Success factors for managing purchasing groups: an empirical survey

In this article, we identify success factors for managing small and intensive purchasing groups by comparing successful and unsuccessful Dutch purchasing groups in a large-scale survey. Transaction costs economics and social exchange theory are used as theoretical frameworks for our broad empirical investigation. We found that the success factors studied that are related to interorganizational trust, the formality of the group, and uniformity of the group members are not success factors for managing purchasing groups. For our data set, the most important success factors are no enforced participation, sufficient total contribution of efforts, all members contribute knowledge, all members rarely change representatives, fair allocation of savings, and communication. We discuss the academic and practical implications of the success factors found. Educator & practitioner summary In this article, we identify success factors for managing small and intensive purchasing groups. The most important success factors found are no enforced participation, sufficient total contribution of efforts, all members contribute knowledge, all members rarely change representatives, fair allocation of savings, and communication. We discuss the academic and practical implications of the success factors found. Introduction Purchasing in relatively small and intensive groups is becoming increasingly popular in both the private and public sector (Doucette, 1997; Johnson, 1999; Nollet and Beaulieu, 2003, 2005; Polychronakis and Syntetos, 2007; Tella and Virolainen, 2005). More and more organizations pool and/or share their purchasing volumes, information, and/or resources in purchasing groups in which the members share the workload between themselves. By doing so, these organizations aim to obtain, among other things, lower purchase prices and reduced duplications of efforts and activities. Theoretically, these advantages can outweigh disadvantages such as anti-trust (legal) issues and disclosure of sensitive information in a large number of cases. Thus, at least in theory, cooperative purchasing can be a beneficial concept for business and governmental organizations. However, in practice, small and intensive purchasing groups do not always flourish and premature endings of such groups occur (Jorritsma-Lebbink, 2000; Schotanus, 2007; Vliet, 1998). A good understanding on what factors significantly influence the success or failure of a purchasing group can help such groups to flourish and prevent premature endings. Unfortunately, current research offers little guidance on how to manage a purchasing group. On a general level, there is an extensive amount of literature dealing with interorganizational cooperation, but a comprehensive theory has not yet emerged (Hoffmann and Schlosser, 2001). In addition, most of the existing literature does not deal with the management of interorganizational cooperation, but deals with the formation of interorganizational cooperation (Spekman et al., 1998). On a more specific level, several studies on success factors for interorganizational cooperation have been carried out (e.g., Hendrick, 1997; Gottschalk and Solli-Sæther, 2005; Hoffmann and Schlosser, 2001; Kogut, 1988; Park and Ungson, 1997), but only a very limited number of studies provide a broad empirical investigation into success factors for interorganizational cooperation (Hoffmann and Schlosser, 2001). Even more specifically, the only previous empirical study that explicitly deals with several success factors for managing purchasing groups is a study carried out by Hendrick (1997) among 28 organizations that participate in purchasing groups. However, as we discuss later on in this paper, the results of Hendrick are not fully consistent with the results of existing studies on success factors for interorganizational cooperation (e.g., Hoffmann and Schlosser, 2001). It is not clear yet what explains these inconsistencies. It could be due to the specific context of cooperative purchasing, but it could also be due to the sample or the methods used in the different studies.