CASE STUDY
1. Introduction
Organizational buying behavior is so much more than the simple act of placing an order with
a supplier (Webster & Wind, 1972a). Hence, the organizational buying behavior involves a
complex series of events that allows a firm to move from the basic recognition of a need,
through technical specification and potential supplier evaluation, to reaching and evaluating a
final purchase decision according to Osmonbekov, Bello and Gilliland (2002). Further,
organizational buying behavior is knowledge about which factors and conditions that
influences the purchasers’ motives, information search, buying decisions and how purchasing
departments and buying centers organize purchasing decision making (Buvik, 2001).
Therefore, organizational buying behavior is described as a complex process of decision
making and communication which takes place over time, involving several organizational
members and relationships with other firms and institutions by Webster and Wind (1972a).
Most businesses purchases both products and services, according to Kotler, Armstrong,
Saunders & Wong (1996). However, the service sector has since year 1900 grown bigger
than the goods sector in the industrialized countries (Grönroos, 1998). Service companies
substitute a great part of today’s society, as we daily consumes some kind of service.
Services are considered as a natural part of our life and constitute such a great part that it is
only when they fail that we realize how dependent we have become of them. (Hoffman &
Bateson, 1997)
1.1. Organizational buying behavior of services
Purchasing objectives are according to Webster (1991) commonly expressed as buying the
right items in the right quantity at the right price for delivery at the right time and place.
Hence, businesses needs to develop a strategy for purchasing in order to maintain an
adequate flow of goods and services into its operations (ibid). Businesses often face a more
complex buying decision than consumer buyers do since these purchases usually involves
larger sums of money, complex technical and economical considerations, and interactions
among many people at many levels in the buyer’s organization. These factors extend the
buying decision process and tend to make it more formalized than the consumer buying
process. Additionally, in the business buying process, buyers and sellers are usually more
dependent on each other since the focus is on meeting the customers’ demands in the long
run. (Kotler et al., 1996)
1
,Wind and Thomas (1980) identifies the buying process and the buying center as two concepts
that constitute major parts of organizational buying behavior. Webster (1991) explains that
the buying process represent a complex set of activities which employ a lot of members of
the buying organization and result in a decision to purchase goods and services from a
specific vendor. Most purchase decisions within an organization are made by a group of
people that collectively make buying choice decisions for an organization (Lewin &
Johnston, 1996). This group is known as the buying center according to Kauffman (1996).
Kauffman (1996) has, in addition to the two major concepts of buying behavior, identified
factors that influences the buying process, the buying center and in the end the organizational
buying behavior. These additional factors are individual characteristics, organizational
factors, environmental factors and service and market factors (ibid).
The organizational buying behavior vary depending on the characteristics of the product or
service, according to Kauffman (1996), hence it is of importance to have a clear idea of the
product or service being purchased (Axelsson, 1998). Furthermore, Axelsson (1998) points
out that various kinds of services are different and that this must be understood by the buying
function of the firm. One way to increase the awareness of services differences is by
classifying services in accordance to Grönroos’s (1979) theory. The author suggests that
services can be classified by the market they are sold in, and by the service provided. First,
he separates services sold on producer market from services sold on consumer market.
Secondly, he suggests that these two groups of services can be divided into two additional
groups called professional services and other services. Professional services have special
characteristics that are usually present. Qualified personnel perform professional services,
they have a consulting or a problem solving feature, and they are characterized by an
assignment from the buyer to the seller. (ibid) Examples of professional services are,
according to Day and Barksdale (1994), legal-, consulting-, research- and accounting
services. The authors continue by claiming that purchases of professional services require a
considerable investment of human, time and financial resources. These kinds of services are
therefore considered as one of the most important decisions which a company makes. (ibid)
1.2. E-billing- a professional service
Based on the discussion above, there is a need to study organizational buying behavior based
on a specific service, and this study is focused on the organizational buying behavior of one
particular professional service sold on the producer market, i.e., electronic billing services for
the business-to-business market. In other words, an e-billing service used only for
transactions between a company and its organizational customers and not between a
company and consumers. E-billing services can be classified as professional services since it
2
,constitute a part of businesses accounting activities, are performed by qualified personnel,
and by an assignment from the buyer to the seller in accordance with Grönroos (1979)
theory.
Electronic billing services are one of the most promising new tools of business-to-business
electronic commerce (Haschka, 2002). Seeing that today’s business leaders are more
compelled than ever to streamline their business processes in order to cut costs and improve
efficiencies across all parts of their business according to Ulrich (2002). The primary focus
has been on improving internal business processes while the next wave of process
improvement will focus on the inefficiencies surrounding the transactions and information
exchange between companies. Effective connections between a company’s internal business
process and their business partners will realize dramatic improvements in business
performance, reducing paperwork while increasing access to valuable information. (ibid)
Gurau, Ranchhod and Hackney (2001) establish that the introduction of new computer
technology and e-commerce have made it possible to improve many processes in companies.
E-commerce is expected to cause far reaching changes in the way business is conducted and
the way companies interface with their customers according to Andrieu (2001). Gurau et al.
(2001) explains that the Internet can work as a source of information, a communication tool
and a distribution channel for products and services. Moreover, the Internet is considered a
revolutionary tool for the development of commercial transactions based on its advantages of
increased speed, interaction and flexibility. Additionally, buyers and sellers can access and
contact each other directly, potentially eliminate some of the marketing costs and constraints
imposed by such interactions in the earthly world. This may also have effect of shrinking the
channel and thereby reduce the time it takes to complete business transactions. (ibid)
To ensure the future of e-commerce, secure electronic payments system and online banking
facilities needs to be developed (Andrieu, 2001). Andrieu (2001) maintain secure online
payment systems to be the single most important element of the e-commerce infrastructure.
Hence, without electronic payments, e-commerce is unlikely to take off. A transformation is
taking place as the world is changing from a paper-based money world to an electronic
money world. Nevertheless, even though the largest part of money is held in electronic form,
consumers as well as a majority of businesses still rely on paper money for most of their
daily transactions. (ibid)
Still, e-payments become more important as more and more companies have started to do
business over the Internet according to Amor (2000). Technological possibilities and
economical necessities have introduced new financial procedures and monetary structures.
Electronic payment solutions makes it possible for companies to save both time and money
compared to offline payment, therefore many companies have changed the way they pay
3
, their invoices. (Amor, 2000) Andrieu (2001) points out three powerful factors of e-payments.
First, e-payments are less costly than traditional forms of payments. Second, e-payments are
superior to paper money for a wide range of transactions. It can easily be transformed from
one currency to another or into bonds or stocks, it takes up virtually no room, it can be
counted automatically, and it never wears out. Third, electronic money is far more suitable
for distance transactions as it can be moved easily and quickly. (ibid)
E-billing services will within a short time period change consumers bank habits. Many
Swedish consumers are already using the Internet when paying their invoices but with e-
billing service they are no longer forced to pick up the envelope and register every number
manually. The invoice will arrive electronically and show up when the customer log on to his
or her Internet bank. (Göteborgs Posten, 2002-10-16) Amor (2000) claims that although the
business-to-consumer sector will be the first step on the Internet, the real advantage lies in
offering e-billing services to corporate customers due to the large volumes that are being
turnover. Nevertheless, the business-to-business market is still dealing with the “chicken and
egg problem” since buyers wait for sellers to take on e-billing at the same time as sellers wait
for buyers to do the same thing. The problem is becoming more complicated since both
parties are waiting until more sellers and buyers decide to take on e-billing. (Robinson, 2001)
The Gartner Group state that more than 95 percent of all business-to-business transactions
still are settled with paper invoices and checks. Dealing with paper invoices are costly and
drawn out processes that prevents corporate finance organizations from achieving
productivity breakthroughs that drive down costs. Moreover, manual paper invoices limit
visibility into vital status information and can slow the posting process, making it difficult for
corporate finance professionals to develop precise forecasts on cash flow and earnings. In
addition, inefficient interactions between trading partners cause costly and time consuming
exceptions and disputes. (Ulrich, 2002)
The preferred methods for automating business processes and converting to electronic
transactions has since 1980 been offered by electronic data interchange1 (EDI). The
companies, which started to use EDI technology for invoice presentments and payments
processes, did within a short time period experience an increased speed in the payment
processes. However, only large and financially strong companies have been able to afford the
install and manage the technology of EDI. This fact made the introduction of an Internet
based e-payment solution in the early 1990’s very welcomed. Hence, the Internet-based
solution is considered as an inexpensive and efficient technology that makes it possible for
companies in all sizes to take advantages of Internet-enabled presentment and payment
processes. (Haschka, 2002)
4
1. Introduction
Organizational buying behavior is so much more than the simple act of placing an order with
a supplier (Webster & Wind, 1972a). Hence, the organizational buying behavior involves a
complex series of events that allows a firm to move from the basic recognition of a need,
through technical specification and potential supplier evaluation, to reaching and evaluating a
final purchase decision according to Osmonbekov, Bello and Gilliland (2002). Further,
organizational buying behavior is knowledge about which factors and conditions that
influences the purchasers’ motives, information search, buying decisions and how purchasing
departments and buying centers organize purchasing decision making (Buvik, 2001).
Therefore, organizational buying behavior is described as a complex process of decision
making and communication which takes place over time, involving several organizational
members and relationships with other firms and institutions by Webster and Wind (1972a).
Most businesses purchases both products and services, according to Kotler, Armstrong,
Saunders & Wong (1996). However, the service sector has since year 1900 grown bigger
than the goods sector in the industrialized countries (Grönroos, 1998). Service companies
substitute a great part of today’s society, as we daily consumes some kind of service.
Services are considered as a natural part of our life and constitute such a great part that it is
only when they fail that we realize how dependent we have become of them. (Hoffman &
Bateson, 1997)
1.1. Organizational buying behavior of services
Purchasing objectives are according to Webster (1991) commonly expressed as buying the
right items in the right quantity at the right price for delivery at the right time and place.
Hence, businesses needs to develop a strategy for purchasing in order to maintain an
adequate flow of goods and services into its operations (ibid). Businesses often face a more
complex buying decision than consumer buyers do since these purchases usually involves
larger sums of money, complex technical and economical considerations, and interactions
among many people at many levels in the buyer’s organization. These factors extend the
buying decision process and tend to make it more formalized than the consumer buying
process. Additionally, in the business buying process, buyers and sellers are usually more
dependent on each other since the focus is on meeting the customers’ demands in the long
run. (Kotler et al., 1996)
1
,Wind and Thomas (1980) identifies the buying process and the buying center as two concepts
that constitute major parts of organizational buying behavior. Webster (1991) explains that
the buying process represent a complex set of activities which employ a lot of members of
the buying organization and result in a decision to purchase goods and services from a
specific vendor. Most purchase decisions within an organization are made by a group of
people that collectively make buying choice decisions for an organization (Lewin &
Johnston, 1996). This group is known as the buying center according to Kauffman (1996).
Kauffman (1996) has, in addition to the two major concepts of buying behavior, identified
factors that influences the buying process, the buying center and in the end the organizational
buying behavior. These additional factors are individual characteristics, organizational
factors, environmental factors and service and market factors (ibid).
The organizational buying behavior vary depending on the characteristics of the product or
service, according to Kauffman (1996), hence it is of importance to have a clear idea of the
product or service being purchased (Axelsson, 1998). Furthermore, Axelsson (1998) points
out that various kinds of services are different and that this must be understood by the buying
function of the firm. One way to increase the awareness of services differences is by
classifying services in accordance to Grönroos’s (1979) theory. The author suggests that
services can be classified by the market they are sold in, and by the service provided. First,
he separates services sold on producer market from services sold on consumer market.
Secondly, he suggests that these two groups of services can be divided into two additional
groups called professional services and other services. Professional services have special
characteristics that are usually present. Qualified personnel perform professional services,
they have a consulting or a problem solving feature, and they are characterized by an
assignment from the buyer to the seller. (ibid) Examples of professional services are,
according to Day and Barksdale (1994), legal-, consulting-, research- and accounting
services. The authors continue by claiming that purchases of professional services require a
considerable investment of human, time and financial resources. These kinds of services are
therefore considered as one of the most important decisions which a company makes. (ibid)
1.2. E-billing- a professional service
Based on the discussion above, there is a need to study organizational buying behavior based
on a specific service, and this study is focused on the organizational buying behavior of one
particular professional service sold on the producer market, i.e., electronic billing services for
the business-to-business market. In other words, an e-billing service used only for
transactions between a company and its organizational customers and not between a
company and consumers. E-billing services can be classified as professional services since it
2
,constitute a part of businesses accounting activities, are performed by qualified personnel,
and by an assignment from the buyer to the seller in accordance with Grönroos (1979)
theory.
Electronic billing services are one of the most promising new tools of business-to-business
electronic commerce (Haschka, 2002). Seeing that today’s business leaders are more
compelled than ever to streamline their business processes in order to cut costs and improve
efficiencies across all parts of their business according to Ulrich (2002). The primary focus
has been on improving internal business processes while the next wave of process
improvement will focus on the inefficiencies surrounding the transactions and information
exchange between companies. Effective connections between a company’s internal business
process and their business partners will realize dramatic improvements in business
performance, reducing paperwork while increasing access to valuable information. (ibid)
Gurau, Ranchhod and Hackney (2001) establish that the introduction of new computer
technology and e-commerce have made it possible to improve many processes in companies.
E-commerce is expected to cause far reaching changes in the way business is conducted and
the way companies interface with their customers according to Andrieu (2001). Gurau et al.
(2001) explains that the Internet can work as a source of information, a communication tool
and a distribution channel for products and services. Moreover, the Internet is considered a
revolutionary tool for the development of commercial transactions based on its advantages of
increased speed, interaction and flexibility. Additionally, buyers and sellers can access and
contact each other directly, potentially eliminate some of the marketing costs and constraints
imposed by such interactions in the earthly world. This may also have effect of shrinking the
channel and thereby reduce the time it takes to complete business transactions. (ibid)
To ensure the future of e-commerce, secure electronic payments system and online banking
facilities needs to be developed (Andrieu, 2001). Andrieu (2001) maintain secure online
payment systems to be the single most important element of the e-commerce infrastructure.
Hence, without electronic payments, e-commerce is unlikely to take off. A transformation is
taking place as the world is changing from a paper-based money world to an electronic
money world. Nevertheless, even though the largest part of money is held in electronic form,
consumers as well as a majority of businesses still rely on paper money for most of their
daily transactions. (ibid)
Still, e-payments become more important as more and more companies have started to do
business over the Internet according to Amor (2000). Technological possibilities and
economical necessities have introduced new financial procedures and monetary structures.
Electronic payment solutions makes it possible for companies to save both time and money
compared to offline payment, therefore many companies have changed the way they pay
3
, their invoices. (Amor, 2000) Andrieu (2001) points out three powerful factors of e-payments.
First, e-payments are less costly than traditional forms of payments. Second, e-payments are
superior to paper money for a wide range of transactions. It can easily be transformed from
one currency to another or into bonds or stocks, it takes up virtually no room, it can be
counted automatically, and it never wears out. Third, electronic money is far more suitable
for distance transactions as it can be moved easily and quickly. (ibid)
E-billing services will within a short time period change consumers bank habits. Many
Swedish consumers are already using the Internet when paying their invoices but with e-
billing service they are no longer forced to pick up the envelope and register every number
manually. The invoice will arrive electronically and show up when the customer log on to his
or her Internet bank. (Göteborgs Posten, 2002-10-16) Amor (2000) claims that although the
business-to-consumer sector will be the first step on the Internet, the real advantage lies in
offering e-billing services to corporate customers due to the large volumes that are being
turnover. Nevertheless, the business-to-business market is still dealing with the “chicken and
egg problem” since buyers wait for sellers to take on e-billing at the same time as sellers wait
for buyers to do the same thing. The problem is becoming more complicated since both
parties are waiting until more sellers and buyers decide to take on e-billing. (Robinson, 2001)
The Gartner Group state that more than 95 percent of all business-to-business transactions
still are settled with paper invoices and checks. Dealing with paper invoices are costly and
drawn out processes that prevents corporate finance organizations from achieving
productivity breakthroughs that drive down costs. Moreover, manual paper invoices limit
visibility into vital status information and can slow the posting process, making it difficult for
corporate finance professionals to develop precise forecasts on cash flow and earnings. In
addition, inefficient interactions between trading partners cause costly and time consuming
exceptions and disputes. (Ulrich, 2002)
The preferred methods for automating business processes and converting to electronic
transactions has since 1980 been offered by electronic data interchange1 (EDI). The
companies, which started to use EDI technology for invoice presentments and payments
processes, did within a short time period experience an increased speed in the payment
processes. However, only large and financially strong companies have been able to afford the
install and manage the technology of EDI. This fact made the introduction of an Internet
based e-payment solution in the early 1990’s very welcomed. Hence, the Internet-based
solution is considered as an inexpensive and efficient technology that makes it possible for
companies in all sizes to take advantages of Internet-enabled presentment and payment
processes. (Haschka, 2002)
4
