessitated by the current project *Variance (%) 18.776 13.003 11.587 10.33 8.00
13. Whether the company's own brand can co-exist with the buyer's brand Factor mean 3.573 3.254 3.965 3.97 3.88
supported by the current project S.D. 0.919 0.996 0.781 0.82 0.84
14. Whether the current project may crowd-out the potential profit margins **Cronbach's α 0.865 0.753 0.751 0.72 0.52
generated by other projects Standardized α 0.868 0.752 0.754 0.72 0.52
15. The payment terms of the current project Total items n 6 5 4 3 2
16. Credit history of the buyer
F1 = Learning, publicity and compatibility.
17. Payback period anticipated for the investment allotted for the current project
F2 = Adaptation in resources and standards.
18. Degree of departure from the standardized product caused by the current
F3 = Project economic contribution.
project
F4 = Credit worthiness and financial terms.
19. Tediousness of payment terms required by the current project
F5 = Buyer's collaborativity and stature.
20. Learning of marketing information made possible by the current project
*Five factors accounted for 61.7% of the variance were extracted. Factor extraction criteria
21. Learning of product design made possible by the current project
used include Scree test, the latent root, and variable communalities greater than 0.50.
22. Learning of management/operational knowledge made possible by the
**Cronbach's alpha coefficients for composite measures with factor loadings N 0.50.
(continued on next page)
614 W. Lee et al. / Industrial Marketing Management 39 (2010) 605–615
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Wenshu Lee is professor in the Department of Communication Studies at Loyola
Marymount University. She received her Ph.D. from University of Southern California.
She teaches critical organizational communication, critical intercultural communica-
tion, and qualitative research methods. Her current research focuses on transnational
feminism and multisectorial collaboration in the Pacific Rim for global sustainability.
Ji-Ren Lee is professor of strategy and international business in the Department of
International Business, College of Management at the National Taiwan University. He
received his Ph.D. from the University of Illinois at Urbana-Champaign. His research
focuses on competence-based growth strategy and international joint venture.

Wangen Lee is assistant vice president of the TXC Corporation, a company specializing in
the manufacturing of crystal/oscillator products. He received his MBA in International
Business from the College of Management at the National Taiwan University, and MLS from
Indiana University, Bloomington. Currently he is a doctoral student in the Graduate
Institute of Management at the National Taiwan University of Science and Technology.

Tom M. Y. Lin is professor of the Graduate Institute of Management at the National

Taiwan University of Science and Technology. He received his Ph.D. from the University
of Warwick, UK. His research focuses on word-of-mouth marketing and market
segmentation.