Purchasing power and purchasing strategies — Insight from the humanitarian sector

Zusammenfassung

Power is a complex concept in any relationship. Its relative, perceptive, intangible, context dependent, and multifaceted nature has made it difficult to study. In this research, the aim was not to study power per se, but to study purchasing in light of the existing constraints from power relations. This PhD dissertation is about buyers with low purchasing power, how they buy what they need, and how their decisions affect their power.

Organizations enter exchange relationships to access required resources not produced internally, and are exposed to uncertainty from not being able to fully control or predict flow of resources. Consequently they become dependent on their partners. Their level of dependence indicates the influence, or leverage they might have on the partner. Thus, firms that are highly dependent on their supplier base have less leverage or low purchasing power.

This situation can be seen in several industries; e.g. in the airline industry, in purchase of oil/gas, in purchase of vaccines, or in several purchases made by the public or humanitarian organizations. There are several forms of purchasing strategy practiced in such situations. But, previous studies had mostly focused on the stronger partner in an exchange relationship, and thus less was known about the buyers with low purchasing powers.

Thus, in this dissertation, it was aimed to understand the purchasing strategies practiced by these buyers, and how they can have more influence on supply. In 4.5 years, a pre-study, a multiple and a single case study was conducted on the topic and the results summarized in a licentiate thesis, 5 different scientific articles, and the concluding remarks (Kappa) of the dissertation. In the exploratory pre-study, we observed that some buyers with low purchasing power had managed to influence their supply market for better purchase terms. Considering the predictions of previous research on constraint absorption of powerful partners, this influence was surprising. So, the interrelation between purchasing power and purchasing strategies was then studies among multiple buyers of vaccines for developing countries. The predictions from this study were extended to a single case study where the impact of one specific purchasing strategy (cooperative purchasing) found in the multiple case study, was studies on the buyers’ purchasing power.

Results from our study show that certain purchasing strategies can improve the influence of buyers with low purchasing power. The findings from this study contribute to purchasing studies by introducing and conceptualizing the concept of purchasing power and to purchasing practice by showing the factors that can impact higher or lower purchasing power and purchasing strategies that can improve buying situations.

In this brief summary of the studies and results of this research, you will first be introduced to the context in which the studies were conducted and the research problem it intended to answer.