Can international buyer-supplier relational attributes influence the intention to source from local suppliers? A case study of International Oil Companies in Tanzania

Abstract

This study explores whether International Oil Companies (IOC) intending to source their non-consultancy services from local providers  are affected by their respective strategic relationships with international service providers. International Oil Companies (IOC) exploring  oil and gas in Tanzania were used as a case study to represent the group of buyers. This study adopted Industrial Marketing and  Purchasing perspectives (IMP) on buyer-supplier relationships, where the structural and functional attributes of buyer-supplier  relationships were examined. Structural Attributes include continuity, complexity, interdependence, and trust, while Process Attributes  include adaptation, conflict, cooperation, socialisation, and formalisation. Buyers’ intention to source from local suppliers was measured  by four dimensions: presence of sourcing policy from local suppliers, presence of activities for creating awareness among local suppliers  about supply opportunities, presence of relaxed evaluation criteria, and payment scheme that favours local suppliers and establishes a  central unit for coordinating all activities intended to facilitate sourcing from local suppliers. A survey design was used, whereby primary  data were collected from 189 employees working at middle- and top-level positions in oil and gas companies. Data analysis involved  examining descriptive statistics for respondents’ attributes and inferential statistical analysis, where relationships between the study  variables were examined. The findings show that, given the new market constraints and without any forceful inducement, OICs will  consider sourcing from local suppliers despite the ongoing strategic relationship with international suppliers. Therefore, host countries  should focus on developing the competence of local suppliers to meet IOCs’ expectations.