IESE Insight
Stronger Together: When Companies and Civil Organizations Join Forces
A. Ishikawa Lariú; Ricardo Morel Berendson
Editor: IESE
Artículo basado en: Alianzas entre empresas y organizaciones de la sociedad civil
Año: 2008
Idioma: Spanish

In an era of enormous wealth creation and technological innovation, we also have high levels of economic and social inequality, where nearly two-thirds of the global population lives in poverty and, consequently, lacks access to such basic services as education, employment, health care and housing.

Increasingly, the business world is becoming aware that important social issues like these are not the sole responsibility of governments and civil organizations. Companies are realizing that the way they operate has innumerable effects on the lives of vulnerable groups at local, national and global levels.

One practice businesses can use to address social issues involves forming cross-sector alliances with civil organizations, to tackle social issues from multiple vantage points while generating mutual benefits at the same time. Alice Lariú and Ricardo Morel, collaborators for the “La Caixa” Chair of Corporate Social Responsibility and Corporate Governance at IESE, explore the issues involved, in Alianzas entre empresas y organizaciones de la sociedad civil (Partnerships Between Companies and Civil Organizations).

According to the authors, by sharing the know-how, resources and experience of each sector, these partnerships are more likely to find solutions that produce lasting results, compared with what could be achieved by each party acting alone.

Generally, the private sector contributes financial resources, management, technology and logistics, while the civil sector provides social networks and specific know-how about the issue being addressed.

Joining forces allows for a greater understanding of the problems, and improved governance structures, and has the potential to create innovative solutions that yield economic opportunities for all.

Types of Partnerships
The authors identify three different types of partnerships according to their objectives.

Promotion of a cause (advocacy and awareness campaigns). The private sector assumes a leadership role in the management of the undertaking, which can involve such issues as health, the environment and poverty.

One good example of this type of alliance can be found in the agreement made between the WWF (World Wide Fund for Nature) and the multinational firm Unilever. The two teamed up to promote the development of the fishery certification Marine Stewardship Council (MSC) to protect and regulate the management of marine resources.

Strategic philanthropy and social investment. The private sector contributes financing and experience in a planned, monitored and systematic manner. The authors cite the example of a partnership between CARE and Motorola to improve communications between people living in developing countries.

Inclusive partnership. Both sides collaborate to promote entrepreneurship, create employment, integrate the low-income population into their value chain and provide them with decent, affordable goods and services. In this type of alliance, while the business keeps its sights on the objective of generating profitability, it also contributes to the fight against poverty and social exclusion.

One example of this involves Grameen Bank and Danone, which have teamed up in Bangladesh to market yogurt products enriched with the nutrients that children living in the country’s rural areas often lack.

The Benefits of Partnership
All of these alliances can bring considerable benefits for companies while also making an impact, to a greater or lesser extent, on civil organizations and society in general. The authors mention several benefits.

Improved public image. For the company, this means brand differentiation and a positive perception among its customers, employees and society in general; as for the civil organization, forming a successful partnership with a company can reinforce its image and position.

Exchange of capacities. Skills are shared in order to reach objectives with greater effectiveness than what would be achieved by working separately.

Access to more resources. This includes the technical, human, knowledge, material and financial resources possessed by the various sectors involved.

Greater knowledge of the market and potential customers. Civil organizations have access to low-income markets and an in-depth understanding of them, something that can benefit the companies interested in those markets.

Product innovation. By entering the low-income segment, the company is compelled to develop its capacity for creating new products that address the real needs of this new market.

Improved distribution channels. The company can make use of the distribution-channel models previously established by a civil organization for getting its products into places with limited access.

More reliable supply. Civil organizations can become reliable suppliers for companies.

The Risks of Partnerships
The risks and challenges posed are often similar for both sides of the partnership, although they vary according to the phase in which the alliance happens to be. Many of these problems are foreseeable and can be avoided or mitigated if dealt with soon enough. The authors review these risks according to the before, during and after of the partnership’s life cycle.

Before the partnership. First and foremost, careful attention must be placed on choosing a partner. It is also important not to be influenced by stereotypes or prejudices related to the potential partner. Finally, it is essential that civil organizations overcome their potential distrust of businesses deriving from the belief that the latter seek only financial benefits.

During the partnership. Problems could arise, such as misunderstandings, power differentials, the departure of key personnel, distrust, poor communication or disagreements on the distribution of costs and revenues. These are issues that the company and the civil organization will have to grapple with in order to reach agreements.

After the partnership. If an alliance ends up failing in the end, the main risks are a negative reputation, legal problems, time and money wasted and the possibility of confidential information leaking out. The authors note, however, that even in the case of a falling-out, there are important lessons to be learned that can lead to improvements.

Seeking Success and the Ideal Partner
While there is no foolproof recipe for a successful relationship, there are a number of factors that help pave the way. The authors recommend, before making the alliance official, reach agreements with the other party that are built on fundamental principles:

  • Respect the different approaches taken by the partner.
  • Be transparent and communicate clearly and directly about work-related issues.
  • Predefine basic roles and norms.
  • Be committed to the objectives of the partnership.
  • Be clear on the common goals.
  • Define what resources are necessary.
  • Try to achieve self-sufficiency, not dependency, between the two sides.

Above all, they say, identify the best possible partner. In this regard, it is vital to be clear on one undisputable premise: the perfect partner does not exist. Therefore, it will be necessary to take the time to fully discover the strengths and weaknesses of the potential partners and carefully consider which one would be more capable of compensating for the deficiencies of the other.

While maintaining a partnership between a company and a civil organization is a difficult task that requires a great deal of effort and patience, it is ultimately worthwhile, the authors conclude.

© IESE Business School - University of Navarra