Abstract

The article focuses on the problems of managing reciprocity. Reciprocal trading relationships, where firms buy some of their needs from their best customers rather than from outsiders, are probably as old as commerce. But with the coming of giant enterprise, it became an important managerial tool designed to assure that a firm's customers show some form of favoritism in their buying or other business practices. As businesses learned how sales could be increased through the skillful use of their buying power, they have at least partially accounted for changes in organization structures, the direction that new product development has gone and even a few mergers. This article deals with the managerial difficulties that arise when a firm becomes a member of reciprocal grouping. In some instances, the debilitating effect of the practice goes unseen and uncounted by those who practice it. Some of the costs of reciprocity are so subtle that proof must come more from what is known about managerial and organizational theory than from empirical evidence. In other instances, the costs are easily recognized, but the advantages to be gained from reciprocity are considered worth the price that must be paid.