Consortium is a word that comes from the Latin consortium meaning association or society, from the word consors meaning owner of means or comrade.
The word refers to a temporary collaboration to perform a certain task or to provide a specific service or product more efficiently. A consortium is an association of two or more individuals, companies, universities, or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal. Each participant retains its separate legal status and thus, the consortium’s control over each participant is generally limited to activities involving the joint endeavor, particularly the division of profits.
A consortium is formed by contract, which delineates the rights and obligations of each member. Consortia are more common in the non profit sector. For example, Five Colleges, Inc. is one of the oldest and most successful consortia in the United States. The participants in Five Colleges, Inc. are: Amherst College, Hampshire College, Mount Holyoke College, Smith College, and the University of Massachusetts at Amherst. Another example of a successful consortium is the Five Colleges of Ohio of Ohio: Oberlin College, Ohio Wesleyan University, Kenyon College, College of Wooster and Denison University. These consortia have pooled the resources of their member colleges and the university to share human and material assets as well as to link academic and administrative resources.
An example of a for profit consortium is Airbus Industrie (“Airbus”). Formed in 1970, Airbus is one of the world’s premier manufactures of civil airliners. Airbus is owned by EADS (80%) and British Aerospace (20%). EADS itself is a merger of Aérospatiale-Matra of France, Daimler-Chrysler Aerospace of Germany, and Construcciones Aeronáuticas of Spain, which were originally separate partners in the consortium, owning 37.9%, 37.9%, and 4.2%, respectively. Airbus' status as a consortium means that profits accrue to the partner companies representative to their interests. Work is allocated on the same basis as profits.
Another example of a for profit consortium is when a group of banks colloborate to give a loan. This is more commonly known as a syndicated loan. A more permanent joint activity is usually called an institute.
Last updated: 06-01-2005 19:27:54