Issues in supplier partner selection

Purpose – The purpose of this conceptual paper is to attempt to answer the related questions of how and why supply chain partners are chosen. Research objectives are to understand how and why collaborative partners are chosen, by learning the actual decision‐making processes and key factors in partner selection. Design/methodology/approach – A mixed methods approach was chosen, comprising: a focused literature review, to identify key issues, and informal interviews, leading to the development of a Partner Negotiation Model; a multiple case study approach, involving formal interviews about two partnerships, supplemented by documentation, contracts, correspondence and other records; and some manual data analysis and a qualitative research tool. The whole resulted in identification of significant issues for partner negotiation and selection. Findings – Contrary to accepted theory in the alliance, partner selection, and decision‐making literature, the results show that alliance partners are chosen through a complex negotiation process rather than rational selection. The research and interviews with software industry collaborators suggest roles for factors such as complexity, cyclic negotiation, several types of partners, several levels of alliance formation, and hidden factors, such as personal friendship or perceived reputation. Overall, the problem of collaborative partner selection was found to be much more complex than expected. Research limitations/implications – Research results are limited by the small sample of partnerships reviewed, but the results can be used as a starting‐point for further larger‐scale studies. Practical implications – Supply chain partners in business can use these results to help them better understand the process and criteria for future supply partner selection. Originality/value – The results may be used to develop a set of partner selection recommendations for practitioners. For specific firms that become involved in organizing supply chain alliances, the results of this work will provide decision support in terms of choosing among partners or indeed whether to engage in a particular relationship.