COLLABORATIONS

Collaboration involves agencies coming together and fundamentally changing their individual
approaches to a goal to allow for the sharing of resources and responsibilities.

WHY COLLABORATE?
If you are faced with a problem that you cannot solve yourself – technical, financial, or
commercial problem:
a) To share risks
b) To share costs
c) To gain technological know how
d) To speed up product development
e) To develop industry standards
f) To gain additional markets
g) Reduce time-to-market

BARRIERS TO TRANSFER
What hinders technology transfer and what cause joint projects to fail?
a) Lack of awareness – what technologies are available to them
b) Lack of knowledge – If staff of company is lacking technical knowledge, it may not be able
to capitalize on the technology being offered in the transfer
c) Lack of funds – company may not be able to afford the development costs of the technology
being transferred
d) Lack of common interests – Individuals putting the interests of their own company ahead of
the alliance
e) Conflict of interest – Even in collaborations on the technical level or strong, it has been
found that collaborations between competing companies doesn’t work.
f) Lack of Trust – If little trust exists between companies, it is doomed to fail
g) Poor communications – Fail to keep each abreast on everything relevant to the collaboration,
activities, thoughts, processes, goals, direction of venture
h) Lack of infrastructure – company may lack equipment and facility in infrastructure to take on
the transfer
i) Over-committed – The Company may be over-committed on current projects and simply
lacks the time needed for success.

BARRIERS – WITH REGARD TO COLLABORATION

a) Technical Problems – which are generally overcome, but which add time and money and
frustration
b) Resource Limitation – Poor budget control
c) Change in Project’s Structure – Loss of key members or loss of partner
d) Organizational Problems – due to a partner losing or changing interest in the technological
side.

FACTORS INFLUENCING SATISFACTION OF FIRMS AND RESEARCH

ORGANIZATIONS IN COLLABORATION
 Previous links
 Commitment
 Partner’s reputation
 Definition of objectives
 Communication
 Conflict
 Organizational design
 Geographical proximity

STRATEGIC ALLIANCES
A strategic alliance is a partnership of two or more corporations or business units to achieve
strategically significant objectives that are mutually beneficial.
The nature of the partnership can vary widely. The costs and level of commitment for each type
of partnership can also vary widely, but they are typically less than in a merger or acquisition.
A strategic alliance = an agreement between two or more partners to share knowledge or
resources, which could be beneficial to all parties involved.
The formation of strategic alliances means that strategic power often resides in sets of firms
together. Alliances not only allow for exchange of technology but also for the exchange of skills
and know-how often referred to as competencies. In this way, firms can build knowledge
sharing routines.

The formation of a strategic alliance:

1. Selection of the right partner
2. Negotiations
3. Management towards collaboration

Reasons for entering a strategic alliance:

Concerns in Alliances
The major concerns for a firm trying to acquire technology through building an alliance can be
summarized as:
1. Finding the proper partner: This is critical for the success of the alliance.
2. Dealing with the ambiguities of the relationship: Because it is not necessarily a permanent,
well-defined relationship, the alliance may have unexpected political problems.
3. Discovering that the partnering firms lack a shared vision: A firm could discover that what it
thought it was going to gain from the alliance will not actually materialize.
4. Getting the timing right: Both parties must be able to respond when needed, but financial or
other strategic concerns may interfere with fulfillment of the alliance agreement.
5. Communicating effectively and efficiently between the alliance partners.
6. Protecting intellectual property: The organization should recognize the potential for loss of
knowledge that constitutes a part of the strategic advantage of the firm.
7. Measuring real costs and profits from the alliance: A firm needs to do a realistic cost/benefit
analysis. Many organizations find that the original analysis of alliance benefits and costs was not
realistic.

Risks of strategic alliances:

1. Competition rather than cooperation
2. Loss of competitive knowledge
3. Conflicts resulting from incompatible cultures and objective
4. Reduces management control
5. (Harms the firm’s ability to innovate)
6. Dependence on the supplier
7. Hidden costs.
8. Service provider’s lack of necessary capabilities.
9. Social risk.
10. Inefficient management.
11. Information leakage.

REASONS FOR THE FAILURE OF ALLIANCES BASED ON A REVIEW OF

STUDIES.
 Strategic/goal divergence
 Partner problems
 Strong–weak relation
 Cultural mismatch
 Insufficient trust
 Operational/geographic overlap
 Personnel clashes
 Lack of commitment
 Unrealistic expectations/time
 Asymmetric incentives

Joint ventures, two or more firms combine equity to form a new third entity. The level of equity
can vary from very small amounts to large multimillion dollar investments. The amount
contributed by each party will not necessarily be equal. It is common to have very detailed
agreements covering what each party is to provide, what each can expect, and how each is to
operate in the joint venture.
There are a wide range of motives for establishing corporate ventures:
 Grow the business.
 Exploit underutilized resources.
 Introduce pressure on internal suppliers.
 Divest non-core activities.
 Satisfy managers’ ambitions.
 Spread the risk and cost of product development.
 Combat cyclical demands of mainstream activities.
 Diversify the business.
 Develop new technological or market competencies.

A franchise agreement, a contract is established between the company (franchisor) and the
individual who buys the business unit (franchisee) to sell a given product or conduct business
under the companys trademark. The contract between these two parties typically specifies the
time period and geographical region where the franchisee has the right to conduct these
activities. The franchisor commonly sets standards for behavior by the franchisee in the
contract. Failure to follow these standards may result in loss of the franchise. The contract also
typically requires not only payment by the franchisee of an initial fee to buy the franchise but
also a continuing royalty.

Consortia are characterized by several organizations joining together to share expertise and
funding for developing, gathering, and distributing new knowledge.

A licensing agreement, one firm agrees to pay another firm for the right either to manufacture
or to sell a product. The firm selling the right to this product typically loses the right to control
various aspects of the product, such as pricing and how the product is marketed, when produced,
or sold by the licensee.

Negotiating a licensing deal:

 Terms for the agreement
 Rights granted – intellectual property rights that are granted
 License restrictions
 Improvements
 Consideration (monetary value)
 Reports and auditing of accounts
 Representations/warranties
 Infringement
 Confidentiality
 Arbitration
 Termination

Subcontracting of activities to other firms. These activities may or may not be high value-
adding activities to the business, but the activities outsourced typically will not be where the firm
s competitive advantage is built. The nature of the interdependence between the contracting firm
and the subcontractor will vary with each setting.

Main risks outsourcing:

1. Dependence on the supplier
2. Hidden costs
3. Loss of competencies
4. Service provider’s lack of necessary capabilities
5. Social risk
6. Inefficient management
7. Information leakage

An informal alliance, two firms agree to support each other’s activities in some manner. These
firms may begin this support without formal agreements either to promote a given product or to
aid each other in some way. The agreements are strictly informal. There are few legal protections
or means to enforce these agreements.

The critical questions that the partners entering a formal or informal alliance should ask
are:
1. Do we have clear goals and expectations? (Even with such clarity, partners also need to
recognize that conflicts will happen, but clear goals and expectations reduce the potential for
conflict.)
2. What is each member of the alliance responsible for, and what does each bring to the alliance?
3. Will each member of the alliance promise to develop solutions that will solve the problems
and needs of the members?
4. Will members promise to meet the goals of the alliance?
5. Who will be responsible if the solutions fail? What compensation will be offered?
6. What are the conditions for dissolution of the alliance?
7. How will disputes be resolved?

Mergers and acquisitions

Mergers and acquisitions are not mere linkages; rather, they are permanent changes to the
structure of the firms involved. A merger is a transaction involving two or more corporations in
which only one permanent corporation survives. An acquisition, on the other hand, is the
purchase of a company that is completely absorbed as a subsidiary or division of the acquiring
firm.
An acquisition refers to the outright purchase of a firm or some part of that firm.
In contrast, a merger occurs when two firms combine as relative equals.

Strategic Reasons for Mergers or Acquisitions

Mergers and acquisitions can allow a firm to accomplish a variety of strategic goals. The
merger/acquisition could allow the participating firms to:
 Enter a market quickly or increase speed to market
 Avoid the costs and risks of new product development
 Gain market power
 Acquire knowledge
USING HIGHER EDUCATION RESEARCH AND DEVELOPMENT
Universities can often help small and big companies with R&D. The University often offers
much cheaper rates than a private research company.
a) Access to new technology (A lot of pie in the sky stuff)
b) Keep abreast of new developments
c) Access consultancy skills
d) Professors are possible technical board members
e) Develop joint new technology, benefits both.

LINKING ORGANIZATIONS TO EDUCATIONAL ESTABLISHMENTS

Forming Links
a) Graduate Employment – companies hire graduates and create a natural link back to their
alma mater
b) Sabbaticals – Companies hire university professors to work on-site for a year or semester to
bolster in-house expertise (pretty cheap)
c) Industry/University Research Units – Organized research units where focused groups at the
university partner with companies (e.g. in the US, NSF, MRSEC). Companies gain access to
professors, students, and earn results
d) University/Industry Liaison Units – Universities are creating internal organizations that are in
charge of protecting and developing valuable new technologies to be transferred to industry.
At Brown, the campus based technology transfer unit is BURF, Brown University Research
Foundation.
University – Industry Partnership

Paths of Technology Transfer

 Company to Company Transfer
Private companies with R&D facilities ‘produce’ a lot of innovative ideas that they may or may
not patent or develop. These ideas may not be in their business plan, not within their core
competencies, or returns are too small. These ideas may be suitable for another company.
A small company acquired by a big company or selling off its technology to a big company
Inter-Company transfers. Your idea is now being transferred to products group or manufacturing.

Company to Company Transfer