Development of practitioner guidelines for partnerships between start-ups and large firms

The Authors

Tim Minshall, Centre for Technology Management, University of Cambridge Institute for Manufacturing, Cambridge, UK

Letizia Mortara, Centre for Technology Management, University of Cambridge Institute for Manufacturing, Cambridge, UK

Stelios Elia, Centre for Technology Management, University of Cambridge Institute for Manufacturing, Cambridge, UK

David Probert, Centre for Technology Management, University of Cambridge Institute for Manufacturing, Cambridge, UK

Acknowledgements

The research reported in this paper was funded by the EPSRC-funded Innovative Manufacturing Research Centre (IMRC) at the University of Cambridge Institute for Manufacturing. The authors wish to thank the industrial partners who contributed to this research and to those individuals who provided comments on drafts of this paper.

Abstract

Purpose – The purpose of this paper is to illustrate the development of the final outputs of a research project looking at partnerships between technology-based start-ups and large firms (“asymmetric” partnerships). It presents the stage of the research aimed at understanding how best to design outputs to assist firms in managing such partnerships.

Design/methodology/approach – A combination of company case studies, company workshops, an end-user survey and pilot dissemination programme were used to identify an appropriate form for the packaging and delivery of the research findings (i.e. what problems can be encountered in such partnerships, and what approaches companies have implemented to overcome these problems).

Findings – A range of approaches for overcoming the problems of managing partnerships between firms whose age and size are markedly different were catalogued. The research presented in this paper revealed that companies felt best able to learn from the experiences of others through a combination of direct support, multi-company workshops, and online access to selected materials.

Research limitations/implications – The generalisability of the findings may be limited by the fact that the majority of the organisations collaborating in this research either were located in the high-technology business cluster in and around the city of Cambridge, UK or had formed partnerships with companies in this geographic region.

Practical implications – Partnerships between technology-based start-ups and technology-intensive large firms can provide an effective means of accessing and integrating the complementary assets required to bring a novel technology to market. This research will help firms overcome the numerous challenges involved in setting up and managing such partnerships by providing stakeholders with easier access to academic research findings. It will assist researchers who are considering how to disseminate research outputs to industry.

Originality/value – There is a strong body of work on improving the performance of partnerships in general, but less on overcoming the practical challenges of managing partnerships between firms of markedly different age and scale. In addition, the selection of the optimum process for ensuring that the findings of such research are used to support implementation remains a topic of debate. This work helps to address both gaps.

Article Type:

Research paper

Keyword(s):

Partnership; Business formation; Large enterprises; Knowledge transfer; United Kingdom.

Journal:

Journal of Manufacturing Technology Management

Volume:

Number:

Year:

2008

pp:

391-406

Copyright ©

Emerald Group Publishing Limited

ISSN:

1741-038X

Introduction

The focus of this paper is to describe how the outputs of academic research on partnerships between large companies and high-tech start-ups (“asymmetric partnerships”) have been converted into practitioner guidelines.

Technology-based start-ups are typically resource constrained and often struggle to access the complementary assets they need to get their ideas to market and to generate value (Barney, 1991; Garnsey, 1998; Brush et al., 2001). At the same time, shortening product life cycles, intensification of competition and increased product complexity has been driving change in the way large firms operating in technology-based industries innovate. A trend has been noted whereby firms in many sectors are moving away from a predominantly “closed” approach to a more “open” model of innovation (Chesbrough, 2003; Chesbrough et al., 2006; IBM, 2006). Within an open innovation environment, start-ups can be an important source of technology for larger firms.

Bringing together the needs of technology-based start-ups and large firms seeking to apply an open innovation strategy points to the logic of partnering, i.e. the formation of mutually beneficial, non-trivial organisational links. However, research and anecdotal evidence show that making such partnerships work can be extremely problematic and not completely understood (Doz, 1988; Alvarez and Barney, 2001). To address this gap, research was undertaken to understand better why such partnerships are problematic, and to investigate what approaches have been used by firms to overcome the challenges. This background work has been reported in Minshall (2005) and Minshall et al. (2005). Consideration was then focused upon how best to transfer these results back to practitioners as evidence suggests that the outputs of research projects are not always presented to practitioners in a manner best suited to support implementation (Pfeffer and Sutton, 1999; van de Ven, 2007).

This paper is organised as follows:

A brief review is presented of the academic literature relating to partnerships between start-ups and large firms, and the challenges of converting the outputs of management research into a format that supports implementation.
The paper summarises the content to be transferred to practitioners, i.e. approaches and solutions to help those involved in asymmetric partnerships.
The research conducted for capturing the needs of potential users of the findings is then described.
The paper then presents examples of how the research results relating to dissemination have been implemented before presenting key conclusions.

Literature review

We start by reviewing research on the challenges of managing partnerships between start-ups and large firms. We then review research on the translation of management research into application.

For the purposes of this research, we are taking the term “partnership” to specify a range of inter-organisational relationships:

[…] in which the parties […] maintain autonomy but are bilaterally dependent to a non-trivial degree (Williams, 1991, p. 271).

There are a number of theoretical approaches that attempt to explain the function of partnerships. See de Rond (2003) for a review of these approaches. For the purposes of this research, we see partnerships as a means used by firms to access complementary assets along a continuum from the specific (e.g. to share a distribution channel) to the broadly defined (e.g. to explore areas for cooperation). The partnership may have an intentionally short-term life (Duysters and de Man, 2003) or may be a long-term strategic alliance (Lorange and Roos, 1992), and its function may change over time (Bidault and Salgado, 2001).

In terms of governance modes, partnership agreements can be split into three broad categories: equity, contractual and informal. These modes can be represented along a spectrum as shown in Figure 1.

Each firm in the partnership may have different approaches to managing partnerships, from formal to informal, and from planned to emergent (Doz, 1988). Firms' prior experiences at managing partnerships and the way in which they link strategy and operations in relation to the partnership all contribute to the “collaborative maturity” of the partners (Fraser et al., 2003).

There are specific challenges facing a start-up firm in managing a partnership with a larger, mature firm, as reviewed in Alvarez and Barney (2001) and de Rond (2003). One of the key challenges relates to the difference between the rate at which a large firm is able to learn about the details of a start-up's core technology, and the rate at which the start-up firm is able to imitate the organisational resources of the large firm (Alvarez and Barney, 2001).

While issues relating to firm-level collaborative product development have been researched (Farrukh et al., 2003; Emden et al., 2006), there is comparatively little work on the challenges encountered when one of the partners is a very young company with limited commercial track record seeking to exploit a technology at a very low-readiness level (i.e. still at the proof of concept stage, or which has only been shown to operate in a laboratory environment (Mankins, 1995).

For the purposes of this research, we have labelled such partnerships “asymmetric” to emphasise the difference in resources, capabilities and experience between the two firms involved.

We now briefly review the literature on the conversion of management research into application. There is already a well established body of literature examining the wide range of activities that have been variously labelled technology transfer, knowledge transfer and knowledge exchange. See, for example, reviews from Bozeman (2000), Amessea and Cohendet (2001), and D'Este and Patel (2007). Much of the research focuses on the transfer of packaged or codified knowledge from the physical and life sciences, but there are particular issues that relate to the transfer – and implementation – of outputs of management research (Pfeffer and Sutton, 1999; van de Ven, 2007).

Three broad issues have been identified by van de Ven (2007) in relation to what he describes as the theory-practice gap. Firstly, is the lack of use of the outputs of management research a result of inappropriate communication methods? Research shows that both managers and consultants who advise them are unlikely to have read the academic literature regularly (Rynes et al., 2002; Rousseau, 2006). An approach to overcoming this gap between knowledge generation and implementation is to change the way in which the knowledge is packaged, and the way in which it is transferred. Workbooks can provide a more accessible route to knowledge and one which is more closely linked to application. Examples of research outputs that have been converted into workbooks can be seen in Neely et al. (1996), Gardiner et al. (1998), Pongpanich (2000), Moultrie and Fraser (2004) and Mortara et al. (2007). However, Pfeffer and Sutton (1999) argue that even when outputs are packaged into user-accessible formats, there may still be a poor rate of implementation of the results.

Secondly, the problem may relate to the differences in the type of knowledge. van de Ven (2007) argues that science and practice knowledge are two distinct kinds of knowing. Scientific knowledge is focused upon building generalisations and theories, whereas practical knowledge in the professional domain is connected to the structure and dynamics of particular situations. Consequently:

Exhortations for academics to put their theories into practice and for managers to put their practices into theory may be misdirected because they assume that the relationship between knowledge of theory and knowledge of practice entails a literal transfer or translation of one into the other (van de Ven, 2007, p. 4).

The third problem identified by van de Ven (2007) relates to the actual production of the knowledge. In relation to the development of management knowledge, a process of enquiry that is unengaged with the stakeholders beyond the academic environment may face problems in transfer and implementation. Approaches with the common theme of “involvement with members of an organization over a matter which is of genuine concern to them” (Eden and Huxham, 1996, p. 75) are a potential solution. The process approach to research (Platts, 1993) provides another route to ensuring relevance of the production of new knowledge by engaging with the target organisations at three stages (i.e. creating the process, testing and refining through application, investigating the wider applicability).

For the purposes of the research presented in this paper, we are focusing our attention onto the different communication methods used to ensure knowledge is transferred in a format most likely to support implementation, and on the on-going engagement of stakeholders throughout the research and dissemination process.

Methodology

Development of research outputs for transfer to practitioners

In the period 2004-2006, research was undertaken to examine the motives for start-ups and large firms wishing to collaborate, the management problems such partnerships present, and the approaches used to overcome these problems. The research drew upon concepts from the resource-based view of the firm to provide a structure for capturing issues and approaches using a case study method. Data were captured from a range of companies using a combination of single-company interviews and multi-company workshops. The results of this research have been reported in Minshall (2005) and Minshall et al. (2005) but the main findings relevant to this paper are summarised in the following sections.

The case study data was structured around the viewpoints of four key stakeholder groups: the start-up, the large firm, the start-up's investors, and the legal counsel for both parties. A summary of issues identified by each of these stakeholder groups is given in Table I.

Re-examination of the cases with reference to the literature on partnering revealed that the factors can be broadly grouped around:

generic partnership issues (i.e. issues that are likely to emerge in a partnership between any two firms); and
specific issues related to asymmetric partnerships (i.e. where there are significant differences in scale and commercial experience between the two firms).

Attention was then turned to re-examining the cases to see what approaches had been used to address the specific challenges of asymmetric partnerships. Examples of approaches observed from the case studies are given in Table II.

Development of practitioner guidelines

The guidelines were developed in four steps:

A draft workbook was written.
The workbook was presented for comment at multi-company workshops.
Interviews and an on-line survey were used to gather feedback from potential users.
A pilot programme of activities was implemented.

The workbook drew upon the lessons learned from the production of similar publications for other research projects by the authors, and incorporated the issues and approaches summarised in Tables I and II. The structure of the workbook combined briefing notes, checklists and guidelines as shown in Figure 2.

The checklists that formed the core of the workbook were designed to help users from both established firms and start-ups highlight areas of possible concern when assessing a possible partnership, or in reviewing an existing partnership. An example of a checklist item is shown in Figure 3.

The prototype workbook was then presented for comment at multi-company workshops. Feedback from the workshops revealed that, although the content did raise important issues, there were concerns at the utility of the workbook for helping address the specific issue of setting up and managing asymmetric partnerships. In response to these concerns, increased effort was focused upon building better understanding of how users would wish to have the outputs of the research converted into something that could support their partnering activities.

To help identify an effective mechanism for transferring the results of this research, a review of the needs of potential users of this research was undertaken. A series of face-to-face interviews were carried out with managers within 20 of our case study organisations. The aims of these interviews were to identify what possible type of support these managers would value in overcoming the challenges of asymmetric partnerships. Based on the issues raised in these interviews, coupled with issues raised in the earlier part of the project, an on-line survey was designed and deployed to triangulate these issues against those of a wider group. Key aims of the survey were to:

Assess the need for a support method by both start-up and established firms.
Explore the requirements of a support mechanism from both parties.

A total of 112 organisations were approached to provide data for this survey. About 38 full responses were received (16 from large firms and 18 from start-ups) giving a return rate of 34 per cent.

Results

About 91 per cent of the survey respondents indicated that they either “strongly agreed” or “agreed” that a structured support method for setting up and managing partnerships between start-ups and large firms would be useful. The responses to the questions relating to two aspects of the requirements of a support mechanism are shown in Figures 4 and 5.

The survey results shown in Figure 4 revealed firstly that both start-up and large firms put greater emphasis on having issues highlighted and prioritised than in having prescriptive solutions delivered. Secondly, there were few differences between the functions required by the start-ups and the large firms.

The survey results shown in Figure 5 revealed the preferences for the format of the knowledge transfer activities:

direct contact with a neutral party (e.g. a facilitator or mentor) with who issues could be discussed;
multi-company events where issues could be raised and shared, and different practices and experiences could be discussed; and
access to materials on-line (for the start-ups in particular).

Based upon the results of this market analysis, an integrated set of activities was developed and piloted. These activities were:

Multi-company workshops held at local technology business incubators.
The development of a community of practice of those interested in the setup and management of asymmetric partnerships. This community was drawn from those that had attended the workshops and related events. The community was connected via attendance at events and through a secure intranet. The intranet provided access to documents and presentations that members of the community wished to share with each other.
A public web site (www.managingpartnerships.net) providing introductory information on this topic, i.e. case studies, short briefing papers, sources of further information, etc.
Access to direct support from experienced mentors and advisors drawn from the community of industrial partners and university associates. These mentors and advisors are able to use the lessons shared and captured by the community of practice to inform the support they provide.

Discussion

The research showed that while asymmetric partnerships did present numerous management problems for all the organizations involved, some had found ways to overcome these challenges. However, it was not clear how such experience could best be disseminated to help other organizations.

The research revealed a number of issues in relation to the transfer of knowledge into a format appropriate to support implementation of the lessons learned. To avoid problems identified by Platts (1993), Eden and Huxham (1996) and van de Ven (2007), the project had a high level of stakeholder engagement throughout the research process. The research originated in a need identified from initial interviews with stakeholders, and the dataset relating to the formation and management of asymmetric partnerships was built up iteratively through case study interviews and multi-company workshops. This level of engagement enabled early recognition that the initial plan for the dissemination of research outputs was inappropriate. Rapid feedback of the views of potential end-users indicated that workbooks were a dissemination method which would not have the highest impact. The close contact with stakeholders enabled the gathering of a wide range of viewpoints on preferred dissemination and engagement routes.

Following this input from end-users, two dissemination workshops (one fee-based, one free) were held attracting 40 company managers involved in, or planning, asymmetric partnerships. About 14 of these managers were from outside the Cambridge sub-region, and two from overseas. A simple example of how the workshop approach could be a valid way for disseminating these research outputs is given by the fact that over 80 per cent of companies attending indicated that the information presented was of direct benefit to their company. An additional positive note was the endorsement received from a government-funded independent company organization which, after participating in one workshop, agreed to fund four further workshops to be delivered around the UK to support start-ups in forming and managing asymmetric partnerships in one specific sector. This in turn has led to interest in running such workshops from one UK-based industry association and one UK regional government agency. Although these follow-on activities are not a validation of the workshop approach, they are a demonstration that presenting the results in form of a workshop gives visibility to the research work and may generate further opportunities for dissemination and engagement. From the researcher perspective, the workshop format allows discussion and direct sharing of results, and enables managers to engage with the findings of the research more readily than might be the case if the same information were presented only in a workbook format. The multi-company workshop provides a mechanism by which the research team can continue to engage with a community actively involved in the formation and management of asymmetric partnerships. However, this method of dissemination requires a continuous investment of time and effort by the research team.

As part of the workshop offering, attendees could request to become members of the “community of practice” and gain access to the related intranet. The intranet provided a secure environment for sharing resources, requesting assistance, and discussion. Almost all attendees indicated a desire to have access to this resource. Usage of the intranet peaked in the period immediately following each workshop but declined to almost zero unless specific prompts were sent by a member of the research team. Discussions with members of this community and similar ones indicated that the main perceived value of the community was in hearing examples of the experience of others (i.e. many-to-many interactions), and in knowing who to call to discuss particular issues (i.e. one-to-one direct queries). There have been very few examples of members of the community posting queries on-line or via e-mail to which the wider group can respond. However, there seems to be an emergent role for the network facilitator (currently the research project principle investigator), i.e. someone that members of the community can contact to seek advice such as “Who might know about X?” or “Do you anyone that has tried Y?”.

The public web site set up to provide an introduction to the topic of starting and managing asymmetric partnerships had around 100 downloads per month of the briefing materials provided on-line.

In terms of the provision of direct support through one-to-one consultations, there has been very limited observed uptake. Less than 10 queries for such assistance have been recorded during the pilot period. However, it is not clear whether or not those seeking support are finding the assistance they need through direct contact with other members of the community.

In summary, the results of the pilot period of knowledge transfer activities reflect the findings of the user survey in some areas but not in others. For example, the survey showed a clear desire for one-to-one consultations to support their partnering activities, yet there has been little evidence of this service being used. The survey also showed that large firms gave the lowest priority to multi-company workshops, yet large firms have been the most significant group of attendees at these events.

Conclusions

Four conclusions emerge from the research presented in this paper.

Asymmetric partnerships present many management challenges but organizations have found ways to overcome many of these.
Engagement with stakeholders throughout the research and dissemination process is very important as it allows emergent issues to be addressed. Stakeholder engagement avoids the need for researchers to be committed from the outset to a single path for both research and dissemination.
The use of a workbook-based approach for addressing a complex multi-stakeholder problem such as the setup and management of asymmetric partnerships may alone not be the most effective means of transferring research outputs to practice. Both start-ups and large firms want to participate in a range of activities and be members of networks which allow experiences and issues to be shared and discussed with other firms.
The development of any approach such as that outlined in this paper is never likely to reach a point of completion. There is a need for on-going iteration of both content and activities to deliver effective support back to companies. This presents both a challenge and opportunity. The challenge is that research projects are typically funded to deliver results at a clear endpoint. On-going iterations and improvements to outputs do not typically form part of research funding proposals. Yet facilitation of, and engagement with, a community practice allows the researcher to be involved in the knowledge transfer activities and this in turn may support the identification of new research areas.

Figure 1Spectrum of partnership forms

Figure 2Structure of the prototype workbook

Figure 3Example checklist from prototype workbook

Figure 4Summary scores for questions relating to the ranking of functions required to support partnership setup and management

Figure 5Summary scores for questions relating to how potential users would rank support options

Table IExample issues from different stakeholder perspectives

Table IIExamples of approaches used by start-ups and large firms

References

Alvarez, S.A., Barney, J.B. (2001), "How entrepreneurial firms can benefit from alliances with large partners", Academy of Management Executive, Vol. 15 No.1, pp.139-48.