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.