Establishing Successful Partnerships Under Conditions of Unbalanced Power

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Establishing Successful Partnerships Under Conditions of Unbalanced Power
Anneke Zwart, Student (University), Netherlands

The development of long-term relationships is strategically important for many organizations. For example, partnerships can:
- Provide extended resources for the creation of new technologies,
- Support organizations to increase efficiency
- Improve the process of innovation generation.

However, many partnerships are unsuccessful. What are the reasons?
Khanna et al. (1998) argues that many partnerships fail because of a poor understanding of the strategic dynamics when the relationship between firms is asymmetric due to power imbalances. Large asymmetries can be a major barrier to effective collaboration, both on the collaborative and the competitive components of inter-firm interactions. The collaborative aspects refer to the development of common benefits through the use of each other’s resources and knowledge, while competitive aspects refer to the usage of a partner’s knowledge and resources for own objectives.
Cambra-Fierro (2015) developed three practical and systematic steps that small organizations should take to efficiently create value out of partnerships with larger firms:
  1. CHOOSE A LIMITED AMOUNT OF KEY PARTNERS: small organizations have a limited amount of resources. As a result, they need to devote their own resources and knowledge to develop and manage only a limited amount of key partners for long-term relationships. in this, selecting those firms that have complementary rather than competitive objectives, and a strategic unifying motivation, is really important.
  2. DEVELOP RELATIONAL CAPITAL: the long-term success of a partnership largely depends on relational constructs such as trust, inter-firm interactions on various organizational levels and cooperation. Such factors are able to decrease the potential risk of opportunistic and selfish behavior. Furthermore, it is important to find committed champions who are able to support small organizations to interact with different organizational levels of their larger partners.
  3. CREATE RECIPROCAL VALUE PROPOSITIONS: whether a partnership is balanced or not, the management of the relationship is key to any successful partnership. The main purpose in this management is to find a balance between focusing on one’s own objectives and adapting to a partner’s desires. Large investments in relationships and an open mind are necessary to create a better understanding of a partner. This is key to the creation of reciprocal value propositions, which develop when both parties in a partnership recognize that their objectives can complement each other even though they can be different from each other.
Source: Cambra-Fierro, L.P.J.J. (2015) “Uneven Partners: Managing the Power Balance” Journal of Business Strategy Vol 36 Iss. 6 pp. 13-21
Khanna, T., Gulati, R. and Nohria, N. (1998) “The Dynamics of Learning Alliances: Competition,
Cooperation and Relative Scope” Strategic Management Journal Vol. 19 No. 3 pp. 193-210.


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