01 Oct 2001  Research & Ideas

Five Questions for James Austin

Editor's Note— In an email interview, Harvard Business School professor James Austin spoke with HBS Working Knowledge managing editor Carla Tishler about his work on collaboration and his ongoing research.

Tishler: You talk about companies transitioning across three stages of collaboration—philanthropic, transactional, and integrative—although these stages are not necessarily linear, nor does every company move through each stage. What are the key factors that force (or encourage) companies to move from one stage to another?

Austin: Moving from traditional philanthropy to higher levels is generally propelled by the two organizations discovering, incrementally, opportunities for mutually beneficial value creation. The closer collaboration is fostered by a perception of shared objectives and values and a growing level of trust. Making it all happen comes from the energy and vision of social enterprise within both the business and the nonprofit.

Q: Integrative collaboration would seem a lofty goal for most companies, as this level of collaboration requires a true meshing of business goals with those of the partnering nonprofit. How do profit-driven CEOs explain this type of collaboration to shareholders?

A: CEOs perceive integrative relationships as strategic alliances and investments that generate significant benefits to the companies. Those benefits vary from case to case but encompass superior capacity to attract, motivate, and retain talented employees who see significant corporate community engagements as an important dimension of their association with a company. The closer interactions of the two organizations can create new opportunities for skill and leadership development. The integrative stage also can bring to the company new and powerful connections with customers, a further opportunity to differentiate the company and its products. It can also elicit positive reactions from government officials and regulators on important business issues.

Q: It's clear that nonprofits get financial benefits from partnering with businesses. Are there other less tangible benefits of these collaborations? What about the downsides? Does a nonprofit run the risk of muddying or diluting its mission as a result of collaboration?

A: Nonprofits in strategic alliances often state that often more than financial assistance, the value comes from skill transfer, credibility enhancement, and access to new networks. Of course, there are associative risks for both partners in a deep and highly visible alliance. If one partner encounters difficulties that generate negative press, the other runs the risk of being tainted. The stronger alliances have deep mutual commitment that enables them to not only endure such difficult moments, but even assist the partner to overcome the problems. Nonprofits can be tempted to take resources from corporations or other donors that might push them into activities that are inconsistent with their mission or values. Such relationships can be disastrous. For example, the AMA broke off a cause-related marketing agreement with Sunbeam Corporation after its members decided that it was not appropriate to its social mission. This ended up costing the nonprofit association over $10 million in compensatory payments and legal fees.

Q: While doing the research for this paper, did you run into any surprises?

A: The joy of research is discovery, so it is a surprisingly rich undertaking. The main discovery in my cross-sector research that seems to surprise people most is the processes whereby traditional check-writing relationships can be developed into very powerful and deep strategic alliances between businesses and nonprofits.

Q: This Working Paper is No. 22 in the Social Enterprise Series. What's the overall aim of the series, and what's next for you as part of it?

A: The Social Enterprise Working Paper series is an integral part of the processes through which my colleagues in the Social Enterprise group at HBS develop and share the intellectual capital that we are continually generating. My current work involves e-philanthropy as well as looking at cross-sector collaboration in Latin America.