Austin Strategic Collaboration Between Nonprofits and Business

Nonprofit and Voluntary Sector Quarterly
http://nvs.sagepub.com Strategic Collaboration Between Nonprofits and Business

James E. Austin Nonprofit and Voluntary Sector Quarterly 2000; 29; 69 DOI: 10.1177/089976400773746346 The online version of this article can be found at: http://nvs.sagepub.com/cgi/content/abstract/29/suppl_1/69
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Strategic Collaboration
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Strategic Collaboration Between Nonprofits and Businesses

James E. Austin Harvard Business School
Collaboration between nonprofits and businesses is increasing and becoming more strategically important. Based on 15 case studies, this article presents a cross-sector collaboration framework consisting of four components. First, the collaboration continuum provides a conceptual framework for categorizing different types of partnerships and studying their possible evolution through three principal stages: philanthropic, transactional, and integrative. Second, the collaboration value construct facilitates the analysis of the definition, creation, balance, and renewal of the value generated in different types of alliances. Third, a set of alliance drivers is identified that determines the nature and functioning of the partnerships. Fourth, alliance enablers that contribute to the effective management of the relationship are set forth. The article discusses the dynamics of the alliance marketplace. The research builds on and extends existing interorganizational research theories by providing a distinctive conceptual framework and new empirical understanding 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 intensify.1 A convergence of political, economic, and social pressures is fostering such collaboration. Governments are downsizing and privatizing due to fiscal 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 central governments to the local level and from the public sector to the private 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 more effective organizational approaches is bringing nonprofits and corporations together. These alliances are also emerging because businesses are
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 earlier 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 2000 Sage Publications, Inc. 69-97
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increasingly reexamining their traditional philanthropic practices and seeking 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 theoretical and empirical study by multiple disciplines for decades. Collaboration continues to attract intense scholarly attention in special journal issues such as 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) who have, over the years, provided insightful reviews of the literature in this field concur that none of the various, existing discipline-based theories adequately explain why IORs arise 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 2 (Burke, 1999; Gray & Wood, 1991; Kanter, 1994). Much of the foregoing theory development has concerned relationships between similar types of organization (e.g., corporation to corporation or nonprofit 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). There is a relative paucity of field-based studies and conceptualization on alli3 ances between businesses and nonprofits. This article addresses that knowledge gap by providing an analytical framework and substantiating empirical examples that will deepen our understanding of how such alliances arise and evolve, with particular emphasis on which factors contribute to their viability. From a theoretical perspective, the study hopefully will further illuminate additional ways to conceptualize and analyze cross-sector collaboration. A 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 nonprofitbusiness alliances, selected because they were considered to be of strategic importance to the partners, were studied in-depth through structured interviews with key decision mak4 ers in both the nonprofit and business organizations. To further test and refine the conceptualization and findings derived from these case studies, we subsequently surveyed 10 additional partnerships, which again were selected on the basis of perceived significance by the partners and reputed effectiveness as reported by third party sources. For these corroborative case studies,
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we also used structured interviews, but with fewer interviewees. There was also an attempt to have the sample encompass a broad range of social purpose activities and alliances that had existed for many years so as to permit investigation of their evolution. The alliances studied are listed in the appendix and treated more extensively in the authors book (Austin, 2000).5 The article will set forth a cross-sector collaboration framework consisting of the following four components:
The collaboration continuum (CC) enables us to categorize and characterize the different
types of NPObusiness relationships and the stages that they may pass through as an alliance evolves. The collaboration value construct (CVC) helps us to systematically analyze and understand 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 crosssector collaborationalignment of strategy, mission, and values; personal connection and relationships; value generation and shared visioning; and continual learning. Alliance enablers are a constellation of supporting factors that deal with relationship management and contribute to partnering effectivenessfocused 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
A basic question for practitioners and researchers is What kind of collaboration do we have, and how might it evolve over time? The interaction between the nonprofit and the corporation can be usefully envisioned as a CC. 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 characterizes most nonprofitbusiness relationships today, but increasing numbers are 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.
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Table 1. Collaboration Continuum Stage II (Transactional)
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Nature of Relationship Level of engagement Importance to mission Magnitude of resources Scope of activities Interaction level Managerial complexity Strategic value
Stage I (Philanthropic) Low Peripheral Small Narrow Infrequent Simple Minor
Stage III (Integrative) High Central Big Broad Intensive Complex Major
As shown in Table 1, if the relationship migrates along the CC, the nature of 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 missions shifts from peripheral to central. The magnitude of the financial, 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 contact in the philanthropic stage to increasing frequency in the transactional and integrative stages. Managing the relationship evolves from a simple task to a complex undertaking. The strategic value of the alliance increases from minor to major. This conceptualization allows collaborators to locate their relationship on the continuum as a basis for discussing what type of relationship they have, how it is evolving, and where they want it to go. Progression along the continuum 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. Some partners may decide that lower levels of engagement may better suit their situations, objectives, or strategies (Sinclair & Galaskiewicz, 1997). Although our research suggests that there are significant collaboration gains to be had by moving to a high level of engagement, both in specific benefits 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 are not discrete but rather blend into each other. Alliances can have characteristics 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 different points on the continuum. Again, the CC helps us think more systematically and strategically about the nature of the collaborative configurations. It is important to recognize that most corporations have some type of relationship with many different NPOs, and many NPOs, too, have several corporate relationships. Multiple IORs can be usefully approached as managing a
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collaboration portfolio. The task is identifying the purpose or function of each relationship, its relative importance, and its transformative potential as a strategic alliance. Segmenting these relationships into the different CC stages may facilitate this. Many of the relationships might be usefully retained in the philanthropic stage, whereas some others might be targeted for specific transactional collaborations, and a smaller number for the more complex and potentially 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
It began with a request in 1988 for 50 pairs of boots from Timberland as part of the City Year uniform for its youth service corps. An administrative assistant approved the request. For Timberland, this was nothing more than a minor charitable gift. The next year, City Year requested and received 70 pairs. Michael Brown, the cofounder of City Year, recounted, This was now a 2-year-old relationship with two conversations, two faxes, and a feeling a little bit like, Okay, they just did that, send a thank you, but dont bother them. Timberlands chief operating officer (COO), Jeff Swartz, described this interaction as traditional charitable giving, reactive to a supplicants request. 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 Timberlands 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 Years 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 communication was the mode of operation. This behavior would appear to fit into the resource dependence theory explanation. From the corporate side, Timberland was operating under the charity syndrome: give to good causes that solicit assistance but deal with these as a peripheral part of your activities. The value flow was largely seen as one-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-level engagements between nonprofits and companies are commonplace and often long-standing. They represent a form of limited reciprocity consistent with social exchange theory. However, many engagements, including
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City Year and Timberlands, evolve to the next relationship stage. The partners 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 relationship 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 others agendas. We acknowledge that they are separate; Timberlands job is to make boots and earn profit, and City Years 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 buyerseller relationship. The cornerstone for building a richer collaboration was the identification of 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. Timberland became the provider of City Years entire uniform. This was important to City Year as it created visible identity. For Timberland, it served to publicize 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 Swartzs mind the value of direct community service by employees as a means of fostering team building, leadership development, interdepartmental relationships, project management, and in general, a high-involvement culture in which individual and collective efforts make a difference in outcomes within the business and outside. City Year did a presentation at the opening of a Timberland retail outlet and, later, at the companys international sales meeting. Timberland upped 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 assistance to City Year in the areas of finance, marketing, and human resource
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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 missions, organizations, and activities. Swartz refers to this as a mutual mission relationship. He describes it as boundarylessness: Its not them and us, its just we are us and they are them and we are together us, too. The creation of the we means an ever-widening set of personal and organizational connections. The relationship network expands beyond the leaders and early proponents and converts. Swartz asserts, Our organization and their organization, while not completely co-mingled, are much more linked. Its not simply personal, its also collective. While we remain separate organizations, when we come together to do things, we become one organization. In effect, the alliance 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 Stage III behavior. Timberlands human resources vice president spent 2 days at City Year helping them structure pay plans and labor policies, for which she used 20 of her paid-time community service hours allotted by the company for 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 companys manufacturing plants. Instead of being a transactional relationship like a commercial exchange, it is more like an equity-based relationship in a joint venture. The organizational integration was significantly advanced by Swartz being named to City Years board of directors and then later becoming its chairman. In several Stage III collaborations studied, the corporations top executives have become board members of the nonprofit, thereby engaging in the governance function of their partner. City Years 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 distinctly imprinted the others organizational culture. Community service became an even more integral part of Timberlands strategy and culture, leading 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
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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 being created, which leads us to the second component of our cross-sector collaboration framework.
COLLABORATION VALUE CONSTRUCT
Every relationship involves an exchange of value between the participants. There are four dimensions of the CVC: value definition before an alliance begins, and value creation, balance, and renewal during the collaboration. These elements apply to all types and stages of collaboration. A key question is What is a particular collaborations 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 configurations is central to the creation and continued development of an alliance. We present the CVC here as part of our analytical framework for thinking systematically about the different types of collaboration and their dynamics. We shall 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 partner and to society, the greater guidance the collaboration will have. In this 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, technology and expertise, new perspectives, and greater name recognition. The corporations we studied pointed to benefits such as enhanced reputation and image; improved employee morale, recruiting, retention, and skill development; enrichment of corporate values and culture; increased consumer patronage and investor appreciation; and technology testing and development (Austin, 1998b, Kanter, 1999). It is evident that there are multiple sources of value and, therefore, collaboration motivations for each partner. Defining these clearly is seen as critical. 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. Mercks 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 cant lose. That all needs to be done up front.
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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 consideration of what all sides need lays the base for a successful partnership. Different needs lead organizations to weight benefits quite differently. There is not a standard benefits package. For example, Reading Is Fundamental, 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 recognition you get for doing it. So the relationship that helps us get the word out about the organization is important. Its hard to put a dollar value on it. Its important not just for the branding effort of a national nonprofit organization, but its also important for the local volunteers in the field who absolutely love to feel a part of something big and important.
On the corporate side, Georgia-Pacific (G-P) believed that, by partnering with TNC in the joint management of environmentally important timberlands, it would enhance its credibility with government regulators. This motivation is consistent with legitimization and political theories that stress using collaboration as a vehicle for increasing influence and power (Galaskiewicz, 1985; Oliver, 1990). Reeboks 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 variables. Although early studies found little relationship between corporate social performance and financial results (Arlow & Gannon, 1982; Cochran & Wood, 1984; McElroy & Siegfried, 1986), more recent analyses have identified positive relationships (Bloom, Hussein, & Szykman, 1995; The Conference Board, 1993; Dechant & Altman, 1994; Lewin & Sabater, 1996; Waddock & Graves, 1997). Benefits may be expressed both quantitatively and qualitatively; value is in the eyes of each beholder. Whatever the benefit indicators are, they must be deemed useful and convincing to the relevant stakeholders in each organization if the alliance is to garner the internal support necessary for sustainability. 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
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particular interest is the incremental or distinctive social value created by the collaboration as contrasted to the partners individual actions. Finally, value determination must also weigh the costs and risks of the specific collaboration relative to the benefits. Costs involve the resources that must be deployed to mount and manage a collaboration rather than being put to an alternative use (i.e., their opportunity costs). Often, the scarcest resource that needs to be considered is management and staff time. A major risk in partnering is to the organizations names and reputations. IOR theories point to the tension that arises in having to relinquish some control and autonomy to gain the benefits of collaboration. Reputational risk often arises in transactional relationships involving cause-related marketing in which the NPOs 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 endorsement and its advertising usage have brought suits from several states attorney generals who are concerned about consumer deception (Abelson, 1999). The deeper the alliance, the more exposed each partner is to what happens to the other. However, that depth also enables the partners to manage this risk more effectively. Both City Year and Timberland, for example, have encountered difficulties in their respective operations that led outsiders to question each partners 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 positive benefit-cost ratio, our research revealed that this is not a simple calculation. Not all benefits or costs are directly or easily translatable into monetary terms. Strategic value is often a complex equation rooted in judgment and surrounded 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 about value creation. This involves scrutinizing each organizations resources 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 respective sectors. This tends to be the nature of the value in Stage I philanthropic collaborations. Second, core competencies exchange uses each institutions distinctive capabilities to generate benefits to the partner and the collaboration. These flows
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have greater potential value creation because each organization is leveraging special competencies and providing proprietary or somewhat special resources. For example, in the CAREStarbucks 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, joint value creation represents benefits that are not bilateral resource exchanges but rather joint products or services derived from the combination of the organizations competencies and resources, which characterize Stage III integrative alliances. This is a particularly high-value source because it is uniquely due to the alliances existence and therefore nonreplicable. For example, the Bidwell Training Center is a Pittsburgh nonprofit that trains economically disadvantaged African Americans in a variety of trades. Bidwell combined its minority recruiting capabilities and training facilities with Bayers and other companies technical knowledge to create a chemical technician training program that has graduated over 100 individuals who have obtained 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 case in the NPObusiness alliances. The strategic use of alliances appears to be 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. The extent to which collaborators respective resources and core competencies can be accessed and deployed for strategic value depends on the quality and closeness of the partners relationship. A MCIWorldCom manager stated,
We have received wonderful benefits in working with our nonprofit partners. And we wouldnt know about half the opportunities if we didnt have a true partnership. We wouldnt know about their distribution channels, their memberships. They have unbelievable assets, but they dont 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
Stronger and more enduring alliances have a balanced exchange of value in the collaboration construct. As former CARE president, Phil Johnston
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observed, It doesnt work very well and is not sustainable over time when there is an imbalance either way, which is supportive of Croppers (1996) assertion about balance being essential to collaboration sustainability. The benefits flow in both directions and are deemed by the partners to be acceptably commensurate in value. This seems to be attained where each partner is actively seeking to find ways to advance the others agenda and where they have learned deeply about the others business, a condition that Rackham, Friedman, and Ruff (1996) also find true in business supplier partnerships. If the exchange gets significantly out of balance, it can erode the dominant benefit providers motivation to continue investing in the relationship or tempt it to exercise undue influence over the recipient partner, a concern cited in 6 resource dependency theory. It is worth noting that even a classic philanthropic organization like United Way must deal with a more complex value-balancing equation because its relationships are migrating to the transaction and organizational integration stages. Simply publicizing the donors contribution is no longer sufficient. The executive director of the United Way of Seattle, which has a close relationship with the retailer Nordstrom Company, commented,
Blake Nordstrom called me a month ago and said, Were looking at our community programs nationally. Can you help us? We put a lot of work in on this and gave them some good recommendations. You have to be prepared to give that level of effort, because when youre 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 needs and priorities change). Relationships are dynamic and subject to alteration due to changes in their respective external environments. Even more subtly, 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 commercial 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 efficiently deal directly with the shelters. The brokering function of the AHA was
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no longer needed, so the strength of the alliance deteriorated. At such a juncture, the partners can search for new activities or resource exchange that would renew the alliances 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 CAREStarbucks alliance, over time, Starbucks learned a great deal about designing development projects and even began to do so without CAREs assistance. Similarly, Timberland absorbed City Years techniques for mounting community service projects for its employees. In both instances, 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-sector collaborations, this section presents findings regarding the determinants of the dynamics of an alliance: What is powering the alliance? From our research, we have identified four alliance drivers that appear to contribute significantly to the strength of the collaboration: alignment of strategy, mission, and values; personal connection and relationships; value generation and shared visioning; and continual learning.
Strategy, Mission, and Values Alignment
The more centrally aligned the partnership purpose is to each organizations strategy and mission, the more important and vigorous the relationship appears to be. The greater the mission mesh, the richer the collaboration. Similarly, the more congruent the partners values, the stronger the alliances cohesion. In most of the alliances studied, the collaboration enabled the corporations 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 worlds largest forest products companies, had pursued competing agendas for common lands. Both, however, independently decided that they had to change their strategies. TNC recognized that its strategy of buying land parcels would never be sufficient to protect large ecosystems, most of which included economic resourceusing 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 solutions that would harmonize environmental preservation with economic
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usage. TNC became more of an economic pragmatist, and G-P became more of 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 Georgias Altamaha River involving TNC, G-P, other forest products companies, and governmental agencies. The collaborative modality was a superior approach for managing their external uncertainty, which is supportive of Olivers (1990) assertion of stability or predictability as a critical contingency for relationship formation. Often, the alignment is more straightforward. Ralston Purinas business interest in a larger pet population coincided with the AHAs social concern about reducing animal euthanasia. Pfizers logical concern about the health of the neighborhood surrounding its original manufacturing-site facilities matched well with Beginning With Childrens development of a local school. Time-Warner, a media company, was a clear fit with the nonprofit Time To Read. Both Mercks and Hewlett-Packards businesses are intimately and ultimately linked to the supply of trained scientists, so their engagements with nonprofits strengthening science education were clear fits, just as the interests of Bidwell and Bayer coincided in the training of chemical technicians. When the partnerships migrate into the third stage on the CC, the mission and values 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, whereby the AMA logo would be placed exclusively on nine products in 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). Alignment is in the eyes of the beholder. What looked great to the AMA marketing staff looked horrendous to other key constituencies. This flags the importance 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 emotional connection that individuals make both with the social mission and with their counterparts in the other organization. Although IOR literature emphasizes interpersonal relationships, our findings suggest that, for these crosssector alliances, the double connect with people and purpose is important.
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The mission connect is the motivational driver, and the personal relationships are the glue that binds the organizations together. Our research confirms others 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. American Eagle Outfitters receptivity to partnering with Jumpstart, which prepares low-income preschoolers to be successfully prepared to enter school, was due in part to the personal connection that chief executive officer (CEO) George Kolber could make to the NPOs mission:
One of the things with Jumpstart that hit me was that I grew up in an immigrant foster family. And, quite honestly, I struggled with reading early on. So I sort of connected with Jumpstarts mission right away on a personal level.
Kolber and Jumpstarts CEO Aaron Lieberman soon discovered that they shared a common vision and goals about child education and about corporations involvement in community betterment. These shared values created a fertile terrain for growing a healthy relationship, but personal dynamics can be determinant. As Kolber puts it, You have to like the people youre dealing with. If the people turn you off, I dont care how good the cause is, it doesnt 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 nonprofits operations and beneficiaries. A turning point for the Timberland leadership 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 CAREStarbucks relationship continued smoothly through a change in CEOs at CARE. Times 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 companys Agfa division stalled when its head left the company before support for the collaboration had been adequately broadened. The personal relationships are particularly central to the creation of interorganizational trust. Our interviewees all pointed to the importance of trust to the strength of the collaboration. Trust appears to be one of the critical elements common to most forms of collaboration (Burke, 1999; Dickson & Weaver, 1997; Kanter, 1994; Larson, 1992; Rackham et al., 1996; Ring & Van de Ven, 1994; Waddock, 1988a; Wasserman & Galaskiewicz, 1994). Although good relationships will not guarantee alliance success, bad interpersonal relations can destroy a partnership.
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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 resources and distinctive capabilities to generate benefits for each partner and 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 for our success is that we dont just write a check. We put our resources behind the dollars. Hewlett-Packard provides the National Science Resources Council (NSRC) and 41 school districts with grants of about $3 million, but an HP executive commented, Every district Ive 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 were about. Partners collective capacity to envision ever more enriching and powerful engagement opportunities accelerates and extends the development and value of the alliance. Grays (1989) work cited advancing a shared vision as central to productive collective strategies. City Year cofounder Alan Khazei confirmed this:
We have been able to go the furthest and develop the deepest partnership with Timberland 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 Years 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.
Timberlands COO Swartz added, We are working on a mission that, while it supports our separate agendas, is really focused and fashioned together, and thats a layer that I really want to continue to build. G-Ps corporate strategy has facilitated the development of additional projects 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. TNCs CEO, John Sawhill, summarized the importance of collective visioning: The better partnerships are the ones where they bring us in at the brainstorming phase, rather than when they have already
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decided exactly what they want to do and theyre just confronting us with a final plan.
Continual Learning
In the stronger collaborations, the partners are engaged in continual learning about the partnering process and how it can generate more value. There is openness and hunger to find new ways to engage more effectively. This discovery ethic is fostered by the win-win outcome from learning in the collaborative relationship. Research on business-to-business alliances also points to the inducing effects on learning of these cooperative relationships as contrasted to traditional control-oriented relationships (Hagedoorn & Narula, 1996; Rackham et al., 1996). In the City YearTimberland alliance, for example, both organizations see the relationship as a learning laboratory. As Timberlands vice president of social enterprise, Ken Freitas, expressed, It is not formulaic. There is a continual willingness on both sides to explore and try out new activities and relationship dimensions. There appears to be a discovery ethic that fosters a striving for an ever deeper and richer relationship. Inherent in shared visioning and continual learning is a longer time perspective. This is powerful because it reduces the risk of short-term operating problems derailing the relationship.
ALLIANCE ENABLERS
The alliance drivers are the primary forces propelling the collaboration, but supporting these appears to be a constellation of factors that enable the effective management of the partnering relationship and process, factors such as focused attention, communication, organizational system, and mutual expectations and accountability.
Focused Attention
An intense and deep relationship requires considerable attention. A strategic 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,
For our partnerships, we mandate top-echelon support, because when you need to change the direction of the ship, you need the captain. You cant change the direction by committee. Mercks CEO is genuinely committed to this whole process. He really believes in what hes doing. There is also senior-level involvement from our end. Our president took the leadership in setting this partnership up.
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A Beginning With Children executive echoed this perspective: When we open a new school, Pfizers CEO will be there. Yet, I know that is not always the case with other partnerships. MCIWorldCom flagged that this expectation also holds for the nonprofit: We dont sign partnerships unless theyre brought all the way up to the highest ranking level of the nonprofits. We want to be a strategic partner with these nonprofits; we dont want to be just 1 of 50 partners. Timberlands approach to its cross-sector alliance with City Year is analogous to its relationship with its commercial partners. The company limits its relationships to a small number of carefully selected suppliers and then invests heavily in making that a highly productive and powerful relationship. Rather than spreading its resources and collaborative energy across many partners, it focuses its efforts. Although this increases dependency on the partner, it also increases the probability of enhanced performance.
Communication
To realize the full benefits of an alliance, the partners need to have means of 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. Its readjusting our employees time clocks. And negotiations 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 accomplished. If companies can take the time to really develop a relationship, thats what they need to do.
Internal communication is also important, as indicated by a Reebok executive:

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 employee newsletter and ways to get involved. The extent to which you make things accessible to employees increases knowledge and pride.
The AHA spokesperson recommended,

Be very verbal about the cause. Share it widely with the companys 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
true if it is a second or third or fourth generation relationship; the history of the partnership can get somewhat lost.
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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 commented, Pfizer is a huge company, but it is an efficient one. We have always had a contact person who was very effective. Our program has been facilitated 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:
Once the proposal is put together, we put together a team. Its not one person like a project manager. Their web site people are hooked up with our web site people, their PR [public relations] people with our PR people, their marketing people with ours. Its truly a partnership. That team then puts together the action plan and implementation plan and time frame.
A National Geographic manager confirmed, On multiple occasions, MCIWorldCom have gotten all the partners together. Every step of the way, theyve been very inclusive. Both G-P and TNC have developed systems that reward collaborative behavior. At G-P, a portion of an individuals bonus is tied to his performance on the companys 11-point environmental strategy. TNCs Sawhill also emphasized the importance of incorporating partnership activities into performance objectives: Establish someone in the corporation who has a clear responsibility for making the partnership worksomeone who says, This is my job. This is in my annual objective. Ive got to get this done.
Mutual Expectations and Accountability
Clarity of expectations about the deliverables from each partner appears to 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. Timberlands Ken Freitas asserted, The level of expectation is a fundamental part of our relationship. Timberland COO Jeff Swartz added,
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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 doesnt 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.
From the corporate side, MCIWorldCom indicated that it applies its best practices 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 of the social purpose alliance marketplace. It is very underdeveloped and inefficient. Potential partners do not have good information sources about one another or established mechanisms for seeking each other out. Further exacerbating this process is the relative lack of experience that nonprofits and corporations 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 collaboration process in multiple ways. The numbers of Stage II (transactional) and Stage III (integrative) collaborations are relatively limited, such that experience 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.
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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 different collaborations assets. Benefit assessment is dependent on each partners specific situation and valuation criteria. There are multiple currencies that are not easily translated into dollar terms. The small number of firms and transactions also reduces the level of competition in the alliance marketplace, therefore impeding the determination of value by market forces. Nonprofits, particularly, 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, Its 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 these as relatively narrow and sharply focused transactions. Measures used in advertising, such as audience size, location, demographics, and others, are being 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 alliance myopia. The multifaceted collaboration configurations in Stages II and III, although they are more difficult to value, may have greater worth. Relatively narrow Stage I or Stage II collaborations are particularly exposed 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 marketplace 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 member warned,
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There is the danger of the nonprofit being treated like any other vendor. Theres the advertising 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 companys problems for it and be treated the same way a fix-it agency would be treated.
In the business world, switching vendors is commonplace if the relationship is 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 activities. 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 alliances between nonprofits and businesses. This final section provides some 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 collaboration types and stages. The alignment variable reveals increasing compatibility, congruency, and complementarity of strategy, mission, and values across the continuum. This variable also focuses on how the partners basic attitude toward collaboration moves from benefactorgrantee 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 motivational core of collaboration to illustrate how organizations core resources are mobi- lized and combined in increasingly distinct and powerful ways. The
Table 2. Philanthropic Minimal fit required, beyond a shared interest in a particular issue area Gratefulness and charity orientation Minimal personal connection to cause or people Strong personal connection at leadership level Expanded personal relationships throughout the organization Increased understanding and trust Core competency transfer More equal exchange of resources Shared visioning at top of organization Projects of limited scope and risk Overlap in mission and values Partnering mindset Relationship as tactical tool High mission mesh Shared values Relationship as strategic tool Expanded opportunities for direct employee involvement in relationship Deep personal relationships and trust across organization We mentality replaces us versus them Joint value creation Value renewal Culture of each organization influenced by the other Projects identified and developed at all levels within the organization, with leadership support Broader scope of activities of strategic significance Systematic learning and innovation Discovery ethic Significant and ongoing attention from top management Transactional Integrative
Collaboration Continuum: Drivers and Enablers
Alignment of strategy, mission, values
Personal connection and relationships
Value generation and shared visioning
Generic resource transfer Typically unequal exchange of resources Minimal collaboration in defining activities Corporations respond to specific requests from nonprofits
Continual learning Little top leadership attention Generally annually around grant process Corporate contact usually in community affairs or foundation; nonprofit contact usually in development Use for stated purpose but minimal other performance expectations
Minimal or informal learning
More active learning about process and substance Top management engaged at start-up and periodically More frequent communication between partners and externally More people involved with responsibilities for specific collaboration activities Explicit performance expectations for targeted collaboration activities
Focused attention
Communication
Explicit internal and external communication strategies and processes Partner relationship managers Organizational integration in execution, including shared resources High performance expectations and accountability for results Incentives for collaboration
Organizational systems
Mutual expectations and accountability
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capacity for value renovation grows as one advances along the continuum. Value renewal is fostered by an ever intensifying and more systematic process of continual learning and resultant innovation. The enabling variables reveal a growing capability to manage the partnership relationship in a more explicit 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 broadened and made more explicit. Partners hold increasingly high mutual expectations 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 continuum as indicated in Tables 1 and 2, one will likely identify that some dimensions of an alliance fall more toward one stage and others toward another. The issue is whether such a configuration creates counterproductive inconsistencies or, in fact, best fits the particular circumstances of the partners and the functions and benefits required from the collaboration. It is likely that the evolution 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 collaborators will decide that a particular form of alliance is optimum for their 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 Outfitters began their relationship in 1997 and, within 2 years, had accelerated 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 YearTimberland alliance. In effect, this secondgeneration collaboration had learned from the first and was more prepared for the alliance-building process. A final issue in alliance evolution is longevity. Alliances are not necessarily 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).
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Terminating an alliance can be a recognition of successfully completing a joint mission (Gomes-Casseres, 1996). However, even if the originating project was planned as a single, finite undertaking, partners often are and should be open to further collaborations. The partnering process constitutes an investment in collaborative capacity and in relationship building. These are assets that often 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 partners circumstances 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 collaborations 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 possible evolution. The CVC builds on and confirms the relevancy of resource 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 important and expanding phenomenon that merits further study. There is a need for further field-based research to expand the empirical database on such collaborations. Retrospective or longitudinal clinical studies would enable a refinement of the CC stages and descriptors of alliance evolution. We also need to deepen our understanding of collaboration dynamics and performance determinants, 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 developing 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 collaboration in various ways. The distinctions included different performance measures, competitive dynamics, organizational cultures, decision-making styles, personnel competencies, professional languages, incentive and motivational structures, and emotional content. For example, both the City Year and Timberland executives thought that the potential and process for value creation was different in cross-sector corporationnonprofit alliances than in same-sector collaborations. City Year cofounder Michael Brown indicated, We tend to look at a for-profit as a place to connect a million dots. And we tend to work with nonprofits to connect to
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one or two dots. The corporations have many more access points. Alan Khazei, City Years other founder, added, One of the things that inhibit partnerships between nonprofits is the fear of splitting a limited pie. On the corporate side, Timberland COO Jeff Swartz drew the following contrast:
Its much easier to start a relationship with another business. We know why we are there. We start fast, and then it slows down. With a nonprofit, you start slow. There is a real suspicion on both sides of the agenda. But once we got past that original hump, the relationship has gone much deeper and further.
Collaborating across the sectors is clearly not simply a question of applying 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 collaboration configurations suggests that many of the cross-sector collaboration frameworks 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 American Humane Association and Ralston Purina Amnesty International and Reebok Beginning With Children and Pfizer Bidwell Training Center and Bayer Cooperative for American Relief to Everywhere and Starbucks City Year and Timberland Jumpstart and American Eagle Outfitters National Geographic and MCIWorldCom National Science Resources Council and Hewlett Packard Reading Is Fundamental and Visa The Jimmy Fund and Perini Corporation The Nature Conservancy and Georgia-Pacific Time To Read and Time-Warner The United Way of Seattle and Nordstrom UNCF and Merck Longevity 1984 1988 1989 1989 1991 1988 1997 1996 1991 1996 1948 1994 1985 1950 1988 Social Action Area Pet adoptions Human rights advocacy Community school Job training for disadvantaged minorities International socioeconomic development Inner-city community service Preschool educational preparation Public education Science curriculum development Literacy Child cancer treatment Ecosystem conservation Literacy Social services Minority university education
Strategic Collaboration Notes
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1. Kanters (1998) Davos (Kanter, 1998) lead article identified alliances between corporations as a key trend and imperative in the 21st century. Rackham, Friedman, and Ruff (1996) refer to the new forms of collaboration between corporations and their suppliers as a partnering revolution. Huxhams 1996 edited volume points to collaboration as a growing choice in all three sectors. 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 growing cross-sector collaborations in inner-city revitalization. For an overview of different partnering 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 exchange theory concerns reciprocity, whereby each collaborator is receiving commensurate value from the other (Oliver, 1990). Legitimization refers to the desire to associate with another organization whose prestige would enhance the other partners reputation or credibility (Galaskiewicz, 1985). Efficiency theory from microeconomics concerns savings or productivity gains that would be achieved through lower transaction costs due to combining resources and efforts (Williamson, 1975, 1985). Strategic management theory encompasses contributions to the organizations strategies 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 businessnonprofit collaboration. 4. Full analyses of these case studies and an extended elaboration of the articles cross-sector collaboration framework can be studied in the authors book, The Collaboration Challenge: How Nonprofits and Businesses Succeed Through Strategic Alliances (Austin, 2000). 5. The author expresses his appreciation to Harvard Business School research associates Linda Carrigan and Arthur McCaffrey, and Kathy Korman Frey (M.B.A.) for their excellent assistance in carrying out the case study research; and to the collaborating organizations for their generosity in 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 Administration, where he has been a member of the faculty since 1972. He is the faculty chair of the Harvard Business Schools Initiative on Social Enterprise, and he teaches and researches social entrepreneurship, strategic 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.

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Nonprofit and Voluntary Sector Quarterly

http://nvs.sagepub.com Strategic Collaboration Between Nonprofits and Business

Association for Research on Nonprofit Organizations and Voluntary Action

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Strategic Collaboration Between Nonprofits and Businesses

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Stage I (Philanthropic) Low Peripheral Small Narrow Infrequent Simple Minor

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An advanced reciprocal relationship involves more multifaceted and sophisticated interaction.

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City Years other cofounder, Michael Brown, added,

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Internal communication is also important, as indicated by a Reebok executive:

The AHA spokesperson recommended,

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A NSRC manager stated,

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Collaboration Continuum: Drivers and Enablers

Alignment of strategy, mission, values

Personal connection and relationships

Value generation and shared visioning

Minimal or informal learning

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Mutual expectations and accountability

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Appendix Research Case Studies

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Strategic Collaboration Notes

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