Collaborative Procurement: A Relational View of Buyer Buyer Relationships

Transcription

1 Helen Walker Cardiff University, United Kingdom Fredo Schotanus University of Twente, The Netherlands Elmer Bakker iese Ltd., United Kingdom Christine Harland University of Bath, United Kingdom Collaborative Procurement: A Relational View of Buyer Buyer Relationships Helen Walker is chair of operations and supply management at Cardiff Business School, University of Cardiff. Her research interests include collaborative procurement, public procurement, strategic outsourcing, supply strategy, e-procurement, learning in supply networks, commissioning, and investigating sustainable procurement and sustainable supply chain management in the public and private sectors. walkerhl@cardiff.ac.uk Fredo Schotanus is a part-time assistant professor of purchasing management and management science at the University of Twente in the Netherlands. In addition to his academic activities, he works as a consultant at Signifi cant. He has published a book and several articles and book chapters on subjects in purchasing management. His research interests include public management, group purchasing, purchasing and supply management, allocation problems, and supplier selection. f.schotanus@utwente.nl Elmer Bakker is principal consultant with iese Ltd. in the United Kingdom. He also acted as iese s procurement transformation manager in a previous role as research offi cer at the Centre for Research in Strategic Purchasing and Supply, University of Bath School of Management. His research interests include public procurement, procurement strategy, collaboration, supplier relationship management, and the professionalization of the purchasing and supply profession. elmer.bakker@iese.gov.uk Christine Harland is professor of supply strategy at the University of Bath School of Management. Her research interests include health sector supply management, strategic supply chain management, supply policy, international comparative studies of public procurement, and evidence-based supply. A cofounder of the International Research Study of Public Procurement, now in its sixth phase of research, her latest publication is the Sage Handbook of Strategic Supply Management (2013). c.m.harland@bath.ac.uk Public Administration Review, Vol. 73, Iss. 4, pp by The American Society for Public Administration. DOI: /puar Collaborative procurement is increasingly on the policy agenda in many countries, yet problems with collaboration occur. This article adopts a relational theory perspective to explore the enablers of and barriers to collaboration in purchasing, helping identify success factors. The authors adopted a mixed qualitative/quantitative methodology and interviewed 51 senior staff ers in the United Kingdom. They found that collaborative public procurement is hindered by local politics and differing priorities, supplier resistance, reliance on suppliers for data, and a lack of common coding systems. Enabling factors for collaborating with local governments include dealing with local issues and buying from small and medium-sized enterprises. For health care providers, important themes are product innovation and ensuring supply. The authors develop a list of enabling factors and show their eff ect on collaboration success. This may assist policy makers in identifying areas of guidance and help practitioners prevent problems in collaboration. Many governments worldwide are being required, because of the most recent economic crisis, to cut government spending and reduce system inefficiencies. One of the ways in which governments try to reduce system inefficiencies is by stimulating and/or enforcing more collaborative public procurement. This means that many public organizations are increasingly encouraged to pool or share purchasing volumes, information, and/ or resources (Schotanus et al. 2011, 265). However, while there is a policy imperative for collaborative procurement, public organizations often experience difficulties in forging and sustaining interorganizational relationships in the form of purchasing collaborations (Schotanus et al. 2011). Unfortunately, the literature offers insufficient guidance in finding factors that enable public organizations to overcome these difficulties (Dyer and Singh 1998). Although several Our research adopts a relational perspective to investigate in more detail the most common barriers to and enablers of collaborative procurement in the public sector. studies have been carried out on one or a few enabling and impeding factors, they do not provide a broad investigation of such factors. Also, these studies are not comprehensive. In this article, we identify several enablers and barriers that have not yet been identified in the literature. We aim to improve our understanding of what constrains public organizations in collaborating on procurement and how collaborative procurement can become more advantageous for public organizations. Specifically, our research adopts a relational perspective to investigate in more detail the most common barriers to and enablers of collaborative procurement in the public sector. The contribution of this article is twofold: First, the research seeks to make a contribution to the literature by addressing Dyer and Singh s observation that given the poor track record of many alliances, researchers might examine, in detail, the factors that impede the realization of relational [advantages] (1998, 676). Using relational theory, we explore known and newly found enablers and barriers that exist in cooperative relations between organizations. Learning more about why collaborations succeed or fail is important for managerial practice, and this article provides detailed insights for practitioners who are considering buying cooperatively with other organizations and for policy makers who are implementing a collaborative procurement policy. In addition, the lessons that we learn from this article may be transferable to different public sector contexts. Second, this article makes a contribution by applying relational theory in a new context. The relational view has previously been applied to an exploration of buyer supplier relationships, in which buyers 588 Public Administration Review July August 2013

2 collaborate with suppliers to improve the performance of their supply chains (Paulraj, Lado, and Chen 2008). Both parties benefit from cooperation, although they have competing self-interests. Relational theory has also been applied in the context of a supplier collaborating with another supplier in order to provide goods and services to a buyer (Wu and Choi 2005). The supplier supplier relationship has been framed as co-opetition one in which competing suppliers work together to meet the buyer s requirements (Wu, Choi, and Rungtusanatham 2010). When buyers from different organizations collaborate in order to achieve greater efficiency and better negotiating power with suppliers, we refer to this as a buyer buyer relationship. It may be that because public sector organizations have similar goals and objectives, collaboration is easier in buyer buyer relationships than in buyer supplier or supplier supplier relationships. To date, collaborative buyer buyer relationships have not benefited from being explored through a relational theory lens. Using interview data from 51 senior procurement staff members across the public sector in the United Kingdom, we show that the relational theory lens provides us with new insights into collaborative procurement. These insights might help in managing public purchasing collaborations more effectively. When buyers from different organizations collaborate in order to achieve greater efficiency and better negotiating power with suppliers, we refer to this as a buyer buyer relationship. and can be created only through the joint idiosyncratic contributions of the specific collaborating organizations (cf. Dyer and Singh 1998, 662). Thus, organizations may benefit more by collaboration than by acting alone because of economies of scale, process, and/or information. Collaboration may reduce waste in the procurement system, achieve better outcomes for taxpayers, and, hence, improve the overall socioeconomic position. Several previous studies of public sector collaboration in networks have referred to the relational perspective (although it is not the central underlying concept in these studies) in the following contexts: Strategic alliances in social service delivery networks (Graddy and Chen 2006) Using collaboration as a strategy for enhancing network governance in watershed management programs (Imperial 2005) The economic aspects of interorganizational relationships in the context of strategy formation and strategic governance in public agencies (Johanson 2009) The role of public business centers in firms networking capabilities and performance (Spithoven and Knockaert 2011) The article is structured as follows: First, the literature review sets out the theoretical foundations for the study. Previous studies of collaborative procurement are then reviewed, taking a relational view of the enablers of and barriers to collaborative procurement. The methodology and the findings of the study are subsequently presented and discussed in light of the literature. Finally, conclusions of the study are presented, along with the implications for policy, practice, and future research. Literature Review Theoretical Foundations: The Relational View The theoretical perspective that we adopt is the relational view proposed by Dyer and Singh (1998). The relational view assumes that the sources of competitive advantage may span firm boundaries, just as interdisciplinary and cross-functional strengths lead to a competitive advantage within the firm. In line with this, it is also assumed that interfirm networks may be more efficient arrangements for achieving a resource-based advantage than single firms (Dyer and Nobeoka 2000). The relational view provides a good fit with the collaborative arrangements studied, as the organizations are trying to establish an ongoing relationship that can create value that otherwise could not be created by any of the organizations independently. As the relational view has been used successfully to explore buyer supplier relations (Chen and Paulraj 2004), the theory has the potential to shed light on buyer buyer relationships. In the public sector context of our study, if we substitute the concept of competitive advantage with that of relational rent, the relational view has significance. We define the concept of relational rent as an advantage generated collaboratively in an exchange relationship that cannot be generated by either organization in isolation To our knowledge, this is the first study to make relational theory central to a public sector investigation of collaborative procurement. In the next section, we expand on the details of relational theory and view the collaborative procurement literature through a relational lens. Collaborative Procurement: Enablers and Barriers In the relational view, there are four potential enablers of relational rents (Dyer and Singh 1998). In the list that follows, we briefly describe the potential enablers and illustrate them with examples from our research context to help translate the concepts to a nonprofit context. 1. Investments in relation-specific assets. For example, English local governments coappoint new procurement staff to work in newly created positions within a collaboration that the organizations have all invested in. 2. Substantial knowledge exchange, including exchange that results in joint learning. For example, Welsh local government collaborators exchange information about suppliers and their performance, about calls for proposals and expressions of interest, and about invitations to tender and contracts in order to negotiate with suppliers more effectively. 3. Combining complementary but scarce resources or capabilities, which results in the joint creation of unique new products, services, and/or technologies. For example, because of economies of process, Welsh local government collaborations free procurement staff to work innovatively with local commissioners in the commissioning of complex services, such as providing new regional services to support adults with learning difficulties or combining local needs to provide more preventative services for vulnerable teenagers. Collaborative Procurement: A Relational View of Buyer Buyer Relationships 589

3 Table 1 Relational Enablers of Collaborative Procurement Identified in the Literature Enablers Themes Authors Relation-specific assets Member commitment Doucette 1997; Jost, Dawson, and Shaw 2005; Schotanus, Telgen, and Boer 2010 Trust between members Hoffmann and Schlosser 2001 Knowledge-sharing routines Cooperation and communication Erridge and Greer 2002; Essig 2000; Ritchie and Chadwick 2001; Schotanus, Telgen, and Boer 2010; Tella and Virolainen 2005 Better understanding through collective learning Cicimil and Marshall 2005; Schroeder, Bates, and Junttila 2002 Complementary Appropriate resources (training, IT, etc.) Erridge and Greer 2002; Hughes, Ralf, and Michels 1998; Rozemeijer 2000 resources/ capabilities Complementary expertise, skills, and resources Dyer, Kale, and Singh 2004; Erridge and Greer 2002; Jost, Dawson, and Shaw 2005; Kanter 1994 Standardized procedures and processes Erridge and Greer 2002; Essig 2000 Joint selection of goods and services Hughes, Ralf, and Michels 1998; Rozemeijer 2000 Effective governance Top management support Erridge and Greer 2002; Hughes, Ralf, and Michels 1998; Rozemeijer 2000; Schotanus, Telgen, and Boer 2010 Agreed goals and performance measures Cicimil and Marshall 2005; Essig 2000; Hughes, Ralf, and Michels 1998; Schotanus 2007; Schotanus, Telgen, and Boer 2010 Implementation of appropriate structures Essig 2000; Nollet and Beaulieu 2003; Rozemeijer 2000; Schotanus, Telgen, and Boer Effective governance mechanisms resulting in lower transaction costs. For example, National Health Service (NHS) collaborations have a governing board made up of representatives from each organization, allowing more efficient coordination. By having improved governance and greater economies of scope and scale, transaction costs are lowered by lessening the costs associated with searching for suppliers, lessening negotiation costs, and lessening the costs of monitoring contracts. Tables 1 3 provide an analysis of the collaborative procurement literature, grouped thematically according to the relational view s enablers of and barriers to collaboration. Table 1 presents the four enablers of interfirm relations. With relation-specific assets, the previous literature suggests that member commitment is important to collaboration, which relates to human-asset specificity, the knowhow generated through long-standing relationships (Williamson 1985). Evidence of knowledge-sharing routines is apparent, with cooperation, communication, and collective learning among group members emphasized. Some studies emphasize the importance of complementary resources and capabilities, including sharing appropriate resources and jointly selecting goods and services to buy together. Finally, choosing a governance structure that minimizes transaction costs, thereby enhancing efficiency, is also important (Williamson 1985). In this context, the previous literature emphasizes the need for top management support, appropriate structures, and compatible purchasing philosophies. Dyer and Singh (1998) present four barriers to collaboration for those seeking to imitate successful collaborations. In the list the follows, we briefly describe these barriers, again illustrating with examples from our research: 1. Interorganizational asset interconnectedness is based on the accumulation of shared resources. For example, concern within English local governments over investing in a collaboration and neglecting the needs of one s own organization, with some local governments willing to contribute more than other members to collaborations in terms of time, resources, knowledge, skills, and abilities. 2. Partner scarcity suggests that there are likely to be few partners with complementary resources and relational capacities. This is Table 2 Relational Barriers to Collaborative Procurement Identified in the Literature Barriers Themes Authors Asset interconnectedness Partner scarcity Resource indivisibility Institutional environment Difficulties dealing with interdependence while competing over resources None found in literature Inequity of pain and gain sharing Galaskiewicz 1985 Erridge and Greer 2002; Ritchie and Chadwick 2001; Rokkan and Buvik 2003; Schotanus, Telgen, and Boer 2008 Resistance to change Schotanus 2007 Tension between autonomy and collective Jost, Dawson, and Shaw 2005 Differences in the way of Jost, Dawson, and Shaw working 2005; Polychronakis and Syntetos 2007 Geographic distance Exworthy and Peckham 1998 Table 3 Lack of Enablers to Collaborative Procurement Identified in the Literature Lack of Enablers Themes Authors Lack of relationspecific assets Lack of knowledgesharing routines Lack of complementary resources/capabilities Lack of effective governance Lack of member commitment Ritchie and Chadwick 2001; Schotanus, Telgen, and Boer 2010 Schotanus 2007 Lack of cooperation and communication Lack of resources Jost, Dawson, and Shaw 2005; Laing and Cotton 1997 Lack of standardized procedures and processes Laing and Cotton 1997 Lack of procurement Aylesworth 2003; Erridge and skills Greer 2002 Lack of timing (contracts Ritchie and Chadwick 2001 end at different dates) Lack of data Erridge and Greer 2002 Lack of procurement Erridge and Greer 2002; credibility, loss of status Ritchie and Chadwick 2001 Lack of attention to supplier resistance Schotanus 2007 Lack of top management Schotanus 2007 support not much of an issue in our study, as local governments and NHS trusts have many potential collaborators. 3. Resource indivisibility because of coevolution of resources. For example, once local governments have invested in a 590 Public Administration Review July August 2013

4 collaboration, there is concern about what happens to shared staff, resources, and so on, if one of the local government organizations wants to leave. 4. Institutional environment may not lend itself to cooperation. For example, English local governments have differing local political agendas, which may make collaboration difficult. Table 2 summarizes themes from the collaborative procurement literature, grouped according to the four barriers. Several authors have identified interdependence among organizations as a potential constraint. No previous studies of collaborative procurement that we identified cite scarcity of partners as a barrier. The equal sharing of benefits between collaborating organizations is an important aspect of interorganizational relationships (Lejeune and Yakova 2005). Several studies refer to barriers to collaborative procurement, such as resource indivisibility and inequity of sharing pains and gains, that is, sharing the (dis)advantages of collaboration. Two studies identify differences in the way of working as a potential hindrance in terms of the institutional environment. Studies of collaborative procurement reveal that a lack of certain enablers (e.g., lack of member commitment, lack of standard routines, etc.) could also hinder collaboration. We classify these as lack of enablers, as distinct from barriers, and put them in a separate table (see table 3). The lack of enablers seems to correspond to the list of enablers in table 1, although no evidence was found in the literature specifically relating to lack of knowledge-sharing routines. From our review of previous studies of collaborative procurement, we can see that the relational view can help conceptualize and classify barriers to and enablers of collaborative buying. We also found it helpful to distinguish between barriers and lack of enablers in evaluating the literature from a relational perspective. In this article, we provide an empirical investigation of these relational concepts by interviewing senior practitioners engaged in collaborative procurement activities. We seek to evaluate whether the relational view can explain what happens when public sector organizations collaborate in their procurement activities. The next section outlines the methodology for the study. Methodology We adopted a sequential exploratory mixed-methods design (Hanson et al. 2005), in which qualitative interview data are collected and analyzed first, along with secondary data by using Web sites, reports, and documentation provided by the public sector organizations. Next, themes from the qualitative data were transformed into counts to see which collaborative procurement themes were most frequently mentioned by interviewees. Feedback on the findings was then sought at a workshop. Interview Sample The sponsors of the research were the NHS Purchasing and Supply Agency, the South East Centre of Excellence, and Value Wales. This shaped our sample to focus on the NHS (24 interviews), English local government (16 interviews), and Welsh local government (11 interviews). The interviewees came from a balance of national We provide an empirical investigation of these relational concepts by interviewing senior practitioners engaged in collaborative procurement activities. (6), regional (6), and local (8) organizations, ranging from small to large organizations, that all had adopted collaborative procurement to some extent. All of the interviewees buy similar products and services, such as transportation services, agency staff, and energy; the NHS also buys medical products. Our study employed purposeful sampling (Strauss and Corbin 1990), selecting interviewees who were senior procurement staff with detailed knowledge and experience of collaborative procurement for at least two years. Interviewees were identified through our sponsors, who provided public sector contacts. Interviewee titles included director, chief executive, category manager, and senior buyer. More than 50 interviews is a reasonable sample size for a qualitative study (Morse 1994), allowing us to have some confidence in the generalizability of our observations. As an estimation of how representative our sample is of public buyers, the total spending of the sample organizations is approximately 16.8 billion, which represents about 8 percent of the estimated spending of 220 billion in the public sector (National Audit Office and Audit Commission 2010). Semistructured Interviews and Analysis An interview tool with open-ended questions related to the job situation of the interviewee, experiences of collaborative procurement, constraints, problems, enablers, and so on was developed. Interview summaries were sent to interviewees and verified. The interview findings were compared across the NHS and English and Welsh local governments. Transcripts and summaries of the interviews were coded initially by one researcher. The coding was conducted according to the themes in the relational framework (Berg 1995). Each subsequent transcript was analyzed in the same way until there was a saturation of themes (Miles and Huberman 1994). A second researcher independently coded 10 interview transcripts and summaries. The two researchers had 87 percent inter-rater agreement regarding the consistency and frequency of allocation of interview quotes to themes, which can be regarded as an acceptable level of agreement (Carey, Morgan, and Oxtoby 1996). Finally, we presented the findings of the study at a workshop. In total, 36 interviewees attended, as well as 10 attendees from other public sector organizations. Feedback from the workshop was positive, and practitioners affirmed the identified barriers and enablers. Findings and Discussion We found broad evidence for adopting a relational view in the context of the study but modified the framework by making new additions to the themes and by distinguishing between barriers and lack of enablers. The findings are summarized in tables 4 6, with each table followed by a discussion of general findings, sector-specific findings, and new themes. In the appendix, the three tables are integrated into one to provide an overview of all of the themes found and their effects on the performance of a buyer buyer collaboration. Note that each table indicates how many interviewees commented on a theme. If a theme emerged repeatedly across the different Collaborative Procurement: A Relational View of Buyer Buyer Relationships 591

5 Table 4 Enablers of Collaborative Procurement ( means that a theme has not been identified in previous collaborative procurement literature) Enablers Themes Lit. Local NHS Total Relation-specific assets Member commitment % Knowledgesharing routines Complementary resources/ capabilities Effective governance Cooperation and communication 7 2 8% Benefits calculated and 4 3 6% communicated Better understanding through collective learning 0 0 0% Standardized procedures and % processes Joint selection of goods and % services Appropriate resources (training, 4 4 7% IT, etc.) Complementary expertise, skills, 1 2 3% and resources Top management support % Agreed goals and performance % measures Supplier involvement and 7 2 8% capacity SME support 6 0 5% Implementation of appropriate 1 2 3% structures % Table 5 Barriers to Collaborative Procurement ( means that a theme has not been identified in previous collaborative procurement literature) Barriers Themes Lit. Local NHS Total Asset interconnectedness Interdependence difficulties while competing over resources Neglect interests of own organization Neglect needs of local community 3 2 7% 2 2 6% 2 1 4% Partner scarcity None found in the data 0 0 0% Resource indivisibility Tension between autonomy % and collective Inequity of pain and gain % sharing Institutional Conflicting local politics % environment and differing priorities Resistance to change % Geographic distance 4 2 9% Difficulties in stakeholder 2 3 7% management Differences in way of 2 2 6% working % public sector settings (i.e., having a higher percentage than other themes), this may indicate that it is a relatively common theme in collaborative public procurement. For ease of comparison, we also provide a column summarizing themes that emerged from the data but have not been identified previously (the mark in the Literature column means that a theme has not been identified in previous collaborative procurement literature and is a novel finding from our data). Enablers Enablers identified in the study are presented in table 4. These empirically derived enablers show a reasonable degree of congruence with those identified in the literature in table 1. Table 6 Lack of Enablers of Collaborative Procurement ( means that a theme has not been identified in previous collaborative procurement literature) Lack of enablers Themes Lit. Local NHS Total Lack of Lack of member % relation-specific assets commitment Lack of attention to setting 1 1 1% realistic expectations Lack of Lack of common coding % knowledgesharing routines systems Lack of cooperation and communication 2 2 2% Lack of complementary resources/ capabilities Lack of effective governance Lack of data % Lack of standardized % procedures and processes Lack of attention to % ( potential) conflicts between local and collaborative staff Lack of resources 6 4 5% Lack of procurement skills 8 2 5% Lack of timing (contracts 6 2 4% end at different dates) Because of a lack of 2 5 4% data having to rely on suppliers for data Lack of strategic buying, better for commodities 3 2 3% Lack of procurement 9 5 8% credibility, loss of status Lack of top management 7 3 5% support Lack of attention to supplier 7 3 5% resistance Lack of consideration of the 8 2 5% supply market % Discussion of general findings and comparing sectors. In the study, several enablers of collaborative procurement emerged strongly. Participants felt that collaboration was particularly aided by member commitment and standardized routines and procedures. Effective governance, including top management support and implementation of appropriate structures, was mentioned as an enabler, particularly by NHS interviewees. Some NHS collaborations gave indications of such governance and cultural change issues on their Web sites. For example, one collaboration stated that its aim is to bring about a new way of working in purchasing and transformational change in relation to procurement (PRO-CURE 2010). It is not shown in the table, but standardizing procedures and processes was particularly emphasized by Welsh purchasers, who also saw a lack of standardized procedures and processes as hindering collaboration (see table 6). This can be explained by the fact that reducing bureaucracy and standardizing procedures and processes have been given strong national attention in Wales (Value Wales Procurement 2009). In terms of knowledge-sharing routines, interviewees discussed collaboration being enabled by cooperation, communication, and sharing. However, they did not specifically discuss collective learning, which has been identified as an enabler in previous 592 Public Administration Review July August 2013

6 collaborative procurement research (see table 1). Welsh participants particularly emphasized the importance of cooperation and communication, and one participant made the following observation regarding knowledge-sharing routines: Value Wales needs to provide knowledge transfer points... to share information between local authorities or provide networking events in which people can be familiarized with a contract, and experiences can be shared (Welsh local government, chief executive). Policy makers and practitioners could investigate ways to develop knowledge-sharing routines and collective learning in order to support collaboration. Discussion of new themes that have not yet been identified in the literature. The first new theme has to do with the perception among participants that collaboration was aided by ensuring supplier involvement and capacity for larger collective contracts. This theme can also be observed in the list of lacking enablers in table 6, where a lack of supplier involvement was evident in comments concerning a lack of attention to supplier resistance (to larger collaborative contracts), a lack of consideration of the supply market (a lack of suppliers in the supply market may leave buyers with little choice), and relying on suppliers for data about which organizations buy which products. Supplier involvement under different conditions could be interpreted as either an enabler or a barrier. For example, suppliers can inform staff about products to help purchasing decision making, but also, suppliers may provide biased information and favor certain product lines over others, thereby hindering effective cooperative purchasing. One interviewee commented, Suppliers have direct relationships with clinicians and want to keep it that way... industry has built up confusion about products when they are essentially the same (NHS Confederation, senior buyer). Hence, compared to collaboration on nonprocurement issues, collaborative procurement seems to be specifically hindered by a lack of consideration of suppliers. Another new enabler concerns small- and medium-sized enterprise (SME) support. Collaborative buying, while still enabling local SMEs to participate in the tenders (e.g., by collaborative tendering in small lots), was seen as an important enabler by local government participants and is part of the broader agenda for local government. Councils are asked to encourage diverse and competitive market supply, including small firms (U.K. Department for Communities and Local Government 2008). The Small Business Friendly Concordat states, The Government is committed to helping small firms because they represent such a powerful engine for economic growth.... SMEs are often local businesses and members of the local community; therefore any assistance given to them can also bring benefits to the local community (Local Government Association 2005). Buying from local SMEs to bring benefits to the local community is illustrated in the following comment by a participant: One of the things that is always with me is if I put a pound into [a local SME] then it is probably going round [the local economy] five to seven times. That is terribly important for a local authority (English local We suggest that the development and application of clear calculation methods for indicating collaborative value will enable more successful and committed public procurement collaborations. authority, procurement manager). Buying from SMEs needs to be balanced; if local SME preference leads to cooperative purchases that cost more or are less efficient, this could become a barrier to effective cooperative purchasing. The final new enabling theme identified was the need to calculate and communicate benefits among members, which might also be related to a lack of attention to setting realistic expectations (see table 6). This also means that it is important to persuade members to be committed to their collaborative contracts, as illustrated in the following comment: Collaborations can show [members] the effect that a lack of compliance has on savings (NHS Collaborative Procurement Hub, senior buyer). Given this finding, we suggest that the development and application of clear calculation methods for indicating collaborative value will enable more successful and committed public procurement collaborations. Barriers Barriers identified in the study are summarized in table 5 and, again, are contrasted with the barriers identified in the literature in table 2. Discussion of general findings and comparing sectors. The political influence on collaboration is an interesting and unique aspect of public sector procurement. It also speaks to some of the differences observed between the local entities and the national ones. Both local governments and NHS interviewees mentioned conflicting local politics and differing priorities. However, concerns for local community needs and buying from (local) SMEs (see table 4 for the latter) emerged as more important for local governments than for the NHS. From table 4, the possibility of supporting SMEs through collaboration was seen as important to the local government participants interviewed (5 percent) but was not identified by the NHS participants. Local government participants (see table 5) (9 percent) commented more than NHS interviewees (4 percent) on the tensions between local autonomy and the collective and on the inequity of pain and gain sharing, where the collaborating organizations do not share risks and rewards equally (9 percent among local government participants compared to 1 percent among NHS participants). By contrast, the NHS participants did not put such an emphasis on local issues, and they commented on the relational rents gained by, for example, sharing costs on testing innovative products and assuring supply. This broader view may be attributable to the fact that buyers in the NHS are concerned not just with their own local agendas but also with national strategic supply policy issues, such as product innovation, which are common across all trusts. It would be interesting to conduct further research to understand collaborative procurement from the perspective of different levels (local, regional, and national) in the public sector. We expand on this point in the conclusion. Discussion of new themes that have not yet been identified in the literature. Before we discuss the new themes found, we note that, unlike the relational literature, our study did not find any concerns about partner scarcity among any of the participants, which seems Collaborative Procurement: A Relational View of Buyer Buyer Relationships 593

7 to be less relevant in the NHS and local government context. Such organizations are unlikely to suffer from a lack of collaborators. In England and Wales, there are 410 local authorities and more than 450 NHS Hospital Trusts and Primary Care Trusts that can collaborate on purchasing in a variety of forms at the local, regional, and national levels (Bakker et al. 2008). Despite many potential partners, different partners may be appropriate for collaborative purchasing of different products or services, depending on geographic proximity, the size of the population, and factors such as employment rates, population age profiles, and whether the community served is urban or rural. For some products or services, there may be fewer potential partners, such as specialist hospitals and clinics, which may need to work together beyond the usual regional boundaries (e.g., Roehampton Amputee Rehabilitation Clinic collaborates with the Prosthetic Rehabilitation Unit at the Royal National Orthopaedic Hospital and with other clinics as part of the Prosthetic Strategic Supply Group). Partner scarcity may be a concern for other parts of the public sector that have fewer potential collaborators, such as in defense sector procurement. Our research suggested four barriers to collaboration that have not been previously identified in the literature that give a more fine-grained detail to understanding the tensions between collaboration and the needs of local organizations. Collaborations may present obstacles to managing local stakeholders, as attention may be focused on collaborating at the expense of local interests. Participants were concerned that collaborations might cause members to neglect the interests of their own organization and the needs of the local community that they represent. It is also notable that many interviewees face conflicting local politics and differing priorities, especially if they are geographically distant from one another. A previous study found that elected officials interests may not be compatible with interlocal cooperation (Zeemering 2008). In our study, local political influence was seen as having the potential to hold back a shared agenda. The political influence of local government is illustrated in the following comments, in which collaborative procurement staff referred to the views of politicians secondhand: Related to the political influence that local authorities exert on procurement is the diversity of issues and priorities. There are different priorities in Blackpool, where there are a high number of drug users and related crimes, compared to Portsmouth where there are a higher number of road accidents... This means that budgets will be allocated to different areas of interest, not necessarily purchasing. This will make collaboration on some things difficult (English central government, director of procurement). Buyers expressed concern that collaborative procurement might lead to the local economy, local suppliers, and their own interests losing out: The elected council members have responsibility for local economic and social well-being. So why would they collaborate with another council, take part in a tender and invest in this, if that meant the selected supplier would be from another region, benefiting someone else s local economy? There is no incentive to do so (Welsh local government, director of procurement). Another participant expressed, Procurement staff fear job losses that may result from any collaborative purchasing arrangements (Welsh local authority, senior buyer). In addition, if collaboration on a contract is unsuccessful, members may revert to taking care of local needs: We are all paid by our individual authorities and we have to succumb to the pressure of those, so if somebody tried a [collaborative] contract and all of a sudden the hits the fan, the authority priority will have to take first place (English local government, senior buyer). It is apparent that the themes of political influence and local priorities emerged strongly across local governments. It is understandable and expected that different local governments may have different priorities, but it seems from the aforementioned comments that these differences could have a negative impact on the nature and extent of the collaboration. Some of these less tangible barriers may be overcome by establishing closer ties with collaborating buying organizations. For example, it may be helpful for procurement practitioners and locally elected officials in the early stages of a collaboration to discuss and align agendas with the collaborators so as to prevent potential conflict. If it can be demonstrated that there are greater benefits to the collaboration that is, greater relational rents occur then the differing priorities may not deter collaboration. Additionally, procurement officers can use certain procurement techniques that enable governments to still express certain local priorities in joint tenders and enable local businesses to participate in these tenders. Examples of such techniques are tendering in lots (each lot represents one member of a collaboration, and suppliers can bid on one or more lots) and using flexible functional specifications instead of more rigid technical specifications. Lack of Enablers Regarding collaboration being constrained by a lack of enablers (see also table 3), the analysis benefited from the differentiation between the categories lack of enablers and barriers, as more comments concerned lack of enablers (50 percent of all quotes) shown in table 6 compared to the comments concerning enablers and barriers (see also tables 4 and 5). Discussion of general findings and comparing sectors. Common hindrances perceived across all public sector settings included a lack of member commitment and resources, top management support, common coding systems and data, and procurement credibility preventing successful collaboration. English local governments had a particular concern about a lack of top management support hindering collaboration, which may indicate concerns about the political influence of senior local government officials. The NHS stood out as concerned about a lack of common coding systems. This may be of less concern within local governments, as they often conduct collaborative procurement through standardized Web portals (IESE 2010). Discussion of new themes that have not yet been identified in the literature. In all, six new themes were identified relating to lack of enablers. Some of the new themes have already been discussed in the previous sections in related discussions (we addressed earlier lack of attention to setting realistic expectations, lack of attention to [potential] conflicts between local and collaborative staff, and lack of consideration of the supply market ). In this section, we discuss the three new themes that have not been addressed. 594 Public Administration Review July August 2013

8 In terms of knowledge-sharing routines, a new theme among NHS interviewees was that hospital trust procurement departments have no common procurement coding system for coding and categorizing products and services. This leads to a lack of [comparable] data on which products and services are being bought by which hospitals. Collaborations may have to rely on possibly less reliable data from suppliers to calculate compliance with collaborative contracts and to identify new possibilities for joint tenders. Collaborating organizations can benefit from improving relational information technology and e-collaboration for relational rent (Johnson et al. 2007; Rosenzweig 2009). Some interviewees commented that collaborative procurement was more suited to standard items and commodities, whereas more strategic purchasing to meet longer-term aims was better left to the organizational level. Our focus is away from strategic purchasing in our collaborations, as a lot of managerial effort is required (NHS Collaborative Procurement Hub, senior buyer). Some interviewees believed that collaborative purchasing of commodities would, over time, become routine and release staff to focus on more strategic purchasing. The possibility of collaborating on strategic items was discussed at the final workshop conducted as part of this study. During the workshop, it was suggested that there must be greater exploration of the more strategic aspects of collaboration, rather than a focus on standard items that were deemed easy. This echoes calls for purchasing to have a more strategic focus (Chen, Paulraj, and Lado 2004; Ellram and Carr 1994), which has been found to be beneficial to integration in buyer supplier relationships (Paulraj, Chen, and Flynn 2006) and may also benefit buyer buyer relationships. Managerial Implications The findings discussed in the previous sections have several lessons for policy and practice. For policy makers, the research highlights some of the specific common barriers to and enablers of collaborative procurement, which may assist policy makers in identifying areas of support and guidance that can be offered regionally and nationally. The new themes that we identified from our data may indicate that policy makers could (1) develop tools for calculating the benefits of collaboration, (2) offer facilitation to collaborating organizations to aid discussion their differing local needs, and (3) offer advice on involving suppliers and SMEs in the early stages of collaboration. Looking at the lessons for policy makers from the perspective of relational theory, knowledge-sharing routines benefit interfirm relations (Dyer and Singh 1998) and public sector knowledge networks (Dawes, Cresswell, and Pardo 2009) but were not widely in evidence in our study. In the Netherlands, the PIANOo Web site (2007) funded by the Dutch government provides online discussion forums for procurement practitioners, which may be an efficient way for communities of practice to establish knowledge-sharing routines and exchange knowledge to support collaborative procurement. Some interviewees commented that collaborative procurement was more suited to standard items and commodities, whereas more strategic purchasing to meet longer-term aims was better left to the organizational level. The new themes that we identified from our data may indicate that policy makers could (1) develop tools for calculating the benefits of collaboration, (2) offer facilitation to collaborating organizations to aid discussion their differing local needs, and (3) offer advice on involving suppliers and SMEs in the early stages of collaboration. Collaboration may also assist in adherence to policy guidance. Public sector procurement needs to observe European Union procurement policies and rules. It should also demonstrate accountability, fairness, equity, and transparency; maximize competition; and maintain a level playing field for suppliers (European Commission 2012). These procurement principles might be met more efficiently by collaborative procurement than by individual organizations, as acceptable procurement processes can be followed more effectively and expertise can be consolidated. Another useful direction for future policy may be to develop guidance and promote the more strategic aspects of collaboration rather than use collaborative procurement as a vehicle for exploiting economies of scope and scale. Collaborative purchasing clearly benefits standard routine items, where one can achieve savings by aggregating demand among several organizations and by driving down prices with suppliers, for example, buying electricity or paper in bulk. Strategic purchasing concerns analyzing the product or service portfolio of the collective organizations (Kraljic 1983). Decisions can be made about which items are most costly (e.g., the building of new hospitals), present the greatest supply risk (e.g., the health service needs to ensure supply of flu vaccinations from specialist suppliers, whereas saline or bandages might be available from a wide variety of suppliers), and are of greatest strategic importance (e.g., commissioning complex health and social care services, such as mental health services, may have the biggest impact on community well-being). Important categories can be managed by specific teams, and key supplier relationship management can be developed. By working more closely with suppliers, one is more likely to have product innovations and quality improvements. Strategic purchasing is more easily pursued with collaborative procurement, where there are economies of scope and scale and dedicated staff, and where mainly large and/or (quasi)monopolistic suppliers are involved. Collaborative procurement, therefore, enhances efficiency concepts (Gershon 2004) by providing savings and introduces dynamic efficiencies such as innovation and product or service quality. In terms of practitioner implications, the research suggests some common factors that signal successful collaborations, as well as other factors that may answer some of Dyer and Singh s (1998) concerns about why many collaborations fail. Practitioners need to put effort into standardizing procurement procedures and processes, agreeing on goals and performance measures, and ensuring the commitment of members and the joint selection of goods and services, which all have been identified as important to the success of collaborations. Rather than achieving a collaborative advantage, collaborative inertia is sometimes a more apt description of the collaborative process (McGuire 2006). Practitioners need to find some way of reconciling tensions between individual and Collaborative Procurement: A Relational View of Buyer Buyer Relationships 595

9 collective interests, overcoming resistance to change, and accommodating different priorities and organizational agendas. Putting effort into building relational capital and commitment between collaboration members may provide a way to overcome such barriers. Our findings affirm the observation that public managers need to budget the time necessary to negotiate with collaboration members about how to govern, paying attention to the tension between self-interest and collective interest and building reciprocal and trusting relationships (Thomson and Perry 2006). Conclusion This study adopted a relational lens to explore collaborative procurement. Applying this perspective to collaborative procurement not only provides us with an extensive overview of (newly found) impeding and enabling factors in collaborative procurement (see appendix) but also with new insights. Among other things, we found that, compared to collaboration on nonprocurement issues, collaborative procurement is hindered specifically by a lack of common coding systems, a lack of consideration of the supply market, supplier resistance, reliance on suppliers for data, and a lack of strategic buying. We also found that, compared to collaborative procurement in the private sector, collaborative procurement in the public sector is hindered by local politics and differing priorities. On the other hand, partner scarcity does not present an obstacle to collaborative procurement in the public sector. Furthermore, we found noticeable differences between collaborating local governments and collaborating health care providers that have not yet been identified in the literature. For local governments purchasing collaboratively, dealing with concerns about local issues and buying from SMEs seem to be specific success factors. For health care providers, concerns about product innovation and ensuring security of supply seem to be strong collaborative procurement themes. Implications for Further Research There are several opportunities for future research. The existing literature on collaborative procurement has often lacked theoretical underpinnings and has not had a comprehensive overview of barriers and enablers. In this article, we address these gaps by adopting a relational lens and extending existing knowledge of what helps and hinders collaboration. We would like to continue our contribution to theory testing and develop a more finely grained understanding of how the conditions for collaboration might be made more conducive from a relational perspective and what the implications are for collaborating organizations. This could include survey research to systematically scrutinize the antecedents and moderating factors affecting collaborative procurement and how collaboration affects financial and operational performance. We feel that the relational approach may prove fruitful in future studies of collaborative procurement. Furthermore, other theories may shine more light on buyer buyer relations and the broader field of collaborative public procurement Table A.1 Overview of All Factors That Impede ( ) or Enable (+) Collaborative Procurement ( means that a theme has not been identified in previous collaborative procurement literature) Factor Categories Themes Effect Lit. Total (Lack of) relation-specific assets and asset interconnectedness (Lack of) knowledge-sharing routines and partner scarcity (Lack of) complementary resources/ capabilities and resource indivisibility (Lack of) effective governance and institutional environment (Lack of) member commitment +/ 13% Lack of attention to setting realistic expectations 1% Interdependence difficulties while competing over resources 0% Neglect interests of own organization 0% Neglect needs of local community 0% Lack of common coding systems 6% (Lack of) cooperation and communication +/ 4% Benefits calculated and communicated + 2% Better understanding through collective learning + 0% (Lack of standardized) procedures and processes +/ 9% Lack of data 5% Lack of attention to (potential) conflicts between local and collaborative staff 3% Joint selection of goods and services + 3% Lack of resources 3% Lack of procurement skills 3% Tension between autonomy and collective 0% Lack of timing (contracts end at different dates) 2% Appropriate resources (training, IT, etc.) + 2% Inequity of pain and gain sharing 2% Because of a lack of data having to rely on suppliers for data 2% Lack of strategic buying, better for commodities 1% Complementary expertise, skills, and resources + 1% (Lack of) top management support +/ 6% Conflicting local politics and differing priorities 4% Lack of procurement credibility, loss of status 4% Agreed goals and performance measures + 3% Resistance to change 3% Lack of attention to supplier resistance 3% Lack of consideration of the supply market 3% Supplier involvement and capacity + 3% SME support + 2% Geographic distance 2% Difficulties in stakeholder management 1% Differences in way of working 1% Implementation of appropriate structures + 1% 100% 596 Public Administration Review July August 2013