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Business Journal for Entrepreneurs Volume 2008 Issue 2
Volume 2008 Issue 2
RiskFactorsIssuesinITOffshoreOutsourcingProfessors Alexander Mechitov, Helen Moshkovich, William Rupp, Stephens College of Business, University of Montevallo; Teamwork in Organizations: A Value Driven Management (VDM) Analysis Using a Case Study Approach From An MBA Student’s Perspective Dr. Donovan A. McFarlane, M.B.A., Ph.D., Adjunct Professor in Business Studies, City College – Fort Lauderdale Campus; Determining Attributes of Successful Acts of the Nashville Music Industry:Implications for Marketing StrategyRobert P. Lambert, DBA, Professor of Marketing, Belmont University, Donald W. Caudill, Ph.D., Professor and Chair, Marketing, Management & Leadership and E-Business & Entrepreneurship, Bluefield College, Gregory Faulk, Ph.D.,Professor of Finance, and Paul Hinman, Belmont University; Don’t Go it Alone: Building Effective Cross-Sector Collaborations between Social Entrepreneurs and Corporations Thaddeus McEwen, Ph.D., Professor, Department of Business Administration, School of Business and Economics, North Carolina A&T State University; Forecasting the Price Indicator at the Athens Stock Exchange based on Cross Prediction Nearest Neighbor AlgorithmMike P. Hanias,TEI of Chalkis, General Department of Applied Sciences, and Panayiotis G. Curtis, TEI of Chalkis, Accounting Department, Psachna Euvoias, Greece; China: Strategy, Innovation, and EntrepreneurshipPeter Geib, Professor of International Business & Management and James Swenson, Professor of Management, Minnesota State University Moorhead; Identity Theft:New Challenges Professor James L. Bush, Jr. , Middle Tennessee State University; Linkages Between The USA And The Pan-European Equity Markets Konstantinos Gillas& Emmanuel Maurokoukoulakis, University of Crete, School of Social Sciences, Department of Economics, Crete, Greece; An Analysis Of Quality In Health Care Services And The Patients’ Total Satisfaction Index Professors Athanasios Papadimitriou and Eleni Klamaria, University of Athens, Department of Economics, and Dr. John Mylonakis, Athens, Greece; An Empirical Study of the Organizational Factors Affecting the Optimization of Data Warehousing Design StrategyC.S. Shim, Dept. of CIS, Savannah State University, and Yong B. Shin, Dept. of MIS, Francis Marion University;
Don’t Go It Alone: Building Effective Cross-Sector Collaborations Between Social Entrepreneurs And Corporations
Thaddeus McEwen, PhD
Professor and Director of the Interdisciplinary Center for Entrepreneurship and E-business
DON’T GO IT ALONE: BUILDING EFFECTIVE CROSS-SECTOR ALLIANCES BETWEEN SOCIAL ENTREPRENEURS AND CORPORATIONS
Thaddeus McEwen, PhD
North Carolina A&T State University
An exciting social trend of the past decade has been the growth of social entrepreneurship. This has led to many courses, centers, and institutes dedicated to social enterprise and social entrepreneurship in U.S. business schools. For example, Harvard Business School undertook a major initiative in social entrepreneurship, while Stanford University started a new journal—The Stanford Social Innovation Review.Also, Columbia University and the University of California at Berkeley sponsor the National Social Venture Competition (Gentile, 2002).As a result, “there has been a dramatic growth in awareness of, and support for the crucial leadership role played by social entrepreneurs—individuals who apply innovative, entrepreneurial, performance driven, scalable approaches to solving societal problems” (Nelson and Jenkins, 2006, p.1).
Despite the growth and the increasing importance of social entrepreneurship, one of the key challenges facing social entrepreneurs is how to harness the technology, core competencies, resources, and problem solving skills of the private sector to help solve the complex social problems begging for solutions (Nelson and Jenkins, 2006).One solution is cross-sector collaborations which will provide social entrepreneurs with increased resources and the corporations with greater opportunities to be more involved in local community development.Through cross-sector collaboration, capabilities are combined and each other’s strengths compensate for each other’s weaknesses (Iyer, 2003 and Johnson, 2005).According to Bryson, Crosby and Stone (2006), cross-sector collaboration is increasingly becoming both a necessary and desirable strategy for tackling tough social problems and achieving beneficial community outcomes. Austin (1998) stated that collaboration is not simply an option, it is an imperative.Social entrepreneurs and corporations need each other.
The purpose of this paper is to present a theoretical framework for developing, implementing, and managing cross sector relationships between social entrepreneurs and corporations.This framework is an illustration of the phases in the collaboration process; it does not attempt to show the extent of interaction among the various phases.The paper synthesizes the literature on cross-sector collaborations and explains the meaning and types of collaboration and the theoretical rationale for cross-sector collaboration between social entrepreneurs and corporations.Next, it presents an framework for cross-sector collaborations which includes the process of forming, the critical issues for success at each phase, and the benefits of cross-sector collaborations.Next, the paper discusses the challenges and the factors that contribute to cross-sector collaboration success.Finally, the conclusions and implications of cross-sector collaboration between corporations and social entrepreneurs are presented.
This paper makes an important contribution to the literature because it focuses on cross sector collaboration (formation, management and benefits), an area in which limited research has been done.Although a great deal of work has been done on strategic alliances among corporations, scholars have paid little attention to cross-sector relationships (Wymer & Samu, 2003; Johnson, 2005).Also, cross-sector relationships are different from private-sector collaboration in objectives, motivations, culture, and goals (Sagawa and Segal, 2000).Because of the differences, findings from the research on private-sector collaboration cannot be directly applied to cross-sector collaborations (Johnson, 2005).Therefore, there is need for more conceptual and empirical work on cross-sector collaboration to help social entrepreneurs and businesses that are already collaborating as well as those interested in building effective cross- sector collaboration (Austin, 2000).
Meaning of Cross-Sector Collaboration
Hamaoui (2007) defines cross-sector collaboration as a partnership between organizations from two or more sectors (e.g. businesses and social entrepreneurs) that commit themselves to working together.It is about sharing risks, costs and benefits, and finding innovative ways to pool resources and talents based on each partner’s core strengths.According to Bryan, Crosby and Stone (2006), cross-sector collaboration is the “linking or sharing of information, resources, activities, and capabilities by organizations in two or more sectors to achieve jointly an outcome that could not be achieved by organizations in one sector separately” (p. 44).
For the purpose of the paper, cross-sector alliance is defined as an engaged and committed relationship between businesses and social entrepreneurs, which leads to a mutually beneficial outcome that furthers the breadth and depth of each entity’s performance (Johnson,2005).Cross-sector collaboration therefore has three defining characteristics:
1.It involves mutual understanding and dependency which means that partners understand that the success of each organization depends, in part, on the other organization (Anderson & Narus, 1990).
2.It enhances both the breadth and depth of each partner’s performance.This is accomplished, according to Iyer (2003), through either compensating for existing weaknesses or enhancing existing strengths among partners. For example, if a corporation collaborates with a social enterprise, because of the different skills sets and knowledge bases, the relationship will expand the knowledge base and expertise of each partner.
3.Cross-sector alliances also involve dynamism.According to Austin (2000), cross-sector alliances have a unique characteristic of being flexible and dynamic.
Cross-sector collaboration is different from intra-private-sector collaboration in their motivations and goals.While private sector alliances focus on economic goals, such as market positioning, business performance and growth, cross-sector collaboration goals are both social and economic and aim to achieve diverse benefits such as community development, image enhancement, financial funding, and social responsibility (Johnson, 2005).
Types of Cross-Sector Collaborations
According to Austin (2000), there are three different types or stages of collaboration.Philanthropic collaboration is mainly an annual corporate donation of money and goods made in response to a request from a nonprofit. It is basically a check-writing relationship. The social entrepreneur receives funding, goods and services, while the company enhances its reputation as a caring and responsible corporate citizen.The level of engagement is low, infrequent and tends to be non-strategic.Transactional collaboration is a specific partnership to exchange resources around a specific activity, for example, cause-related marketing arrangements, event sponsorships, and employee services. It goes beyond simply making donations and involves more frequent interactions than the philanthropic collaboration. Integrative collaboration involves a deep merger of the partners’ missions, people, and activities.As a result partners interact more frequently and undertake more joint projects. Austin (2000) characterized the three types or phases of collaboration as the collaboration continuum, with philanthropic at the lowest level and integrative as the highest level of collaboration.
One level of collaboration is not necessarily better than another.And, movement along the continuum is not automatic; it depends on the decision of the partners (Austin, 2003). Social entrepreneurs and corporations must examine each type and select the one that best fits their situations and provides the most significant value.Some partners may decide that the lower level of engagement best fits their objectives, while others may decide to skip the philanthropic stage and choose one with the higher level of engagement, such as the transactional stage.
The main theories used to explain the underlying motives for cross-sector collaboration between businesses and social entrepreneurs are the (a) Resource Dependency Theory, (b) Knowledge-Based Theory, (c) Social Exchange Theory, and (d) Efficiency Theory.
According to the Resource Dependency Theory (Pfeffer & Salancik, 1978), few organizations have all the critical resources that they need. This lack of self-sufficiency leads to dependence on other organizations and introduces uncertainty into the decision making environment.Cross-sector collaboration is one means of creating a structure to reduce uncertainty and manage dependence.Social entrepreneurs often lack some of the critical skills and know-how and, as such, cross-sector collaborations provide fast access to complementary assets, technology and skills.
Knowledge-Based Theory sees knowledge as the organization’s key strategic resource for creating value. The creation, integration, and application of knowledge are critical to organizational success.The theory suggests that cross-sector collaborations are formed to acquire new skills or technologies that are often too time-consuming and expensive to build internally (Hamel, Doz, & Prahalad, 1989; and Grant & Baden-Fuller, 2000).When properly used, cross-sector collaboration helps organizations to acquire necessary knowledge more quickly (Chung, Luo, & Wagner, 2006).
According to Kogurt (1988a), alliances are also formed to help with the transfer of tacit knowledge.Through cross-sector collaborations, an organization will acquire specialized knowledge without compromising its own skills and capacities (DiMaggio & Powell, 1983).This reduces the cost of information search, facilitates organizational learning, and increases the skills and abilities of the partners (Khanna, Gulati & Nohria, 1994; Hammel, 1991).
Other theories that explain the motives for social entrepreneurs and business collaborations are social exchange theory, which concerns reciprocity—the need for each partner to receive commensurate value from the other (Oliver, 1990) and efficiency theory, which deals with the savings that would be achieved through lower costs due to social entrepreneurs and corporations combining resources and efforts (Williamson, 1985).
Forming the Cross-Sector Collaboration
Forming the cross-sector collaboration demands attention to the decision to collaborate, initiation, implementation, management, and outcome phases.
Deciding to Collaborate
Collaboration between social entrepreneurs and businesses begins with solicitation from one partner. According to Stiefvater, (2001), sixty percent of organizations that have cross-sector alliances indicated that they had initiated it themselves. In deciding to collaborate, each partner should have a clearly defined vision and purpose for the collaboration.Each should be aware of and evaluate the different partnership options to determine what best fits their needs.Will it be the philanthropic collaboration with a relationship that is largely that of a donor and beneficiary; transactional collaboration which involves resource exchanges focused on specific activities or integrative collaboration in which the partners’ missions, peoples, and activities merge into a more collective and organizational integration (Austin, 2000).In addition, each should identify what they want to acquire from the partnership and what they have to offer a partner.The partnership should create a win-win opportunity for all partners.A potential partner will not enter a relationship if they feel that they will be providing an unfair share of the resources or work (Hoskins & Angelica, 2005).
The Initiation Phase includes identifying a champion, selecting appropriate partners, and negotiating terms and structure of the agreement (Simonin, 1997; Wohlstetter, Smith, & Malloy, 2005).During this phase, the main concern is bringing the appropriate stakeholders to the table and getting their commitment to become partners.The purpose is to define the problems clearly, ensuring that the collaboration meets the partners’ specific interests, and securing the resources to move forward (Merrill-Sands & Sheridan, 1996).
In this phase the champion who will be responsible for convening meetings and guiding the organization through the initiation process is identified.He or she prepares the organization for the alliance and needs to have the necessary resources to set the partnership in motion and to keep it on track during the plateaus and setbacks (Waddock, 1989).Providing the necessary authority, responsibility and resources empowers the champion and sends a strong message to the potential partners that the organization is serious and committed to cross-sector collaboration (Deloitte Touche Tohmatsu, 2003).
During this initiation phase, corporations as well as social entrepreneurs should carefully select appropriate partners, ensuring that there is a good fit.Critical questions must be answered, for example: (a) Does the proposed partner have compatible goals, complementary skills and the commitment, to execute an alliance?(b) Is the proposed partner trustworthy and able to provide the benefits sought (Simonin, 1997)? It is critical to select a partner who has similar beliefs about the problem (Waddock, 1989), complementary skills and assets, and a mutual willingness to work together (Austin, 2000,Waide, 1999,Waddock, 1989).
In the initiation phase, it is also important to negotiate the formal and informal agreements about the purpose of the collaboration (Rondinelli & London 2001).Informal agreements about the composition of the collaboration, the mission, and the process are acceptable. (Donahue, 2004); however, formal agreements hold all partners accountable.Elements of a formal agreement might include a clear purpose, commitment of resources, selection of formal leader, list of members, and decision-making structure to deal with local conditions and changes (Arino & de la Torre, 1998; Crosby & Bryson 2005a).All partners must completely agree on a shared purpose, if not they may not be able to agree on the next steps (Huxham & Angen, 2005). To ensure that all partners agree, involve all key stakeholders in preparing the agreement; make it a highly participative process (Page, 2004).
During the ImplementationPhaseboth social entrepreneurs and corporations should be following through on the agreements reached on the collaborative arrangements.Formal meetings should be held with the partners transitioning from making the deal to executing the deal.The main concerns include deciding how to structure the collaboration, defining roles and responsibilities, developing decision-making processes, and cultivating commitment. (Waddock, 1989; Merrill Sands & Sheridan, 1996).
In this phase, a clear organizational structure and an explicit decision making process make it possible for partners to effectively work together.(Kanter, 1994; Waddock, 1989).The different types of governing structures are decision making through regular meetings or through informal frequent interactions. The degree of trust among members influences which type of structure is chosen, and the choice of governance structure influences the effectiveness of the collaboration (Provan & Kenis, 2005; Bryson, Crosby, & Stone, 2006).
Partners should also agree on on their respective roles, rights, and responsibilities.Assignment of responsibilities should relate to the individual members’ interests and strengths in order to maintain commitment. Gray (1989) suggests that it is necessary to discuss group process openly and agree on roles and responsibilities, organization, and decision making.Clarity of roles and responsibilities enhances accountability and ensures overall success (Bergquist, Betwee & Meuel, 1995).
The governance structure should also include accountability. Das & Teng (1998) suggest that the goals, structure and process of the collaboration are essential in any accountability plan, as they facilitate effective operation of the partnership.The accountability plan establishes the outcomes for which each partner is responsible, lists the constituents to whom the collaboration is responsible, and outlines the consequences of failure to meet established goals.Such accountability builds trust and helps members feel a sense of “ownership” for the process of working together (Wohlstetter, Smith & Malloy, 2005).
Managing the Collaboration
Managing the collaboration relationship is the next phase.Once the social entrepreneur and the company decide to form a cross-sector alliance, their main focus is translating their intentions into an effective collaboration.Like any organization, the collaboration requires managing conflict, building trust, and building effective leadership.
Managing Conflict.According to Bryson, Crosby, & Stone (2006), “conflict emerges from the different aims and expectations that partners bring to the collaboration” (p. 48).Some have different views about strategies and tactics, while others might be protecting or exaggerating a partner’s control over the work of the collaboration.Also, it comes from progress slowing, lack of clarity and thoroughness in communications between partners, commitment waning, or lack of trust among partners (Parkinson, 2006).Sometimes it is difficult to correctly identify where things are going wrong. To deal with the situation, it is necessary to find out if there are power struggles that relate to the present problem, for example:Is one partner acting defensively out of fear of loss of control or autonomy?Does one partner have a history of conflict with someone involved in the collaboration?Bringing up these issues can alleviate conflict by having an open discussion about the issues in question (Parkinson, 2006).
Also, conflict may be heightened when the partners differ in status (either because of size, funding or reputation).The less powerful partners must be assured that their interests are being considered; otherwise they might lose interest and commitment (Merrill-Sands & Sheridan, 1996).As such, the company does everything possible to help the social entrepreneur feel more comfortable (Keast, Mandell, Brown, & Wilcock, 2004).
Building Trust. Trusting relationships are the essence of collaboration.According to Bryson, Crosby & Stone (2006), these relationships are both the ‘lubricant and the glue’ that keep the collaboration working and help it to stay together. Lack of trust interferes with the quality of relationship among partners, erodes confidence in partners’ abilities to deliver results, lowers performance, and undermines goodwill (Chen and Grady, 2005; Bryson, Crosby, & Stone, 2006).Sometimes, there can be tension among the partners, with one partner feeling the need to point the finger of failure at the other partner.However, shifting the blame does little to solve problems and could destroy the collaboration, (Lewis, 1992).Researchers acknowledge that collaboration begins with trust, but note that building trust is a continuous challenge of successful collaboration (Huxham & Vangen, 2005; Ring & Van de Ven, 1994).It is essential to establish trust early so that partners can feel comfortable exploring and experimenting.Partners build trust by holding meetings, involving everyone in the meetings, sharing information and knowledge, and demonstrating competence, sincerity, and dependability.On the other hand, unilateral actions and inconsistent behaviors often undermine trust (Merrill-Sands & Sheridan, 1996; Parkinson, 2006).
Building Effective Leadership. It is important to manage the collaboration and to chart its direction.According to Crosby & Bryson (2005b) formal leadership positions might include co-chairs of a steering committee, coordinator of a collaboration, or project director.They argued that to be effective, the leaders need “formal and informal authority, vision, long-term commitment to the collaboration, integrity, and relationship and political skills” (Crosby & Bryson, 2005a, p. 47).
They identified two key leadership roles as sponsors and champions (Crosby & Bryson, 2005a).To be successful, sponsors must have considerable prestige, authority, and access to resources that they can use in their work with the collaboration. Champions work to maintain the collaboration and use process and coordination skills to help achieve the goals.Smith & Wohlstetter (2001) also suggest three leadership roles (1) architects (2) information brokers and (3) boundary spanners.Architects design structures to facilitate broad participation in the collaboration and the daily management of the collaboration.Information brokers provide information to members of the collaboration, and (3) boundary spanners are the liaisons with the external environment.They also provide a buffer between the partnership and the external environment.
On the other hand, Alexander, Comfort, Weiner & Bogue (2001) emphasized the importance of informal leadership because participants often cannot rely only on centralized direction.They suggest that partners should always prepare successors to ensure that the organization will survive for many years during the changes in leadership..
This section discusses outcomes of cross-sector collaboration in three categories: learning, benefits to partners, and benefits to society. Although social entrepreneurs and corporations collaborate for different reasons, partners expect to benefit from the collaboration.Many social entrepreneurs enter cross-sector partnerships with the primary goal of learning from their partners. Organizational learning occurs when an organization acquires, assimilates, and applies new knowledge, and skills that improves its competitive advantage.Learning occurs through exploitation as one organization acquires expertise from the other or through common experiences as partners learn while working together (Tsang, 1999).
Besides learning, cross-sector collaboration offers a variety of other benefits to the partners.For social entrepreneurs, collaborating with corporations provide access to strategic advice, networking, marketing and branding opportunities as well as funding.It also provides the opportunity to develop and test new methods to enhance their impact in the local community by leveraging the resources and competencies of business, while creating a sustainable revenue stream for their organization (Nelson & Jenkins, 2006).
In a survey of commercial collaboration between social enterprises and businesses, social entrepreneurs cited growth as their main motivation for collaborating with private sector businesses.These partnerships offer a pathway from dependency on grants as the main income.Other key benefits are improved cash flow which provided greater flexibility, strengthened market position, increased competitiveness, improved economies of scales, access to free high-level management advice, increased opportunities to obtain finance and capital for specific projects, and greater business involvement and investment in the local community (Community Action Network, 2005).
Steckel & Boyson (2001) also listed several reasons why social entrepreneurs collaborate with businesses, including enhanced credibility and visibility through the association with the “branded” company, ability to produce unrestricted income, access to broad array of creative, financial, technical, and human resources, innovative and effective design and delivery of services, expanded opportunities for organizational learning, and better ways of operating more efficiently (p. 6).
For corporations, the main benefit for collaborating with social entrepreneurs is to support the communities in which they work.The collaboration is valuable, both in strengthening the company’s corporate reputation and in enhancing its competitive advantage.It also offers an opportunity for corporate leaders to learn from the social entrepreneurs (Nelson & Jenkins, 2000).Other benefits of collaborating with social entrepreneurs are access to new markets and supply lines, access to and knowledge of local communities and it is professionally and emotionally rewarding (Community Action Network, 2005).It also enhances corporate image, creates comparative advantage over competitors, builds reputation as a caring company, and enhances staff morale through involvement in the partnership and service to the community.
In a report Partnership Alchemy, Nelson & Zadek (2001) outline the following six benefits of collaboration between social entrepreneurs and corporations: development of human capital, improved operational efficiency, organizational innovation, better access to information, enhanced reputation and credibility, creation of a stable society (Nelson & Jenkins, 2006).
Researchers have paid very little attention to the impact of cross-sector collaborations on the society. According to Moore (1995), the purpose of creating and sustaining cross-sector collaborations should be the production of “public value” that cannot be created by single sector alone.Public value in cross-sector collaborations is most likely created by harnessing each sector’s strengths while minimizing,, overcoming, or compensating for the weaknesses.
Cross-sector collaborations are difficult to create and even more difficult to sustain (Bryson, Crosby, & Stone, 2006).Problems arise from one or two causes:(a) a structure that does not fit the purpose, and (b) a partner relationship that does not work effectively. Some of the challenges that may prevent collaborations from achieving their desired objectives are: lack of personal chemistry, cultural differences, the absence of clear goals and objectives, unfair distribution of costs and benefits, mismatched partners, and lack of trust.
Lack of Personal Chemistry
One of the biggest problems social entrepreneurs and corporations faces in managing the cross-sector collaboration relationship is the lack of personal chemistry.Partners sometimes do not connect with each other personally and emotionally, nor do they connect with the purpose of the collaboration. When partners are not getting along it leads to bad interpersonal relationships and possibly failure of the alliance.Positive personal chemistry is essential for a productive and successful partnership (Austin, 2000; Elmuti & Kathawala, 2001).
Sometimes the two partners in cross-sector collaboration have essentially different approaches and languages.Social entrepreneurship tends to be based on process and principle, while businesses are based on product and profit.It is important that partners working together take time to understand each other well as this is critical to their success.Other cultural problems are different values, organizational cultures, and attitudes to business.It is common for partners to have a simplistic understanding of the other’s endeavors and contexts.Company managers often have little understanding of nonprofit causes, and nonprofit managers typically have little understanding of the company’s business or of the business world generally (Elmuti, Abebe & Nicolosi, 2005; Berger, Cunningham & Drumwright, 2004).
Lack of Clear Goals and Objectives
Partners sometimes have misconceptions about the other partner’s objectives; rather than having clear, measurable objectives from the start, some cross-sector collaborations have evolving objectives.Sometimes, objectives may be unspoken and unspecified, and even when the overall objective for the alliance is stated; it may be interpreted differently by the partners.In other cases, objectives for the collaboration may be unrealistic.Partners frequently have mistaken ideas about what alliances can accomplish and the time and complexity involved in addressing social issues.This can lead to unrealistic expectations (Elmuti & Kathawala, 2001).
Unfair Distribution of Costs and Benefits
This is a core issue that usually leads to many partnership failures. The company may be concerned that their resources may be exploited for little gain.A social entrepreneur may perceive that it is not adequately rewarded financially for its work on projects, compared to the amount the company spends on promoting the event. Similarly, companies often perceive that the benefits of the collaboration are too low. For example, companies typically expect nonprofits to exercise initiative in bringing value to the alliance.Too little initiative on the social entrepreneur’s part translates into too few benefits for the company, and this can end a partnership as one company representative said, “I felt the nonprofit was ineffective in providing us with partnership the opportunities” (Berger, Cunningham & Drumwright, 2004, p. 64).A complaint from social entrepreneur is that “company managers often asked for things without thinking of the time and resources it takes us to accomplish the task.They don’t think of the costs to us” (Berger, Cunningham & Drumwright, 2004, p. 65)The perception among some social entrepreneurs is that some company partners make unreasonable demands, and sometimes do not give the collaboration the priority it deserves.
The most common collaboration mismatch is in the perception of time.The nonprofit partner lives in a world of long-term, complicated social problems, while the corporate partner is usually driven by short-term results.The time-consuming consensus-driven decision style of nonprofits is frustrating to the command-and-control style of the corporation.A mismatch problem may also exist between the constituencies of the two organizations.For example, in one alliance, the company’s rural, white, conservative employees had difficulty relating to the nonprofit’s progressive cause and its urban, minority constituency (Berger, Cunningham & Drumwright, 2004).
Lack of Trust
Mistrust leads to breakdown in communication and to alliance problems.As in marketing, alliances cannot reach their potential without trust to strengthen the commitment to the relationship.Building trust is the most critical and yet the most challenging aspect of a successful partnership.Alliances should take steps to build trust among individuals (Lewis, 1992).
Other factors that undermine collaborations include:significant differences in power and influence among the partners (Bleeke & Ernst, 1991), differences in organizational cultures and values (Huxham, 1996), lack of effective communications (Ring & Van de Ven, 1994), creating mission and vision fit (Austin, 2000).
Guidelines for Successful Cross-Sector Collaboration
A review of the literature identified several important factors that impact the success of cross-sector collaborations.
Clear Attainable Goals
The partners must have clear purpose and objectives of the collaboration.They should take the time to ensure that the problems to be addressed are clear and that all members share the aims of the collaboration (Bergquist, Betwee & Meuel, 1995; Huxham, 1996).Lack of clarity will interfere with partners’ visions of the collaboration and may lead to confusion or conflict.The parties should work together to prepare a written “Collaboration Purpose Statement” to help ensure clarity of purpose, (Austin, 1998).
Positive Personal Chemistry
Collaborations have a greater chance of success when key individuals work well together, having agreed on the social purpose of the alliance.While personal chemistry is essential to effective partnerships they do not guarantee success.However, bad interpersonal relations can destroy a partnership.Creating opportunities for employee involvement, at all levels, and in both organizations will encourage and facilitate personal relationships and commitment to the cause (Austin, 2000).
Partner selection is a very important step in creating successful cross-sector collaboration.A successful collaboration requires the coming together of a business and social entrepreneur with similar goals and both intent on success (Elmuti & Kathawala, 2001).Selecting an appropriate partner and agreeing on the rules of the collaboration are two of the most critical steps in the formation of the collaboration.When done well, it builds a higher quality and more sustainable relationship.
Planning, commitment, and agreement are critical components of any successful relationship.The partners must work together, not only to develop the overall strategy for the alliance, but also to develop ground-rules and to define desired outcomes. The first step is to clearly understand the vision and values of each organization.Partners should state each organization’s issues, strengths, and concerns.During these initial meetings, everyone should take the opportunity to learn as much as possible about their potential partners and to find common ground. Next, they also need to define the ground rules for the alliance, for example, how will partners work together?The key issues should be fit with each other, scope and duration, and strategic opportunities to be pursued.Partners should also develop long-term and short-term goals for the collaboration. They should agree on the expected results as well as how the project could be leveraged or replicated in other areas. The final step is to create an implementation plan (Alliance Management, 1999).Thorough planning is key to the successful formation of cross-sector collaborations (Elmuti & Kathawala, 2001).
Open communication is critical to a successful collaboration (Kanter, 1994; Powell, Koput & Smith-Doerr, 1996).Werner & Brenner (1991) found poor communications to be a serious problem in some partnerships, often caused by physical barriers and lack substance in the communications.According to Austin (2000), good communication is the foundation of trust-- the intangible that makes collaborations effective.Without effective communication the collaboration will invariably fail because of doubt and mistrust (Ohmae, 1992).
Partners should view the collaboration as a learning laboratory and should cultivate a discovery attitude that supports continuous learning.Learning about each other’s business and operations helps to build rapport, enhance communication, and can lead to the identification of new collaborative opportunities.Collaborations between social entrepreneurs and corporations are opening up new frontiers for generating mutual benefits while addressing targeted societal needs more effectively (Austin, 2000).
Together with learning how to collaborate, each partner acquires valuable skills and knowledge.The social entrepreneur develops marketing, financial, and business planning skills, while the corporation acquires knowledge of another group of potential customers.
Review Collaboration Progress Periodically
Periodically, partners need to stop and review the progress being made in accomplishing their goals.This may be done informally at the end of each meeting by “taking the temperature of the group” to make sure that all problems are addressed,or it can be done more formally as part of managing the process through regularly review ofthe work that was done and the results achieved. (Nelson & Jenkins, 2005).
Build Mutual Respect and Trust
Good personal relationship between the people doing the work is critical. Nurture mutual respect and trust at all levels of the project.Include a team-building component in the planning and evaluation of projects so that positive personal relationship can be formed and maintained over time.Also, share data; clarify expectations; and set small, short term projects to build trust among the partners (Hoskins & Angelica, 2005).
Conclusions and Discussion
The following conclusions can be drawn from the discussion in this paper:
1.Cross-sector collaboration between social entrepreneurs and corporations is increasing and becoming a popular strategy for addressing complex social problems.According to Bryson, Crosby & Stone (2006) “people who are interested in solving tough social problems and achieving beneficial community outcomes are beginning to realize that multiple sectors must collaborate to deal effectively and honestly with the challenges” (p. 1).
2.Cross-sector collaboration is new and is gaining in importance, but has not received much attention from scholars.In this framework, it is presented as a strategy for harnessing the innovation, technology, and know-how of corporations to solve the complex problems of the society.This framework provides an explanation for why and how the collaboration process works more successfully in some cases than others.
3.The framework suggests that learning is a significant benefit from cross-sector collaboration.Partners work closely on various projects and in that way they not only acquire tacit knowledge, but also learn specialized knowledge and technological skills.They also benefit form vicarious learning and imitation of the partner.
4.Businesses and social entrepreneurs face many challenges during the collaboration formation process.These include different working culture and values, misconceptions of each other objectives, perception that one is being exploited, and partners’ failure to connect with each other personally and emotionally.
5.Successful cross-sector collaborations will depend on appropriate partner selection, clear attainable goals, open and frequent communications, and continuous learning, periodical review of progress, building mutual respect and trust, and careful partner selection. Waddock (1988) reminded collaborators that partnerships are fragile and take time to develop.As such, they should take their time, let partners get to know and trust each other, and keep realistic expectations about the results of the partnership.
6.Cross-sector collaboration holds great potential for enhancing social entrepreneurship and business performance and for generating social value.Although the success of any cross-sector collaboration cannot be guaranteed, the paper provides a framework of how core capabilities of social entrepreneurs and corporations can mutually benefit the partners as well as their communities.
Implications for Practice and for Research
The framework has several implications for social entrepreneurs, businesses, educators and researchers:
1.Provide more information about social entrepreneurs and business collaboration.Although businesses and social entrepreneurs are working together in many communities to make them better places in which to live and work, information about what is being done, who is doing what, or the best practices is not easily accessible.There is need for an organization that brings together those involved in cross-sector collaborations to share and learn from each other.This entity can create a system for assisting social entrepreneurs who are interested in finding a corporate partner, and similarly helping businesses interested in working with a social enterprise.It might also provide support and networking opportunities.
2.Incorporate training for cross-sector collaboration into business and social entrepreneurship education and training programs.This could be done through seminars, case studies, field visits, and as part of university-level business and entrepreneurship programs.These programs will help develop competencies that are critical to cross- sector collaboration success, for example, team building, conflict resolution, conflict utilization, planning and organizing.In addition, these programs will increase business leaders’ and social entrepreneurs’ exposure to each other and help them understand the needs and opportunities for increased collaboration.
3.Create a system to encourage employee suggestions for social innovation.Both social entrepreneurs and businesses can encourage employees to make suggestions for new collaboration projects as well as for improving ongoing collaborations.This can be done through meetings, suggestions boxes, or designated telephone line.
4.Develop and distribute “best practices” case studies of cross-sector collaboration between business and social entrepreneurs.A university or partnering organization might help to identify exemplary partnerships, create cases, distribute them and encourage others to become involved.
The framework and the synthesis of the literature lead to several research propositions.As such, researchers are encouraged to develop specific hypotheses for testing the following propositions:
1.The social entrepreneur or corporation with the greater resource scarcity is more likely to want to enter into cross-sector collaboration.
2.Cross-sector collaborations are more likely to succeed when partners have a clear vision, complementary assets, and similar beliefs about the problem.
3.Cross-sector collaborations are more likely to succeed when they identify a champion, select appropriate partner, and negotiate the terms of the agreement during the planning and initiation stages of the process.
4.The content and the process used to prepare and negotiate the terms of the collaboration agreement affect the success of the collaboration relationship.
5.Success in the implementation phase of the collaboration is related to the creation of a clear governance structure, definition of roles and responsibilities, and development of decision making processes.
6.Cross-sector collaboration success is related to the implementation of an accountability plan which outlines the expectations of each partner, lists constituents, and clarifies the consequences of failing to meet established goals.
7.Effective leadership, such as champions, sponsors, information brokers and boundary spanners is strongly related to cross-sector collaboration success.
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