Cooperative purchasing in small and medium-sized enterprises

Abstract

Despite the increasing research interests in the purchasing group, cooperative purchasing in small and medium-sized enterprises (SMEs) has not received significant attention from the operations and supply chain management researcher. This study investigates the typical advantages of cooperative purchasing for SME retailers, and critical success factors for managing a purchasing group, using a case study of a purchasing group established by Chinese SME retailers. The study suggests that a successful purchasing group can help SME retailers to survive in today's competitive marketplace. The main advantages of cooperative purchasing for SME retailers are lower purchasing prices, mutual learning and support, dealing with illegal bribes, and quality improvement. The success factors for SME retailers to manage a purchasing group are good guanxi (personal and business relationships) among group members, similar characteristics of group members, similar personality traits of top executives, and the role of a big brother (group leader) in the group. This study also provides practical insights for retail managers to consider when developing a purchasing group in dynamic environments, in order to achieve the benefits of cooperative purchasing.