From Waste to Profit
Drivers for Biomass Valorisation from an Interorganisational Perspective
By
N. A. Runge, MSc
DOW Chemical, Terneuzen
The Netherlands
Dr. E.F.M. Wubben*
Management Studies Group
Wageningen University, Wageningen
The Netherlands
Dr. V. Blok
Management Studies Group
Wageningen University, Wageningen
The Netherlands
March 2012
Paper submitted for review for:
WICaNeM2012, 23-25 May 2012 Wageningen
* Corresponding author. Address: Wageningen University, Building de Leeuwenborch, Hollandseweg
1, NL-6707 KN Wageningen, The Netherlands. P.O.Box 8130, NL-6700 EW Wageningen, The
Netherlands. +31-(0)317-484160. emiel.wubben@wur.nl
Abstract
This paper focuses on value added processing of vegetable waste streams from the Dutch food
industry, here referred to as biomass valorisation. Given the growing dynamics in the socalled biobased economy it is posited that companies successful in biomass valorisation
should develop interorganisational relationships to generate competitive advantages, with the
potential to realize relational rents. A broad literature study led to the selection of the
following four plausible drivers for relational rents advancing biomass valorisation: partner
complementary; partner alignment; relationship strength; and governance. Data on this topic
is scarce and confidential, making this paper an explorative exercise. The findings are based
on six case studies from six focal biomass valorising companies, that confirm three drivers for
relational rents advancing biomass valorisation, namely: complementary resources; partner
alignment and relationship governance.
Keywords: Biomass, Valorisation, Relationship, Innovation
1
Introduction
Throughout the entire food chain, from initial agricultural production down to final household
consumption, valuable food is lost. The production and processing stages of food bring about
a massive stream of biodegradable side products from the food industry. According to a FAO
report of 2011, roughly one-third of the edible parts of food produced for human consumption
gets lost or wasted globally, which equals to about 1.3 billion tons per year (Gustavsson et al.,
2011). In Brazil alone the agro-industry of corn, sugarcane, rice, cassava, wheat, citrus,
coconut, and grass collectively generate 600 million tons of residue per year (Ferreira-Leita˜o
et al, 2010). Together, animal and vegetal waste arising from households, commerce and the
food manufacturing industry is called Biowaste (Eurostat, 2012). Currently, biowaste is
offered at large quantities to processing or waste management companies. The prices are
generally low and some of the waste is even sold at a loss (Koppejan et al., 2009).
In recent years, there is an increasing awareness that this biowaste could serve as a valuable
feedstock for the production of valorized products (Nzihou and Lifset, 2010). Valorisation has
been defined as the conversion of waste and biomass to energy, fuels and other useful
materials, with a particular focus on environmental indicators and sustainability goals
(Nzihou, 2010). In this paper valorisation is defined as the process of creating value from
biomass waste and residues by making it available for new economic purposes via innovative
products or processes. An example of valoriation is the processing of vegetable waste into
juices, or using milk components in the pharmaceutical industry.
Biowaste valorization is embedded in the scientific area of sustainable food production,
characterized by complex societal, scientific and commercial discussions regarding what
technology roadmaps to prioritize. The question is raised whether the alternative usage of
crops may either substitute or complement for its prime objective, like is the case when
bioethanol is produced from corn and energy from bargasse respectively. This ongoing ethical
discussion strengthens the believe that valorising biowaste would be an opportunity,
worthwhile to investigate. In order to improve the overall efficiency, effectiveness,
competitiveness and profitability of agriculture and food enterprises, the FAO introduced the
1
Market linkages and Value chains Group (FAO, 2010). Thus far, most attention regarding
biowaste valorisation is paid to its technological aspects. However, creating new- and
connecting existing supply chains to realise optimal biomass valorisation in a biobased
economy requires as much attention to its technological as well as to its managerial aspects.
The process of turning food waste into value added marketable products in mature sectors
requires cooperation between biomass suppliers, technology developers and commercial
partners. From an open innovation perspective (Chesbrough, 2003), inter-organisational
relationships bridge resource, technological and commercial gaps, advancing the dynamic
development of product and process innovations (Batterink, 2009). Various reports in the
field of sustainable supply chains emphasize the advantage of inter-organisational
cooperation. For instance, the Dutch Social and Economic Council (SER) appeals to the
stakeholders in the biobased supply chains to start a dialogue to cooperatively realize a
sustainable and profitable development of the biobased economy (Committee Sustainable
Development, 2010). This means that companies must overcome their traditional perspective
on competitive advantage and have to establish new interorganisational relationships that
result in new product market combinations, new supply chains and eventually, in new
industries.
Despite the presumed importance of interorganisational relationships for biomass valorisation,
specific research on this topic is scarce. The objective of this paper is to increase our
understanding of the mechanisms behind interorganisational relationships of biomass
valorising companies in order to identify important drivers of inter-organisational biomass
valorisation.
This research explores six case studies of six focal biomass valorising companies in the Dutch
agrifood industry, in order to increase our understanding of the mechanisms behind their
inter-organisational alliances for biomass valorisation. The drivers behind these alliances are
derived from a broad literature study, which is presented in section 2. Section 3 presents the
methodology of the empirical research. The analysis of the drivers for inter-organisational
biomass valorization can be found in section 4 and the conclusions and recommendations in
section 5.
2
Theoretical framework
Fundamental innovation in mature markets is more and more considered to be an integrative
process in which various parties play a role. Nowadays, few firms have all the resources,
relationships and time to innovate and compete effectively in isolation. One opens up
innovation trajectories when partners are sought for strategic alliances (Ireland et al., 2002).
Interorganisational relationships seem to flourish in an open innovation environment
(Chesbrough, 2003; Batterink et al., 2012). Hence, this article takes on the umbrella of open
innovation to combine insights from various fields within the management literature to derive
and illustrate a conceptual framework with recognized variables that impact relational rents of
interorganisational relationships. Open innovation is defined as ‘the use of purposive inflows
and outflows of knowledge to accelerate internal innovation, and expand the markets for
external use of the innovation respectively’ (Chesbrough, 2006). The prime advantage of open
innovation lies exactly in the synergy created by the partnering organisations. Their
relationships are a potential source of surplus value. The claimed growing importance of
interorganisational relationships as a source of competitive advantage (Palmatier et al., 2007;
Rindfleisch and Moorman 2001) and the need to develop a better understanding of how
innovation efforts affect firm performance (Rust et al., 2004) result in the growing importance
2
of research on the linkages between interorganisational relationships, innovation, and firm
performance.
Based on thorough research, Gulati (2007) distinguishes eight aspects of value creation in
alliances (Eisingerich et al., 2009). The results show that a part of the benefits of
interorganisational relationships are efficiency based, like reducing transaction costs, reducing
innovation time span and sharing resources. In addition to this, companies may also benefit
from interorganisational relationships enhancing their strategic opportunities in terms of
R&D, resources, product and market access. Consequently, interorganisational relationships
may contribute both to the focal firm’s cost efficiency, and give rise to competitive
advantages of allied partners over other firms.
Thus interorganisational relationships may be a source of interorganisational competitive
advantages, which materialize as relational rents. Relational rent is a supernormal profit
jointly generated and owned by partnering firms and therefore is a property of the dyad or
network (Ziggers and Henseler, 2009). A firm in isolation cannot enjoy these rents. It ‘can
only be created through the joint idiosyncratic contributions of the specific alliance partners’
(Dyer and Singh, 1998). It is posited that companies which are successful in valorising
biomasses, benefit from a network of interorganisational relationships, creating relational rent.
Still it is unclear what variables influence the extent to which interorganisational relationships
create relational rent.
The theoretical framework follows earlier work on alliances by using frames of the resource
based view Wernerfelt (1984), network theory and transactions cost theory (Ireland et al.,
2002). On the basis of a new literature study, we arrived at the following four possible drivers
for relational rents, namely: complementary resources; partner alignment, relationship
strength, and governance of the relationship.
2.1
Complementary resources
The first potential driver for creating relational rent (RR) in biomass valorisation is called
complementary resources. It is a combination of three variables, namely physical assets,
interfirm knowledge sharing routines and complementary resources in a more strict definition
(Dyer and Singh 1998). First, the concept of physical assets itself comprises site specific
assets, for example locating successive production stages close to one another, technical
assets, for example tailor-made machinery, and human specific assets, for example tacit
knowledge developed by a long-term relationship with a customer (Dyer and Singh, 1998).
Therefore, physical assets create value by reducing costs, enabling a product differentiation
strategy and sharing knowledge throughout the supply chain.
Second, interfirm knowledge-sharing routine is defined by Grant (1996) as ‘a regular pattern
of interfirm interactions that permits the transfer, recombination, or creation of specialized
knowledge’. The added value of a shared knowledge base is recognized by many scholars in
the field of network management. For example Burt (1992) proposed the concept of
‘structural holes’, to indicate that firms should bridge complementary contacts which provide
opportunities for new information (access), referrals and control. A highly positive effect of
incoming spillovers on R&D cooperation is found, especially for smaller firms partnering
with research institutes and universities and suppliers and customers (Chun and Mun, 2011).
An optimal combination of interorganisational relationships would include the inflow of novel
knowledge (Gilsing and Duysters, 2008). Concluding, it can be stated that an interfirm
3
knowledge base, from which information exchanged, might be a driver for biomass
valorisation.
Third and final, complementary resources could be defined as ‘distinctive resources of
alliance partners that collectively generate greater rents than the sum of those obtained from
the individual endowments of each partner’ (Dyer and Singh, 1998). By combining physical
and knowledge resources, synergy is created, which makes the combined resources more
valuable, rare and difficult to imitate than the individual resources of the firms (Barney,
1991). For this to happen it is necessary that none of the firms in the partnership can create
this surplus value on its own, as this provides them with an incentive for maintaining the
partnership (Dyer and Singh, 1998).
Based on the insights described above, we derive that the firm’s physical resources
(technology) and the knowledge resources (expertise and knowledge base) should be
complementary to the partner’s resources in order to create relational rent.
H1: “Relational rent depends on the extent to which the resources of the partnering company
are complementary to the resources of the focal company”
Technology
Knowledge base
Physical
resources
Knowledge
resources
Complementary
resources
Figure 2.1 Operationalisation of the concept Complementary resources
2.2
Partner alignment
The second potential driver for biomass valorisation is partner alignment. In order to team up
with a partner with the best potential to create synergetic value in innovative product
development projects, partners should try to get aligned at the technological, strategic and
relational level (Emden et al. (2006).
Technological alignment is of key importance for successful open innovation (Emden et al.,
2006). Firms create competitive advantage by profiling their unique characteristics
(Wernerfelt, 1984). With regard to relationships with companies in the same industry, it is
beneficial to map the firm’s own internal resources and select partners with complementary
internal technological assets. Since technology alignment strongly overlaps with technological
complementarity (see par.2.1), this element is not incorporated in the concept of partner
alignment in the current theoretical framework.
Strategic alignment is about the strategic orientation of the partnering organisations. Strategy
is here defined as ‘the goals of an organisation and the way the organisation wants to reach
these goals’. According to Emden et al. (2006) it is essential that an organisation’s motivation
for entering a partnership is not in conflict with the motivations of the other partnering firm.
Moreover, also the goals of the partners should be aligned. This implies that goals may be
different, yet not conflicting.
Finally, with respect to relational alignment, Emden et al. (2006) distinguish between the
following two aspects: compatible cultures and long term relational orientation. Culture
includes non-tangible issues like behavior, reasoning, norms and values. Sharing a long term
relational orientation is of special interest since this dampens current insecurities, conflicts
4
and sacrifices. Actor bonds represent the social dimension of a business relationship. Welldeveloped actor bonds often cause good interpersonal relationships within a professional
environment (Ford et al., 2006). Companies should not only be aligned at the relational level,
but also the motivation and goals of the partners should be aligned in order to achieve a
successful relationship (Emden et al., 2006; Ford et al., 2006). Based on Emden et al. (2006)
we use strategic and relational alignment as indicators for relational rent.
H2: “Relational rent depends on the alignment between the focal company and the partnering
company”
Motivation
Goal
Culture
Strategic
Alignment
Relational
Figure 2.2 Operationalisation of the concept Alignment
2.3
Partnership strength
Granovetter (1973) introduced the standard distinction between, on one hand, strong ties,
which are intensive, frequent and relate to informational resources which the company has,
and, on the other hand, weak ties which are relations with other companies one is extensively
connected with. Whereas weak ties offer the advantage of providing access to heterogeneous
sources of knowledge and information, strong ties protect the innovation from opportunistic
behavior (Nooteboom, 2009). The following aspects are claimed as important operational
variables to raise insights in the strength of the relationship (Gilsing and Duysters, 2008):
- Duration: duration of the relationship
- Scope: extent to which the relation between firms deals with a wide or narrow scope
of issues.
- Openness: the willingness to mutually share knowledge
- Frequency: indicates the potential for spill-over’s by transfer of tacit knowledge via
contacts.
Gulati (2007) underlines that companies involved in interorganisational relationships benefit
from enhanced strategic opportunities in terms of R&D, and access to financial resources,
products and markets. Consequently, these enhanced strategic opportunities require weak ties,
whereas stronger relationships facilitate and safeguard the exchange of sensitive, tacit
knowledge. As biomass valorisation networks are embedded in the highly competitive and
dynamic environment of the Dutch food industry, dealing with delicate technological
knowledge, strong partnership ties are expected to be necessary. Therefore, relationship
strength is proposed to be the third driver for relational rent. In addition to this, it is found that
relationship strength also affects the need for relationship governance as weak ties increase
the risk for information spill-over (Gilsing and Duysters, 2008).
H3:“Relational rent depends on the strength of the relationship between the focal company
and the partnering company.”
5
Access new techn.
Weak ties
Bridging
Novel combinations
Strength of ties
Man. relational risk
Strong ties
Cohesion
Figure 2.3 Operationalisation of the concept strength of ties
2.4
Governance
Realising relational rents from complementary resources is dependent on value appropriating
mechanisms (Verwaal et al., 2009). How is the exchange of tangible and intangible goods
between the partners safeguarded in innovation alliances, considering the lack of exclusive
control over resources, IP, and the exploitation of the innovation? A governance structure is
recognized to be important to prevent relational rent from vanishing as a result of partners’
opportunistic behavior (Chen and Chen, 2003, Das and Teng, 2000). This fourth potential
driver for relational rent is based on three concepts: trust, mutual dependence and hierarchy
(Nooteboom, 2009).
First of all, effective governance minimizes transaction costs and increase business efficiency
(Dyer and Singh, 1998). Moreover Dyer and Singh propose that the greater the partners'
ability is to employ self-enforcing safeguard, like trust, rather than third-party safeguards
(e.g., legal- contracts), the greater the potential will be for relational rents. Trust means that
partnering firms share their strategic information, e.g. costs, forecasts, risks and rewards (Burt
et al., 2003). Besides controlling the relationship via contracts or trust, also any kind of
mutual dependence can safeguard the partnership. This especially holds for partnerships in
which investments in terms of time or money took place, resulting in high switching costs.
Mutual dependence is related to the extent to which the interrelated firms are sharing a trust
base. The higher the mutual dependence, the more likely it is that trust controls the
relationship (Nooteboom, 2009). Besides these two informal governance mechanisms, formal
governance is also recognised as being a way to protect a relationship from information spillover. An example of this is hierarchy, with a set command structure, incentive system,
standard procedures, dispute procedures and non-marker pricing system (Gulati, 2007).
In addition to the three concepts of trust, mutual dependence and hierarchy, contracts are also
a way to formalize an interorganisational relationship and administer a governance structure.
Nooteboom recognizes contracts as an additional governance mechanism, but questions their
practical feasibility as they are “difficult to specify”, “come at high costs, especially for small
firms”, and because “their compliance can only be controlled to a limited extent”
(Nooteboom, 2009). In transaction cost economics, on the contrary, contracts are perceived as
essential elements in interorganisational relationships. Efficient outcomes are assumed when
the contractual form completely reflects the uncertainty, asset specificity and frequency of the
transaction (Williamson, 1975). For the sake of completeness, contracts are taken into account
in this research. Contractual relationships can include hierarchical elements in their
governance structure (Gulati, 2007). As these hierarchical elements strongly overlap
contracting elements, the concept of hierarchy will be represented by the concept of
6
contracting. Therefore, it will be investigated to what level of completeness the contract
defines these elements.
Now we can derive that relationship governance safeguards the creation of relational rent via
three control mechanisms: trust, mutual dependence and contracting. All three are expected to
eventually influence the ability of partners to create relational rent.
H4: “Relational rent depends on the governance of the relationship between the focal
company and the partnering company.”
Norms & values
Trust
Switching costs
Mutual
dependence
Completeness
Hierarchy
Contract
Governance
Figure 2.4 Operationalisation of the concept Governance
In sum, based on various streams of the management literature this section selected the
following four recognized variables as potential drivers for relational rents from
interorganisational relationships, and thereby for the valorisation of biomass: complementary
resources, governance structure, relationship strength and partner alignment. Figure 2.5
provides a schematic representation of the theoretical framework. Evidently, one is bound at
least to illustrate and review this conceptual framework on the basis of innovation practices
valorizing biomass waste.
Technology
Expertise
Knowledge base
Motivation
Goal
Culture
Physical
resources
Knowledge
resources
Strategic
Complementary
resources
Alignment
Relational
Relational rent
Duration
Scope
Openness
Contacts
Information
sharing
Norms & values
Trust
Switching costs
Mutual
dependence
Completeness
Agency
Contract
Operational variables
Biomass
valorization
Strength
Governance
Exogenous variables
Endogenous variables
Figure 2.5 Theoretical framework
7
3
Research methodology
The research deployed the case study methodology and used a qualitative approach to identify
drivers for interorganisational value creation advancing biomass valorisation. The shortage of
research on the management aspect of this specific phenomenon, justifies an explorative
qualitative approach. Rather than analysing a limited number of variables as in a quantitative
approach, the case studies presented here involve in-depth examinations of biomass valorizing
companies, in order to gain a better understanding of the complexity of the recent biomass
valorisation practices.
The case selection focussed on small and medium sized enterprises (SMEs) in the Dutch
agrifood sector. Innovative SMEs are often more innovative and run fewer network
relationships than larger firms, what eases the analysis. The Dutch agrifood sector was chosen
because of its recognized innovativeness, and the expected access to the potentially sensitive
data on interorganisational relationships. The case selection resulted in six cases from six
focal companies, which all introduced an innovative practice of valorising of agrifood
biomass. For reasons of data sensitivity, the six companies have been coded. Company one,
based on an innovative patented technology, turns side stream vegetables like carrots, paprika
and tomatoes into healthy juices, colouring agents and vitamin components. The second
company produces PLA which is the building block for bioplastic. It developed a procedure to
generate higher rents from sugarcane for PLA production by also valorizing the plant
residues. Thirdly, a company active in the valorisation of potato cork was selected. Potato
cork is a by-product of potato peelings, resulting from the potato processing industry. The
company developed several unique products for the horticultural industry and is currently
exploring other opportunities. The fourth company is an innovative player in the bakery
industry. It developed a bread dough starter which enables the creation of new bread from
side stream bread. This is a value adding innovation since currently twenty-five per cent of all
bread produced is thrown away. Company number five is unique in its process of turning side
stream bakery products, like bread, pies and flan bases, into high quality specialty feed
products. Finally, the sixth company initiated in the establishment of an agrifood cluster
within which food companies will (re)use each other’s waste streams in an innovative way.
The company itself will play a major role in this cluster, as its food production results in many
valuable side flows.
Following the case selection and based on the documents retrieved and analysed, an interview
questionnaire was developed. Six in-depth semi-structured interviews were held with the
selected company representatives to investigate the characteristics of the interorganisational
relationship that was of predominant importance for the development of their biomass
valorisation. At each company we interviewed the person who is responsible for the biomass
biomass valorisation, which often was the company director, division director or R&D
manager. The interview starts with a question regarding the network of the focal company,
aimed to map the network of interorganisational relationships. From this network the most
important partner company is chosen by the interviewee. Thereafter, the respondent is
interviewed about the relationship with this specific partner. The interview questions are
meant to research the following four aspects of the relationship:
o Complementary of both technical and knowledge resources
o Alignment, strategic and relational
o Relationship strength in terms of duration, frequency of contact and openness of scope
o Governance mechanisms: trust, contracting and mutual dependence.
8
To identify alliance-related drivers for biomass valorisation, operational variables predicting
relational rents are verified in literature and tested empirically. All interview questions are
derived from previous studies in the field of interorganisational relationships and innovation
management. An interview protocol was developed to safeguard non-biased and consistent
data gathering. The researchers choose for a combination of open questions and questions
using a Likert scale, to avoid steering effects and gather comparable results at the same time.
To test the existence, interpretation and importance of each source of relational rent, open
questions were formulated. The extent to which each potential source was perceived is
measured with Likert scales. During as well as at the end of the interview, the interviewee
was asked explicitly whether or not all important aspects for generating relational rent were
discussed.
4
Analyses of results
In this section, the results will be analysed. The analysis is based on the propositions from the
theoretical framework; each paragraph coheres with a proposition. The first proposition
describes the proposed categorical relationship between relational rent and the exogenous
variable resource complementarity. The proposition is analysed based on the answers on the
open interview questions and the scores on the multiple choice questions. The subsequent
propositions about partner alignment, relationship strength and governance are analysed
similarly.
Resource complementarity
In order to test resource complementarity as a source of relational rent, the respondents were
asked to describe the surplus value of their partner. Table 4.1 below provides a selection of
the respondents’ answers on this open question.
Case
I
II
III
IV
V
VI
Description of surplus value of partner
“We own the knowledge about the valorisation
technology; our partner supplies the raw material and
production personnel.”
“Part of the added value of the relationship is within
these four steps of the value chain which are
controlled by our partner.”
“We are responsible for the raw materials and
production of the valorized product, our partner takes
care of the distribution and marketing.”
“Our partner’s marketing and market knowledge and
contacts within the bakery sector are complementary
for us.”
“Our partner’s technical personnel and their specific
knowledge about some of our production lines are
complementary for us.”
“Our separate goals fit within the same
plan.” ”Together we strive for symbioses and
collaboration.”
Aspects
o Complementarity
on technological
resources
o Complementarity
on technological
resources
o Complementarity
on
knowledge
resources
o Complementarity
on
knowledge
resources
o Complementarity
on technological
resources
o Strategic
alignment*
Table 4.1 Overview of answers to the question to describe the surplus value of the partner
* The answer of case VI did not fit within the concept of complementarity. However, it does indicate strategic alliance
between the partners.
9
The above results show that in five out of six cases respondents ‘spontaneously’ mentioned an
aspect of their relationship which can be categorized as complementarity. This implies that
complementarity indeed has a categorical impact on the perceived surplus value of the
relationship. The findings supports the statement that partner complementarity is a driver for
biomass valorisation.
From the related Likert scale questions it was found that all studied cases show high
complementarity on one or several technological or knowledge resources. Moreover, it was
concluded that for the cases the partnering company can either be classified as a knowledge
partner with some complementary technological resources or as a technological partner with
some complementary knowledge. It seems that knowledge complementarity and technological
complementarity are somehow interrelated. So, the proposition that partner complementarity
categorically impacts relational rent was confirmed for the researched cases.
Partner Alignment
As alignment is proposed to be categorically related to relational rent, the respondents were
asked in an open question to what extent they experienced that they are aligned with their
partner. An overview of the results is shown in table 4.2.
Case
I
II
III
IV
V
VI
Perception of alignment
“It took time to get aligned about aspects like distribution of
profits and intellectual property.”
“The discussion is always about the division of profits and
risks, but that is normal in a healthy relationship.”
“We definitely experience alignment. We share the same
vision, business culture and mentality.”
Aspects
o Strategic
alignment
o Strategic
alignment
o Strategic
alignment
o Relational
alignment
“Sometimes we had different goals, but we agreed on the o Strategic
bigger picture.”
alignment
“There are aspects we disagree and have arguments about, o Strategic
what is normal, but roughly we are on the same line.”
alignment
o Relational
alignment
“In this realisation phase of the project, different interests are o Strategic
shining through. But that is all part of the game.”
alignment
Table 4.2 Overview of answers to the question to describe the alignment between the partners
* Clashing cultures means that there is no relational alignment. Nevertheless, this answer shows that alignment is considered
a relevant factor, and can be operationalized as relational alignment.
It can be distilled from table 4.2 that the respondents recognize partner alignment as an
important aspect of their relationship. The scores for the multiple choice questions, testing
alignment on: vision and ambition; motivation; goals; organisational culture and management
style, show that most firms perceive alignment. Moreover, when there was a discrepancy on
any of these aspects, the interviewee indicated that this was acceptable within the context of
the relationship. Furthermore, it was found that strategic alignment and relational alignment
form an accurate operationalisation of the concept ‘alignment’, as all answers fitted these two
aspects. From the scores on the Likert scale questions it was concluded that, strategic
alignment is perceived to be high by six out of six cases. Also for relational alignment a high
10
average degree of alignment is shown by six out of six cases. So, based on this analysis we
derive that partner alignment categorically impacts relational rents.
Relationship strength
In order to investigate whether relationship strength categorically impacts relational rent, the
respondents were asked to describe their perception of the relationship. This open formulation
was chosen to prevent the framing effect when asking how ‘strong’ the relationship is.
Case
I
II
III
IV
V
VI
Perception of relationship
“There is a growth in trust and understanding of what
we want from each other and how we want to
accomplish this together.”
“We can get along well, both on a personal and on a
hierarchical level”
Aspects
o Trust
o Strategic alignment
o Relational
alignment
o Strategic alignment
“We share the same vision on sustainability.”
o Relational
alignment
“It became a love-hate relationship, when our partner o Governance
did not want to meet our prerequisites”
“In times of trouble our partner always helped us.” o Trust
“Continuity is most important”
o Duration
“Our personalities match.”
o Relational
alignment
Table 4.3 Overview of answers to the question to describe the relationship with the partner
As table 4.3 shows, this driver selected on the basis of the literature study was hardly
recognized as having an impact on relationship rents. Only one respondent’s answer overlaps
with an aspect of relationship strength, as he mentions the duration and the continuity of the
relationship as being most important. All other respondents incorporated other variables
behind relational rents in their answer. Remarkably, all respondents appeared to ground their
overall perception of the alliance relationship on one or more of the other suggested drivers
for relational rents. This supports the proposition that complementarity, alignment and
governance categorically impact relational rent. A possible explanation for the wide variety of
concepts found is an overlap of operational variables. Already during the development of the
theoretical framework, the researchers found that the operationalisation of the
concepts ’complementarity’, ‘strength, ‘alignment’ and ‘governance’ resulted in closely
related operational variables. To wrap up, it can be stated that the answers relating to the
driver relationship strength, actually support the propositions that complementarity, alignment
and governance categorically impact relational rent. Moreover, no evidence has found to
prove that relational rent is categorically impacted by relationship strength.
Governance
The fourth aspect proposed to be categorically related to relational rent, is governance. In
order to test whether the aspects measuring governance are chosen accurately, the respondent
was first asked the following open question: “Can you describe the formal or informal base
of your relationship?” The answers to this open question are summarized in table 4.4. All
interviewees, when asked about the relationship base, ‘spontaneously’ mentioned the presence
or absence of a contract, a trust base and/or shared equity. Based on the case results (see table
4.4.), two types of relationship governance stand out: formal governance, and social
governance. Contracting and shared equity are formal governance formats to control a
11
Case
I
II
III
IV
V
VI
Description of (in)formal relationship base
“The base is a joint venture with a 50-50 division of the
ownership.” “Within the contract we made detailed
appointments regarding the financial aspects of the
cooperation.”
“At this moment, our relationship is merely trust based; a
formal base like a joint venture is part of our future
perspective.”
“Currently, trust is the base of our relationship. We have no
formal relationship yet.”
“The formal base of the relationship consisted of a subsidy
application. We did have a contract with the Ministry of
Agriculture, but not with our partner directly.”
“There is a clear trust base; I don’t know whether we have a
contract with our partner. Nowadays we are not that
dependent on them as we used to be in the past”
“There is no over-all contract, as we believe that all those
rules might distract us from our joint goal. However, we do
have transactional contracts.”
Aspects
o Contract
o Mutual
dependence
o Trust
o Trust
o Contract
o Trust
o Trust
Table 4.4 Overview of answers to the question to describe the (in-)formal relationship base
relationship, whereas trust and relational alignment are social governance formats. Both have
been found to be perceived as ways to govern the relationship. From the scores on the Likertscaled questions it was found that trust is rather high for all six cases, whereas the scores on
contract completeness and mutual dependence are more fluctuating. So, some relationships
are more formally governed, whereas other relationships have an informal governance format.
Sometimes both formal and informal governance mechanisms are integrated within the
relationship. As all respondents incorporated one or two governance formats in their response
to this open question, it can be concluded that the concept of governance is accurately
operationalized. Based on this analysis it can be concluded that from a combination of the
literature study and the empirical results governance is found to categorically impact
relationship rents, advancing biomass valorisation.
5. Conclusions and recommendations
The focus on sustainability has only recently been extended with a focus on the sustainable
and valuable use of food waste. Even while the industry is striving for optimal efficient food
production, still millions of tons of food are wasted. This situation requires smart, innovative
applications which turn food waste into new valuable products. Biomass valorisation could
have great social benefits as it saves the environment in terms of resources and waste,
optimizes food production and introduces unique innovative products. This research aimed at
identifying potential drivers for biomass valorisation and therewith contributes to these social
gains. Moreover, the recent development in the agricultural science, especially in bio-mass
valorisation and advancement of bio-waste use through the use of network resources, is still
rather unexplored. Being a first and foremost explorative study, this research has scientific
significance by extending the knowledge regarding biomass valorisation from an
interorganisational relational perspective.
12
The empirical research, first, brought to the fore that both technological and knowledge
complementarity between partners advances biomass valorisation. Second, also strong
strategic and relational alignment within the relationship advances biomass valorisation.
Third, relationship governance either based on trust, mutual dependence or contracting, or any
combination of them, positively impacts relational rents. Relationship strength was not
recognized as relevant for interorganisational alliances for biomass valorisation. Thus, we
may conclude that, starting off with a broad literature study, findings from six case studies
from six focal biomass valorising companies, confirm three drivers for relational rents
advancing biomass valorisation: partner complementary; partner alignment; and relationship
governance. Based on the learning from the case studies the theoretical framework presented
in section 2 (figure 2.5) has been revised. This revised framework is presented in figure 5.1.
Technological
resources
Complementary
resources
Knowledge
resources
Relational
alignment
Alignment
Relational rent
Biomass
valorisation
Strategic alignment
Trust
Mutual dependence
Governance
Contract
Exogenous variables
Endogenous variables
Figure 5.1 Revised theoretical framework
This is the first, limited study on drivers in interorganisational relationships that may advance
biomass valorisation in the Netherlands. Although the conclusions seem rather robust the
generalizability of the derivations is unclear, because the representativeness of the cases not
be verified. Further, due to practicalities, the proposed relationship between relational rent and
biomass valorisation has not been brought to the test. Therefore, this paper invites further
research on the managerial aspect of biomass valorisation.. Evidently, here is a need for a
larger number of cases, from various countries. It is also advisable to test the proposed
relationship between relational rents and biomass valorisation, as it enhances the constructvalidity of the research. Moreover, barriers for biomass valorisation would be worthwhile to
be investigated. Therefore one should ideally study failed biomass valorisation projects.
Evidently, interviewing more than the focal company in the interorganisational projectrelationships may add to the quality of the database.
13
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