Types of collaboration

Schilling (2013) discusses the advantages and disadvantages for going solo contra collaboration with externals.

Collaboration with externals can be a costly process and there exists transaction costs related to search, contracts and maintenance of these. Additionally, the collaborative partner will most likely demand something in return such as control or profits. Schilling (2013) lists four key reasons for going solo rather than collaborating.

- Availability of capabilities, meaning if the focal firm can handle the project in-house it should not seek outside collaboration as it is not necessary and thereby save resources.

- Protect proprietary technologies, as projects can lead to new knowledge and technology, which the focal firm should not give away to competitors.

- Controlling technology development and use of it alone gives full control over the process and compromises does not have to made, thereby saving time.

- Building and renewing capabilities, as solo development requires the focal firm to develop new skills, resources and market knowledge, which can be utilized in future business.

The general characteristics of the most common, rather formalized, ways to structure projects (Schilling 2013) are found in the table beneath, but not limited to only these (see table 2). Therefore, for instance lead user is not included.

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Speed Cost Control Leveraging

of existing capability

Dev. of new capability

Accessing other firms capability Solo

Develop.

Low High High Yes Yes No

Strategic Alliance

Varies Varies Low Yes Yes Sometimes

Joint Venture

Low Shared Shared Yes Yes Yes

Licensing In

High Medium Low Sometimes Sometimes Sometimes

Licensing Out

High Low Medium No No Sometimes

Out-sourcing

Medium/Hig h

Medium Medium No No Yes

Collective research organiza.

Low Varies Varies Yes Yes Yes

Looking at the licensing-in and outsourcing these are suitable in an environment where the company is lacking in resources and capabilities. These are sources of inputs from externals, who are superior in relation to what is currently available inside the firm. These can thus provide something additional compared to what is available by going solo. Solo development is also considered to be rather slow as learning must be enabled, while the other methods access others’ capabilities and resources, which can speed up the process. The expected benefit also plays a huge role in deciding on the collaboration. The commitment and trust must be considered opening up the organization to outsiders gives vulnerability. Thereby, the threats and opportunities must be weighed Table 2: Overview of different types of collaboration and their advantages

Page 37 of 124 Figure 7: Types of collaboration based on governance

and participation when screening potential partners.

3.2.3.1 Governance and participation of collaboration

Another theory on types of collaboration comes from Pisano and Verganti (2008), who describe four different ways of collaborating based on two parameters, namely governance and participation. Governance is broken down into two categories, flat and hierarchical. The same goes for participation, which is broken down into open and closed.

Starting with a brief discussion on governance, the most important distinction between a hierarchical and a flat form of governance is who gets to define the problem and choose the solution. In the hierarchical form, one specific organization has the authority to do this. This makes sure that it has the advantage of being able to control the direction of the innovation and ideally capture more of the innovation’s value. In the flat form, these decisions are typically either decentralized or

made jointly by some or all collaborators. The advantage here is the ability to share the costs, risks, and technical challenges of innovating with others.

Hierarchical governance is most desirable when the organization has the capabilities and knowledge needed to define the problem and evaluate proposed solutions.

This ensures that the focal company can maintain its authority over the process. On the other hand, flat governance works best when no single organization within the collaboration has the necessary insights or capabilities in place and when solving the problem serves a common purpose.

The difference between open and closed

participation is fairly self explanatory, as it refers to whether anyone can participate in the network or if it is only for a selected group. When choosing a closed participation two main assumptions should hold true. The first one is that you have been able to identify the knowledge domain from which the best solution to the problem will

Page 38 of 124 come. The second one is that the focal company has been able to select the right partners to collaborate within the field. If this is not the case, a closed participation can be a dangerous path to choose. If in place, however, it has the potential to create ideas of very high quality. Open participation, on the other hand, has the big advantage that it has the potential to attract a large number of problem solvers, which can result in many ideas as well.

However, this approach is not as effective as the closed approach in identifying and attracting the best players.

Open participation works best when it is possible to evaluate the proposed solutions at a low cost. This could for instance be in terms of a software code, which can be checked for bugs. In other cases, the best way to estimate the true value of an idea is through time consuming experiments, which often requires fewer but better ideas.

Based on the distinctions between open/closed participation and flat/hierarchical governance, Pisano and Vertangi (2008) constructs a two by two matrix, which can be seen on figure 7.