Project Customization and the Supplier Revenue–Cost Dilemmas: The Critical Roles of Supplier–Customer Coordination

Abstract

This study examines customization as a coordination problem in transactions with business customers. Marketing research has investigated challenges associated with customized offers from the customer side; however, scant research has examined the supplier's challenges and their performance implications. The authors distinguish between project revenues and costs to reveal a fundamental dilemma that suppliers face during customization. Analyses of dyadic survey data collected from a software supplier and its business customers, as well as objective revenue and cost data, reveal a tension between project revenues and costs. The outcomes of customization depend on factors that relieve the coordination problem, such as customer demand ambiguity, customer participation, product modularity, project team technological capability, and relational embeddedness. These findings provide a basis to assess the value of customization as a tool to implement a customer-oriented business-to-business marketing strategy.

Balancing modularity and solution space freedom: effects on organisational learning and sustainable innovation

“…Our results corroborate the proposed nuance to customisation as we find that varying degrees of modularity and solution space freedom result in various learning rates within TI firms. Therefore, this study contributes to the literature on customisation and the role of modularity (Salvador, De Holan, and Piller 2009;Sanchez and Collins 2001;Steiner 2014;Wang et al 2017) by offering a more hybrid perspective and by showing that the effects of modularity should be considered jointly with the freedom to accommodate customer-specific designs. Second, we contribute to the existing literature on organisational learning (e.g.…”

“…Solution space freedom refers to the degree to which firms accommodate specific customer requests or changes to designs (Ulrich and Tung 1991;Salvador, De Holan, and Piller 2009;Steiner 2014;Wang et al 2017). It determines whether functionalities available to solve customer problems are predefined or can be custom designed on demand (Steiner 2014;Medini, Da Cunha, and Bernard 2015).…”

Marketing research in China during the 40-year reform and opening

“…Studies also involved marketing practice and theory at the business-to-business level. Using a dyadic dataset of a large Chinese information system service provider and its major business customers, Wang et al (2017a) examined customization from the perspective of the supplier. The research presented a dilemma caused by the customization of services or product providers which involves the increase of both cost and revenue.…”

Opportunities and challenges of value co-creation

“…The survey was distributed across three channels: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 knowledge 3 about the questionnaire were eliminated (Wang et al, 2017); as a result, 169 valid responses were collected, resulting in a valid response rate of 65%.…”

“…Furthermore, our contingency model contributes to customer involvement literature by identifying methods to cope with the tension created by the costs and benefits that customer involvement creates. This situation is especially true for the highly interactive hospitality industry that involves factors related exclusively to the service industry (e.g., service climate and customer complexity), which is a good complement to the product development literature that stresses product modularity and technological capability (Fang et al, 2015;Wang et al, 2017).…”