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Quality Uncertainty And Custoner Integration - The Vendor's Perspective -

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  • Economics


Relationships in industrial markets generally contain a certain amount of uncertainty for both parties. Especially for the vendor, risks connected with so-called customer integration need to be considered in respect of "external factors". These factors are brought into the vendor's firm by the buyer in order to create a product or service (e.g. the buyer's employees, information, etc.). Often, the vendor is not capable of determining the quality of these factors prior to concluding a contract or starting the production processes although they are - apart from internal factors - crucial for the quality of his own performance. Therefore, such integrativity of production processes builds up a high risk potential for relationships which has not yet been analyzed systematically. The paper deals with a classification of such external factors considering quality uncertainty and opportunistic behavior. We will point out ways of handling the resulting risks from the vendor's perspective using currently discussed theories of new institutional economics and customer integration.

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