Here’s my simple take on reciprocity—I want to do business with those that do business with me (meaning the company that I work for).

In fact, I’ve been pretty aggressive in the past about promoting my previous employers’ goods or services to prospective and existing vendors.  In some cases, my efforts achieved very significant revenue.  I’ve also given additional consideration to vendors—over other vendors in a competitive bidding situation—who either already buy my employer’s goods or services or who demonstrated a strong willingness to consider doing so.

To clarify, I don’t try to fit a round peg into a square hole to make the deal happen… If a vendor doesn’t have the right goods or services to fit my customer’s requirements, or the vendor’s price is too high (factoring in the margin that my employer gets from that vendor), the fact that the vendor is a current customer or is a potential customer doesn’t have much weight in terms of my sourcing decision.

With that said, even if the vendor / customer doesn’t have the right goods or services, or their price is too high, they still get preferential and personalized treatment. I might give that vendor advance notice of a competitive bid, give them access to levels within my employer that they wouldn’t normally get, or give them more face time with me or my staff to explain why they didn’t get the deal.

But that’s just my opinion… What do others say about reciprocity? Well, for one, the Institute for Supply Management’s Principles and Standards of Ethical Supply Management Conduct (adopted May 2008) state that buyers should “[a]void improper reciprocal agreements.”  I like the ISM position because it doesn’t outright prohibit reciprocity, it just requires that “improper” reciprocity be avoided. And by “improper,” I think ISM is alluding to “illegal”—as in antitrust illegal.  To be clear, reciprocity is not a per se violation of antitrust laws.

Generally speaking, the determination of whether reciprocity is illegal under the Sherman Act depends on:

• the markets involved
• the relative strengths of the companies in those markets
• the amount of commerce actually affected

Not to turn this post into a law review article, but courts in their interpretation of the Sherman Act have found that reciprocity becomes illegal only when it reaches proportions as to significantly interfere with the marketplace. One influential decision found that, to be illegal, reciprocity has to have an impact on a “not insubstantial” amount of commerce. In other words, unless you work for a company like Ford, and you require all of your vendors and their employees to buy and drive Ford vehicles, reciprocity at your company probably will never rise to the level that it would be illegal under the Sherman Act.

Unfortunately, not all companies take the same nuanced, flexible approach that ISM does. In fact, many companies have outright policies prohibiting reciprocity. Here’s an example of IBM’s policy, which has been in place, unchanged, since 1966!


Certainly, it’s easier to have a bright line policy where no one has to think in shades of gray, but I personally think that such policies just don’t make good business sense and limit the value that sourcing pros can bring to their employers. Consistent with ISM’s Principles and Standards of Ethical Supply Management Conduct, I’ll continue to value reciprocal business relationships where such relationships are permitted by my employer and where such relationships don’t run afoul of the Sherman Act.  Just my $.02