Collaboration and dynamic effects

The degree of separation in collaborative ventures between the drivers and the outcomes is difficult to judge over time. In a dynamic business environment the drivers to collaborate, that is the strategic intent, and the outcomes may change over time after going through the black box that is collaboration (Thomson & Perry 2006). Consequently initial reasons for the venture, such as access to markets may change and become, say, improved customer service as the market is established. What drives organisations to collaborate in the first instance and what they perceive to be the benefits in the long-run are thus difficult to separate (Child, Faulkner & Tallman 2005). Park and Ungson (2001, p. 50) note that as collaborative cycles finish, the participants will review the outcomes in terms of ‘efficiency, equity, and goal attainment’ prior to imitating ‘a new loop of negotiation, commitment, and execution

of cooperation’. It appears that what need to be studied are both the strategic intent and the outcomes.

Thomson, Perry and Miller (2008, p. 102) observe that this is difficult as conceptualising the relationship between the process and its outcomes is not straightforward, due to the theoretical perspective that can be adopted (Gray & Wood 1991) to both what the outcomes themselves are and whether or not they are deemed successful (Park & Ungson 2001; Thomson, Perry & Miller 2008). In Sandberg’s (2007) study of Swedish manufacturers, over 95% cited service factors and 72% cost factors as the driving force for collaboration. In analysing the effects though, more intangible gains were also noted including increased competitiveness, more measurement and follow ups and clearer division of responsibilities.

Hardy, Phillips and Lawrence (2003) offer an alternative approach to many by focusing more on the effects of collaboration, rather than the drivers. Approaching collaborative ventures from a multi-disciplinary approach, they highlight the roles of knowledge and knowledge creation. They separate collaboration effects based on three groups of literature, namely strategic, learning and political. However, their grouping results in knowledge being separated from knowledge creation, with knowledge considered a resource that can be acquired for strategic gain. Their strategic category includes the development of distinctive capacity (Barney 1991; Dyer & Singh 1998; Hamel & Prahalad 1989; Peteraf 1993; Porter 1996; Powell, Koput & Smith-Doerr 1996; Prahalad & Hamel 1990; Wernerfelt 1984), and the pooling and transfer of key resources, including knowledge (Gulati, Nohria & Akbar 2000) that enables sustainable competitive advantage through collaboration.

Knowledge creation is categorised differently; Hardy, Phillips and Lawrence (2003, p. 326) argue that ‘networks of collaborating organizations are an important source of knowledge creation’ and that ‘new knowledge grows out of the sort of ongoing social interaction that occurs in ongoing collaborations’. However this raises the difficulty of determining at what point new knowledge becomes a resource for strategic gain and ceases to be knowledge creation in this approach.

Hardy, Phillips and Lawrence’s (2003) final category relates to the political effects of collaboration, particularly in regards to the network of interactions and patterns of relationships of each organisation. Based in network theory (Burt 2004; Granovetter 1973; Moliterno & Mahony 2011) an organisation’s linkages both facilitate and constrain their activities providing influence and being influenced by the other organisations within the network to varying degrees. Consequently the effects of one collaborative venture will be felt to some extent by every organisation throughout the network.

It is the network effect that is quite significant to the benefits of collaboration. Within the supply chain management literature for example, there is acknowledged significance of information sharing to the strategic benefits of collaboration in processes (Fawcett et al. 2012). However there is less recognition of collaboration’s role in accessing and creating knowledge. Recently researchers have begun to focus on the knowledge effects of collaboration, recognising that its contribution to knowledge transfer, creation and innovation is one of its main effects (Hansen & Nohria 2004; Houldsworth & Alexander; Lane & Probert 2007; Nielsen 2005; Soosay, Hyland & Ferrer 2008) particularly due to the learning effects. Witzel (2006)

for example suggests that by sharing knowledge, complementary skills and ideas, innovation can flourish; collaboration is thus critical to innovation. Many companies successfully utilise this approach, such as both Sony and Honda building internal innovation teams for new projects; Airbus Industrie to grow market share and for new designs; and other firms, such as Nokia, using collaborations for R&D (Witzel 2006). BP Plc, with operations in over 100 countries, transformed itself into a collaborative organisation, with key gains being the implementation of over 150 new ideas, a twenty per cent reduction in working capital required and projects being brought in on time (Hansen & Nohria 2004), demonstrating the powerful effects of internal collaboration on knowledge creation, innovation and business efficiency.

Collaboration leads to knowledge creation as part of the informal relationships that arise in the venture (Håkansson 1990); the more collaborative ties an organisation has, the more likely it is to create knowledge (Powell, Koput & Smith-Doerr 1996). Building on the social constructionist perspective and studying innovation in inter- firm alliances (Powell, Koput & Smith-Doerr 1996) it is suggested that knowledge is created in the context of community, for example a community of practice (Brown & Duguid 1991) or through networks of collaborating firms (Powell & Brantley 1992) as new knowledge grows out of social interaction (Hardy, Phillips & Lawrence 2003). Additionally the inherent tension between an organisation’s self-interest and the collective interest of the collaboration can hold the potential for creativity, as disequilibrium stops systems falling into the stability trap (Thomson, Perry & Miller 2008). Operating at this edge of chaos enables latent synergies and new ideas to emerge (Levy 1994; Wheatley 2006). Collaborations then provide an ongoing source of the potential for knowledge creation.

Mintzberg et al. (1996) endorses this view, by suggesting three general insights into collaboration, based on observations from inter-departmental new product development processes and people often unknowingly learning from each other. Firstly ‘people do not always realize, at least overtly, what they learn from each other, sometimes not even that they learn from each other’ (Mintzberg et al. 1996, p. 63). Secondly being part of actual collaboration practice, working together, is how new knowledge is created in the context and practice of the new product process. Thirdly people with different backgrounds and perspectives tend to learn different things, so it is important to trust and appreciate expertise. Given the social interaction that must occur in any form of collaborative venture it is noticeable that the knowledge effects are not more widely acknowledged in the literature. This may be because organisations enter into collaborative ventures for a range of strategic reasons, the drivers, and are unaware that the process will, in itself, create effects such as knowledge creation as an intangible benefit (Håkansson 1990; Hardy, Phillips & Lawrence 2003); alternatively organisations may not recognise or value that as an outcome. This reinforces the importance of the initial strategic intent.

The intent to create and transfer knowledge is complicated by the management of the structures of a collaborative venture due to their impact on social interaction (Ibarra 1992; Spekman et al. 1998). Little is known about how a learning alliance works (Grant & Baden-Fuller 2004; Khanna, Gulati & Nohria 1998) and that without absorptive capacity difficulties in knowledge transfer will occur (Inkpen & Pien 2006). Another key element to achieve knowledge effects is managers who are committed to life-long learning, with the key communication strengths of listening,

being reflective and open to new ideas and risk taking (Kotter 1996; Spekman et al. 1998).

The topics discussed in this chapter indicate that Figure 2.1 can be adapted to include strategic intent and the outcomes of collaboration, namely its effects. These are included in Figure 3.4 below. From the preceding discussions it is apparent that there is a need to investigate further how strategic intent may link to knowledge creation and transfer in collaborative ventures, what drives the formation of collaborative ventures and if knowledge creation and transfer are effects.

Figure 3.4 Strategic intent and collaboration effects

Business ecosystem Actor A Actor B Collaborative venture Strategic intent Strategic intent Collaboration effects

Collaboration effects include knowledge creation and transfer. The next chapter seeks to better understand knowledge creation and transfer, including the role of absorptive capacity.

3.6 Summary

Collaborative ventures are entities created through mutual intention for joint activity or activities, which connect actors in the dynamic context of the business ecosystem. Collaboration itself is an elusive concept that is inherently complex. Further complexity is added by the various arrangements that they can adopt such as strategic alliances and collaboration-enabled supply chains. Moreover the diversity of scholarly and practitioner interest in collaboration has resulted in a broad range of definitions.

Collaborative ventures are a rich source of reciprocal flows between organisations that occur in a dynamic business ecosystem. Operating in the business ecosystem, collaborative ventures are sub-systems that co-evolve, with their flexibility enabling exchange relationships from diverse, interacting systems. Benefits include observing significant trends and accessing information that may inform strategic decision making to help ensure both a sustainable organisation and a successful collaborative venture through strategic renewal.

Although often discussed as static entities, collaborative ventures are dynamic with an interactive process at their centre. Within these central processes are people, their relationships and systems, creating interdependencies. Collaborative ventures are formed to either exploit or explore opportunities, providing strategic benefits to the

organisations involved. Over time the initial strategic drivers may change as the collaborative venture evolves, with new opportunities and ideas emerging generating collaboration effects. Research has indicated that the organisation’s strategic intentions may drive collaborative venture formation rather than economic rationality.

With increasing collaborative ventures there are more opportunities to both create knowledge with, and transfer knowledge from, other organisations. With knowledge creation and transfer being a key driver and effect of a collaborative venture, the subsequent chapter investigates knowledge creation and transfer, with a view to identifying the role of strategic intent and context on its emergence.

Chapter 4 Interactivity, knowing and absorptive