The Role of Willingness and Motivation in the Art of Start: A Case Study of IT SME Supplier Selection and Development

Abstract

To successfully start cooperation with suppliers is challenging. This case study analyzes how a Germany-based IT client cooperates with its suppliers. Both the client and its suppliers are SMEs in IT outsourcing sector. The case explores (1) the role of supplier’s willingness in client’s supplier selection decision, (2) motivations of suppliers to join the client’s supplier development programs and (3) what activities are used in ITO sector to develop suppliers. The results show that besides supplier capabilities, supplier willingness also plays an important role in supplier selection. The selection is not a one-way decision from clients, but a negotiation between the client and suppliers. To come to the cooperation, both parties have to be aligned with their partner’s strategy, show the willingness to cooperate and the commitment on top management level. The motivations of suppliers to join the client are fourfold. They are because the suppliers (1) want to win the contract, (2) to improve their capabilities by learning new skills from the client, especially (3) when the cooperation is aligned with their development strategy and (4) when they realize the commitment and the potential of the client to cooperate and develop the suppliers. In ITO sector, a wide range of supplier development activities are implemented by clients and suppliers including direct supplier activities (finance and human) and indirect activities (incentive, evaluation, competitive pressure). However, it depends on (1) the perceived client-supplier relationship, (2) the supplier absorptive capacity and (3) the supplier developing capability of the client.