OEM and Service Provider Attractiveness and Management in High Value-Added Manufacturing Industries

Abstract

Value creation is considered to be the heart of the customer-supplier relationship. Yet, the concept of supplier attractiveness is underexplored in explaining relationships from an expected value perspective. Furthermore, there is lack of empirical research in the context of service-infused relationships. Particularly, there is deficiency of knowledge about the degree to which original equipment manufacturers (OEMs) may be considered more attractive than service providers and vice versa or if these types of suppliers may need to be managed differently.

The study attempts to contribute to at least two streams of literature by (1) expanding understanding of supplier (OEM and service provider) attractiveness from expected value and inter-firm co-operation perspectives; and (2) identifying practices deployed in contemporary management of relationships in service business networks. To achieve this, a qualitative approach was taken supported by abductive mode of enquiry and multiple case study design.

Findings indicate that vendor attractiveness is viewed as a combination representing the main value dimensions plus other additional factors, showing that supplier attractiveness cannot be considered in isolation from a vendor’s embeddedness in service business networks. Also, although service providers and OEMs can have similar competitive priorities, customers have differing expectations from these two groups of vendors. This is reflected in supplier selection criteria and consequently ‘the ideal vendor profiles’, and in anticipated benefits arising from cooperation. Furthermore, it appears that these types of suppliers need to be managed differently, which is not mentioned in existing theory. Finally, contrary to some of the literature, the importance of tangible and intangible aspects of a purchase does not vary depending on the core product part (tangible goods versus services), and customers do not have direct ties with all service business network members.