ADOPTING PARTNERSHIP STRATEGY FOR ACHIEVING ORGANIZATIONAL GOAL AND OBJECTIVES
CHAPTER TWO
LITERATURE REVIEW
2.1 Concept of Partnership
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach. A partnership may result in issuing and holding equity or may be only governed by a contract.
Although not required by law, partners may benefit from a partnership agreement that defines the important terms of the relationship between them.[7] Partnership agreements can be formed in the following areas:
Business: two or more companies join forces in a joint venture[8] or a consortium to i) work on a project (e.g. industrial or research project) which would be too heavy or too risky for a single entity, ii) join forces to have a stronger position on the market, iii) comply with specific regulation (e.g. in some emerging countries, foreigners can only invest in the form of partnerships with local entrepreneurs.[9] In this case, the alliance may be structured in a process comparable to a Mergers & Acquisitions transaction.
Politics (or geopolitics): In what is usually called an alliance, governments may partner to achieve their national interests, sometimes against allied governments holding contrary interests, as occurred during World War II and the Cold War.
Knowledge: In education, accrediting agencies increasingly evaluate schools, or universities, by the level and quality of their partnerships with local or international peers and a variety of other entities across societal sectors.
Individual: Some partnerships occur at personal levels, such as when two or more individuals agree to domicile together, while other partnerships are not only personal, but private, known only to the involved parties.
Partnerships present the involved parties with complex negotiation and special challenges that must be navigated unto agreement. Overarching goals, levels of give-and-take, areas of responsibility, lines of authority and succession, how success is evaluated and distributed, and often a variety of other factors must all be negotiated. Once agreement is reached, the partnership is typically enforceable by civil law, especially if well documented. Partners who wish to make their agreement affirmatively explicit and enforceable typically draw up Articles of Partnership. Trust and pragmatism are also essential as it cannot be expected that everything can be written in the initial partnership agreement, therefore quality governance and clear communication are critical success factors in the long run. It is common for information about formally partnered entities to be made public, such as through a press release, a newspaper ad, or public records laws.
While industrial partnerships stand to amplify mutual interests and accelerate success, some forms of collaboration may be considered ethically problematic. When a politician, for example, partners with a corporation to advance the latter's interest in exchange for some benefit, a conflict of interest results; consequentially, the public good may suffer. While technically lawful in some jurisdictions, such practice is broadly viewed negatively or as corruption.
2.2 Theoretical Underpinnings of the Study
Two theories will provide critical anchorage of this study, Organization theory and Resource based theory. Resource-based theory of the firm establishes the theoretical frame of reference for organizational set up based on the studies of Porter (1985), Wernerfelt, (1984) and North (1990). This theory presents an image of organizational development and their relationships with the environment; the development organizational-environment relationship first takes an important role in the development of the society reflected in the economy and standards of quality of life (Barney, 1991).
Barney (1991) defines organizational resources as the capabilities and the assets that are controlled by the organization in pursuit of partnership strategies. From the point of view of resource-based theory, Wernerfelt (1984) mentions that an organization has to maintain a competitive advantage built on its resources. Penrose, (1959) states that a company needs reserves for operations and cumulative development process. This therefore suggests that for organizations to remain sustainable they require strategies to exploit their internal and external capabilities. Making an analysis it can be established that the partnership strategies are the balancing factors in economic, ecological and social interactions in the theories mentioned.
Organization theory offers insight on how organizations can secure a steady stream of funds to continue their operations. Organizations must focus on serving their clients with limited resources, keep organizational cost as low as possible and demonstrate a highly efficient use of resources. Managers of non-profit organizations must also deal with diverse stakeholders and must market their services not only to clients but also to volunteers and donors (Casey, 2002). This can sometimes cause conflicts and power struggles among organizations. Moreover, organizations have to evolve with the changing environment in order to fulfill their missions and visions this has led to managers redesigning organizations towards organizational learning. Besides improving communication, continuous learning enhances collaboration within the organization as well as contributes in increasing the capability of the organization. Malunga & Banda, (2012) in their research confirm that through organizational learning, organizations can ensure their sustainability. Sustainability is constituted as an unavoidable necessity for the future survival of the company.
2.3 Partnership strategies
In the current business environment, it has become important for organizations to adopt partnership strategies. Partnership strategies are action plans that organizations put into place in order to achieve their goals in way that they gain competitive advantage over their competitors (Cruz, Pedrozo, & Estivalete, 2006). Management of an organization must apply these strategies in order to guarantee success of the organization. The nature of the environment an organization operates in defines the types of partnership strategies to be adopted (Porter, 1985).
Implementation of these strategies must be done with regard to the resource capability of the organization. Organizations have to be aware of the financial, human resource and even political capability before embarking on adopting a sustainable strategy. All organizations whether for profit or not for profit need a secure flow of income to craft strategies that can meet current and future program needs (Barney, 1991).
Rijamampianina (2003) argues that diversification is a key element to sustainability because if one aspect of strategy fails, another can succeed; he further argues that for organizations to remain viable they must piece together capital from various sources as opposed to single sourcing. Malunga and Banda (2012) in their study of the relationship between revenue diversification and the financial stability of organizations found out that non-profits could indeed reduce their revenue volatility through diversification, particularly by equalizing their reliance on earned income and investments.
Human resource sustainability is also important in ensuring successful partnership strategies. The organization must be able to have a capable employee base whom they can sell the vision of the organization and who will fit seamlessly in the strategy that the organization has come up with to achieve competitive advantage (Barney, 1991). In addition, the human resource must be affordable to the organization to ensure that not many resources are used on payments of employees yet the returns form the strategy implementation does not reflect the payments made out to them. Employees must be provided with good working conditions and proper compensation. Kramer, (2009) in his study found out that employee working conditions, attitude highly influence their productivity in ensuring success of a strategy. He further found out that organization must strive to get talented employees to ensure proper implementation of partnership strategies.
Strategic alliances and mergers among non-governmental organizations are happening in the present. These organizations are partnering together to create stronger alliances with the end result of having combined advantage. Several organizations have also partnered with state departments to avoid duplication of efforts among the partner for instance the gender, social service and children department has partnered with several nongovernmental organizations to support the welfare of children in various regions (Otieno, 2013)
NGOs generating a proportion of their income from enterprises or commercial ventures that they own and run are a rising trend. Typically enterprise-supported PBOs rely on a mix of gift and aid income, and profits from their subsidiary enterprises make up only a relatively small proportion of the total income. Some PBOs have service-provision ventures where they sell a particular expertise to the public sector. Lyne (2012) notes that PBOs can use social enterprises to generate income for undertaking certain activities that donor funding is not provided for. He goes on to state that social enterprises provide for partial sustainability. Few organizations have adopted this as such enterprises have high start up costs, have issues in their management and as a result incur high transaction costs.
Partnership strategies must take cognizance of the environment in which the organization is operating in. A good sustainable strategy must work towards ensuring that the organizations ability for future success is not compromised and at the same time ensure that the environment is not destroyed (Mysen, 2012). The long-term influence of a strategy on the environment must therefore be vey significant to ensure that the strategy is successful in achieving its aims and does not affect the ecology in any way (Coffey,
2013). Any organization activity that may affect the land, waters and air’s ability to take care of the living things sustainably should therefore be considered as non-sustainable strategy.
Partnership strategies have to put into consideration the social aspects of an adopted strategy. A strategy must put into consideration the social and cultural responsibility to the society (Corbitt, 2015). Corporate social responsibility is key in any crafted sustainable strategy. The employees must be treated well; the owners of the organization must get returns form the business, the people coexisting with the organization must benefit from the organization in terms of creation of employment and protection of any other interest that is within the organizations capability (Banker, Mashruwala, & Tripathy, 2014). The social needs of the community in which the organization operates changes every now and then and hence the organization’s partnership strategies must also put into consideration the sustainability of the needs of the surrounding community (Carroll, 1991). Mulaba-Bafubiandi (2007) found out in his study that the stakeholders’ interests are highly significant for organizations in their quest to achieve competitive advantage.
2.4 Challenges of implementing partnership strategies by organizations
Organizations often fail not because they do not have good strategies but because they fail in the implementation of the said strategies (Porter, 2008). Too often the mission, vision and values articulated are not shared across the organization and as a result the vision and mission do not match the service requirements or the needs of the key stakeholders and beneficiaries (Sirsly, 2015). Organizations operate in highly dynamic environments and as such they should recognize that their stakeholders and their stakeholders’ needs may vary overtime and therefore for effective implementation of their strategies they must consciously change and adapt (Burnes, 1996). Organization directors and management must ensure that there’s strong leadership to enhance day-today operations support and align with the stakeholders and their needs (Lacy, Haines, & Hayward, 2012).
Implementation of strategy within an organization has several hurdles and as much as some of these hurdles are preventable it is not always possible to prevent all of them. Shah (1986) found that factors that impede strategy implementation include: organizational commitment, rewards to employees and effective leadership. In addition, Pearce and Robinson, (2009) put forward that factors such as organizational structure, information systems, leadership styles, assignment of key managers, budgeting, reward and control systems are crucial in the implementation of strategies. Otieno (2013) agrees with these researchers, in his study he notes that several factors such as poor communication, misunderstanding of the strategy implementation process, lack of understanding, poor reward and compensation, resources, uncontrollable environmental factors, environmental factors beyond control and lack of proper management support.
In order to effectively adopt and implement partnership strategies firms need to align staff knowledge and expertise, and their activities with the overall goal of the organizations. Non-alignment of staff expertise is one of the blunders that inhibit successful adoption of strategies (Teh & Corbitt, 2015). Moreover, organizations need to establish opportunities for information transfer and exchange. Most organizations lack proper methods, procedures and indicators to monitor and evaluate their project performance. It’s therefore not surprising to find that organizations do not base their project planning on current data and environmental research resulting in lack of resources, materials and tools that respond to project needs (Euge´nio, Lourenco, & Morais, 2013).
In the financial area, organizations lack established methods, procedures and controls to gather, record, classify, analyze and present accurate and timely financial data. In addition, there’s the challenge of devising a proper mix of funding sources. Financial challenges like inaccessibility of startup finance occurs mainly because on starting up, organizations may not have sufficient collateral hence many of the social enterprise strategies may not be successfully implemented (Borland, 2009). Consequently, in order to be successful firms have to strive to get support from policy makers, influential champions and supporters in and out of the not for profit sectors. Getting strong partnership and networks that allow different groups to work together towards a shared goal by coordinating strategies and pulling resources have posed as a challenge to many non-governmental organizations (Lauesen, 2015).
2.5 Summary of Knowledge Gaps
A number of studies have been carried out on partnership strategies none has been conducted at the partnership organization. Some of the studies conducted on partnership strategies include, Kramer (2009), Gandy (2015), Mulaba-Bafubiandi (2007) and Kanyungo, (2014)
conducted their studies in different contexts. This study shall be conducted at the partnership organization, which is a different context and hence may elicit different results.
Onsongo (2012), Otieno (2013) and Njoroge, (2012) conducted their studies in wellestablished NGOs that have well operational structures and funds. There is need to conduct a similar study in a local grass root organization with less organized structures.
This informed the need to conduct a research on partnership strategies adopted by the partnership organization.