Retail Cooperative Groups: Effectiveness In A Hypercompetitive Market

Abstract

Hypercompetition affects organizations in an industry, influencing their structure and relationships with other entities. The presence of hypercompetitive firms in an industry discourages the use of long-term, cooperative alliances, favoring instead short-term, transactional relationships (Lengnick-Hall and Wolff 1999). Retail cooperatives, a unique form of organization in the retail industry, are composed of individual, independent retailers cooperating voluntarily to build scope and scale advantages. They depend on long-term cooperation between and among their many members to build efficiencies that allow them to compete effectively against larger, more powerful competitors (Ghosh 1994). The strength of a member's desire to behave in a manner that benefits the cooperative as a group, rather than in a way that may benefit only the individual member, is represented by the concept of group identification (Lembke and Wilson 1998). A member's level of identification with the group is a key indicator of their commitment to that group (Albert, Ashforth and Dutton 2000). In a segment of the retail industry exhibiting signs of hypercompetition, what effect does group identification, a sign of loyalty to the group, have on member perceptions of the cooperative group? At a time when long-term, alliance relationships are believed to be a liability to a firm (D'Aveni 1994), are retail cooperatives perceived to be an effective form of organization by their members? This study assesses the influence of a member's level of group identification on that member's perceptions of cooperative group structure and relationship effectiveness. Implications will benefit management of cooperative groups who are seeking the appropriate role of these organizations in a hypercompetitive market. Retailers who are considering whether or not to join a cooperative group in the current environment may also benefit.