Paper info: The price setting of a technical system in a network-based purchasing/development project. A conceptual framework
The price setting of a technical system in a network-based purchasing/development project. A conceptual framework
Norwegian University of Science and Technology
Place of Publication
The paper was published at the 17th IMP-conference in Oslo, Norway in 2001.
This paper introduces a conceptual framework for explaining the price setting process ofa technical system in a purchasing/development project in which several other actors areinvolved besides the customer and the supplier. The conceptual framework is apreliminary result of a case study in progress. It frames the economically related pricesetting concept into a wider and more varied picture comprising purchasing,technological development and a network of many organizational actors. The industrialnetwork perspective according to the Uppsala school is chosen as the basis fordescription of the interorganizational processes. Basic elements in this approach arerelationships and interaction between clearly identifiable actors with a specific purpose.The price setting in a network case is thus pictured as an interaction process betweenactors connected through a network of relationships. The interaction is structuredaccording to five enacted and parallel roles, namely prioritizing, supplier baseorganization, technological development, financing, and price rationalization. Thesuggested framework can be used to create interesting research questions. For example,the framework may explain why a buying company can achieve a very low price for aproduction system which is purchased from a company acting as a systems supplier. Sucha message should be pertinent to small firms or companies having difficulties in makingbig and expensive investments in new production systems. Furthermore, can anextraordinary low price be achieved while the close relationships in the network are keptand even improved. A positive answer to this question has theoretical implications.