Competence‐based risk perception in the project business

Abstract

PurposeThe perceived risk of services is not characterized by being inevitably higher than that of tangible products but rather by the fact that performance risk is bilateral and process‐like. The aim of this paper is to explore the nature of this competence‐based risk perception during different project transactions.Design/methodology/approachThe research approach is a qualitative, exploring one. The elements of the theoretical framework have been explored with the help of parallel supplier and buyer in‐depth interviews. In terms of industry coverage the focus of the study was in the traditional engineering areas including some other players of b2b project markets in the participant group.FindingsBuyers' perceived performance risk can be linked to the presumed weaknesses of the supplier in professional background, personnel, size or technology, and to certain external factors. Risk perception coming from mainly competence asymmetry can be reduced by interactive communication but it must be adjusted to the buyer's comprehension level. Intensive two‐way communication may be to justify the appropriateness of the buyer's decision.Practical implicationsUnderstanding the risk perception of buyers can improve the management of purchasing activity and the purchasing process as well as the proactive behaviour of the supplier. Exploring the risk behaviour of the supplier can help to harmonize the selling/procuring activities of the supplier/buyer.Originality/valueThe originality of the paper lies in the process‐like, bilateral modelling of risk perception in the service transaction. Based upon this approach a comparative interviewing has been carried out.