Effectiveness of Buyer-Supplier Prior Experience on E-Procurement Platforms

Abstract

E-procurement platforms facilitate transactions between suppliers and buyers from all over the world. Over time, suppliers and buyers may develop familiarity from prior experience with earlier transactions. The project team literature has established that prior experience leads to better project performance. In this study, we examine the effectiveness of prior experience between buyers and suppliers in e-procurement platforms with a focus on the moderating roles of temporal distance and language difference between the buyer and the supplier as well as the effect of routine tasks in the project (termed “task routinization”). Using a unique data set from a large e-procurement platform, Freelancer.com, we first find that buyers’ prior experience with a supplier positively affects project outcomes, and temporal distance and language difference both negatively affect project outcomes. This is consistent with previous findings for emerging e-procurement platforms. More interestingly, we find that the effectiveness of prior experience is constrained by both temporal distance and language difference, such that if a greater temporal distance separates the buyer and supplier or if the two speak different languages, prior experience is less likely to be helpful. In addition, while task routinization does not directly affect a project’s success, it has a positive interaction effect with prior experience, suggesting that buyers’ prior experience with a supplier is more effective in enhancing project outcomes when a project comprises routine tasks. Our findings on prior experience, temporal distance, language difference, and task routinization contribute to a better understanding of the e-procurement platform for global outsourcing and procurement. Limitations are discussed and topics are identified for future research.