Bargaining Power and Information Technology in African–European Business Relationships:: Case of the Dutch Flower Auctions

Abstract

This article addresses the emergence of African–European business relationships. Its focus is on the role of bargaining power and information technology and its impact on the different stakeholders in (electronic) markets (sellers, market maker, buyers). Information technology is seen as an enabling technology that facilitates reaching a wider customer base (called reach) and providing a channel for increased customer services (called richness). The central question is how African suppliers can create bargaining power by means of information technology and therefore enter and improve their position in European markets. Research is carried out in the flower industry. In this industry African flower growers create competitive advantage and develop business relationships with European buyers (wholesalers, retailers). In this article we investigate three flower markets (Tele Flower Auction, FloraHolland Auction, and Aalsmeer Auction), the role of African flower growers, and the use and impact of information technology in these markets. The results of our research show that there are potentials for African flower growers to enter the European flower markets and to increase their position of bargaining power. A first potential is using and implementing information technology for the access to new and large European markets. African flower growers use information technology to streamline transaction processes and lower transaction costs. A second potential is related to the quality and specificity of the produced flower products. Information technology can remove the quality uncertainty of products and can provide rich information services to buyers. The results in the flower industry suggest that information technology provides opportunities for the African producers to expand the reach and richness of their product and service offerings, thus creating economic value.