AustinS tra tegic Co llabo ration
Strategic Collaboration Between
Nonprofits and Businesses
James E. Austin Harvard
Business School
Collaboration between nonprofits and businesses is increasing and becoming more stra tegically
important. Based on 15 case studies, this article presents a cross-sector collabo
rationframeworkconsistingoffourcomponents.First,thecollaborationcontinuumpro vides a
conceptual framework for categorizing different types of partnerships and studying their possible
evolution through three principal stages: philanthropic, transac tional, and integrative. Second,
the collaboration value construct facilitates the analysis
ofthedefinition,creation,balance,andrenewalofthevaluegeneratedindifferenttypesof
alliances.Third,asetofalliancedriversisidentifiedthatdeterminesthenatureandfunctioningofthepart
nerships.Fourth,allianceenablersthatcontributetotheeffectivemanagementoftherelationshiparesetf
orth.Thearticlediscussesthedynamicsofthealliance marketplace. The research builds on and
extends existing interorganizational research
theoriesbyprovidingadistinctiveconceptualframeworkandnewempiricalunderstanding of
cross-sector alliances. Future research needs are identified.
The 21st century will be an age of accelerated interdependence. Cross-sector collaboration
between nonprofits, corporations, and governments will inten sify.A convergence of political,
economic, and social pressures is fostering
suchcollaboration.Governmentsaredownsizingandprivatizingduetofiscal pressures on budgets
and due to a recognition of the limits of the state as a deliverer of social services. There is a
growing devolution of functions from
centralgovernmentstothelocallevelandfromthepublicsectortotheprivate sector, including both
nonprofits and corporations. Social problems have grown in magnitude and complexity, and
nonprofit organizations (NPOs) have proliferated to address these. However, traditional
funding sources and institutional capacities have not kept pace. The search for new resources
and moreeffectiveorganizationalapproachesisbringingnonprofitsandcorpora tions together.
These alliances are also emerging because businesses are
1
Note: I would like to express my appreciation to the businesses and nonprofits who generously shared their
experiences and insights and to colleagues who provided valuable feedback on ear lier drafts, particularly, Elaine
Backman, Joe Galaskiewicz, Allen Grossman, and Rosabeth Moss Kanter. Table 2 was prepared with the assistance
of Linda Carrigan.
Nonprofit and Voluntary Sector Quarterly, vol. 29, no. 1, Supplement 2000 69-97 © 2000 Sage
Publications, Inc.
69
70 Austin
increasingly reexamining their traditional philanthropic practices and seek ing new
strategies of engagement with their communities that will have greater corporate
relevance and higher social impact.
RESEARCH CONTEXT AND APPROACH
Interorganizational relationships (IORs) have been the subject of rich theo retical and
empirical study by multiple disciplines for decades. Collaboration
continuestoattractintensescholarlyattentioninspecialjournalissuessuchas the Journal of
Applied Behavioral Science (1991) and The Academy of Management Journal (1997).
Interestingly, scholars (Galaskiewicz, 1985; Gray & Wood,
1991;Oliver,1990;Osborn&Hagedoorn,1997)whohave,overtheyears,pro vided insightful
reviews of the literature in this field concur that none of the
various,existingdiscipline-basedtheoriesadequatelyexplainwhyIORsarise or how they
develop and operate. The main theories have tended to focus on explaining the motives
for collaborations and on their ongoing dynamics. These theories include resource
dependence (Pfeffer & Salancik, 1978), social exchange (Oliver), legitimization
(Galaskiewicz), efficiency (Williamson, 1975, 1985), and strategic collaboration and
corporate social performance (Burke, 1999; Gray & Wood, 1991; Kanter, 1994).
3Much of the foregoing theory development has concerned relationships
betweensimilartypesoforganization(e.g.,corporationtocorporationornonprofit to
nonprofit). Although cross-sector collaboration has attracted important scholarly
scrutiny, it has often focused on nonprofit-to-government relations (Powell & Clemens,
1998) or multiparty collaborations (Gray, 1989).
Thereisarelativepaucityoffield-basedstudiesandconceptualizationonalliances between
businesses and nonprofits.This article addresses that knowl edge gap by providing an
analytical framework and substantiating empirical examples that will deepen our
understanding of how such alliances arise and
evolve,withparticularemphasisonwhichfactorscontributetotheirviability. From a
theoretical perspective, the study hopefully will further illuminate additional ways to
conceptualize and analyze cross-sector collaboration.
4A prominent methodology in past research on collaboration has been case studies,
which have proven particularly useful for generating theoretical and practical insights
(Gray & Wood, 1991). The research for this article followed that methodological
tradition. Five nonprofit–business alliances, selected because they were considered to
be of strategic importance to the partners, were studied in-depth through structured
interviews with key decision mak ers in both the nonprofit and business
organizations.To further test and refine the conceptualization and findings derived
from these case studies, we
subsequentlysurveyed10additionalpartnerships,whichagainwereselected on the basis of
perceived significance by the partners and reputed effective ness as reported by third
party sources. For these corroborative case studies,
2
Strategic Collaboration 71
we also used structured interviews, but with fewer interviewees. There was
alsoanattempttohavethesampleencompassabroadrangeofsocialpurpose
activitiesandalliancesthathadexistedformanyyearssoastopermitinvesti gation of their
evolution. The alliances studied are listed in the appendix and treated more extensively
in the author’s book (Austin, 2000).
The article will set forth a cross-sector collaboration framework consisting of the
following four components:
5
• The collaboration continuum (CC) enables us to categorize and characterize the different types of
NPO–business relationships and the stages that they may pass through as an alli ance evolves.
• The collaboration value construct (CVC) helps us to systematically analyze and under stand how value is
defined, created, balanced, and renewed in an alliance in each of the stages on the collaboration continuum.
• Alliance drivers identify four forces that provide the primary power for strategic
crosssectorcollaboration—alignmentofstrategy,mission,andvalues;personalconnectionand relationships;
value generation and shared visioning; and continual learning.
• Allianceenablersareaconstellationofsupportingfactorsthatdealwithrelationshipman agement and contribute
to partnering effectiveness—focused attention, communication, organizational system, and mutual
expectations and accountability.
Each of these components of the framework will be discussed and substantiated with
examples from the case studies. To provide an additional perspective on the complexity
of initiating cross-sector collaborations, I will then discuss the alliance marketplace. The
article ends with some final reflections on alliance building.
COLLABORATION CONTINUUM
Abasicquestionforpractitionersandresearchersis“Whatkindofcollabo ration do we have,
and how might it evolve over time?” The interaction
betweenthenonprofitandthecorporationcanbeusefullyenvisionedasaCC. There are
different types of collaboration on the continuum, with distinct characteristics and
functions. Some collaborations may evolve from one type or stage to another. Our
research defines three types or stages: philanthropic, transactional, and integrative. In
the philanthropic stage, the nature of the relationship is largely that of charitable donor
and recipient. This character
izesmostnonprofit–businessrelationshipstoday,butincreasingnumbersare migrating to
the next level. In the transactional stage, there are explicit resource exchanges focused
on specific activities; for example, cause-related marketing, event sponsorships, and
contractual service arrangements would fall into this category. Some collaborations
have moved to the integrative stage in which the partners’ missions, people, and
activities begin to merge into more collective action and organizational integration.
This alliance stage approximates a joint venture and represents the highest strategic
level of collaboration.
72 Austin
Table 1. Collaboration Continuum
Stage I Stage II Stage III Nature of Relationship (Philanthropic)
(Transactional) (Integrative)
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AsshowninTable1,iftherelationshipmigratesalongtheCC,thenatureof the partnership
changes. The level of engagement by the two organizations’ people moves from low to
high. The importance of the collaboration to the
parties’missionsshiftsfromperipheraltocentral.Themagnitudeofthefinan cial, in-kind, and
intangible resources deployed in the alliance grows significantly. The scope of activities
encompassed by the collaboration broadens considerably. The interaction intensity
moves from the annual donation
contactinthephilanthropicstagetoincreasingfrequencyinthetransactionaland integrative
stages. Managing the relationship evolves from a simple task to a
complexundertaking.Thestrategicvalueoftheallianceincreasesfromminor to major.
This conceptualization allows collaborators to locate their relationship on the
continuum as a basis for discussing what type of relationship they have,
howitisevolving,andwheretheywantittogo.Progressionalongthecontinuum is not
automatic, and regression can occur. The continuum is not a normative model; one stage
is not necessarily better than another. Movement along the CC is the result of conscious
decisions and explicit actions by the
partners.Somepartnersmaydecidethatlowerlevelsofengagementmaybet ter suit their
situations, objectives, or strategies (Sinclair & Galaskiewicz, 1997). Although our
research suggests that there are significant collaboration
gainstobehadbymovingtoahighlevelofengagement,bothinspecificbene fits accruing to the
respective partners and in the social value added by the alliance, the effort and
investment (i.e., the costs) to obtain those are greater.
If collaborators do wish to move to a higher level stage, the CC helps them assess the
changes required in resources, processes, and attitude. The stages
arenotdiscretebutratherblendintoeachother.Alliancescanhavecharacter istics that tend to
correspond with more than one stage as they evolve. In effect, they might be
characterized as hybrids, with different facets falling at
differentpointsonthecontinuum.Again,theCChelpsusthinkmoresystem
aticallyandstrategicallyaboutthenatureofthecollaborativeconfigurations.
It is important to recognize that most corporations have some type of rela
tionshipwithmanydifferentNPOs,andmanyNPOs,too,haveseveralcorpo rate
relationships. Multiple IORs can be usefully approached as managing a
Strategic Collaboration 73
collaborationportfolio.Thetaskisidentifyingthepurposeorfunctionofeach
relationship,itsrelativeimportance,anditstransformativepotentialasastra
tegicalliance.SegmentingtheserelationshipsintothedifferentCCstagesmay
facilitatethis.Manyoftherelationshipsmightbeusefullyretainedinthephil anthropic stage,
whereas some others might be targeted for specific transac tional collaborations, and a
smaller number for the more complex and poten tially more powerful integrative
partnerships.
To illustrate the progression along the CC, we turn to the evolution of the 10-year-old
alliance between City Year, a nonprofit dedicated to promoting community service
through the mobilization of an urban youth corps, and Timberland, a manufacturer of
boots and other apparel.
Stage I: Philanthropic
Itbeganwitharequestin1988for50pairsofbootsfromTimberlandaspart of the City Year
uniform for its youth service corps. An administrative assis tant approved the request.
For Timberland, this was nothing more than a
minorcharitablegift.Thenextyear,CityYearrequestedandreceived70pairs. Michael Brown,
the cofounder of City Year, recounted, “This was now a
2-year-oldrelationshipwithtwoconversations,twofaxes,andafeelingalittle bit like, ‘Okay,
they just did that, send a thank you, but don’t bother them.’” Timberland’s chief
operating officer (COO), Jeff Swartz, described this
interactionastraditionalcharitablegiving,reactivetoasupplicant’srequest.“Our expectation
was a thank-you note and a small sense of self-congratulations and nothing more.”
The relationship in this philanthropic stage is very circumscribed in terms of
resources deployed and points of interaction. It was incidental to Timberland’s mission,
somewhat more important to City Year, but also not critical. Few individuals and none of
the top leadership were involved. In this initial stage, traditional mind-sets about the
appropriate nature of such an IOR shaped the interaction. The nonprofit operated from a
fund-raising mentality and suffered from what City Year’s Brown referred to as the
“gratefulness syndrome”: Their task was to extract resources and, if successful,
graciously issue thanks but not bother the donor thereafter. Minimizing interaction and
communicationwasthemodeofoperation.Thisbehaviorwouldappeartofit into the resource
dependence theory explanation.
Fromthecorporateside,Timberlandwasoperatingunderthe“charitysyn drome”: give to
good causes that solicit assistance but deal with these as a
peripheralpartofyouractivities.Thevalueflowwaslargelyseenasone-way, with the
corporation giving economic resources and the nonprofit receiving, although the
company did perceive psychological benefits. Expectations and investment were
relatively low and narrowly defined on both sides. Such
low-levelengagementsbetweennonprofitsandcompaniesarecommonplace and often
long-standing. They represent a form of limited reciprocity consis tent with social
exchange theory. However, many engagements, including
74 Austin
City Year and Timberland’s, evolve to the next relationship stage. The part ners’
interaction and dialogue enabled them to discover mission overlap and the potential for
new value creation from collaboration.
Stage II: Transactional
The transactional stage is characterized as a mutually beneficial relation ship in which
there are two-way benefit flows that are consciously identified and sought. Jeff Swartz
characterized it this way:
We talk about how to advance each other’s agendas. We acknowledge that they are sepa rate;
Timberland’s job is to make boots and earn profit, and City Year’s mission is to put young people into
service and transform American society. The relationship is separate, and yet, there are strategic ways
that we can align the outcomes.
Swartz refers to this stage as “commercial,” because it is dominated by a search for
specific value transactions between the two parties, analogous to a buyer–seller
relationship.
Thecornerstoneforbuildingarichercollaborationwastheidentificationof an overlapping
of missions and a compatibility of values. Swartz had been developing a new corporate
strategy in which he added the element of “beliefs” to the prevailing theme of “boots and
brand.” This dimension held that the company and its employees should make a positive
difference in the society at large, and that the corporate culture should foster involvement
in confronting and solving problems within and outside of the company. City Year held a
similar belief in bettering society, and its organizational mission encompassed the
promotion of civic engagement, not just by its youth corps members but also by
corporations and other elements of society.
The partners increased their interactions and mutual resource flows. Tim berland
became the provider of City Year’s entire uniform. This was impor
tanttoCityYearasitcreatedvisibleidentity.ForTimberland,itservedtopub licize that the
company had a whole line of casual and outdoor apparel and that it was deeply
committed to this NPO. City Year organized community service projects for
Timberland employees. This hands-on experience was pivotal in cementing the
relationship. It crystallized in Swartz’s mind the value of direct community service by
employees as a means of fostering team building, leadership development,
interdepartmental relationships, project
management,andingeneral,ahigh-involvementcultureinwhichindividual and collective
efforts make a difference in outcomes within the business and
outside.CityYeardidapresentationattheopeningofaTimberlandretailout
letand,later,atthecompany’sinternationalsalesmeeting.Timberlandupped its financial
and in-kind contribution to $1 million a year. The City Year staff, using its expertise in
group development, led Timberland employees in team building and diversity training.
Timberland executives provided technical
assistancetoCityYearintheareasoffinance,marketing,andhumanresource
Strategic Collaboration 75
management. Here we see that reciprocal exchange was playing a larger role than just
alleviating resource scarcity. Strategy considerations entered as an even more powerful
shaper of collaborative behavior.
Stage III: Integration
In this stage, the partners reached new levels of integration of their mis sions,
organizations, and activities. Swartz refers to this as a “mutual mission relationship.” He
describes it as “boundarylessness”: “It’s not them and us,
it’sjustweareusandtheyarethemandwearetogetherus,too.”Thecreation of the we means an
ever-widening set of personal and organizational connec tions. The relationship network
expands beyond the leaders and early propo
nentsandconverts.Swartzasserts,“Ourorganizationandtheirorganization, while not
completely co-mingled, are much more linked. It’s not simply per sonal, it’s also
collective. While we remain separate organizations, when we come together to do things,
we become one organization.” In effect, the alli ance is an organizational process
framework for collaboration, but in another sense, it is also an action entity with a
merged identity that is distinct from each of the partners’.
Swartz provided an example of the distinction between Stage II and
StageIIIbehavior.Timberland’shumanresourcesvicepresidentspent2days
atCityYearhelpingthemstructurepayplansandlaborpolicies,forwhichshe
used20ofherpaid-timecommunityservicehoursallottedbythecompanyfor every employee.
This was seen by Swartz as Stage II transactional behavior. Under the sought-for Stage
III model, this time would just be seen as part of her job, no different than being out
assisting one of the company’s manufacturing plants. Instead of being a transactional
relationship like a commercial exchange, it is more like an equity-based relationship in a
joint venture.
TheorganizationalintegrationwassignificantlyadvancedbySwartzbeing
namedtoCityYear’sboardofdirectorsandthenlaterbecomingitschairman. In several Stage
III collaborations studied, the corporations’ top executives have become board members
of the nonprofit, thereby engaging in the gov ernance function of their partner. City
Year’s cofounder, Alan Khazei, observed,
We both share this vision of a new paradigm of how business and community relate and how you can
do well by doing good. We have really tried to push what Jeff [Swartz] calls the boundarylessness and
are constantly inventing new ways of cooperation between the two organizations.
A further, important dimension of the integration is that each partner has dis tinctly
imprinted the other’s organizational culture. Community service
becameanevenmoreintegralpartofTimberland’sstrategyandculture,lead ing it to provide
employees with up to 40 hours of paid time off annually for service activities, setting a
new benefit standard for industry. Timberland
76 Austin
assisted City Year in financing and recruiting additional corporations to enable it to
expand its operations nationally.
One of the critical underpinnings of this strategic alliance was the value
beingcreated,whichleadsustothesecondcomponentofourcross-sectorcol laboration
framework.
COLLABORATION VALUE CONSTRUCT
Everyrelationshipinvolvesanexchangeofvaluebetweentheparticipants. There are four
dimensions of the CVC: value definition before an alliance begins, and value creation,
balance, and renewal during the collaboration.
Theseelementsapplytoalltypesandstagesofcollaboration.Akeyquestionis What is a
particular collaboration’s value proposition? The magnitude, form, source, and
distribution of that value is at the heart of relational dynamics. Social exchange and
resource dependence theories have focused on these dynamics. Assessing the potential
and actual value of collaboration configu
rationsiscentraltothecreationandcontinueddevelopmentofanalliance.We
presenttheCVChereaspartofouranalyticalframeworkforthinkingsystematicallyaboutthedif
ferenttypesofcollaborationandtheirdynamics.Weshall revisit the value variable when we
examine the alliance drivers.
Value Definition
The more specifically that one can set forth the expected benefits to each
partnerandtosociety,thegreaterguidancethecollaborationwillhave.Inthis value definition
process, partners identify the multiple possible benefits and their worth. NPO benefits
cited by our research subjects included additional financial resources, services or goods,
access to other corporations, technol ogy and expertise, new perspectives, and greater
name recognition. The cor porations we studied pointed to benefits such as enhanced
reputation and image; improved employee morale, recruiting, retention, and skill develop
ment; enrichment of corporate values and culture; increased consumer patronage and
investor appreciation; and technology testing and develop ment (Austin, 1998b, Kanter,
1999).
Itisevidentthattherearemultiplesourcesofvalueand,therefore,collabo
rationmotivationsforeachpartner.Definingtheseclearlyisseenascritical.A Merck executive
stressed, “The expectations about what the partnership should produce has to be really
clearly thought through on both sides before the partnership begins.” Merck’s partner,
the United Negro College Fund (UNCF), coincides,
Sit down with the upper echelon in the company and set goals. Analyze the strengths and weaknesses of the
partnership. Figure out a way to maximize those strengths, and you can’t lose. That all needs to be done up
front.
Strategic Collaboration 77
A manager from MCIWorldCom indicated, “We go through a very rigorous process
when we choose our partners. We actually codevelop the proposal with them to make
sure it has all the elements both do want.” A staff member from Beginning With
Children suggested that starting with “a full considera tion of what all sides need” lays
the base for a successful partnership.
Different needs lead organizations to weight benefits quite differently.
Thereisnotastandardbenefitspackage.Forexample,ReadingIsFundamen tal, like
Cooperative for American Relief to Everywhere (CARE) and The Nature Conservancy
(TNC), stressed the benefit of enhanced visibility,
For the nonprofit, reputation is close to being everything. And reputation is closely tied to visibility.
Your reputation is enhanced not just by the good work you do, but by the recog nition you get for doing
it. So the relationship that helps us get the word out about the
organizationisimportant.It’shardtoputadollarvalueonit.It’simportantnotjustforthe branding effort of a
national nonprofit organization, but it’s also important for the local
volunteersinthefieldwhoabsolutelylovetofeelapartofsomethingbigandimportant.
On the corporate side, Georgia-Pacific (G-P) believed that, by partnering with TNC in
the joint management of environmentally important
timberlands,itwouldenhanceitscredibilitywithgovernmentregulators.Thismotivation is
consistent with legitimization and political theories that stress using collaboration as a
vehicle for increasing influence and power (Galaskiewicz, 1985; Oliver, 1990). Reebok’s
partnership with Amnesty International had quite different benefits: the creation of a
special organizational culture that helped its recruitment efforts.
Whereas some partnering benefits can be readily defined and quantified, others are
more complicated. A Visa spokesperson indicated their clear indicator, “In the rating for
best overall card, which is a key measure, we jumped seven share points after partnering
with Reading Is Fundamental.” Linking collaboration to profits, however, is complicated
by all the intervening vari ables. Although early studies found little relationship between
corporate social performance and financial results (Arlow & Gannon, 1982; Cochran &
Wood,1984;McElroy&Siegfried,1986),morerecentanalyseshaveidentified positive
relationships (Bloom, Hussein, & Szykman, 1995; The Conference Board, 1993;
Dechant & Altman, 1994; Lewin & Sabater, 1996; Waddock & Graves, 1997).
Benefitsmaybeexpressedbothquantitativelyandqualitatively;valueisin the eyes of each
beholder. Whatever the benefit indicators are, they must be deemed useful and
convincing to the relevant stakeholders in each organiza
tioniftheallianceistogarnertheinternalsupportnecessaryforsustainability.
Given that the partners in these alliances have come together also out of a joint
concern about addressing a particular social problem, value definition should also
encompass the social value generated by the collaboration. This will vary greatly
depending on the nature of the social purpose. That purpose will generally be
primarily related to the mission of the nonprofit, but of
78 Austin
particular interest is the incremental or distinctive social value created by the
collaboration as contrasted to the partners’ individual actions.
Finally,valuedeterminationmustalsoweighthecostsandrisksofthespe cific collaboration
relative to the benefits. Costs involve the resources that
mustbedeployedtomountandmanageacollaborationratherthanbeingput
toanalternativeuse(i.e.,theiropportunitycosts).Often,thescarcestresource
thatneedstobeconsideredismanagementandstafftime.Amajorriskinpart nering is to the
organizations’ names and reputations. IOR theories point to the tension that arises in
having to relinquish some control and autonomy to
gainthebenefitsofcollaboration.Reputationalriskoftenarisesintransactional relationships
involving cause-related marketing in which the NPO’s name is associated with a
company and its product. Not only is the nonprofit exposed to whatever happens to the
product and business but the implied endorse ment and its advertising usage have
brought suits from several states’ attor ney generals who are concerned about consumer
deception (Abelson, 1999).
The deeper the alliance, the more exposed each partner is to what happens
totheother.However,thatdepthalsoenablesthepartnerstomanagethisrisk more effectively.
Both City Year and Timberland, for example, have encountered difficulties in their
respective operations that led outsiders to question each partner’s relationship with the
other. The strength and strategic importance of the alliance allowed the partners to
weather the criticism and even to assist in overcoming the causal problems.
Although the desirability of a partnership will depend on there being a
positivebenefit-costratio,ourresearchrevealedthatthisisnotasimplecalculation.Notallbenefi
tsorcostsaredirectlyoreasilytranslatableintomonetary
terms.Strategicvalueisoftenacomplexequationrootedinjudgmentandsurrounded by
uncertainty. The more involved and integrated the alliance, the more complex the
calculation.
Value Creation
The partnerships are strengthened when the parties think continually
aboutvaluecreation.Thisinvolvesscrutinizingeachorganization’sresources and capabilities
to see how they can create value. The magnitude of the value is related to the nature of
the resources involved.
First, generic resource transfer involves each organization providing to the other
benefits stemming from resources that are common to many similar organizations. For
example, the company gives money to the nonprofit, and the nonprofit supplies good
deeds and good feelings. Both organizations could provide credibility and image
enhancement to the other in their respec tive sectors. This tends to be the nature of the
value in Stage I philanthropic collaborations.
Second, core competencies exchange uses each institution’s distinctive capa bilities to
generate benefits to the partner and the collaboration. These flows
Strategic Collaboration 79
have greater potential value creation because each organization is leveraging special
competencies and providing proprietary or somewhat special resources. For example, in
the CARE–Starbucks alliance, CARE provided its knowledge about how to mount
development projects in the coffee-growing communities where the company wished to
benefit. Starbucks, in turn, used its in-store promotional skills and retail store network to
provide information about CARE and to sell special coffee packages from the project
countries, from which CARE received part of the proceeds. This type of value creation
characterizes transactional-stage relationships and is consistent with social exchange
theory.
Finally,jointvaluecreationrepresentsbenefitsthatarenotbilateralresource exchanges but
rather joint products or services derived from the combination
oftheorganizations’competenciesandresources,whichcharacterizeStageIII integrative
alliances. This is a particularly high-value source because it is uniquely due to the
alliance’s existence and therefore nonreplicable. For
example,theBidwellTrainingCenterisaPittsburghnonprofitthattrainseco nomically
disadvantaged African Americans in a variety of trades. Bidwell combined its minority
recruiting capabilities and training facilities with
Bayer’sandothercompanies’technicalknowledgetocreateachemicaltechnician
trainingprogramthathasgraduatedover100individualswhohaveobtained employment in
the sponsoring companies. These programs could not have been executed without the
specific partners combining their core competencies in a distinctive and new manner.
Efficiency theory, which emphasizes value creation through combining similar
resources and missions to achieve economies of scale or cost savings, seems less
applicable to these cross-sector collaborations than to same-sector alliances. Capturing
synergies derived from complementarity are more the
caseintheNPO–businessalliances.Thestrategicuseofalliancesappearstobe much more
relevant as a source of value. The motivations increasingly move from social
responsibility to competitive enhancement as the collaborations migrate from the
philanthropic to the transactional to the integrative stages.
Theextenttowhichcollaborators’respectiveresourcesandcorecompeten cies can be
accessed and deployed for strategic value depends on the quality
andclosenessofthepartners’relationship.AMCIWorldCommanagerstated,
We have received wonderful benefits in working with our nonprofit partners. And we wouldn’t know
about half the opportunities if we didn’t have a true partnership. We
wouldn’tknowabouttheirdistributionchannels,theirmemberships.Theyhaveunbeliev able assets, but they
don’t necessarily know how to exploit them all. When you work with them in a really close partnership,
they will let you use those assets.
Value Balance
Strongerandmoreenduringallianceshaveabalancedexchangeofvaluein the
collaboration construct. As former CARE president, Phil Johnston
80 Austin
observed, “It doesn’t work very well and is not sustainable over time when there is an
imbalance either way,” which is supportive of Cropper’s (1996) assertion about balance
being essential to collaboration sustainability. The benefits flow in both directions and
are deemed by the partners to be accepta bly commensurate in value. This seems to be
attained where each partner is actively seeking to find ways to advance the other’s
agenda and where they have learned deeply about the other’s business, a condition that
Rackham, Friedman, and Ruff (1996) also find true in business supplier partnerships. If
theexchangegetssignificantlyoutofbalance,itcanerodethedominantbene fit provider’s
motivation to continue investing in the relationship or tempt it to exercise undue
influence over the recipient partner, a concern cited in resource dependency theory.
ItisworthnotingthatevenaclassicphilanthropicorganizationlikeUnited Way must deal
with a more complex value-balancing equation because its relationships are migrating to
the transaction and organizational integration
stages.Simplypublicizingthedonor’scontributionisnolongersufficient.The executive
director of the United Way of Seattle, which has a close relationship with the retailer
Nordstrom Company, commented,
6
Blake Nordstrom called me a month ago and said, “We’re looking at our community programs
nationally. Can you help us?” We put a lot of work in on this and gave them some
goodrecommendations.Youhavetobepreparedtogivethatlevelofeffort,becausewhen you’re in a close
relationship, they will always be coming to you for advice.
An advanced reciprocal relationship involves more multifaceted and sophisticated
interaction.
Value Renewal
As a collaboration evolves, the value of the benefits may erode (e.g., as transferred
skills are internalized by the recipient partner or as partners’
needsandprioritieschange).Relationshipsaredynamicandsubjecttoaltera
tionduetochangesintheirrespectiveexternalenvironments.Evenmoresub tly, successful
collaborations may slide into complacency and stop searching for value opportunities.
Consequently, there is an important need to renew the value of the collaboration. This
places a premium on the creative capacity for innovation. In the social purpose alliance
marketplace, as in the commer cial marketplace, the failure to innovate and create new
value will likely lead to the displacement of laggards by innovators.
Ralston Purina and the American Humane Association (AHA) created an alliance that
aimed at increasing placements so as to reduce the euthanasia of unadopted animals.
In the beginning of the collaboration, AHA served the primary function of linking the
company with its member animal shelters. However, once the connection was made,
Ralston Purina could more effi
cientlydealdirectlywiththeshelters.ThebrokeringfunctionoftheAHAwas
Strategic Collaboration 81
no longer needed, so the strength of the alliance deteriorated. At such a junc ture, the
partners can search for new activities or resource exchange that would renew the
alliance’s value, or the relationship can remain at a lower level or even be eliminated.
The AHA did not deem it necessary to engage in renewal because the fundamental
mission of increasing animal placement through the alliance had been effectively
transferred to the local member shelters.
In the CARE–Starbucks alliance, over time, Starbucks learned a great deal about
designing development projects and even began to do so without
CARE’sassistance.Similarly,TimberlandabsorbedCityYear’stechniquesfor
mountingcommunityserviceprojectsforitsemployees.Inbothinstances,the partners had to
seek out additional activities in which new value was being created to offset the
depreciation of the original source of value.
ALLIANCE DRIVERS
Whereas the CC and the CVC provide analytical frames for examining
cross-sectorcollaborations,thissectionpresentsfindingsregardingthedeterminants of the
dynamics of an alliance: What is powering the alliance? From
ourresearch,wehaveidentifiedfouralliancedriversthatappeartocontribute significantly to
the strength of the collaboration: alignment of strategy,
mission,andvalues;personalconnectionandrelationships;valuegenerationand shared
visioning; and continual learning.
Strategy, Mission, and Values Alignment
The more centrally aligned the partnership purpose is to each
organization’sstrategyandmission,themoreimportantandvigoroustherelationship
appearstobe.Thegreaterthemissionmesh,thericherthecollaboration.Simi
larly,themorecongruentthepartners’values,thestrongerthealliance’scohe sion. In most of
the alliances studied, the collaboration enabled the corpora tions to fulfill their stated
commitment to community and to refine and shape the corporate values related to this.
An interesting example to illustrate how the emergence of alignment can foster
collaboration is the relationship between TNC and G-P. Historically, TNC, an
international conservation organization and the largest private owner of nature
preserves in the United States, and G-P, one of the world’s largest forest products
companies, had pursued competing agendas for com mon lands. Both, however,
independently decided that they had to change
theirstrategies.TNCrecognizedthatitsstrategyofbuyinglandparcelswould never be
sufficient to protect large ecosystems, most of which included eco nomic
resource–using activities. G-P recognized that resisting environmental protection
pressures was increasingly unsustainable, both politically and legally. Thus, both TNC
and G-P shifted their strategies toward finding solu tions that would harmonize
environmental preservation with economic
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usage.TNCbecamemoreofaneconomicpragmatist,andG-Pbecamemoreof an
environmental steward. These strategic shifts created a common ground for
collaboration. This led to a partnership in 1994 to jointly manage unique, forested
wetlands in North Carolina in such a way that certain areas would remain undeveloped
and others would be lumbered using environmentally low-impact methods. In 1998,
success with this initial collaboration led to a larger project along 50 miles of Georgia’s
Altamaha River involving TNC, G-P, other forest products companies, and
governmental agencies. The col laborative modality was a superior approach for
managing their external
uncertainty,whichissupportiveofOliver’s(1990)assertionofstabilityorpre dictability as a
critical contingency for relationship formation.
Often, the alignment is more straightforward. Ralston Purina’s business interest in a
larger pet population coincided with the AHA’s social concern
aboutreducinganimaleuthanasia.Pfizer’slogicalconcernaboutthehealthof the
neighborhood surrounding its original manufacturing-site facilities matched well with
Beginning With Children’s development of a local school. Time-Warner, a media
company, was a clear fit with the nonprofit Time To
Read.BothMerck’sandHewlett-Packard’sbusinessesareintimatelyandultimately linked to
the supply of trained scientists, so their engagements with
nonprofitsstrengtheningscienceeducationwereclearfits,justastheinterests of Bidwell and
Bayer coincided in the training of chemical technicians. When
thepartnershipsmigrateintothethirdstageontheCC,themissionandvalues alignment
becomes very tightly connected. The United Way of Seattle observed that its partnership
with Nordstrom had reached the point where “Our identities are interwoven.”
Misalignment can carry dire consequences. The American Medical Association
(AMA) entered into a transactional alliance with Sunbeam
Corporation,wherebytheAMAlogowouldbeplacedexclusivelyonnineproductsin exchange
for royalties on their sales. When this staff-brokered deal became public, many AMA
members expressed anger, as did board members who had not approved the arrangement.
The NPO backed out of the contract and was forced to pay Sunbeam almost $10 million
in compensation. Responsible staff members were dismissed (Associated Press, 1998;
Bartling, 1998). Align ment is in the eyes of the beholder. What looked great to the
AMA marketing stafflookedhorrendoustootherkeyconstituencies.Thisflagstheimportance
of stakeholder analysis in managing the risk of misalignment (Finn, 1996).
Personal Connection and Relationships
Institutional partnerships are created, nurtured, and extended by people. Social
purpose partnerships appear to be motivationally fueled by the emo
tionalconnectionthatindividualsmakebothwiththesocialmissionandwith their
counterparts in the other organization. Although IOR literature empha sizes
interpersonal relationships, our findings suggest that, for these crosssector alliances,
the double connect with people and purpose is important.
Strategic Collaboration 83
Themissionconnectisthemotivationaldriver,andthepersonalrelationships are the glue that
binds the organizations together. Our research confirms oth ers’ findings that the active
involvement of top leaders is vital to alliance strength because of their authorizing and
legitimizing functions (Waddock, 1988b), but the connections need to permeate all levels
of the organizations.
AmericanEagleOutfitter’sreceptivitytopartneringwithJumpstart,which
prepareslow-incomepreschoolerstobesuccessfullypreparedtoenterschool, was due in part
to the personal connection that chief executive officer (CEO) George Kolber could make
to the NPO’s mission:
OneofthethingswithJumpstartthathitmewasthatIgrewupinanimmigrantfosterfam ily. And, quite honestly,
I struggled with reading early on. So I sort of connected with Jumpstart’s mission right away on a
personal level.
Kolber and Jumpstart’s CEO Aaron Lieberman soon discovered that they shared a
common vision and goals about child education and about corpora tions’ involvement in
community betterment. These shared values created a fertile terrain for growing a
healthy relationship, but personal dynamics can
bedeterminant.AsKolberputsit,“Youhavetolikethepeopleyou’redealing with. If the people
turn you off, I don’t care how good the cause is, it doesn’t make any difference.” The
positive personal chemistry between Kolber and Lieberman seems to have spread to
others in the two organizations.
In several instances, the personal connection and relationships were significantly
advanced by involving the corporate leaders directly with the
nonprofit’soperationsandbeneficiaries.AturningpointfortheTimberlandleadership came
when they and their employees worked with the City Year staff on repairing a halfway
house. Direct service can create personal connection.
The sustainability of an alliance requires that the relationship connections extend
beyond the top leadership and that the alignment be sufficiently strong to transcend the
person-specific ties if key individuals should leave either organization. Continuity in the
face of leadership change is an acid test of alliance strength. The CARE–Starbucks
relationship continued smoothly through a change in CEOs at CARE. Time’s literacy
program was sufficiently institutionalized that it continued after the merger with Warner.
Although Bidwell Training Center had several successful joint activities with Bayer, its
project with the company’s Agfa division stalled when its head left the com pany before
support for the collaboration had been adequately broadened.
Thepersonalrelationshipsareparticularlycentraltothecreationofinteror ganizational trust.
Our interviewees all pointed to the importance of trust to the strength of the
collaboration. Trust appears to be one of the critical ele ments common to most forms
of collaboration (Burke, 1999; Dickson &
Weaver,1997;Kanter,1994;Larson,1992;Rackhametal.,1996;Ring&Vande Ven, 1994;
Waddock, 1988a; Wasserman & Galaskiewicz, 1994). Although
goodrelationshipswillnotguaranteealliancesuccess,badinterpersonalrela tions can
destroy a partnership.
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Value Generation and Shared Visioning
As was indicated in the previous discussion of the CVC, the fundamental viability of
an alliance depends on its ability to generate value for each of its partners.
High-performance collaborations are about much more than giving and receiving money;
they are about mobilizing and combining multiple
resourcesanddistinctivecapabilitiestogeneratebenefitsforeachpartnerand social value for
society. Imbalance in the value exchange may hinder the development of the
relationship. Because the resources exchanged may depreciate in value over time,
alliance vigor requires innovation in creating new value sources.
MCIWorldCom states, “We are not believers in checkbook philanthropy.” Reflecting
further, the spokesperson explained that, “I think the main reason
foroursuccessisthatwedon’tjustwriteacheck.Weputourresourcesbehind
thedollars.”Hewlett-PackardprovidestheNationalScienceResourcesCoun cil (NSRC) and
41 school districts with grants of about $3 million, but an HP executive commented,
“Every district I’ve talked to says, ‘You know, your money was nice, but the biggest
contribution you made was your people.’” NSRC remarked that HP “has given us a
whole fresh way of looking at what we’re about.”
Partners’ collective capacity to envision ever more enriching and powerful
engagement opportunities accelerates and extends the development and value of the
alliance. Gray’s (1989) work cited advancing a shared vision as central to productive
collective strategies. City Year cofounder Alan Khazei confirmed this:
WehavebeenabletogothefurthestanddevelopthedeepestpartnershipwithTimberland because we both
share this vision of a new paradigm of how business and community relate and how you can do well by
doing good.
City Year’s other cofounder, Michael Brown, added,
It was very clear to Timberland that City Year wanted to be the kind of organization that was on the
cutting edge of engaging the private sector and saw all the value of full-scale engagement. And
Timberland wanted to do the same with the nonprofit sector. Neither looked at philanthropy in a
traditional or narrow way.
Timberland’sCOOSwartzadded,“Weareworkingonamissionthat,whileit supports our
separate agendas, is really focused and fashioned together, and that’s a layer that I really
want to continue to build.”
G-P’scorporatestrategyhasfacilitatedthedevelopmentofadditionalproj ects using a
shared visioning process, whereby local operating units actively seek out partners and
work with them to define environmental projects best suited for the local area. TNC’s
CEO, John Sawhill, summarized the impor
tanceofcollectivevisioning:“Thebetterpartnershipsaretheoneswherethey bring us in at
the brainstorming phase, rather than when they have already
Strategic Collaboration 85
decided exactly what they want to do and they’re just confronting us with a final plan.”
Continual Learning
In the stronger collaborations, the partners are engaged in continual learn
ingaboutthepartneringprocessandhowitcangeneratemorevalue.Thereis openness and
hunger to find new ways to engage more effectively. This dis covery ethic is fostered by
the win-win outcome from learning in the collabo rative relationship. Research on
business-to-business alliances also points to the inducing effects on learning of these
cooperative relationships as con trasted to traditional control-oriented relationships
(Hagedoorn & Narula, 1996; Rackham et al., 1996).
In the City Year–Timberland alliance, for example, both organizations see the
relationship as a learning laboratory. As Timberland’s vice president of social enterprise,
Ken Freitas, expressed, “It is not formulaic.” There is a con tinual willingness on both
sides to explore and try out new activities and
relationshipdimensions.Thereappearstobeadiscoveryethicthatfostersastriving for an ever
deeper and richer relationship. Inherent in shared visioning
andcontinuallearningisalongertimeperspective.Thisispowerfulbecauseit
reducestheriskofshort-termoperatingproblemsderailingtherelationship.
ALLIANCE ENABLERS
Thealliancedriversaretheprimaryforcespropellingthecollaboration,but supporting these
appears to be a constellation of factors that enable the effective management of the
partnering relationship and process, factors such as
focusedattention,communication,organizationalsystem,andmutualexpec tations and
accountability.
Focused Attention
An intense and deep relationship requires considerable attention. A strate gic alliance
is seen as a priority relationship, has high internal visibility, and receives concentrated
engagement by key decision makers. The partnership occupies a significant ongoing
share of mind of the organizations’ leadership beyond the initial personal connection,
which we saw was one of the primary alliance drivers.
A UNCF executive stated,
Forourpartnerships,wemandatetop-echelonsupport,becausewhenyouneedtochange the direction of the ship,
you need the captain. You can’t change the direction by commit tee. Merck’s CEO is genuinely committed
to this whole process. He really believes in what he’s doing. There is also senior-level involvement from our
end. Our president took the leadership in setting this partnership up.
86 Austin
A Beginning With Children executive echoed this perspective: “When we open a new
school, Pfizer’s CEO will be there. Yet, I know that is not always the case with other
partnerships.” MCIWorldCom flagged that this expecta tion also holds for the nonprofit:
“We don’t sign partnerships unless they’re
broughtallthewayuptothehighestrankinglevelofthenonprofits.Wewant to be a strategic
partner with these nonprofits; we don’t want to be just 1 of 50 partners.”
Timberland’s approach to its cross-sector alliance with City Year is analo gous to its
relationship with its commercial partners. The company limits its relationships to a small
number of carefully selected suppliers and then
investsheavilyinmakingthatahighlyproductiveandpowerfulrelationship. Rather than
spreading its resources and collaborative energy across many
partners,itfocusesitsefforts.Althoughthisincreasesdependencyonthepart ner, it also
increases the probability of enhanced performance.
Communication
Torealizethefullbenefitsofanalliance,thepartnersneedtohavemeansof communicating
effectively, efficiently, and frequently. Multiple communications channels, formal and
informal, are used. Partners stressed the importance of forthrightness and constructive
criticism. Openness seems particularly powerful in social purpose collaborations,
especially in the integrative-stage relationships. Good communication appears to foster
trust and vice versa.
Interacting across sectors is complicated, as noted by one corporate manager:
The hardest challenge is the cultural differences between corporate and nonprofit organizations. We just
move much faster. It’s readjusting our employees’ time clocks. And nego tiations are different, and
accountability is different. Everything is different. Once you understand how they work, think, and
operate, you can get a lot of great things accom plished. If companies can take the time to really develop
a relationship, that’s what they need to do.
Internalcommunicationisalsoimportant,asindicatedbyaReebokexecutive:
We had a huge campaign to make sure that people read about this partnership with Amnesty
International, not just in the annual report. There were constantly stories in the
employeenewsletterandwaystogetinvolved.Theextenttowhichyoumakethingsacces sible to employees
increases knowledge and pride.
The AHA spokesperson recommended,
Be very verbal about the cause. Share it widely with the company’s employees and help it permeate the
culture so that the employees feel that by doing their job, they are helping to achieve some good. That is
really extending the arms of a partnership. This is especially
Strategic Collaboration 87
trueifitisasecondorthirdorfourthgenerationrelationship;thehistoryofthepartnership can get somewhat
lost.
This challenge was exacerbated in the case of Starbucks by its explosive growth that
geometrically increased the flow of new employees who had never heard of the alliance
with CARE.
Organizational System
Clearly delineating responsibility for the management of the relationship in both
partners’ organizations contributes to alliance vitality. Incentives for collaboration that
are built into the managers’ performance evaluation process ensure attention to the
alliance. Beginning With Children com mented, “Pfizer is a huge company, but it is an
efficient one. We have always
hadacontactpersonwhowasveryeffective.Ourprogramhasbeenfacilitated because of our
relationship with this person.” Both Reading Is Fundamental and Visa had a dedicated
staff for the management of their relationship.
MCIWorldCom uses a team approach:
Oncetheproposalisputtogether,weputtogetherateam.It’snotonepersonlikeaproject manager. Their web
site people are hooked up with our web site people, their PR [public
relations]peoplewithourPRpeople,theirmarketingpeoplewithours.It’strulyapartnership.Thatteamthenputs
togethertheactionplanandimplementationplanandtimeframe.
A National Geographic manager confirmed, “On multiple occasions, MCIWorldCom
have gotten all the partners together. Every step of the way, they’ve been very
inclusive.”
Both G-P and TNC have developed systems that reward collaborative
behavior.AtG-P,aportionofanindividual’sbonusistiedtohisperformance on the company’s
11-point environmental strategy. TNC’s Sawhill also emphasized the importance of
incorporating partnership activities into per formance objectives: “Establish someone in
the corporation who has a clear responsibility for making the partnership
work—someone who says, ‘This is my job. This is in my annual objective. I’ve got to
get this done.’”
Mutual Expectations and Accountability
Clarityofexpectationsaboutthedeliverablesfromeachpartnerappearsto be important. In
addition to providing programmatic guidance, this fosters mutual accountability and
motivates execution responsibility. Mutually high expectations promote both rising
performance standards and greater value creation.
Timberland’s Ken Freitas asserted, “The level of expectation is a funda mental part of
our relationship.” Timberland COO Jeff Swartz added,
88 Austin
The organization that you chose to partner with needs to have the same commitment to powerful
notions and the same ability to deliver on these as you do. If they are not at the same level, the equation
falls apart and the relationship doesn’t work.
Accountability is the concomitant of high expectations. Partners must be able to
demonstrate how well they have produced the expected benefits. A UNCF executive
observed,
Individuals in charge of corporate giving are becoming more accountable for what they give. And the
only way to account for what they give is through restricted funding, where they are better able to
measure exactly how their funds are used.
A NSRC manager stated,
We have quality products and services that we have to demonstrate are effective. The corporations
like the quality assurance standards that we maintain. We research and evaluate everything we do.
Every program has a 5% to 10% part of the budget that is dedicated to that.
Fromthecorporateside,MCIWorldComindicatedthatitappliesitsbestpractices to
performance assessment: “Our measurement is very quantitative. We probably have
more scientifically measured results than most foundations.”
THE ALLIANCE MARKETPLACE
The foregoing cross-sector collaboration framework can help us understand and
develop alliances, but the task is further complicated by the nature
ofthesocialpurposealliancemarketplace.Itisveryunderdevelopedandinef ficient. Potential
partners do not have good information sources about one
anotherorestablishedmechanismsforseekingeachotherout.Furtherexacer
batingthisprocessistherelativelackofexperiencethatnonprofitsandcorpo rations have in
developing alliances that transcend the traditional charitable check-writing relationship.
The interest in alliance creation is, however, increasing rapidly as nonprofits seek to
diversify their funding sources, and some forms of transactional partnering are rapidly
proliferating, particularly cause-related marketing (Andreasen, 1996).
The relative immaturity of the alliance marketplace complicates the col laboration
process in multiple ways. The numbers of Stage II (transactional)
andStageIII(integrative)collaborationsarerelativelylimited,suchthatexpe rience and
information are not widely available. There is not a common, widely used
communication vehicle to enable organizations to find partners. Public information on
nonprofits is less readily and amply available than for corporations. There is no
collaboration clearinghouse for matching interested parties. The expression of supply
and demand forces is hindered.
Strategic Collaboration 89
Once potential partners find each other, often through accidental or quite arduous
searches, there is no prevailing market price to guide transactions. The pricing function is
further impeded by the nonstandardization of differ ent collaborations’ assets. Benefit
assessment is dependent on each partner’s
specificsituationandvaluationcriteria.Therearemultiplecurrenciesthatare
noteasilytranslatedintodollarterms.Thesmallnumberoffirmsandtransac tions also reduces
the level of competition in the alliance marketplace, there fore impeding the
determination of value by market forces. Nonprofits, par ticularly, find the valuation
process especially difficult. Corporations have more experience in valuing assets and
setting prices, but they, too, find that task difficult in cross-sector collaborations.
One nonprofit executive expressed the frustration that
The most difficult piece of advice to give is the one we keep asking ourselves: What price do we put on
our involvement in these campaigns? Every day, the phone is ringing and ideas are coming in
unsolicited. It may be $10,000 to be part of a product promotion, or $50,000 or $500,000. The nonprofit
has to be able to set priorities and be able to say, “It’s worth this amount.”
As the alliance marketplace matures, valuation and pricing will become easier. This is
happening at an accelerating pace in cause-related marketing collaborations, which
constitute perhaps the fastest growing segment of corporate advertising. Many businesses
and nonprofits are increasingly viewing
theseasrelativelynarrowandsharplyfocusedtransactions.Measuresusedin
advertising,suchasaudiencesize,location,demographics,andothers,arebeing used to assess
and attach values to such collaborations. The growing systematization of the valuation
process is helpful, but there is the risk that the search for the more easily quantifiable
forms of collaboration will lead to alli ance myopia. The multifaceted collaboration
configurations in Stages II and III, although they are more difficult to value, may have
greater worth.
RelativelynarrowStageIorStageIIcollaborationsareparticularlyexposed to competitive
inroads, as Ralston Purina discovered. Pet food competitors began bidding away the
animal shelters partnering with Ralston by offering higher grants than Ralston was
giving. The development of the alliance mar ketplace brings more entrants and more
competition for partners. When one corporation or nonprofit demonstrates that there is a
competitive advantage accruing from an alliance, its competitors will soon follow suit. If
the original partnership is based predominantly on a financial transfer, then it is more
exposed to capture by competitors offering better terms. If the relationship is
multifaceted and involves volunteers, services, joint activities and planning, and strong
personal relationships, then it is more insulated from competitor incursions. These
constitute barriers to entry.
Similar advice holds for nonprofits. A Reading Is Fundamental staff mem ber warned,
90 Austin
Thereisthedangerofthenonprofitbeingtreatedlikeanyothervendor.There’stheadver tising firm and the PR
firm and the nonprofit. Our relationship with Visa was absolutely not like that, but it happened to us
once before, and we quickly extricated ourselves from that situation. We were not there to solve a
company’s problems for it and be treated the same way a fix-it agency would be treated.
Inthebusinessworld,switchingvendorsiscommonplaceiftherelationshipis not deeply
embedded. This will also hold for the social purpose alliance marketplace.
This marketplace will mature at an increasing rate because collaboration breeds more
collaboration. As partners become more confident with each other and in their
collaborating capacities, they engage in further joint activi ties. Furthermore, they tend to
take on additional cross-sector alliances with new partners. This continual learning and
accumulating experience will strengthen the functioning of the alliance marketplace.
Furthermore, this collaboration-multiplier effect generates an important social capital
dividend in the form of growing numbers and networks of social purpose cross-sector
alliances.
FINAL REFLECTIONS ON ALLIANCE BUILDING
The cross-sector collaboration framework provides a conceptualization and analytical
tools for systematically examining, developing, and managing
alliancesbetweennonprofitsandbusinesses.Thisfinalsectionprovidessome reflections on
alliance evolution and research implications.
ALLIANCE EVOLUTION
Practitioners and researchers can use the CC to help understand what type of alliance
they have and what kinds of transformation would be required to move to a different
point on the continuum. Table 2 extends the partnership characterization given in Table 1
by indicating how the alliance drivers and enablers vary across the philanthropic,
transactional, and integrative collabo ration types and stages.
The alignment variable reveals increasing compatibility, congruency, and
complementarity of strategy, mission, and values across the continuum. This
variablealsofocusesonhowthepartners’basicattitudetowardcollaboration moves from
benefactor–grantee to true partners and how the approach shifts from incidental to
tactical to strategic. The personal connection variable shows how the depth of the
connection with the purpose and the breadth of interpersonal relations grow across the
three stages, which produces greater understanding and trust. The value generation
variable goes to the motiva tional core of collaboration to illustrate how organizations’
core resources are mobi- lized and combined in increasingly distinct and powerful
ways. The
Mutual expectations Use for stated purpose but minimal other Explicit performance expectations for High performance expectations and
and accountability performance expectations targeted collaboration activities accountability for results
Incentives for collaboration
Organizational systems Corporate contact usually in community More people involved with responsi- Partner relationship managers
affairs or foundation; nonprofit contact bilities for specific collaboration Organizational integration in execuusually in development activities tion, including shared resources
Communication Generally annually around grant process More frequent communication Explicit internal and external combetween partners and externally munication strategies and processes
Focused attention Little top leadership attention Top management engaged at Significant and ongoing attention
start-up and periodically from top management
Continual learning Minimal or informal learning More active learning about Systematic learning and innovation
process and substance Discovery ethic
Value generation and Generic resource transfer Core competency transfer Joint value creation
shared visioning Typically unequal exchange of resources More equal exchange of resources Value renewal
Minimal collaboration in defining Shared visioning at top of Culture of each organization
activities organization influenced by the other
Corporations respond to specific Projects of limited scope and risk Projects identified and developed at
requests from nonprofits all levels within the organization,
with leadership support
Broader scope of activities
of strategic significance
Personal connection and Minimal personal connection to cause Strong personal connection at Expanded opportunities for direct
relationships or people leadership level employee involvement
Expanded personal relationships in relationship
throughout the organization Deep personal relationships and
Increased understanding and trust across organization
trust We mentality replaces us versus them
Alignment of strategy, Minimal fit required, beyond a shared Overlap in mission and values High mission mesh
mission, values interest in a particular issue area Partnering mindset Shared values
Gratefulness and charity orientation Relationship as tactical tool Relationship as strategic tool
Philanthropic Transactional Integrative
Table 2. Collaboration Continuum: Drivers and Enablers
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capacity for value renovation grows as one advances along the continuum.
Valuerenewalisfosteredbyaneverintensifyingandmoresystematicprocess of continual
learning and resultant innovation. The enabling variables reveal
agrowingcapabilitytomanagethepartnershiprelationshipinamoreexplicit and sophisticated
manner. The attention of top leadership becomes focused on the alliance as an
increasingly strategic relationship. Communication processes become more systematic
and jointly managed for both internal and external stakeholders. Responsibility for
managing the partnership is broad ened and made more explicit. Partners hold
increasingly high mutual expec tations for performance and demand accountability for
the fulfillment of commitments.
Practitioners face the challenge of deciding what types of collaboration they should
construct. By recognizing collaboration as a multifaceted contin uum as indicated in
Tables 1 and 2, one will likely identify that some dimen
sionsofanalliancefallmoretowardonestageandotherstowardanother.The issue is whether
such a configuration creates counterproductive inconsisten cies or, in fact, best fits the
particular circumstances of the partners and the
functionsandbenefitsrequiredfromthecollaboration.Itislikelythattheevolution of an
alliance will happen incrementally, with some variables advancing before others, so
hybrid collaboration configurations mixing characteristics from different stages are to be
expected. It is also possible that the
collaboratorswilldecidethataparticularformofallianceisoptimumfortheir circumstances
and that further evolution is not desired. In addition, as mentioned previously, if the
organizations have multiple alliances, the best path may be to construct various
partnering forms serving distinct functions in their collaboration portfolio.
Our studies reveal that many alliances do evolve sequentially through the three stages,
but there are examples of IORs starting as sharply focused Stage II transactional deals
that are often around cause-related marketing arrangements. Movement along the CC
tends to be incremental as partners get to know each other better, build trust and
confidence, and experiment with increasingly broader and more complex collaborative
activities. For many alliances, this process evolves over many years. However, there are
examples of rapid transiting along the CC. Jumpstart and American Eagle
Outfittersbegantheirrelationshipin1997and,within2years,hadaccelerated through the
philanthropic and transactional stages and were advancing deeply into organizational
integration. This rapid advance was greatly enabled because the partners had studied and
modeled their collaboration after the decade-old City Year–Timberland alliance. In
effect, this secondgeneration collaboration had learned from the first and was more
prepared for the alliance-building process.
Afinalissueinallianceevolutionislongevity.Alliancesarenotnecessarily forever. The
longevity time frame is a function of purpose and performance. Some collaborations
may have sharply circumscribed purposes with agreed on, finite time lines (e.g., a
3-year cause-related marketing program).
Strategic Collaboration 93
Terminatinganalliancecanbearecognitionofsuccessfullycompletingajoint
mission(Gomes-Casseres,1996).However,eveniftheoriginatingprojectwas planned as a
single, finite undertaking, partners often are and should be open to further collaborations.
The partnering process constitutes an investment in
collaborativecapacityandinrelationshipbuilding.Theseareassetsthatoften can yield
continuing dividends. Of course, termination can also occur due to diminishing returns
from the collaboration; the initial benefits can decline relative to the costs of maintaining
the alliance, and value-renewing activities may not be found. Furthermore, external
forces may change a partner’s cir cumstances and needs such that the original function of
the alliance is no longer valid or the resources to enable it are not available.
RESEARCH IMPLICATIONS
This research has expanded our knowledge about cross-sector collabora tions between
nonprofits and businesses. It is hoped that the empirically grounded cross-sector
collaboration framework has advanced our conceptualization of such collaborations. The
CC provides us with a distinctive way to both categorize types of collaboration and to
examine systematically their
possibleevolution.TheCVCbuildsonandconfirmstherelevancyofresource dependence,
social exchange, legitimization, and corporate social performance theories for this type
of cross-sector collaboration. The alliance drivers and enablers present a new
configuration of determinants of collaboration dynamics and performance that extend
and refine prior causal IOR models.
Cross-sector collaboration between nonprofits and businesses is an
importantandexpandingphenomenonthatmeritsfurtherstudy.Thereisaneedfor
furtherfield-basedresearchtoexpandtheempiricaldatabaseonsuchcollaborations.
Retrospective or longitudinal clinical studies would enable a refine ment of the CC
stages and descriptors of alliance evolution. We also need to
deepenourunderstandingofcollaborationdynamicsandperformancedeter minants,
particularly the drivers and enablers. Finally, focused attention on the nature and
functioning of the social purpose alliance marketplace could accelerate its development.
The high interest among practitioners in develop ing these alliances may create
interesting opportunities for action research.
It is worth noting that many of the practitioners in our research indicated that
cross-sector partnering was quite different from same-sector collabora tion in various
ways. The distinctions included different performance meas ures, competitive dynamics,
organizational cultures, decision-making styles, personnel competencies, professional
languages, incentive and motivational structures, and emotional content.
Forexample,boththeCityYearandTimberlandexecutivesthoughtthat the potential and
process for value creation was different in cross-sector corporation–nonprofit
alliances than in same-sector collaborations. City Year
cofounderMichaelBrownindicated,“Wetendtolookatafor-profitasaplace to connect a
million dots. And we tend to work with nonprofits to connect to
94 Austin
one or two dots. The corporations have many more access points.” Alan Kha zei, City
Year’s other founder, added, “One of the things that inhibit partner ships between
nonprofits is the fear of splitting a limited pie.” On the corpo rate side, Timberland COO
Jeff Swartz drew the following contrast:
It’s much easier to start a relationship with another business. We know why we are there.
Westartfast,andthenitslowsdown.Withanonprofit,youstartslow.Thereisarealsuspi cion on both sides of
the agenda. But once we got past that original hump, the relationship has gone much deeper and further.
Collaboratingacrossthesectorsisclearlynotsimplyaquestionofapplying standard
operating procedures for collaboration with peer organizations. Further comparative
research of cross-sector and same-sector collaborations could shed additional insights.
Some of our related research on social sector partnering involving other
collaborationconfigurationssuggeststhatmanyofthecross-sectorcollabora tion
framework’s elements are also applicable to social purpose alliances more generally
(Austin, 1998a). Applying and adapting the framework to other alliance types would be a
fruitful broadening of the conceptualization. There is much to be studied and much to be
learned as we enter the age of alliances.
Appendix Research
Case Studies
Alliance Partners Longevity Social Action Area American Humane Association and 1984 Pet
adoptions
Ralston Purina Amnesty International and Reebok 1988 Human rights advocacy Beginning With Children
and Pfizer 1989 Community school Bidwell Training Center and Bayer 1989 Job training for disadvantaged
minorities Cooperative for
American Relief to Everywhere 1991 International socioeconomic
and Starbucks development City Year and Timberland 1988 Inner-city community service Jumpstart and
American Eagle Outfitters 1997 Preschool educational
preparation National
Geographic and MCIWorldCom 1996 Public education National Science Resources Council and
1991 Science curriculum
Hewlett Packard development Reading Is Fundamental and Visa 1996 Literacy The Jimmy Fund and Perini
Corporation 1948 Child cancer treatment The Nature Conservancy and Georgia-Pacific 1994 Ecosystem
conservation Time To Read and Time-Warner 1985 Literacy The United Way of Seattle and Nordstrom
1950 Social services UNCF and Merck 1988 Minority university education
Strategic Collaboration 95
Notes
1. Kanter’s (1998) Davos (Kanter, 1998) lead article identified alliances between corporations
asakeytrendandimperativeinthe21stcentury.Rackham,Friedman,andRuff(1996)refertothe new forms of
collaboration between corporations and their suppliers as a “partnering revolu tion.” Huxham’s 1996 edited
volume points to collaboration as a growing choice in all three sec tors. Bartling (1998) focuses on the growing
use of collaboration by nonprofit associations with corporations and governments. Arsenault (1998) reveals the
collaboration imperative for coping with growing mission, industry, and task complexity. Peterson and
Sundblad (1994) document
growingcross-sectorcollaborationsininner-cityrevitalization.Foranoverviewofdifferentpart nering patterns and
motivations, see Austin (1998c).
2. Resource dependence theory deals with, among other aspects, resource scarcity as a motivator for
meeting these needs through collaboration, but with an accompanying concern about the potential loss of
autonomy and power to the resource provider (Pfeffer & Salancik, 1978). Social
exchangetheoryconcernsreciprocity,wherebyeachcollaboratorisreceivingcommensuratevalue
fromtheother(Oliver,1990).Legitimizationreferstothedesiretoassociatewithanotherorganiza tion whose prestige
would enhance the other partner’s reputation or credibility (Galaskiewicz, 1985). Efficiency theory from
microeconomics concerns savings or productivity gains that would
beachievedthroughlowertransactioncostsduetocombiningresourcesandefforts(Williamson, 1975, 1985).
Strategic management theory encompasses contributions to the organizations’ strate gies due to collective
action; closely related to this is corporate social performance theory, which particularly concerns relationships
and responsibilities with external stakeholders (Burke, 1999; Gray & Wood, 1991; Kanter, 1994).
3. Recent works by Kanter (1998, 1999) have provided new insights on business–nonprofit collaboration.
4. Full analyses of these case studies and an extended elaboration of the article’s cross-sector collaboration
framework can be studied in the author’s book, The Collaboration Challenge: How Nonprofits and Businesses
Succeed Through Strategic Alliances (Austin, 2000).
5.TheauthorexpresseshisappreciationtoHarvardBusinessSchoolresearchassociatesLinda
CarriganandArthurMcCaffrey,andKathyKormanFrey(M.B.A.)fortheirexcellentassistancein
carryingoutthecasestudyresearch;andtothecollaboratingorganizationsfortheirgenerosityin sharing their
experiences.
6. Kanter (1989) cites such imbalances in business-to-business partnerships as a potential “dealbuster.”
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James E. Austin holds the Mclean Chair at the Harvard University Graduate School of Business Admin
istration, where he has been a member of the faculty since 1972. He is the faculty chair of the Harvard Busi
ness School’s Initiative on Social Enterprise, and he teaches and researches social entrepreneurship, strate
gic management of nonprofits, and nonprofit board governance. He has published 16 books, dozens of
articles, and a multitude of case studies. Professor Austin has served as an advisor to businesses, nonprofit
organizations, and governments throughout the world for the past three-and-a-half decades.