Buying Business Services

Citation

Pauwels, P. (2003), "Buying Business Services", International Journal of Service Industry Management, Vol. 14 No. 5, pp. 596-599. https://doi.org/10.1108/09564230310500246

Dominant trends such as lean management, the outsourcing of non‐strategic activities and industry‐wide optimizations of supply chains in the context of globalization‐through‐specialisation have dramatically increased the economic and strategic importance of purchasing in many industries. While purchasing in general plays an increasingly essential role in the value‐creating power of firm, the purchasing of business services – the focus of this book – potentially generates leverage to a firm's competitive advantage.

Nevertheless, purchasing of business services continues to be a poorly researched and almost isolated research field. The top journals’ interest in purchasing remains close to permafrost. In many academic business journals, many times purchasing is adopted as an almost accidental setting for investigating more general concepts and relationships. Particularities and the very role of purchasing towards a firm's performance remains a black hole in many perspectives.

With this book, Axelsson and Wynstra significantly contribute to closing this gap. In particular, the authors explore the buying process of business services from a clear service management perspective. Thereby, they reintegrate purchasing in the mainstream of business and management research by building on fundamental theories and conceptualizations such as the IMP's network perspective and transaction cost economics. Yet, this book is not a research monograph. More than scientifically explaining particularities in the buying (process) of business services, the book describes and scrutinizes business services buying from different angles: the role and character of business services, the question of outsourcing business services, and the particularities of the buying process. Therefore, the authors have constructed this book on three pillars. First, they built a network perspective of service‐producing firms. Services consist of activities that are performed by interdependent actors. Second, the authors deliberately adopted a behavioural/contingency perspective. Managerial discretion in the context of influencing environmental factors remains the point of departure throughout the book and its conceptualizations. Finally, the authors built on state of the art knowledge on service marketing and management.

In the first and introductory part of the book, business services are defined in various contexts. As a result, Axelsson and Wynstra present a plethora of classifications of business services. Many of these classifications bring added value to both the practitioner as well as the academic. For the businessman or woman they help in structuring and prioritizing purchasing policies. For researchers, these classifications embed interesting ideas for future research. Yet, some of the classifications in this and later chapters seem to overlap. Others appear contradictory. This is mainly due to their descriptive (i.e. non‐explanatory) character. A clear relationship with a discriminating construct (e.g. decision‐making complexity, strategic importance, firm performance, etc.) could have remedied this confusion.

The first part of the book appropriately sets the scope and defines the lenses. Here, two limitations have to be acknowledged. First, it is understandable that the authors isolate the purchasing function from its internal context in order to increase parsimony in the logic and arguments. Nevertheless, earlier research has shown that the very relation of purchasing with other primary and supporting functions in the firm, such as marketing, R&D and human resources management, has a significant (moderating) impact on the effect particular characteristics of purchasing have on organizational performance (Kotabe, 1992). We believe that these interrelationships within the boundaries of the firm are even more important in the context of business services buying. Therefore, we would have expected a more significant discussion of the interfaces between the purchasing function and other strategic functions of the firm. Second, the authors tend to simplify the buying situation of services. Indeed, a majority of business services are embedded in a bundle of market offerings that are sold as solutions, not as “products” (Anderson and Narus, 1999). As a consequence, it is expected that more services are bought along, and together with products than as pure service market offerings. Integrating this additional complexity would have increased the realistic stance of the book even further.

The second part of the book presents business services in terms of the network‐based activities‐resources‐actors (ARA) model. The ARA model has been widely employed in studies of business networks. In this perspective, business services consist fundamentally of activities that are performed by actors who need access to resources in order to carry out these activities. As a consequence, the interdependency between actors is a main driver of the ARA model. More than an analytic tool, the book adopts this model as a basic framework for investigating in‐ and outsourcing and to portray the interplay between buyers and sellers of business services. In contrast to a poor coverage of the intra‐firm relationships purchasing is involved in, as indicated above, the adopted network perspective has resulted in a rich description of the relationship between buyers and (potential) suppliers. The network approach has even implicitly led to a “reverse marketing” approach to purchasing throughout the book. This offers a very interesting pivotal point for research collaboration between purchasing scholars and marketing academics.

Part III takes a more pragmatic stance and focuses on decision making before and during the buying of business services. Service specification, supplier selection and price negotiations are clearly covered, including a presentation of ready‐to‐use managerial instruments. A clear strength of this discussion is that the authors do not adopt a slightly adapted product perspective, yet fundamentally build on the basic characteristics of services to define critical steps in the buying decision‐making process. In fact, the sections in which the authors build on research in service marketing and management turned out to be the most explanatory of the entire book. Clear emphasis is put on the interplay between the buyer and seller from the outset of the buying process. Departing from the inherent complexity of service quality evaluation, the authors present sound and manageable frameworks to assess potential sellers and to predefine quality requirements. In particular, the author's input/throughput/output/outcome typology for specifying business services is innovative and holds potential beyond the service specification stage. Although the relationship between satisfaction and loyalty as discussed in chapter 7 is not frame breaking in the services marketing literature, it may be revealing for many purchasing scholars. In chapter 9, an inspiring discussion focuses on setting and negotiating prices of services. Appropriately, the authors adopt and develop a market value perspective as proposed by business marketing scholars (Anderson and Narus, 1999).

The fourth and final part of the book is more reflective. Axelsson and Wynstra confront a transaction‐ and a relation‐oriented approach to purchasing as well as a (highly related) market‐versus network‐perspective. Thereby, they discuss the theoretical framework they – more or less implicitly – adopted in the preceding chapters. In an elegant way, the authors take position in favour of a relation‐oriented network perspective, yet without disregard to the role of a transaction‐oriented market perspective in the context of particular purchase situations. However, this reflective part could have become a forward looking part as well. Unfortunately, the authors have not taken the opportunity to translate many interesting findings of the previous chapters in a more formal/abstract agenda for future research. At the same time, the unravelling of their conceptual platform could have been a leverage for a future look on managerial evolutions in purchasing and business services buying more in particular. Yet, Axelsson and Wynstra did a good job in trying to convince the reader that a network/relationship approach is not equal to a non‐performance stance. Focusing on, for instance, relationship costs the authors plead for a more long‐term economic evaluation of purchasing activities.

In sum, the authors have managed to present a very readable book. Mainly the number of lively examples throughout every chapter invites both practitioner and academic – for teaching as well as research purposes. This book is positioned in between an analytic research handbook and a normative managerial guide as well as in between a rationalistic and a holistic behavioural piece. Basically explorative, the authors shed light on the various sides of the phenomenon and invite critical readers to structure available knowledge on business service buying – in all a significant step towards more analytic work on this topic. In contrast to a more US approach, the managerial positioning of this book foregoes clear cut, normative rules for purchasing. The authors invite managers who are directly or indirectly related to purchasing to build a critical‐analytical perspective on decision‐making. In this sense, the book is frame breaking. Adopting a clear European perspective on purchases it contributes to counterbalancing a US‐dominated more tactical operations management focus on purchasing.