The role of information quality and quantity on the performance of partner-selection strategies in B2B digital platforms

Abstract

Partner-selection strategy has a significant impact on the network configuration and financial performance of Information Technology Outsourcing (ITO) firms in both traditional marketplaces and digital platforms. Despite a growing body of literature on network theory and relational governance examining the superiority of Dyadic Trust and Reputation, it remains unclear how the buyer-supplier network is altered by two different selection strategies and its impact on the performance. This study employs a simulation-based approach to develop new theories proposing possible answers to the research questions. Simulation models implemented in this study are based on transaction cost theory and relational exchange theory to examine the impact of partner selection strategies on buyer’s long-term performance within the context of B2B digital platforms. The study tracks the evolution of network structure and its effect on long-term cost performance, depending on the partner selection strategy adopted. The simulation results indicate that the quality and quantity of information in the marketplace affect the supply chain structure based on the partner-selection strategy adopted by buyer firms. A partner-selection strategy that utilises a centralised feedback system in B2B digital platforms to enhance the accuracy of supplier reputation is better equipped to handle changes in technological unpredictability and reduce partner opportunism. Additionally, higher quality information in the B2B digital market leads to increased visibility of reliable suppliers. This study contributes to the field of strategic management by systematically analysing the impact of information quality and quantity on the performance of buyers taking a partner-selection strategy in the context of B2B digital platforms and relationship network theory. The simulation results indicate that information accuracy and transaction volume can lead to the faster and cheaper identification of reliable suppliers in the uncertain environment of ITO transactions. The simulation results suggest that the relative cost advantage of relationship-based strategies may decline in B2B digital platforms where trustworthy suppliers can receive more business opportunities outside of the relationship-based pool. This suggests a premium cost may be required to maintain reliable supplier relationships, adding another boundary condition to the relational network theory. The findings can be used by managers in B2B digital platforms to prioritise investment in attracting new buyer firms that are still hesitant to join the platform.