High-Technology Buying in Low-Technology Environment: The Issues in New Market Economies

Abstract

Many LDCs (less developed countries) that lack market values and competitive experience and instruments have moved to market economies. In this paper, we look at some of the new issues in the interaction process; particularly, at buyer behavior when the risk element becomes important and complex within a relatively short period, and uncertainty is much higher. The case examined involves the process of buying plants and equipment for the production of cash-operated and telephone card-operated equipment in Algeria. Both the technology and the product were new to the country. This limited empirical study raised some issues about the behavior of low-technology buyers and assessed the impact of the interaction between partners in international markets. Perceived risk resulting from uncertainty is magnified by new pressures of the environment; namely, shifts to performance requirements, a higher level of competition, and financial restrictions. These new market constraints influence both buyers (directly) and suppliers (indirectly). The supplier must adapt to both new market conditions and new buyer behavior and must reassess the new market pressures and requirements to determine more accurately the market impact of establishing these new relationships.