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«No. 86 – January 2016 How to assess CSO-business partnerships for development Bruce Byiers, Francesca Guadagno1, Karim Karaki2 Key messages The ...»

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No. 86 – January 2016

How to assess CSO-business

partnerships for development

Bruce Byiers, Francesca Guadagno1, Karim Karaki2

Key messages

The growing reference Stylised facts suggest This paper presents a case In particular it proposes

to CSO-business 'philanthropic' partnerships study approach to assess combining the above

partnerships as a are more frequent than these aspects based on factors with a political

'modality' for development 'strategic' partnerships but four dimensions: relation to economy understanding raises the importance of may be less sustainable; core business; degree of of interests and external understanding the private sector tends to partner engagement; factors to capture the the processes dominate but partnerships partnership activities; and complexity of such underlying these and their with shared control may governance structure. approaches in terms of policy implications. yield greater drivers and challenges developmental benefits. this is the basis for future work.

1. Introduction The recently agreed 2030 Agenda for Sustainable Development highlights the need for the development community to act collectively, and commit adequate resources, efforts and nous to tackle substantial and increasingly interrelated challenges: climate change, poverty, gender inequalities, and more.

Acknowledging the complexity of addressing such issues, the development community underlined the need for collaboration between national or subnational governments, private sector actors and civil society actors. As a way to pull together a set of complementary and reinforcing resources, capabilities and knowledge, inclusive multi-stakeholder partnerships will be a key instrument for the implementation of the Sustainable Development Goals (SDGs) Agenda. In this context, partnerships between civil society organisations (CSO) and business are attracting particular attention.

This paper is part of a broader study into the drivers and key constraints to effective strategic CSObusiness partnerships for development. Starting from the view that partnerships often prove to be Francesca Guadagno is an ECDPM Alumnus.

The authors would like to thank their colleagues San Bilal and Sebastian Grosse-Puppendahl for their guidance and useful contributions. The views expressed in this study are those of the authors only and should not be attributed to any other person or institution.

www.ecdpm.org/bn86 How to assess CSO-business partnerships for development challenging to form, initiate and implement, in practice the focus is specifically on the processes associated with establishing and operating CSO-business partnerships and the various actors and factors that impinge on this. The aim is not to evaluate the effectiveness of partnerships as such.

The expected findings will serve as a basis for understanding the key roles that donors and other policymakers could play in order to better support and facilitate strategic CSO-business partnerships. This will then feed the dialogue among donors and other partners in Europe and in Africa.

The main question addressed is as follows: What are the main partnerships characteristics and institutional factors that drive and constrain the process of establishing and maintaining effective CSO-business partnerships?

Building on an in-depth literature review on the topic (Byiers et al., 2015), this paper lays out an approach to analyse partnerships in a way that addresses the above question. The remainder of this paper is structured as follows: the next section briefly summarises the literature about CSO-business partnerships and is followed by an overview of the key gaps found in the literature. This section concludes by introducing the analytical framework that will shape the research. The final section presents the research method chosen to collect and analyse the data.

2. CSO-business partnerships: overview of the literature and analytical framework

2.1. Four dimensions, many classifications: How to unify existing taxonomies A large body of literature has emerged as a result of the rise in CSO-business partnerships. In order to examine the drivers and constraints in specific business-CSO partnerships, Byiers et al. (2015) identify four

key dimensions capturing the characteristics relevant to select and assess CSO-business partnerships:

1. Relation to core business: If partnerships involve the core business of the partners; !

2. Degree of partner’s engagement: if partnerships require more or less intense interactions and/or involve exchanges of resources and/or co-creation of new resources; !

3. Partnership’s activities: what activities partnerships involve and their subsequent level of complexity;

and !

4. Governance structures: How responsibility and power are distributed in the partnerships. !

Before discussing each dimension in more depth, it is worth noting that they are not mutually exclusive. On the contrary they should be seen as interrelated, thus making some combinations of characteristics more likely to be observed following the type of CSO-business partnership - from strategic to philanthropic.

Dimension 1: Partnerships related to core-business activities Partnerships can be classified according to whether the associated activities are related or not to partners’ core business activities. Philanthropic partnerships are generally not related to core business activities or with the overall strategy of the private partners. On the contrary, strategic partnerships are linked to the regular activities of the private sector partners and fit in their overall strategies.

In the literature, two streams can be distinguished: scholars who think this fundamental difference as a dichotomy (Ashman, 2001), and those who rather see it a continuum (e.g. Galaskiewicz and SinclairColman, 2006; UNGC, 2007; Tennyson et al., 2008). At one extreme, there are philanthropic donations, for example, on the other are collaborations to produce new goods or services targeted towards development.

Those thinking in continuum terms point to initiatives such as cause-related marketing initiatives and community development programs. Although in practice philanthropic partnerships seem to be the focus of more partnerships, there is a recent and growing interest in strategic partnerships, explained by its stronger potential to contribute to sustainable development.

www.ecdpm.org/bn86 How to assess CSO-business partnerships for development Dimension 2: Degree of partner’s engagement The degree of engagement is characterised by three main aspects: (i) the frequency of interactions, (ii) the intensity of interactions, and (iii) the type of resources shared. In that regard, strategic partnerships require a different degree of partner engagement than philanthropic partnerships.

In strategic partnerships, partners usually aim at co-creating value by, for example introducing new products or services that require combined collaborative inputs and efforts to achieve success. This in turn requires more frequent and more intense interactions between the partners, as they tend to collaborate on complex projects, which often have a longer time horizon. Strategic partnerships also involve more resources in terms of quantity and quality – not only partners share financial resources, but they more importantly exchange knowledge, expertise and competencies.

A high degree of engagement also implies more challenges: strategic partnerships are more complex relationships where partners need to (i) find common areas of interest and (ii) overcome cultural, organisational and communicational barriers which can affect the formation, initiation and implementation of partnerships. Combining and transferring knowledge requires frequent and intense interaction, in order to build trust and finding areas of overlapping expertise that can be a common ground for knowledge and skill transfer.

On the other hand, philanthropic partnerships mainly involve donations meaning that the relationship between partners is arm’s length, involving a lower degree of engagement. Partners are therefore less obliged to interact frequently or intensely, and their contribution within the partnership is often limited to financial resources (e.g. donations), which require virtually no interaction between the parties.

Dimension 3: Partnership’s activities In the literature, CSO-business partnerships are also classified according to the nature of the activities performed within the partnership, the third dimension of CSO-business partnerships.

As seen in the literature review (Byiers et al., 2015), activities implemented in philanthropic partnerships are by definition not related to a firm’s core business activities, and can be characterised by their simplicity.

Such activities comprehend e.g. advocacy, donations-sponsorships, marketing activities/campaigns, employee fundraising, or product licensing. The nature of the activity has important implications for the partnership process, independent of whether or not it relates to core business, and of the level of partner engagement.

Strategic partnerships, directly related with firms’ core business activities, have to do with their regular operations. Consequently, they involve a set of more complex activities related to marketing, production, or new business development, which are characterised by the concept of value co-creation. This highlights the need for such partnerships to have competent and resourceful members, so as to perform well in such activities.

Table 1 below summarises the key references and their focus in terms of the categories of CSO-business partnerships, according to the three dimensions discussed above.

Table 1. Philanthropic versus strategic partnerships in the literature

–  –  –

Dimension 4: Governance structures The fourth dimension discussed in the literature concerns the governance structures that shape or regulate CSO-business partnerships. Focusing on the partnerships process, governance structures define how the partnerships is set and managed (e.g. how partners select each other; how roles and responsibilities are divided); and (ii) reflect the way power is distributed within the partnership. They have consequently important implications for the internal functioning of the partnership, its decision-making processes and its outcome (developmental impact).

It is worth noting that governance structures are not necessarily related to the partnership’s type – whether partnerships are philanthropic or strategic, even if this may have an impact on how governance structures are formed. Having said that, and as highlighted by the Danish Red Cross study (2015), some characteristics of partnership’s governance such as managerial complexity/involvement can be linked to its type.

Table 2 complements Table 1 by illustrating the interrelation between the four dimensions and the partnership’s type when put in practice. To do that, dimensions are divided into their main characteristics (exception being the governance which characteristics are not always linked to the partnership types), which in turn are assessed according to the type of partnerships.

–  –  –

Table 2 - Overview of the four partnership dimensions Adapted from Danish Red Cross, (2015, p.14)

2.2. Stylised facts about CSO-business partnerships The review of CSO-business partnerships’ case studies provides the following set of four stylised facts.

Philanthropic partnerships seem to be more frequent than strategic partnerships...

In the survey of Dutch NGOs by Elbers (2004), philanthropic partnerships are found to be more common than strategic partnerships. Anecdotally, this still seems to be the case today.

As discussed above, philanthropic partnerships generally require lower levels of partner engagement, thus needing less resources to function and maintain than strategic partnerships. This argument gains further relevance in these times of resource scarcity, and is reflected in the State of Partnership Report, where most of the NGOs surveyed declared that their partnerships were “limited to a financial relationship” (Partnership Resource Center, 2011, p. 25). This short-term focus mirrors the potential added-value of strategic partnerships: intense interactions means more (both in quantity and types) resources exchanged, and increased spillovers effects.

However, strategic partnerships come at a high cost in terms of time and efforts. To implement an integrative partnership requires creation of a ‘partnership space’ or a space of ‘cultural compatibility’, i.e. an area of overlap of interests and cultures. This takes a lengthy process of trust building to mitigate the differences in terms of interests, missions and governance structures between the partners (Rondinelli and London, 2003). Trust is key to maximise synergies and build the success of the venture.

Besides trust, building a partnering space depends on the ‘organisational fit’ between the partners, or the “internal match or the compatibility between organisations” as phrased by Van Tulder and Pfisterer (2013:

2). Jamali and Keshishian (2008) define ‘compatibility’ as the “complementary strengths and weaknesses and commitment as reflected in the formalised commitment of necessary time, energy and resources” (p.

280). This match happens when partner interests are aligned, and their role considered appropriate in the context of the partnership. Although ambiguity about the motivations for working together and the processes for collective decision-making are common (Rein and Stott, 2009), ensuring an organisational fit between partners is a way to mitigate and/or avoid misunderstandings, misallocation of costs and benefits, mismatches of power, mismatched partners, misfortunes of time, and mistrust (Berger et al., 2004).

While the literature seems to suggest that philanthropic partnerships are more frequent than strategic partnerships, it would be interesting to test the veracity of the arguments advanced in the literature

–  –  –

justifying the reasons why firms and CSO engage in philanthropic partnerships; and to what extent strategic partnerships can be better incentivised so as to be considered as attractive as philanthropic partnerships.

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