In high-technology markets, technology uncertainty is one of the major problems which have been discussed for decades. In Heide and Weiss’s (1995) article, they claim that technology uncertainty and switching cost are the two problems which exist in high-technology market. However, in the decision-making process, not only technology uncertainty but also supplier opportunism is an important factor which could influence the transaction cost in the purchasing behavior.
Although there is increasingly research in procurement and opportunism among member firms, little attention has been given to connect the relationship between procurement and opportunism. In the research of Heide and Weiss (1995), they argue that certain aspects of a firm’s purchasing situation may influence the purchasing decision. They examine how the characteristics of high-technology markets have different effects in the two stages of buys’ decision process, the consideration stage and switch stage. The idea of consideration or switching is a kind of opportunistic behavior. The reason is the switching behavior which is performed by one party would erode the other party and increase the transaction cost. In the relationship of marketing channels, this kind of behavior would evoke opportunism.
In the high-technology industry, China already became a major growing market where every country wants to go in. Due to the emergence in consumer electronics, such as cell-phones, laptops, MP3, video games, and digital cameras, the growing demands derives the performance of connector markets. In 2001, the major application of connectors is in personal computers; but, nowadays many connector manufacturers also strive for orders from consumer electronics and internet
communication. In the report of connector industry forecast (2007), the author mentions that world connector sales will achieve a 6.6 percent increases in 2007 based on strong economies in China and Asia and forecasts that sales will make five consecutive years of growth. The growth rate in China is the highest compared with North America, Europe, Japan, and Asia-Pacific. The percent change is 15.0 percent from US 6,010.7 dollars in 2006 to US 6,912.4 dollars in 2007. Therefore, according to the statistic report, it’s not surprised that China would be a prospective country in the future.
Since 1978 Deng Xiaoping opened China to market competition, China already became a domestic exporter in the world. To attract foreign investors, China government provided preferential treatment to foreign investors, such as tax holidays, reduced tax rates, and duty-free import of machinery and equipment. In the twentieth century, China is the largest emerging economy in the world and is characterized by very rapid change. Due to China’s huge market potential, relative low cost of productive resources such as land, labor, and improving business environment, more and more high-technology companies are moving to China (Zhao, Flynn, & Roth, 2006). After China became a member of the WTO in December 2001, China not only took a large step forward toward increased economic exchange with international trading partners but also became the largest exporter in the world of many industrialized markets. In Yeung, Cheng, and Lai’s article (2005), they forecast China would be the largest producer of semiconductors in the world by 2010 and the vast technology would transfer in electronics industry emerging as the most prominent and rapidly developing industries.
However, because of the cultural difference and the lack of lawful controls and transparency in procurement procedures, organizations in China are faced with confusing and inconsistent bureaucracy. Therefore, many researchers (Zhao, Flynn, &
Roth, 2006) claim the notion of guanxi(relationship) is a critical research issue in doing business in China. Guanxi is the granting of preferential treatment to business partners in exchange for favor and obligations (Lee, Pae, & Wong, 2001). In academic field, there are several theoretical bases used in studies of guanxi, including relational exchange theory, transaction cost economics theory, and resource dependence theory (Zhao, Flynn, & Roth, 2006). In the connector manufacture industry, buyers often have existing suppliers who can provide the product, as a result of previous equipment purchases. Therefore switching behavior would have more impact in the relationship and increase the transaction cost. According to transaction cost economics theory, the purpose of the article is to find out how guanxi influence procurement behavior and opportunism in business-to-business relationships.
In the relationship among member firms, opportunism between member firms is a popular topic because a firm which behaves opportunistically could increase its short-term, unilateral gains but could erode the other party in the long-term. Brown, Dev & Lee (2000) claim opportunism by one party can erode the long-term gains potentially accruing to both parties in a dyadic channel relationship. But the opportunistic behavior is hard to monitor. As a result, a lot of researchers examine how to mitigate opportunism in marketing channels (Heide & John, 1992).
On the other way, a key to success in business-to-business markets is to understanding client purchasing behavior (Bunn, 1993). However Bunn (1993) argues that such understanding is difficult to achieve, because the organizational procurement process is often dynamic and complicated. In Chang and Ding’s research (1995), they also have recognized that Industrial purchasing is a complex decision-making process, and the purchasing behavior has been influenced by a variety of interpersonal, organizational, and environmental factors. Therefore, research scholars and marketing managers agree that organizational buyers use alternative decision processes for
different situations (Bunn, 1993). Bunn (1993) reports the development of a classification scheme of purchasing patterns and situations. The development provides a tool by which sales representatives can develop adaptive selling approaches based on a small set purchasing situations and corresponding purchasing decision approaches.
According to the open-door policy and the growing portion of marketing activity in high-technology, China already became an important market in the world. But the empirical evidence about purchasing behavior and opportunism in China is still scare.
In particular, very little conceptual and empirical research has been directed toward examining how to mitigate opportunism in purchasing process in China high-technology market. Therefore, the article focuses on two specific questions faced by purchase managers in China: (1) how the technology uncertainty influences supplier opportunism in China high-technology market, and (2) what role guanxi takes in purchasing behavior and supplier opportunism.