Consortium – Definition

Cite this article as:"Consortium – Definition," in The Business Professor, updated December 4, 2019, last accessed October 26, 2020,


Consortium Definition

A consortium is realized when two or more firms, governments, households or individuals come together to participate n a common task-driven towards the same objective. In a consortium, the companies or individuals that come together and pool their resources together to achieve a common objective. Consortiums are often formed when there is a large project to be undertaken, and when such projects are beyond what a single firm, individual or government can execute. When financial and human resources are pooled together, every party in a consortium must stick to their responsibility as stated in the agreement.

A Little More on What is a Consortium

A consortium is usually formed for short-term projects with huge capacity. A consortium is different from a syndicate, in a consortium, several firms, companies or experts from diverse industries or the same sector come together, pool their resources (financial and human) to achieve a common goal. Consortiums are often formed for non-profit purposes, although, there are some exceptions. They are formed to execute a significantly large project to benefit their sector or the general populace. Consortiums are often formed in the educational sector, this is where several universities and educational institutions pool financial resources, research and theses materials, professors, and other knowledge-based materials to achieve a common educational goal.

Consortiums and For-Profit Businesses

Not all consortiums are not-for-profit purposes, there are corporate for-profit consortiums. In for-profit consortiums, experts or companies in the same sector can merge their resources to produce a product that might be difficult to produce just be a company. In such a consortium, not only are financial and human resources of the firms in the consortium pooled, their research works, equipment, facility, and others are also pooled towards executing a specific project.

A common example of a for-profit consortium was done in the airline industry whereby, four European companies formed a consortium to produce a commercial aircraft. A for-profit consortium can also occur in other industries such as automobile, mining and many others.

Consortiums and Government

Consortiums are not limited to companies in the same industry or companies from different sectors. Governments also engage in consortiums, this consortium can be between a government and a private enterprise or between two or more governments. The most common consortiums that governments engage in are those with private enterprises, especially when it relates to formulating standards that will improve production and consumption in a sector.

Governments that collaborate with private enterprises to formulate standards guarantee consumer health and safety, safe and effective products and profitable manufacturing in the country.

Consortiums vs. Joint Ventures

Consortiums are different from joint ventures. When two or more firms or enterprises come together to form a joint venture, they share the ownership of the venture which means all the profits and risks of the venture are shared equally among the participants. Businesses in a joint venture also work together and they all participate in the governance, risks, and losses of the venture. In a consortium, however, two or more companies pool their resources together for a common goal, which is often short-termed. The day-to-day operations of the firms that make up the consortium are run independently as these are not part of the agreement for the consortium.

Reference for “Consortium”

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