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Success Determinants when Tendering for International Consulting Projects

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  • Roger Svensson

Abstract

A unique database on individual proposals is used to analyse competition among consulting firms (CFs) for international projects. CFs, which sell services based on human capital, focus on developing countries when operating abroad and, thereby, are highly dependent on development agencies (DAs). The DAs have strict tender rules and claim that skill and experience are the most important factors when proposals are evaluated. Both economic theory and the results of the estimations suggest, however, that long-term relationships (LTRs) between the CFs and the clients are at least as important as traditional skill and experience factors. The LTRs are here measured by means of information about whether the CF has previously worked for the client (repeat purchases) or has visited the client. The results indicate that the client in some cases has pre-decided which CF to select. The client invites several CFs to compete for the tender anyway, either because he is forced to do so by the financier, or because he wants to subject an old supplier to competitive pressure. As the tender rules do not seem to be followed, a policy implication would be that the DAs can skip, or at least relax, their strict tender rules, or strengthen the sanctions associated with violations of the rules.

Suggested Citation

  • Roger Svensson, 2001. "Success Determinants when Tendering for International Consulting Projects," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 101-122.
  • Handle: RePEc:taf:ijecbs:v:8:y:2001:i:1:p:101-122
    DOI: 10.1080/13571510151075314
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    References listed on IDEAS

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    1. Poulfelt, Flemming & Paynee, Adrian, 1994. "Management consultants: Client and consultant perspectives," Scandinavian Journal of Management, Elsevier, vol. 10(4), pages 421-436, December.
    2. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    3. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    4. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
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    Citations

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    Cited by:

    1. Roger Svensson, 2007. "Knowledge transfer to emerging markets via consulting projects," The Journal of Technology Transfer, Springer, vol. 32(5), pages 545-559, October.
    2. Roger Svensson, 2003. "Visits to the client when competing for new consulting contracts: sourcing information or influencing the client?," Applied Economics, Taylor & Francis Journals, vol. 35(14), pages 1531-1541.
    3. Svensson, Roger, 2001. "Unfair Competition by Government Firms and Authorities in the Consulting Market," Working Paper Series 561, Research Institute of Industrial Economics.

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