22906: When Cheap Costs More: An Empirical Investigation of Supplier Reactions to Price Concessions (session 25574)

Monday, July 28, 2025

08:30 - 10:00 CEST (GMT+2)

Location: Bella Center: Hall B- B2-m6

Session Type: Paper Session
Orientation: International,Research
Shareable link: https://cdmcd.co/YKLQMn

Author(s)

YE

Yasmine Medhat Elhenawy

U. of Mannheim, Business School, Germany
LE

Lamiaa Mohamed Eltantawi

-, Egypt
FV

Frederik G. S Vos

-, United States
MA

Mona Ali

The German U. in Cairo, Egypt
SC

Steven Carnovale

Rochester Institute of Technology, United States

In business, as in life, “Cheap may cost more” often rings true. This is particularly prevalent in the purchasing decisions made within buyer-supplier transactions. This study investigates how suppliers respond to price concessions demanded by buying firms, revealing the consequences that ripple through the supply chain. Drawing on in-depth interviews with buyers and suppliers in automotive industry, the research uncovers important insight: aggressive cost-cutting strategies can backfire, leading to declines in performance across several dimensions, like reduced product quality, diminished service support, layoffs that disrupt communication channels with the original equipment manufacturer (OEM), and suppliers seeking alternative market opportunities, leading to delays and shortages for buyers. But what drives these reactions? The findings highlight the profound influence of cultural dynamics and power-dependence relationships.

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