Managing Inter-Organizational Partnership and Alliances - Essay Example

Managing Inter-Organizational Partnership and Alliances The nature of Collaboration - Introducing collaboration themes In contemporary world of management, it is important to encourage collaborative problem solving in both public and private sectors. Collaboration between labour, business and government has become famous over the years. It has been observed that during the period of crisis, there was increase in tendency of collaboration. Apart from solving problems during crisis, there are several other situations demanding collaboration, such as: existence of indivisible problems, conflicts rising from disadvantages of conventional disputative methods and also in case of increase in environmental turbulence (Gray, 1985). Collaboration refers to gathering of tangible resources (for example, information, labour and money) and appreciations by at least two or more stakeholders for solving certain problems, which cannot be solved by a single person. Serious problems often arise in the business environment, which cannot be handled by a single firm. The problems arise due to increase in external pressure, which has a tendency to obstruct the decision making of firms. The inability of individual firm to sustain in turbulent environment is mainly due to failure in producing any solution at domain level. As a result, collaboration between two or more firms is preferred in such a situation. It not only brings support to the victim firm, but also helps the whole collaboration to gain positive incentive (Gray, 1985). In current business world, alliance between two or more companies (from different parts of world or separate ends of supply chain) appears to have become a common phenomenon. Few alliances last until one partner is able to establish business again and in other cases, merger takes place between the firm’s capabilities and technologies. A successful collaboration provides firms with strong competitive edge. It is observed that top executives devote immense time for screening financial ability of their partners, rather than concentrating upon and managing human aspects of the alliance. The companies are worried about controlling the relation with their partners, instead of nurturing the relationship to an extent, which would help in building a strong bond (Gray, 1985). Hence, companies are unsuccessful in developing collaborative advantage as they lack one main resource. Business alliance actually focuses on three main aspects. Firstly, the alliances aim at yielding benefits for the partners and act as more than a mere deal. They can be identified as live systems that have the ability to nurture combined possibilities. Apart from the general reason for entering into a collaborative relationship, it offers new opportunities to both parties, which can be exploited in near future. Secondly, alliances result in successful collaboration, rather than facilitating exchange. The partners give respect and value to skills, which are entailed by the alliance. Thirdly, alliances cannot be controlled by a formal system; rather, it requires rich interpersonal connections in order to improve learning of both parties (Kanter, 1994). Exploring aims in collaboration The aim of collaboration is both prescriptive and positive. It basically focuses on profits of partnership and also concentrates on increasing benefits to a great extent. The main logic of collaboration is very simple to explain and understand. Firms do not necessarily have the capability to perform all business activities in most efficient manner. It is noticed that for completing few tasks, firms require new strengths though developments or acquisition of assets. The least costly and enduring ways of gaining assets is by way of partnership. It is referred as the arrangement where two or more companies combine their forces for accomplishing specific task (Macdonald and Chrisp, 2005). The cooperative goals with partners act as main motivator of the relationship that exists between their supply chains. The partnership gives a fresh vision to common objective of the partners. It also helps in initiating trust and encourages commitment towards the relationships in form of technical support, investment in resources or advice for other partner. The partners enter into broad-minded discussions whenever problems arise in order to resolve them. During the discussion session, both parties have the opportunity to build a good relation by helping each other and solving conflicts (Macdonald and Chrisp, 2005). Partnership takes place with an aim of resolving detrimental issues and accomplishing tasks, which cannot be done singly. If the partnership is not successful, then it can cause frustration among business individuals who had estimated success. Hence, it can be stated that for a particular partnership, inter-personal trust plays an essential function in building relations. It takes a long time to establish effective relationship, but once the partnership is successful, it brings along numerous benefits for both the companies (Macdonald and Chrisp, 2005). Trust plays an important role in the collaboration process. The vital role of inter-personal trust and inability to build a successful partnership is very critical for the changes in personnel relationship. In such a case, demand from partners become crucial than that of partnership. It is often noted that working in partnership limits scopes and can be considered as less career enhancing. The main advantage of partnership is that when involved parties end the partnership, the task, learning and trust dissolves with the closure. Nevertheless, the assets possessed by parties are regarded to be complementary, but are not equal in value and the partners are also not at par (Macdonald and Chrisp, 2005). It is not likely for both the organisations to keep similar set of assets. So, they have the tendency to seek dissimilar assets that are not available to them internally. Different organisations have their own way of operation; and after a partnership, new employees take time to adapt to newer situation. As partnership is not a temporary function, companies are encouraged to adhere to their own ways of operation as they have to return to the same, after the partnership ceases to exist (Macdonald and Chrisp, 2005). Exploring structure in collaboration The structure of collaboration is explained by considering few recent studies on joint venture. The structural perspective of joint venture focuses on relation between top management/partners and parents. The strategies that are devised during joint venture are assumed to be inadequately formulated. So, implementation of those strategies can entail problems in respect to the venture, if not successful. It is evident that implementation of those strategies require intelligent and skilled minds with the capability to guide entire system properly and efficiently (Hoon-Halbauer, 1999). The following elements need to be managed in order to make the venture successful: systems, people, structures, rewards and culture within organization. It is noticed that success of joint venture cannot be explicated only by the view point of interplay among members of the Board of Directors of joint venture as well as parent firms; rather, attempts should be taken for comprehending complex nature of the management situation (Hoon-Halbauer, 1999). The following figure elaborates the management structure of joint venture: Figure 1: Principle relationship between the members of the joint venture . (Source: Hoon-Halbauer, 1999) From the above figure, several vital conclusions can be drawn in order to explain the main relationship between structures of joint venture. There is always a conflicting relationship between partners of the joint venture as both have different state of mind in terms of management control. The structural relationship between venture and parent identifies parental control on the joint venture, which is required for operating autonomously. The relationship shared by the staff of the joint venture and that of the parent firm is very important for success of the venture (Hoon-Halbauer, 1999). It is observed that mistrust and difference in perception are two vital issues that arise between them. Lack of communication can lead to such a situation where the groups of staff as well as executives find it difficult to cope up with the other’s decision. However, the relation between staff and parent firm or staff and joint venture executive or parent and the executives is often questioned for any issue. It is observed that issue of allegiance occurs between them, which give shape to a situation, where the joint venture can be regarded as failure (Hoon-Halbauer, 1999). Issue of allegiance can be raised at all levels and not only in the operational level. There exist several similar problems in the top management. Exploring trust in collaboration The contemporary global economy requires effective collaboration across the national boundaries. The international networks and alliances between different firms help in establishing relation between different teams within companies, which are situated in separate geographic locations and have different cultures. It was observed in past few decades that the wave of global mergers, strategic alliance and acquisitions have multiplied the scope of collaboration. The development of this global network has assisted companies to expand internationally and gain strength by building competitive advantage (Child, 2001). The multinational companies have constantly located key activities and tried to build successful association with companies, which have the capability to support their activities. The activity includes development of new products for which highly skilled labours are required. The companies have constantly depended on teams for accomplishing tasks or completing a new project. The team believes in pooling individual experience and knowledge that assist them in completing a particular task. The companies, thus, seek global collaboration for the purpose of functioning successfully (Child, 2001). Currently, it has been realised by the managers that mutual trust plays an important role for success of international collaboration. Formal contracts are referred as vital milestones for collaboration and thus, provide a foundation for the business partners to work together. Even so, such contracts are rare and building a good foundation for partnership is a difficult task. Apart from formal contract, it has been noticed that informal understanding is also an essential factor for determining the exact method of collaboration. In such a situation, trust reinforces a successful relation (Child, 2001). Exploring power in collaboration The researchers consider the topic, power of collaboration, to be an important facet of paradox. The Board of Directors is referred as the highest authority in a particular company. As a result, the top management have the authority to exercise their power over subordinates. The board is expected to supply important recommendations and judgement after analysing performance of the employees and management as a whole. For analysing performance, the board require in-depth knowledge regarding employees as well as different issues of the corporation. The board needs to specify that the judgment is taken independently and assure that there is no biasness. The process of operation of board builds a collective strength and also demands trust of the employees in order to avoid any unpleasing situation in the company (Sundaramurthy and Lewis, 2003). Approaches for collaboration and control promote different models for individual companies. The main assumptions for collaboration and control disclose several human aspects like, the relation between management and owner and ways of imparting motivation among employees. Power articulates and recommends solutions when employees encounter challenges in an organisation and motivates them to overcome the same in an efficient manner. Risk differential acts as the main driver for conflict. Wiseman and Gomez-Mejia (1998 cited in Sundaramurthy and Lewis, 2003) had stated that principles of an individual are not risky as they hardly affect decision of the management because of the fact that top management has the sole authority to formulate principles and employees are bound to abide by them (Sundaramurthy and Lewis, 2003). The assumptions of collaboration and control dictate the roles and structures of the board. It is observed that the control approach highlights discipline. Fama (Sundaramurthy and Lewis, 2003) had stated that the board forms the real internal monitor for an organisation. The most important responsibility of the board is to scrutinize business decisions made in the firm. Apart from the directors, there are other individuals too, who facilitate the daily operation and maintain regular communication with the board. The positions occupied by CEO and chairman balances and check other positions in the board, thereby controlling the process (Sundaramurthy and Lewis, 2003). Exploring learning in collaboration Joint ventures, alliances, partnerships, networks and inter-organizational collaborative relationships have become important in current contemporary world of management. The main aim for collaboration is many, but the vital area of concern is learning. The learning that is generated through collaboration has become very prominent currently. The issues pertaining to learning are raised, which can be positive as well as negative. Both the issues help in determining the development of capacity and joint innovation in an organisation. The potency of an organization to acquire sufficient learning from its partner for delivering collaboration in areas has received attention over years (Huxham and Hibbert, 2008). There are various benefits that can be obtained from positive learning relationships. There are undesirable and potential results for the partners when learning become extensively unidirectional. It is assumed that attitudes of the partners towards learning have significant effects on broader results of collaboration. Nevertheless, when the topic is extensively studied, attitude of the partners is not the main area of concern; rather, the focus is mainly on the method of learning and its results. It is not important to understand the wide range of attitudes that are relevant for any situation and their effects. Inkpen and Beamish (1997 cited in Huxham and Hibbert, 2008; Huxham and Hibbert, 2008) had stated the difference between accessing and acquiring data from partners. Even so, they had not explicitly discussed ways in which attitudes of the partners will affect learning. Attitude of an opportunist can be presumed as the thinking pattern can be judged easily. Assimakopoulos and Macdonald (2003 cited in Huxham and Hibbert, 2008) had focussed on networks of innovation and also examined social and informal learning processes. Nonetheless, both the authors had not considered the influence of attitudes on these processes (Huxham and Hibbert, 2008). Exploring identity in collaboration Currently, trust in collaboration has become an important topic of research in organization studies. However, it has remained a subtle concept for few reasons. Firstly, it is observed that many academic researchers have elaborated on the concept in dissimilar manners and have obtained conflicting results from its maintenance and generation. Therefore, actual concept behind generation of trust is still blurred, especially when parties are distinguished by their conflicting backgrounds and goals. Secondly, it can be stated that the concept of trust has clarified vital theoretical problems pertaining to control. Many authors have argued on the topic of trust, which has been regarded as functional equivalent of control and power and subsequently have identified ways in which association can be power-based or trust-based. Nevertheless, in spite of the work, the association between trust and control have remained blurred (Maguire, Phillips and Hardy, 2001). In order to identify the relation between trust and control, the following steps are undertaken. Firstly, a model is developed for explaining underlying actions of power and controls. It allows one actor to trust others with respect to three different types of trust. Secondly, actors generate identification-based trust. It is defined as an essential form of trust, which involves both goodwill and predictability. Thirdly, the topic of control includes production of identity, which demonstrates how the concept of a discursive identity is constructed. It also gives emphasis on the link between normative control and identification-based trust (Maguire, Phillips and Hardy, 2001; Zhang and Huxham, 2009). Exploring leadership in collaboration There exist a number of literatures that explore leadership in collaboration. Collaborative leadership is applied in both inter and intra organizational contexts. It aims at highlighting the rise in connectivity and interdependence in context to governance and management. It also elaborates on disadvantages of conventional hierarchical approaches associated with leadership. Lipman-Blumen (1996 cited in Judge and Ryman, 2001) had accepted the challenge for devising new leadership pattern in order to highlight tension between two antithetical forces: diversity and interdependence. She had rejected competitive, manipulative, individualistic and charismatic leadership strategies as they are referred as connective leadership (Judge and Ryman, 2001). She had proposed models on the basis of three categories or set of behaviours that is employed by individuals for achieving their objectives. The first set is direct, which is closely related with various forms of expressions among individualism and diversity. The second set is relational, which gives emphasises on identification with others and lastly, instrumental set, which gives source to actions, that are ethically rooted for harmonising conflicting forces of diversity and interdependence (Judge and Ryman, 2001; Feyerherm, 1994). Exploring success in collaboration The success of collaboration depends on a number of factors. These factors are quite pivotal as companies tend to often overlook them, which leads to severe consequences. So, recently, the factors have become very important for facilitate successful collaboration (Huxham, Hibbert and Hearne, 2008). The main factor for the process of collaboration is dependence of the partners on each other. If interdependency does not exist between the partners, then it is likely that companies will encounter problems in near future. The behaviour of the partners also affects employees to a great extent. The miscommunication between the management and parent firms can bring in huge turmoil in operation of the collaboration. Therefore, it is very important for partners to foster and maintain cooperation so as to ensure success of the collaboration (Huxham, Hibbert and Hearne, 2008). Managing to collaborate There exist a number of advantages of doing business collaboratively. Even so, effectiveness of a partnership highly depends on nature of management; both after and before the collaboration has taken place. Efficient management system is the first stage for ensuring that collaboration is effective. The second step highlights the relationship and trust that is build among participants. This relationship is leveraged for achieving the aims of collaboration (Huxham and Vangen, 2005) Reference List Child, J., 2001. Trust: The fundamental bond in global collaboration. Organizational Dynamics, 29(4), pp. 274-88. Feyerherm, A. E., 1994. Leadership in collaboration: A Longitudinal study of Two inter-organizational rule-making groups. Leadership Quarterly, 5 (3/4), pp. 253-270. Gray, B., 1985. Conditions facilitating interorganizational collaboration. Human Relations, 38, pp. 911-936. Hoon-Halbauer, S., K., 1999. Managing Relationships Within Sino-Foreign Joint Ventures. Journal of World Business, 34 (4), pp.344-399. Huxham, C. and Hibbert, P., 2008. Manifested attitudes: Intricacies ofinter-partner learning in collaboration. Journal of Management Studies, 45(3), pp. 502 -529. Huxham, C. and Vangen, S., 2005. Managing to collaborate: The theory and practice of collaborative advantage. London: Routledge. Huxham, C., Hibbert, P. and Hearne, P., 2008. 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Identity construction and trust building in developing international collaborations. Journal of Applied Behavioral Science. 45(2), pp. 186 – 211. Read More