Using agency theory to model cooperative public purchasing

Abstract

Cooperative purchasing is beginning to receive renewed attention by scholars and practitioners alike in both the private and public sectors. Generally, cooperative purchasing arrangements have been reported to reduce costs, expedite transactions, and increase product knowledge. In the public sector, cooperative purchasing has been reported to reduce political risk, minimize "red-tape," and, in some cases, avoid all reported social equity goals that are reported to increase costs. In this article, we contend that the lack of conceptual clarity has marred the literature on cooperative public sector purchasing, and as a result public sector purchasers have no theoretical guidelines to help them decide upon this purchasing mechanism. Therefore, the purpose of this article is to use agency theory to analyze, define, and establish a conceptual framework of cooperative public purchasing to help guide academics and practicing public sector purchasing professionals.