Implications of a Classification of Forms of Cooperative Purchasing

The concept of cooperative purchasing is as old as ancient Egypt and Babylon. Even in those days groups of independent organizations cooperated in one or more steps of the procurement process by pooling their purchasing volumes, information and/or resources to improve their performances. The main objective of this paper is to identify and classify the current forms of cooperative purchasing according to the intensiveness for the members and the number of different activities for the cooperative initiative. Based on new institutional economics and transaction cost economics we identify five main forms of cooperative purchasing depending on varying scores on intensiveness and scope of activities. Managerial implications of a classification of forms of cooperative purchasing include differences in the organizational structure, formality, et cetera. A classification can also serve as a guideline at the early stage of a cooperative purchasing initiative when the aim is to find a suiting form of cooperative purchasing. Furthermore, we explicitly discuss the hitchhikers’ dilemma. This dilemma deals with small organizations hitchhiking on contracts from large organizations. For large organizations there may be no incentive to allow hitchhiking. For small organizations it can be very interesting to hitchhike though. Savings allocation mechanisms could compensate this dilemma and stimulate the concept of cooperative purchasing. Research implications include an emphasis on the importance of using a classification, as it may not be possible to put all forms of cooperative purchasing in one box. Therefore, when researching cooperative purchasing it is highly important to define and classify the studied forms of cooperative purchasing.