Business-to-business(B2B or, in certain countries, BtoB) is referred to as when one firm enters into a commercial deal with another. This is most often seen when the following criteria are met:
- A firm is acquiring raw materials for their manufacturing process in order to generate output (for example, a food producer buying salt), i.e., supplying raw materials to another company that will make output from the raw materials.
- A business requires the services of another business for operational reasons (e.g., a food manufacturer employing an accountancy firm to audit their finances).
- A business is a company that resells products and services that have been generated by others (e.g., a retailer buying the end product from the food manufacturer).
Business-to-business (B2B) is sometimes compared with business-to-consumer (B2C) (B2C). It is frequently the case in B2B transactions that both parties have comparable negotiating power, and even when they do not, each party typically involves professional staff and legal counsel in the negotiation of terms, whereas B2C transactions are significantly more influenced by the economic implications of information asymmetry. However, in a business-to-business environment, huge corporations may have a number of commercial, resource, and information advantages over smaller corporations. A Small Company Commissioner position was established by the United Kingdom government as a result of the Enterprise Act 2016 in order to "help small companies to settle disputes" and "examine concerns by small company suppliers about payment difficulties with bigger enterprises that they supply."
A large portion of the economy of the United States is comprised of business-to-business enterprises. This is particularly true in firms with 500 or more workers, of which there were 19,464 in 2015, where it is believed that as many as 72 percent are businesses that mainly service other businesses, according to the Bureau of Labor Statistics.