Supplier-Switching Inertia and Competitive Asymmetry: A Demand-Side Perspective

Building on strategic management, operations strategy, and supplier management literatures, this article presents a framework for supplier selection from the demand-side perspective. We highlight the role of a purchasing firm’s switching inertia in the supplier selection process and demonstrate the usefulness of our framework for the industrial automation industry. Empirical data for this study was collected from 171 corporate and plant-level executives in pharmaceutical, chemical, and paper-and-pulp manufacturing industries in the United States. A series of Web-based individually customized discrete choice experiments asked the respondents to either switch to the new supplier or stay with the existing supplier. Based on the results of these experiments, we demonstrate the existence of switching inertia in the supplier-selection process and discuss the managerial implications for incumbent and challenger supplier firms.