Value creation in social partnership

In reading the literature, I have identified three different perspectives on value creation: 1) value creation as a function of relations; 2) value creation as process; 3) value creation as communication (processes).

Value creation as a function of relations

The research on value creation in social partnerships tends to focus on how “social”

and synergistic types of value can be achieved or “co-created” (for example, Googins & Rochlin, 2000; Le Ber & Branzei 2010b; Austin & Seitanidi, 2012a and 2012b). In this perspective, value creation is largely conceptualised as a function of the resource exchange and the relationship between the partners (figure 2.6). For example, Googins and Rochlin (2000) outline an evolving “value exchange relationship” which is designed to “encourage partners to consider what type of relationship or commitment they need to make in order to ensure that value generation goals are achieved” (p. 138-139). Adding a fourth stage of

“transformational collaboration” to the collaboration continuum (figure 2.1), Austin and Seitanidi hypothesise that the chances of innovation and co-creation of synergistic value with social impact, which they argue is a “greater” (Austin, 2010b, p. 14) and “superior” type of value (Austin & Seitanidi, 2012b, p. 944), are higher when partners complement each other, leverage their distinct competencies, have a two-way flow of resources and strongly linked interests (Austin & Seitanidi, 2012a).

Figure 2.6: The Collaborative Value Creation Spectrum (Austin & Seitanidi, 2012a, p. 745)

From an identity perspective, but still with a focus on relations and social value creation, Brickson (2007) argues that an organisation’s identity orientation has an influence on its potential to advance particular types of social value both inside and outside the organisation. Organisational identity orientation is the “nature of assumed relations between an organisation and its stakeholders as perceived by members” of the organisation (p. 864). Where members of individualist organisations perceive the organisation as a sole entity distinct from others, members of collectivist organisations see the organisation as a member of larger groups of community and evaluate themselves on the basis of their contribution to these groups (Brickson, 2007).

Value creation as process

As mentioned, the CVC framework builds on the collaboration continuum where value creation is seen as a function of the collaboration stage, but it also adds a new perspective by exploring how the processes and sub-processes in partnership formation and evolution contribute to value creation. Drawing on Seitanidi and Crane’s (2009) process model presented above, Austin and Seitanidi (2012b) argue that the early stages of “partnership formation” and “partner selection” are critical for realising value “emerging from resource complementarity” and for determining the value creation potential of the partnership (p. 931). The assessments of the partnership potential, the operational complementarity between partners and the potential risks that are carried out in these stages can have a significant influence on the actual outcome of partnerships. The “partnership implementation” (design) process is considered to be the “value creation engine of cross-sector interaction”

(p. 936) where “valuable intangibles” are produced through working together (p.

937). As illustrated in figure 2.7, in this perspective, experimental and iterative

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design processes that take place at the organisational and partnership level may eventually add what Andreasen refers to as “structural and purpose congruency”

(cited in Austin & Seitanidi 2012b, p. 937) and stabilise partnership processes and structures which contributes to partner compatibility and generates interaction value (ibid). Examples of such design processes are goal setting and agreeing on partnership organisation and management, for example, through the drafting of a partnership agreement or a Memorandum of Understanding (ibid).

Figure 2.7: Value creation processes in Partnership Design and Operations (Austin &

Seitanidi, 2012b, p. 939)

Austin and Seitanidi (2012b) emphasise that interaction value (e.g. trust, relational capital, learning, knowledge, joint problem solving) is also generated through less structural measures such as the leadership, trust-building and communication and identity work described above – work that Austin and Seitanidi refer to as “trust-based governance” (p. 938). In this connection, Austin notes that a particular challenge in value creation is that it can be difficult to assess the value (Austin, 2010b, p. 14). He recommends that partners try to quantify the benefits and weigh them against costs (Austin, 2010a, p. 90), but appreciates that when quantification is impossible and when impacts that occur over long periods of time are hard to attribute, the assessment of value may boil down to a perception of what is

“perceived” as a “fair exchange” (Austin, 2010b, p. 13).

In the partnership “institutionalisation” process, the partnership is embedded within each organisation and has reached what Le Ber & Branzei refer to as “value frame fusion” (Austin and Seitanidi, 2012b, p. 940). At this stage, partners speak the

“same language” and may start new “cycles of value creation” where they develop new capabilities, value propositions and value frames, but this depends on the

“quality of the processes; the evolution of the partners’ interests, capabilities, and relationships and changes in the environment (ibid).

Le Ber and Branzei’s work on value frame fusion (2010b) and role (re)calibration (2010a) in social partnerships are other examples of process based contributions to the study of value creation. In addition to analysing value creation as a process, they also emphasise and describe the work that is involved. As mentioned above, Le Ber and Branzei (2010b) base their research on the value logics perspective and are concerned with understanding how “cross sector partners come to recognise and reconcile their divergent value creation frames in order to co-construct social value”

(p. 163). Drawing on Goffman, Kaplan and Snow et al., Le Ber and Branzei define frames as “collectively negotiated understandings that punctuate framing processes by providing shared interpretations of people, events, or settings” (p. 163).

According to Le Ber and Branzei, value frame fusion involves “effortful processes”

where for-profit and non-profit partners deliberately and “iteratively revise their own frames in relation to each other to reach common ground” (p. 164). Figure 2.8 illustrates four parallel framing processes that unfold “simultaneously and relationally” for the for-profit and non-profit “arms” of the partnership (p. 183).

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Figure 2.8: Value frame fusion (Le Ber & Branzei, 2010b, p. 184)

In frame negotiation, value frames are negotiated by moving back and forth between two diagnostic framing processes: frame contrast and frame rift. In the process of frame contrast, partners deliberately juxtapose and compare each other’s frame. In the process of frame rift, they jointly recognise that changes are taking the partnership in a different direction than one, or often both, partners desire. The prognostic framing processes called frame elasticity and frame plasticity help partners find solutions to social problems. Frame elasticity helps partners experiment with and interpret possible solutions (Benford and Snow, in Le Ber and Branzei, 2010b, p. 181). However, frame elasticity is not enough to “reach a shared appreciation of each other’s complementarities” (ibid). In their study, Le Ber and Branzei observed a fourth process which they refer to as frame plasticity, which refers to the partners’ efforts to take in some parts of their new understandings while rejecting others. Hence, frame plasticity is a process of compromising between prior understandings and new understandings. According to Le Ber and Branzei (2010b), frame plasticity does not “strive for frame alignment within the partnership but rather facilitates inner alignment across each partner’s sector-, partnership- and organization- specific understanding of what social value is and how it can best be co-created” (p. 181). As an outcome of these framing processes, partnerships may reach value frame fusion which is defined as “the construction of a new and evolving prognostic frame that motivates and disciplines partners’ cross

sector interactions while preserving their distinct contribution to value creation” (p.

164).

Le Ber and Branzei (2010a) have also analysed how the alignment of partnership roles and relationships affects the potential of social innovation and social value creation. Their conclusion is that success or failure depends on partners motivation to iteratively realign their roles and on how they frame their interaction. Their starting point is that role alignment and re-alignment is “ubiquitous and iterative”

and that partners continuously engage in relational processes that help them appraise progress towards their goals and partnership goals (p. 145). What they found in their study was that accounts of success or failure could trigger both individual and mutual role (re)calibrations. When, for example, a contract was signed or funding was granted, this stimulated role recalibration and provided new

“impetus for value renewal” (p. 159). Setbacks, change in management or failure to find funding had the same effect.

In summary, the literature presented in this section focuses on value creation processes from a (neo) institutional perspective where for profit and not for profit partners seek to overcome their differences. In the section below, I introduce a third perspective on value creation that is also process based but involves a different perspective on social partnerships. Furthermore, as in the example of Le Ber and Branzei’s work presented above, it foregrounds the work involved in value creation.

Value creation as communication

Koschmann et al. (2012) base their study of value creation in XSPs (their abbreviation of cross-sector partnerships) on the perspective that communication constitutes organisations (CCO) (Taylor & Van Every, 2000). Based on this, they view cross-sector partnerships as a “distinct organisational form that is constituted primarily through communication patterns as opposed to hierarchies, markets, or resource flows” (p. 334) and depict them as “textual co-orientation systems that emerge from situated communication processes” (ibid).

When it comes to the question of the value of XSPs, the main argument is, therefore, that assessing and increasing the value of partnerships must be based on processes that are associated with communicative constitution. Hence, in the CCO perspective, the assessment of value is not an “objective determination of organisational success” (Koschmann et al., 2012, p. 345-346). Instead, it focuses on how well the organisation “secures the legitimate right to continue to appropriate the capital of the individuals and collectives associated with it” (ibid). Capital being individuals’ commitment of time and effort, firms’ commitment of funds, government’s commitment of reputation and legal authority and civil society organisations’ commitment of knowledge and passion (ibid). Koschmann and colleagues, however, are not preoccupied with the value of partnerships at the

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individual level, but at the partnership level. In their view, the value of partnerships is their existence as “distinct entities” as well as their capacity to act, i.e. to make a difference to people and to the communities and “problem domains” in which they operate (ibid). Such “collective agency” emerges as an “authoritative text” which

“represents the collective, shows how its activities are connected in relative unity and portrays the relations of authority and criteria of appropriateness that become manifest in practice”. Further, it can “impact subsequent efforts to marshal the willing consent of others so as to attract the necessary capital to be successful” (p.

336-338). Koschmann et al., point to three communication practices that shape the authoritative text and increase the value potential. These are the increase of

“meaningful participation”, the management of the forces that draw people together towards a group identity (centripetal) and the forces that separate and divide people (centrifugal), and finally the creation of a distinct and stable partnership identity.

Further, they identify two communication practices that “manifest” the value of the partnership for stakeholders. These are “external intertextual influence” and

“accounts of capital transformation” that partnership members make to their home organisations to demonstrate the value of the partnership and “justify” the organisation’s engagement (p. 346).

The five communication practices are pictured in figure 2.9 with specific “empirical indicators” that are supposed to be used when assessing how well a partnership is doing in terms of these practices – and hence in terms of potential and overall value.

Figure 2.9: Communication practices to increase and assess cross-sector partnership value (Koschmann et al., 2012, p. 339)

In summary, in the CCO perspective the value of partnerships, defined as collective agency, is created through communication.

In the review of the literature on value and value creation that I have presented in this section, I did not find one clear definition of “value”, but a lot of knowledge was gained about how value is approached and understood in this research strand.

First, building on the functionalist idea that social partnerships are a way to optimise or improve a situation, understanding value in the context of social partnerships is positioned as crucial for understanding and optimising partnerships.

Second, a prominent understanding is that partners are embedded in different sector-based value logics, which are argued to be both a potential challenge to partnerships, but also a potential “source” of value and, not least, “added” value.

Third, as a motivation for and a potential outcome of partnerships, value is largely equated with “benefits” and assessed in a cost-benefit lens where valuation is conceptualised as the weighing of costs against benefits. Defined as potential benefits, value may come in many different forms, tangible and intangible, “social”

and “business” value, and “accrue” to partners at the individual as well as collective

“levels” in short-term or longer term time horizons. Fourth, the value potential is not realised as an outcome of partnerships until it has been created. Value creation is generally approached as a function of the relation between partners and it happens – or fails to happen - in the emergent, experimental and iterative processes

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where partners work individually and together to form and implement partnerships.

In a CCO perspective, value creation can also be seen as a communication process where value emerges from and is shaped through particular communication practices.

In the following and concluding section, I discuss where this leaves me with respect to my general research interest.