Overview of Collaborative Entrepreneurship: An Integrated Approach ...

Group Decis Negot (2009) 18:419–430 DOI 10.1007/s10726-008-9134-x

Overview of Collaborative Entrepreneurship: An Integrated Approach Between Business Decisions and Negotiations Domingo Ribeiro-Soriano · David Urbano

Published online: 2 November 2008 © Springer Science+Business Media B.V. 2008

Abstract In recent years, the complex, turbulent and changing environment in which firms operate has greatly intensified. A new era of continuous innovation has emerged in which knowledge is the key asset, and whose exploitation determines success for many firms. In this context, it is generally accepted that effective knowledge management depends heavily on a company’s ability to collaborate, both inside (Collective Entrepreneurship) and outside (Collaborative Entrepreneurship) the organization. Collaboration enables a firm to be entrepreneurial and continuously innovative by exploring new markets. Continuous innovation and market exploration are the building blocks of collaboration. Therefore, the aim of this paper is to develop the concept of Collaborative Entrepreneurship, linking the most relevant issues with the concept of Collective Entrepreneurship, from a preliminary integrative approach. From this approach, three elementary dimensions are emphasized: strategy, structure and management philosophy. Strategy refers to the shared common project among collaboration partners; Structure concerns the flexibility of structures and adaptation to environmental changes; and Management Philosophy is about trust. Also, networks within the firm and among firms could form the basis of Collaborative Entrepreneurship in the context of negotiation and decision processes. A brief overview of the content of each of the articles included in this special issue on Collaborative entrepreneurship is presented following this article.

D. Ribeiro-Soriano (B) Department of Business Administration, University of Valencia, Edificio Departamental Oriental. Campus de los Naranjos, Valencia 46022, Spain e-mail: [email protected] D. Urbano Business Economics Department, Autonomous University of Barcelona, Edifici B, Bellaterra–Barcelona 08193, Spain e-mail: [email protected]

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D. Ribeiro-Soriano, D. Urbano

Keywords Collaborative entrepreneurship · Collective entrepreneurship · Corporate entrepreneurship · Intrapreneurship · Entrepreneurial firms · Entrepreneurial teams · Cooperation

1 Introduction Entrepreneurship and innovation research have an important common historical background. Economist Joseph Schumpeter (1934) first put forward the argument that innovation is the primary driver of economic development. The author positioned the entrepreneur as an agent of change, whose creative behavior in terms of different aspects of innovation was seen as creative destruction. Indeed, it is Schumpeterian innovation that differentiated the behavior of entrepreneurs from non-entrepreneurial managers (Carland et al. 1984), making entrepreneurship and innovation almost inseparable. After Schumpeter’s (1934) work, many researchers have considered innovation to be a distinctive trait of entrepreneurship (Van de Ven et al. 1999; Zahra and Bogner 2000). So, for a considerable time now, it is widely accepted that new firms and established businesses compete successfully by innovating. Nevertheless, in the current global and hyper-competitive economy, innovation has become a necessary condition, not only for increasing firms’ competitiveness, but also primarily to ensure their survival. Continuous innovation has been viewed as the new driver of the economy, and the capacity to continuously innovate as the crucial capacity for organizational success. Despite its importance, innovating is one of the most significant but difficult tasks for established businesses (Miles and Snow 1986; Miles et al. 2006). Even for firms that have previously introduced successful innovations, developing new innovation processes may be complicated. In this context, both scholars and practitioners have shown increased interest in studying and achieving a better understanding of how firms could innovate on a continuous efficient basis (Miles et al. 2006; Huse et al. 2005). It can thus be stated that a need to develop an organizational process that enables innovation to be continuous has been recognized (Miles et al. 2006). Taking this into account, the following question should be posed: How can organizations develop a business model for continuous innovation? Miles, Miles et al. (2005), in a recently published article, present a futuristic scenario in which innovation and economic development would be linked with “the power of collaboration”. According to these authors, collaboration is defined as “a process where two or more parties work closely with each other to achieve mutually beneficial outcomes” (Miles et al. 2006). Consequently, collaborative entrepreneurship is the type of collaboration that stimulates innovation in a continuous way (Appley and Winder 1977; Gray 1989; Miles et al. 2006). Although entrepreneurship has generated considerable attention in the literature, it has been historically conceptualized and studied as a phenomenon at an individual level, often leading to either psychologically reductive or overly-socialized value-based explanations (Granovetter 1985). However, these extant approaches fail to explain forms of entrepreneurship that are enabled by shifting social interactions, such as those experienced in social movements and communities. In this context,

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collaborative entrepreneurship has emerged as a new phenomenon within the entrepreneurship field (Weber et al. 2007). The concept of collaborative entrepreneurship redirects attention away from popularly held conceptions of the “entrepreneur as hero”, and towards a more nuanced understanding of how entrepreneurship is shaped by shifting opportunity structures and how particular entrepreneurs are aided through the construction of social networks (Aldrich and Zimmer 1986) and shared cognitive frames (Berger and Luckmann 1967). Therefore, entrepreneurship and the ability to innovate come from a skill that is underdeveloped in most companies: collaboration (Miles et al. 2000). Collaborative entrepreneurship emphasizes the possibility of creating something of economic value based on new, jointly generated ideas that emerge from the sharing of information and knowledge (Gupta and Govindarajan 2000). In this sense, Miles et al. (2005, 2) noted “the most underutilized resource among firms in advanced economies is knowledge.” Knowledge creation and utilization, in turn, lead to innovation. It is now apparent that effective knowledge management depends heavily on a company’s ability to collaborate, both inside and outside the organization. Therefore, the knowledge generation and sharing process needs to be opened up considerably.

2 Collaborative Entrepreneurship and Collective Entrepreneurship Entrepreneurial organizations have the capacity to form collaborative relationships. In collaboration, each party accepts responsibility for its own inputs as well as for the equitable sharing of returns on outputs. In this sense, the origin of this collaborative phenomenon can be seen in certain examples involving strategic alliances among large organizations—a developmental partnership that can take various forms—or industrial districts. Nevertheless, the emergence of collaborative entrepreneurship as a recent phenomenon of interest describes an organization composed of firms from different industries, whose collaborative abilities allow them to pursue a joint strategy of continuous innovation (Miles et al. 2005). Moreover, in this description, two characteristics must be emphasized: (i) collaborative relationships are voluntary, and (ii) collaborative relationships facilitate knowledge creation, and, in turn, continuous innovation. Beyond collaborative entrepreneurship, continuous innovation can be achieved within the confines of existing businesses, through collaboration among employees and groups (Jassawalla and Sashittal 1999). In this sense, the importance of teams in the innovation process is emphasized (Stewart 1989). Therefore, building a business model to innovate in a continuous way also depends on how employees collectively understand their world, and how they function in collaborative activities, e.g., in making decisions, estimating the effects of possible actions, allocating appropriate resources etc. Collective entrepreneurship is the term generally used to refer to entrepreneurial teams and to collaboration among employees (Stewart 1989). It is therefore an important domain to explore, and it is fundamentally different from the aggregation of firms in collaborative communities. On the contrary, the collective perspective represents a bridge between individuals in a team and actions taken with regard to team decisions. In this sense, Johannisson

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(2003) presented entrepreneurship as “a collective phenomenon that is as much the outcome of a joint effort as an individual endeavor.” Johannisson (2003) pointed out that “a better understanding of entrepreneurship will be achieved if all enterprizing and organizing, including entrepreneurial venturing, are recognized as generically collective; a collective image of venture projecting applies from the gestation period and throughout the existence of the firm.” From an academic point of view, corporate entrepreneurship or intrapreneurship is one of the most powerful innovation approaches for studying the formation of collective entrepreneurship. The process of corporate entrepreneurship reflects the birth of new businesses within existing organizations, i.e., internal innovation or venturing, and the transformation of organizations thorough renewal of the key ideas on which they are built, i.e., strategic renewal (Guth and Ginsberg 1990). Through this process, a business can enrich its performance by creating new knowledge that becomes a foundation for building new competencies or revitalizing existing ones. Under this broad conception, Schumpeter’s (1934) view can also be perceived of the entrepreneur as one who “carries out new combinations,” but in this case the entrepreneur is more likely to be plural (Gartner et al. 2004). Often, functional departments can become too specialized and isolated from the rest of the organization. Cross-functional work teams can provide a platform for cross-organizational communication, resulting in more integrated and strategically aligned organizational cultures, products and services. For this reason, it is important to note that, firms that have previously developed a strong capacity for collaboration among their employees are likely to develop collaborative communities in the future. Consequently a firm’s ability to collaborate with other firms starts with being able to collaborate internally (Miles et al. 2005). 3 Linking Collaborative and Collective Entrepreneurship: The Role of Networks Collaboration to create and apply knowledge for the purpose of continuous innovation is very sophisticated behavior, and is based on many factors (Miles et al. 2000; Hansen and Nohria 2004). However, three elementary dimensions adapted from Miles et al. (2005), Hansen and Nohria (2004), Morris et al. (2005) are emphasized: strategy, structure and management philosophy. Strategy refers to the shared common project among the partners of a collaboration, inside and outside the firm; Structure concerns the flexibility of organizational structures, non-hierarchical relationships in the firm and adaptation to environmental changes; and Management Philosophy is about the trust built up among both workers and firms, where ideas are a common resource and capabilities could be exploited in a collaborative way (see Fig. 1). 3.1 Strategy Increasingly, product and service innovation is occurring across individuals, companies and industrial interactions. On the one hand, employees frequently share information

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Strategy Common “Project” NEGOTIATION PROCESS

DECISION PROCESS Collaborative and Collective Entrepreneurship

Structure Flexibility

NETWORKS

Management Philosophy Trust

Fig. 1 Collaborative and collective entrepreneurship

with colleagues within the firm. In this sense, innovations in a given firm could be the result of shared ideas and efforts of organizational members. On the other hand, some firm resources are often shared with other firms. In both cases, shared information may create an economic advantage for the participants (Hansen and Nohria 2004) and a shared common project with explicit objectives of the relationship could be a cornerstone of the collaboration. Clearly communicated organizational vision and objectives ensure consistency and allow for best practices such as participation and involvement to materialize (Berry 2004). 3.2 Structure In the collaborative business model proposed to achieve continuous innovation, one of the major characteristics of networks is that they are voluntary. Thus, innovation cannot be managed hierarchically because it depends on knowledge being offered voluntarily rather than on command. Therefore, collaborative and collective entrepreneurship demand an organizational structure in which modes of governance, and operating mechanisms are reconfigured in novel ways. Following Miles et al. (2005), networks would be governed as a limited liability partnership of a number of member firms and a flexible number of temporary affiliates who would fluidly adapt their roles and responsibilities to ongoing ventures. In this model of structure, members operate independently in their markets, but share ideas in an ‘innovation catalogue’ to alert potential allies to opportunities for collaboration. 3.3 Management Philosophy A collaborative exchange of information, ideas, experiences and insights occurs when the exchange is jointly and purposefully undertaken, with the expectation of mutually beneficial outcomes (Miles et al. 2000). In collaborative and collective relationships, the parties each accept responsibility for their own inputs as well as for the equi-

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table sharing of returns on outputs. Therefore, developing a model of collaborative— or collective entrepreneurship in practice demands an atmosphere of trust in which members treat ideas as a common resource and collaboratively exploit capabilities (Solomon and Flores 2001). Trust acts as the bonding agent that allows for networks to realize and achieve their full potential. Trust can eliminate the barriers that hinder long-term relationships, knowledge-sharing and continuous feedback that can enable creativity, innovation and competitiveness. Due to the fact that trust develops over time through repeated encounters and interactions, open communication becomes essential to the development of trust.

3.4 The Role of Networks As we stated before, networks within the firm and among firms could be the basis for Collaborative Entrepreneurship in the context of negotiation and decision processes. Networks understood as as connections and relationships among both employees and firms, have been widely studied in the literature since the social capital theory. It is recognized that social capital includes interpersonal, inter-group inter-organizational relationships, networks and connections, as well as the underlying group and community resources, social structure, and cultural dynamics (Hitt and Ireland 2002; Luthans and Youssef 2004; Capó-Vicedo et al. 2008). On the other hand, Johannisson (1986, 1988, 1998, 2000, among others) examines entrepreneurship and small business from a network approach. Johannisson (1986) stated that “entrepreneurs in owner-managed firms have to supplement internal resources in order to adapt to increasingly turbulent environments.” In this sense, “the personal network of the entrepreneur supplies resources on conditions which do not conflict with the small business’ need for flexibility. Networks vary in terms of their constituent elements and how they carry out their roles as support systems.” In general terms, networks involve the contacts and ties that relate organizational members and units with each other and with the outside world. Networks establish the inter-linkages that allow for the sharing and exchange of ideas and resources at the cognitive (e.g., team mental models, networked organizations), affective (e.g., social support), and behavioral (e.g., teamwork) levels. The specific characteristic of networks is that they are dynamic. This means that none of its members has a fixed role, and the resources of each firm are often shared with other firms, usually, though not always, within the network (Nahapiet and Ghoshhal 1998; Miles et al. 2000). Therefore, collective and collaborative entrepreneurship require only a small conceptual leap to imagine and then describe an organization composed of employees—or firms with different capabilities—or from diverse industries—whose collaborative abilities allow them to pursue a joint strategy of continuous innovation (Miles et al. 2005). In other words, collective entrepreneurship, at a first level, and collaborative entrepreneurship as a second level, will be a major business model in which a community of collaborating firms linked together in a network would support a new organizational model based on continuous innovation (Bragge et al. 2007) in the context of participation

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(Klyver et al. 2008). The ability to develop such networks is essential to the building of organizations capable of continuously producing large amounts of innovation. In this context, it is interesting to note that, the negotiation process in collaborative and collective works becomes more complicated in accord with the increasing number of participants in decision making (Druckman and Olekalms 2008). In this context, applications of computer and communication technology are increasingly important due to their role in group decision making. In particular, and as Kersten and Lai (2007) state, with negotiation being an often difficult process involving complex problems, computer-based collaboration becomes especially relevant in order to facilitate the communication and coordination of individual activities (Kogut and Zander 1992; Brian et al. 2000; Zahra and Bogner 2000; Antunes and André 2006; Kersten and Lai 2007; Pietroni et al. 2008).

4 Final Remarks In recent years, the complex, turbulent and changing environment in which firms operate has greatly intensified. A new era of continuous innovation has emerged, in which knowledge is the key asset whose exploitation determines success for many firms. In this context, it is accepted that effective knowledge management depends heavily on a company’s ability to collaborate, both inside (Collective Entrepreneurship) and outside (Collaborative Entrepreneurship) the organization. So, for the era of innovation, the underlying capability is collaboration and cooperation. Collaboration enables a firm to continuously innovate and explore markets. Continuous innovation (in terms of new product generation, understood as Intrapreneurship or Corporate Entrepreneurship) and market exploration, in turn, are the building blocks of an entrepreneurial organization. We can also relate these concepts with the term of co-opetition (Brandenburger and Nalebuff 1996). Co-opetition is part cooperation and part competition. According to these authors, “it describes the fact that in today’s business environment, most companies can achieve more success in a dynamic industry than they ever could working alone.” Specifically, when companies work together, they can create a much larger and more valuable market than they ever could by working individually. Companies then compete with each other to determine who gets the largest share of that market. Co-opetition allows for the real-world business situation that there can be multiple winners in the marketplace. Business, unlike war, is not a winner takes all proposition. The objective is to maximize your return on investment—regardless of how well or how poorly other people or other companies perform.” Hence, the concept of collaborative entrepreneurship shifts attention towards a more embedded view of collective entrepreneurial action. Developing a businesses model to achieve teams and networks of firms that use continuous innovation is not easy (Miles et al. 2006). In this sense, Johannisson (1986) stated that “the network metaphor suggests varying ingredients for entrepreneurial strategies, substituting networking competencies for traditional planning systems and financial resources.”

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Nevertheless, there are some real-life examples that can be used to identify their most effective features (Holsapple and Wenhongluo 1999). Therefore, the capacity to learn how to collaborate in a multidimensional world is possible through education and experience. When such business models can be clearly and completely specified, their implementation will be easier. Consequently, from an academic viewpoint, collaborative entrepreneurship and collective entrepreneurship constitute emergent fields of study.

5 The Content of the Special Issue on Collaborative Entrepreneurship This special issue contains five papers by scholars from several countries and universities. In the first paper, Montoro-Sánchez, Ortiz-De-Urbina-Criado and Romero-Martínez refer to the decision to use alliances as corporate entrepreneurship and the role of resources and skills. In the current competitive business environment, a growing number of entrepreneurial companies rely on strategic alliances to capture the resources they need to achieve their strategic objectives. In this paper, the entrepreneurial initiative in large companies created through alliances is analyzed. In particular, the paper examines the role played by the company’s resources and skills in the decision to cooperate as a way of developing entrepreneurial activity. The results show that, financial and intangible resources are not determinant when choosing alliances. However, skills are the most important factor when opting for cooperation. In all cases, previous experience with alliances makes it more probable that a company will choose this option again as a way of developing entrepreneurial activity. On the other hand, companies with corporate entrepreneurship experience are more likely to opt for any alternative other than alliances. In the second paper, Welbourne and Pardo develop the concept of relational capital related to strategic advantage for SMEs in negotiation and collaboration. The main conclusions of this manuscript drawn from the consideration of human resources as being rare, socially complex and difficult to imitate, and therefore, constituting a source of competitive advantage, is not a new one. But this article goes a step further. By merging ideas of collaborative research, human resource management, and the resource-based view, the authors indicate that, collaborative entrepreneurship, as a successful answer to today’s business environment, is not just based on human beings, per se, as real assets but on the relationships those humans have with other stakeholders. The empirical research, conducted via a survey sent to a large number of executives and senior leaders, indicates that relational capital is the valuable, rare and inimitable resource that acts as source of competitive advantage for SMEs. Why SMEs? The explanation might be because they are aware of their lack of fundamental resources and thus have more incentives for negotiating and collaborating with other firms, while bigger companies, with easier access to key resources and therefore less inducement towards network formation, value human capital as a resource itself. Moreover, independently of firm size, results suggest a positive relationship between performance and relational capital. That would mean that relational capital, regardless of firm size, is the most important asset to build up over time.

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The third paper by de Castro and Mota starts from a knowledge based perspective of firms in order to analyze their need to dynamically combine productive activities both within and across boundaries. The importance of vertical and horizontal relationships is well known from the literature but it is usually dealt with in static terms. The authors contend, which seems novel to us, that Technological Centers, often created by competitors and ‘complementors’ in a given location, become themselves a negotiated dynamic context. Notwithstanding the fact that the center may be initially created as a neutral ground for access, sharing and production of productive knowledge by participants, once it is installed and working, it can be (and is) diversely approached and dealt with by the various actors, and performs different roles vis-à-vis those counterparts. Some of their associates are more dynamic and participative than others in intervening in the Center’s configuration and management and all seem happy to accept the consequences of their differing behaviors, in terms of the benefits each one draws from the productive knowledge accessed and created through and in the center. Technological centers thus become what the authors call ‘negotiated contexts’, a formulation that we consider fortunate, as it draws the focus towards the hitherto little noticed tacit negotiations that take place between multiple counterparts across a third party, an apparently neutral institution. Economic agents, interacting in a context that they themselves created, seek to create new opportunities and resources. However, through their very participation on the conformation, governance and investment in that ‘context’, they benefit differently from the results of their collective and individual participation. De Castro and Mota’s perspective displays notorious links to the evolutionist and neo institutional streams of economic theory that have been gaining notoriety of late. New avenues of research appear to open from this tradition with the trend towards ongoing concerns, entrepreneurship and knowledge based strategic management, as well as the need to study the appropriation of entrepreneurship benefits. The purpose of the forth paper by Lee, Lim and Soriano is to identify key factors that influence suppliers’ participation in the electronic market (EM). Among many EM models, this paper focuses on private exchange since it currently is the largest part of e-commerce. Most previous studies on EM have focused on inter-organizational factors such as trust, dependency, subsidy expected from a partner, and the number of suppliers. These have been identified as factors influencing traditional electronic data interchange (EDI) adoption, the domain which is fundamentally different from Internet-based Business to Business (B2B) EM. Since many suppliers do not believe their off-line relationships with buyers will be transferred to on-line marketplaces, it is difficult to expect traditional EDI adoption factors will also work in EM. Thus, this paper investigates the impact of suppliers’ internal capabilities in terms of cost, flexibility, delivery, and quality rather than the inter-organizational factors. The results of this study show: (1) suppliers still believe that contractible aspects, such as lower price, play a more important role than non-contractible areas such as superior flexibility of production capability, fast and reliable delivery, and quality; and (2) standardized rather than engineered products still dominate the marketplace. These results suggest that, buyers need to convince their suppliers that PE is a new marketplace where not only price but also other non-contractible factors play an important role as does order winning criteria.

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Finally, the fifth paper of the special issue by Ernst, López-Sánchez and Urbano deals with a negotiation model for inducing higher levels of service in a distribution channel. Among the multiple challenges faced by supply chains is the fact that they are not owned by only one entity. They are a network of firms involved in delivering value to the end-consumer (e.g., vendors, manufacturing facilities, distributors, retailers). The real competition is then, not among companies, but among supply chains. Companies belong in a Supply Chain that eventually competes with other Supply Chains to maximize profitability for all of its members (i.e., business partners). Supply Chain Management is thus the discipline that coordinates, from a systemic perspective, all the corporate functions in charge of optimizing the flow of materials, information and finances across business partners. It involves complex relationships between the companies (or agents) at different levels, and requires a variety of mechanisms for coordination, cooperation and conflict solving. It is therefore, important to gain insight into the nature of those mechanisms. By borrowing concepts from economics (i.e., Nash bargaining solution), the paper develops a theoretical framework that incorporates behavioral dimensions to the actual negotiation process (and its outcome) as can occur in a supply chain environment. The paper also emphasizes, in a rigorous fashion, the common wisdom of how important it is to develop long-term relationships among the companies of a supply chain, since it reduces the uncertainty of conflicting objectives, and therefore, makes the supply chain more competitive. Acknowledgements The authors acknowledge the financial support from the Projects SEC2003-04770 and SEJ2007-60995 (Spanish Ministry of Education and Science), and 2005SGR00858 (Catalan Government’s Department for Universities, Research and Information Society).

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