Author: Sascha Klöker, October 7, 2024
1 Introduction
In the current era, the world is undergoing profound changes. These changes are for example the contemporary era, the world is undergoing profound transformations. These developments are, for example, characterized by globalization and technological advancement. While these trends provide companies with the opportunity to gain a competitive advantage through innovation and achieve substantial profits, they also pose significant challenges. The issues and challenges faced by both businesses and society as a whole have not diminished in recent years but have instead become increasingly complex and difficult to address.1 These challenges extend across virtually all domains, ranging from climate change, resource depletion, and species extinction to social inequality, poverty, and human rights violations.2
As early as the 1990s, literature and research identified that challenges such as climate change had become so vast and intricate that individual actors whether companies, groups, or even entire governments could no longer tackle these issues independently.3 The concept of collaboration was already taking shape at that time, with existing literature recognizing the pivotal role that partnerships could play in addressing these challenges.4 This understanding has only grown in significance, especially in the context of sustainability. For instance, the United Nations identified the formation of partnerships as one of its core objectives in promoting sustainable development, as outlined in the 2030 Agenda for Sustainable Development (Goal 17), which was adopted by all member states in 2015.5
A partnership can be defined as an association or collaboration between at least two organizations aiming to achieve a common goal. This process is often seen as dynamic and evolving.6 In this process, the resources of the various parties are pooled to accomplish shared objectives that would be challenging or impossible for the individual parties to achieve independently.7 According to the definition provided by Wood and Gray (1991), this process must be regarded as interactive. The participating entities typically distinct autonomous stakeholders utilize shared rules, norms, and structures, which must be collectively defined by both parties to ensure the successful implementation of the partnership.8Overall, a partnership can be understood as a collaborative action undertaken by different organizations under self-determined conditions with the goal of achieving a common objective.
There are various types and forms of partnerships. When considering business partnerships, many people initially associate these arrangements with collaborations between corporate entities. Such collaborations frequently prove to be highly successful. However, businesses are primarily driven by stakeholder and shareholder satisfaction, as well as profit generation.9 A partnership between two profit-driven organizations may not focus on addressing social or environmental challenges. To address this issue, cross-sector partnerships have emerged, involving collaborations between the business sector and the social sector.10
One illustrative example of a cross-sector partnership is the collaboration between a non-governmental organization (NGO) and a business entity. In this context, profit-oriented companies engage with NGOs to pursue a specific goal or jointly realize a project. In theory, the unique expertise of NGOs on social and/or sustainable issues, coupled with their favourable public reputation, combined with the economic knowledge, market power, influence, and financial resources of businesses, has the potential to generate both economic benefits and social and sustainable outcomes through this collaboration.11 Moreover, NGO-business partnerships have been a prominent topic in academic literature since the mid-1990s, with a particular focus on addressing complex socio-ecological challenges.12
The potential of NGO-business partnerships to deliver social, environmental, and economic benefits while providing solutions to increasingly complex challenges makes them a topic of considerable interest and relevance from multiple perspectives. Nonetheless, as with any partnership, potential challenges exist within this configuration that could hinder or even prevent a positive outcome. Consequently, this thesis explores NGO-business partnerships from a comprehensive academic perspective and identifies practical implications for the involved parties. This research is conducted under the following topic: “Exploring the dynamics of NGO-business partnerships: A comprehensive literature review.”
To provide the most comprehensive overview and implications on the topic of NGO-business partnerships, this thesis is structured as follows: Following the introductory chapter, the subsequent section outlines the methodology, which elucidates the approach employed in the literature review and the process by which sources were sought and integrated. The methodology chapter is followed by a review of the literature. The literature review offers an overview of the fundamental definitions of NGOs and businesses and examines the evolution of the relationship between these two entities. Additionally, it explores the fundamental concept of NGO-business partnerships, covering their various forms, motivating factors, and outcomes, such as value creation and associated challenges and risks. The need for further research in this area is then emphasized. The following chapter presents the practical implications derived from the literature review. These implications are categorized according to the phases of a partnership: before, during, and after the partnership. Finally, the paper highlights the factors that either facilitate or hinder the successful implementation of NGO-business partnerships.
2 Literature Review
The aim of the literature review is to map the academic discourse on NGO-business partnerships. To this end, it first provides a basic explanation of the terms “NGO” and “business.” Subsequently, the evolution of interactions between the two organisations over time is elucidated, followed by an examination of the partnership itself, encompassing all its theoretical forms. Subsequently, the motivations, outcomes and benefits and challenges of NGO-business partnerships are elucidated. In conclusion, the thesis identifies several avenues for further research.
2.1 Definition
2.1.1 What is an NGO?
The term NGO is an acronym for non-governmental organisation. The literature does not provide a standardized or precise definition of the term. Over time, various scholars have attempted to delineate the concept of NGOs. Mawlawi, for instance, defines an NGO as an association of individuals within a private, voluntary, non-profit organization (NPO), where members pool their skills and resources to pursue shared goals and ideals.13 In contrast, Teegan et al. (2004) offer the following definition: “private, not-for-profit organizations that aim to serve particular societal interests by focusing on advocacy and/or operational efforts on social, political and economic goals, including equity, education, health, environmental protection, and human rights” (p. 466).14 A more recent conceptualization by Kourula and Laasonen (2010) defines NGOs as “social, cultural, legal, and environmental advocacy and/or operational groups that have goals that are primarily non-commercial” (p. 40).15 These definitions illustrate that NGOs are associations of individuals primarily committed to sustainability or related issues, striving to address social or environmental challenges within an economic framework, without the intent to generate financial profit. Consequently, an NGO may also be referred to as an advocacy organi-sation.16
The definitions available in the literature highlight the broad scope of the term NGO, as the sector is subject to minimal or no legal regulation or oversight.17 This regulatory void and the consequent lack of a clear delineation between different types of organizations classified as NGOs create opportunities for potential misuse of the term. A pertinent example is the phenomenon known as astroturfing. Coined by U.S. Senator Lloyd Bentsen, the term refers to the deliberate presentation of a seemingly benevolent initiative or project to achieve a specific objective, such as orchestrated protests. Through such practices, societal trust is exploited to gain undue advantage, often without the alleged organisation genuinely pursuing social or sustainable objectives.18
NGOs are not profit-oriented entities and are therefore categorized under the broader umbrella of NPOs. The term NPO, like NGO, lacks a precise regulatory definition. However, the scope of NPOs is even broader. NPOs encompass all organizations that do not prioritize financial gain and instead focus on activities that align with a mission aimed at generating social value.9,19 The specific goals that an organization must pursue to qualify as an NPO are not clearly defined. These organizations engage in the production and provision of both private and public goods, but they do not operate within the economy as traditional market actors. Instead, NPOs occupy a space between the market and the state. Examples of such organizations include associations, clubs, foundations, churches, and, notably, NGOs.9 In this context, NGOs can be regarded as a specific category within the broader classification of NPOs.
The primary objective of NGOs is typically to address social or sustainability-related issues, raise awareness of injustices, or encourage other actors to modify their behaviours. Given the wide array of objectives pursued by NGOs across various sectors, it is evident that the strategies employed to achieve their goals are equally diverse. Regardless of whether an NGO seeks to effect change in sustainability, social justice, human rights, or providing tangible relief to disadvantaged groups or communities, there are foundational approaches that apply universally. These approaches can be classified into four categories: service NGOs, protest NGOs, advocacy NGOs, and hybrid NGOs.20 Furthermore, NGOs can be categorized as either insider or outsider organisations.21 Insider NGOs work closely with the business sector, aiming to collaborate on the implementation of socially responsible programs and projects. By contrast, outsider NGOs adopt a more critical stance toward such collaborations, preferring to apply public pressure and confrontational tactics.22
Yaziji and Doh (2009) propose another classification, distinguishing between self-benefiting NGOs and other-benefiting NGOs.23 The classification focuses on who benefits from the organisation’s activities. In the case of self-benefiting NGOs, only the members of the organisation gain from its initiatives, such as in the example of Alcoholics Anonymous. Other-benefiting NGOs, however, aim to benefit a broader audience, including the general public, through their actions and provision of goods. Environmental organisations serve as a prominent example of other-benefiting NGOs.24
2.1.2 What is Business?
This paper explores the relationship between NGOs and business. After a brief discussion of NGOs, this section examines the term business. In the context of this paper and relevant literature, business is understood as traditional commercial enterprises. Unlike NGOs, whose primary goal is to address social or environmental issues without seeking financial profit, businesses are primarily driven by the objective of generating profit, with the potential goal of maximizing it.25This includes a broad spectrum of companies, ranging from manufacturers to service providers. Fundamentally, businesses strive to optimize their operations in order to achieve maximum efficiency and cost-effectiveness. The ultimate aim is to provide high-quality goods or services at the most competitive price point.9 This fundamental principle is evident across various industries, from technology to healthcare.
Businesses can take different forms, often reflected in their legal structures, size, and degree of internationalization. A notable example is multinational enterprises (MNEs), which operate across multiple national markets and are typically large in scale.26 In contrast, small and medium-sized enterprises (SMEs) represent a distinct category. SMEs are smaller in comparison to MNEs, measured by factors such as employee count, turnover, or balance sheet total.27 According to the European Commission, an enterprise qualifies as an SME if it employs fewer than 250 individuals and has an annual turnover not exceeding €50 million.28 This paper considers both MNEs and SMEs within the framework of their partnerships with NGOs. Henceforth, the terms business or corporate entity will be used to refer to companies in general throughout the thesis.
2.2 The Evolution of NGO-Business-Interactions
The private social and sustainability sector and the profit-oriented business sector have engaged in dynamic interactions for several decades, with these interactions evolving significantly over time.23 This progression can be observed both in the academic discourse surrounding NGO-business relations and in practical implementations. By the late 1990s, a discernible shift occurred in the focus of the literature, with increased attention devoted to NGO-business partnerships. Over the following years, there was a noticeable rise in the number of journal articles addressing the topic, culminating in a peak around 2010, when partnerships between NGOs and business organizations became a prominent area of study.29
One of the most significant developments in the evolution of NGO-business interactions has been the changing nature of how these two entities engage with each other. Initially, NGOs and businesses viewed each other as adversaries; however, this relationship has gradually evolved into a more cooperative dynamic.29 Arenas et al. identified early interactions as predominantly confrontational, with NGOs leading anti-corporate campaigns aimed at exposing corporate malpractices and instigating behavioural changes within the corporate sector.30 As a result of such public actions by NGOs, businesses faced increasing pressure, which in some cases led to changes in corporate policies and strategies.31
Despite the effectiveness of confrontational strategies employed by NGOs, new forms of engagement between NGOs and businesses have emerged over time. These newer approaches combine confrontation with collaboration.30 Kolk and Pinkse also observed this shift, noting a move from initial antagonism to a more cooperative stance.32 This evolution has been exemplified through stakeholder dialogues and the establishment of innovative partnerships.14
The transition towards a more collaborative approach was driven by mutual interests among both NGOs and businesses. According to Hartmann et al., businesses have sought to reorganize their environmental strategies, leading to more proactive approaches rather than reactive ones, which in turn has contributed to the increase in partnerships with social organizations.3 Simultaneously, NGOs have come to recognize the benefits of partnering with businesses as an alternative to confrontation. This added value can be seen in various areas. For instance, NGOs have acknowledged that partnering with a company allows them to extend their influence beyond the individual company to the broader global environment and even entire industries. For example, in the field of governance, an NGO might influence the behaviour of one company, which could, in turn, affect other companies within the same industry.30 Figure .1 illustrates the evolution of NGO-business interactions. Furthermore, within the context of corporate social responsibility (CSR), NGOs have recognized that they can pursue common goals more effectively when working collaboratively with businesses, which has led to an increased willingness to form partnerships in recent years.33
NGOs have also adjusted their strategies to some extent. Schiller argues that the shift towards more collaborative arrangements stems from the fact that NGOs have become more pragmatic and less dogmatic, increasingly seeking solutions to economic challenges.34 Concurrently, companies have recognized the potential benefits of collaborating with the civil sector, such as creating a favourable working environment and enhancing their credibility. This underscores the transformation and adaptation both parties have undergone regarding their perspectives, approaches, and strategies over time. As a result, the predominant dynamic has shifted from confrontation to collaboration, with the ultimate goal of achieving shared objectives.
The transformation of NGOs is closely tied to the changing roles and relevance of NGOs in the market, as well as their funding circumstances.33 Over time, social and sustainability issues have gained prominence, and the inability of governments to adequately address these challenges has elevated the role and responsibility of NGOs in resolving them. Simultaneously, governments have reduced their collaboration with NGOs, prompting these organizations to seek alternative partners.35 The business sector has become a primary focus for NGOs for two key reasons. First, the increasing globalization and internationalization of enterprises have theoretically expanded their capacity to effect change. Second, businesses possess significant financial resources, which are particularly important for NGOs given the rising number of NGOs and the subsequent competition for public funding. This financial necessity has driven NGOs to seek alternative sources of funding, resulting in partnerships with corporate entities.36 Furthermore, NGOs are increasingly internationalizing and developing innovative strategies for engaging with the business sector.37
Despite the overall trend towards more collaborative NGO-business relationships, this development does not apply universally. In part, this can be attributed to the fact that some NGOs prefer to maintain greater autonomy and, therefore, are reluctant to form close partnerships or engage in any type of collaboration. This stance is often adopted to avoid undue influence from businesses, which could jeopardize the NGO’s credibility.36 On the other hand, Baur and Schmit demonstrate that NGOs engaging with multiple firms can also positively influence the nature of these interactions.38
2.3 NGO-Business-Partnerships
2.3.1 Collaboration and Cooperation among Organizations
The formation of a partnership between two organizations, wherein both entities collaborate to achieve a shared objective, is a well-established concept within the field of organizational studies. To describe this process, the literature often employs alternative terminology. In the context of NGO-business partnerships, the terms collaboration and cooperation are frequently used.39 These two terms are often treated as synonymous.40 Despite their near interchangeable usage, the literature has produced varying definitions over time.39
At the core of all definitions is the notion of working together. According to Hardy and Phillips, collaboration is fundamentally a strategy of mutual engagement, characterized by the voluntary participation of all partners.41 Similarly, Salvato, Reurer, and Battigalli define collaboration as the act of two or more individuals working together to achieve a common goal.42 In a broader sense, Knoben and Oerlemans describe collaboration as an organizational activity where parties work together.43
Beyond the aspect of joint work, collaboration is often viewed as a process in itself. Majchrzak, Jarvenpaa, and Bagherzadeh describe collaboration as an ongoing communicative process, wherein the terms of the partnership are continually renegotiated.44 In line with this, Hardy et al. (2005) assert that collaboration results from a continuous dialogue based on pre-existing discourses.45 This ongoing dialogue fosters the exchange of information, which is seen as an essential aspect of the collaboration process.46 In conclusion, collaboration can be defined as an association of parties, based on the exchange of information or knowledge in a dynamic process characterized by communication and collective efforts toward a common goal.
The term cooperation is frequently used interchangeably with collaboration.46 However, in organizational studies, cooperation is sometimes distinguished by the willingness of the parties to work together, in contrast to collaboration. For instance, Das and Teng (2000) define cooperation as the willingness to join forces with a partner to pursue mutually compatible interests within an alliance, rather than acting opportunistically.47 Moreover, cooperation involves not only the willingness to form a partnership but also the intention to maximize shared interests within the alliance.48 According to Gong et al., cooperation also requires partners to establish rules, select suitable personnel, and ultimately implement plans, so that a project can be considered cooperation from a scholarly perspective.49
In essence, the terms cooperation and collaboration are largely synonymous. In the context of the definitions provided, both terms refer to a cooperative relationship between partners aimed at achieving a specific goal or facilitating the exchange of information. The distinction between the two terms lies primarily in the emphasis on willingness when defining cooperation in the literature.39
2.3.2 NGO-Business-Partnership in General
The partnership between NGOs and business entities represents a cross-sector collaboration. Cross-sector partnerships have become a central focus in both management research and practical applications. A partnership is classified as a cross-sector partnership when there is substantial and sustained interaction between organizations from at least two distinct sectors.50 In academic literature, three primary sectors are identified.51 The first is the for-profit sector, commonly referred to as the business sector, which includes companies and other organizations focused on maximizing profits. The second sector is the government sector, encompassing the state and various governmental bodies. The third is the non-profit sector, comprising organizations that do not prioritize profit maximization, typically operating within civil society and social domains.24,51 NGOs fall within the third sector, meaning that an NGO-business partnership involves collaboration between the profit-oriented and non-profit sectors.
The concept of an NGO-business partnership can be defined in multiple ways.52 Despite significant scholarly efforts, a universally accepted definition has yet to emerge. A general definition is provided by Kindornay et al., who describe collaboration between businesses and NGOs as a mutual commitment, wherein both parties agree to leverage their respective resources and work cooperatively to achieve a common goal.53 This definition aligns closely with a general understanding of partnership. Expanding on this, Berger et al. offer a more detailed interpretation, defining NGO-business partnerships as cooperative processes between the private and non-profit sectors, where both economic and non-economic objectives, such as the enhancement of societal well-being, are pursued.54 A comparable, process-oriented definition is provided by Al-Tabbaa et al. (2014), which characterizes the partnership as an agreement to address social and environmental issues while providing mutual benefits to both parties.55 Similarly, Clarke and Clane emphasize that collaboration aims to tackle social and environmental challenges and is intended as a long-term endeavor.50
In addition to focusing on outcomes and the collaborative process itself, NGO-business partnerships can also be defined based on the differences between the involved entities. For example, Aldrich & Reuf describe collaboration as a symbiotic and mutually beneficial relationship between organizations with no overlapping resources or identity niches.56 Moreover, O’Connor and Shumate suggest that such symbiotic relationships offer significant advantages to both parties, although the specific benefits may vary depending on the partnership.57
Beyond the varying approaches to defining NGO-business partnerships, different terms are used in academic literature depending on the emphasis of the partnership. One such term is “strategic alliance,” which typically refers to a partnership formed for strategic purposes, with the goal of addressing complex issues through the shared creation of new goods or services.58 If the partnership is specifically focused on environmental issues and involves an environmental NGO, it is often labelled a green alliance.59 However, there is no consensus in the literature regarding the scope of the term green alliances. Some studies adopt a narrow interpretation, applying the term only when environmental groups are part of the alliance. In contrast, others take a broader approach, arguing that the inclusion of specific organizations is secondary, as long as the alliance is oriented toward developing solutions to environmental challenges.60
2.3.3 Dimensions and Forms of NGO-Business-Partnerships
The relationship between NGOs and companies can take various forms, ranging from sponsorships to joint ventures. The prevailing view in the literature suggests that the form of such partnerships is a dynamic process, capable of initiating change and evolving over time. To illustrate these concepts, the literature frequently employs continuums to depict this progression. Each continuum aims to clarify the different phases of the relationship by considering various stages of development.61
Austin (2000) established a foundational framework with his Continuum of Collaboration, which remains widely discussed in leading academic journals.62 In this model, Austin examines the relationship between business enterprises and NPOs, although it also applies to partnerships between NGOs and businesses without restrictions on relationship type.62,63 Austin posits that a partnership between NPOs and companies is not static but rather a dynamic process, which can be divided into three distinct phases. In theory, each partnership has the potential to evolve from one phase to the next. These phases are organized in ascending order of collaboration intensity: the philanthropic stage, the transactional stage, and the integrative stage.63 It is challenging to demarcate the phases with precision; thus, they are best viewed as a fluid transition. Differences between the stages are identified through parameters such as the level of engagement, the relevance of the partnership to the organizations’ missions, the resources exchanged, the scope of activities, the degree of interaction, and the level of trust.64 These parameters can be used not only to describe Austin’s continuum but also to characterize similar frameworks, such as the Continuum of Community Engagement proposed by Brown et al.61
The philanthropic stage represents the least collaborative form of engagement. At this level, participation is minimal, and resources are limited.61 This often manifests as an outsourcing or charity relationship, where companies act as donors and NGOs as recipients. In such cases, the transfer of resources is mostly unilateral, with companies providing financial contributions while NGOs pursue their respective missions.62 This type of relationship is commonly referred to as arm’s-length collaboration and is considered the least complex, though also the least impactful partnership form. One reason for its limited impact is the minimal interaction beyond the transfer of resources, and its connection to the missions of both parties is often tangential.20 In the context of CSR, Margolis and Walsh describe this collaboration as a buy option, in which companies fund NGOs’ missions in exchange for advice on CSR activities, with little mutual influence.65
In the middle stage of Austin’s framework, the transactional stage, the nature of the partnership shifts from primarily philanthropic engagement to the execution of tangible projects. This requires a moderate level of commitment and more interaction between the two parties than in the philanthropic stage.61 Additionally, resource flows evolve from unilateral to bilateral, meaning both parties contribute resources to the partnership.51 A greater investment typically correlates with increased activities that promote success but also introduces greater complexity, particularly in management.62 However, the potential for greater added value is significantly higher for both NGOs and businesses.66 Partnerships in the transactional stage often manifest as sponsorships or cause-related marketing initiatives.67
The final phase, according to Austin’s continuum, is the integrative stage.63 At this point, the partnership between NGOs and firms is characterized by deep integration, high levels of participation, substantial resource investment, and extensive collaboration.68 A key distinction between this phase and the previous ones is that the partnership is no longer incidental to the organizations’ missions but becomes a strategic priority. This shift enables the development of strategic value for both partners, achieved through the creation of a unified entity.62 From this perspective, it resembles a strategic partnership, but this form of collaboration requires more complex structures and greater resource commitment than earlier stages.69
In addition to Austin’s continuum, Bowen et al. present an extension of this concept with their Continuum of Community Engagement. According to Bowen et al., NGO-business partnerships can be classified into three distinct strategies: transactional, transitional, and transformational.70 A transactional engagement is defined by a one-sided exchange, where organizations provide resources such as donations, information, or time to community groups with minimal interaction.71This approach is analogous to Austin’s philanthropic stage.61 A Danish study by Neergaard et al. indicates that most NGO-business partnerships fall into this transactional category.72 At the other end of the spectrum, the transformational strategy is highly interactive and focuses on joint management. This strategy is employed to address challenges, make collaborative decisions, and realize mutual benefits, closely resembling Austin’s integrative stage but with even more intensive cooperation.70 Consequently, transformational strategies are considered a fourth complementary stage of partnership.61 Bowen’s transitional strategy, situated between transactional and transformational, involves two-way dialogue and strategic representation but lacks definitive power.61,70,71
Figure 2 illustrates how the nature of the relationship evolves across these four phases, corresponding to varying levels of intensity and interaction, as described by Austin’s Continuum of Collaboration and Bowen et al.’s Continuum of Community Engagement.
In addition to the general theoretical approaches to describing the forms of NGO-business partnerships, a more practical perspective can be adopted by analyzing how NGOs and businesses interact and how resources are allocated within these partnerships. Darko, in his analysis, identifies four distinct categories of partnership forms, derived from an examination of the development of these collaborative arrangements. The four categories are as follows: awareness-raising, information sharing, resource contribution, and resource pooling.73 Figure 3 illustrates the relationship between the degree of cooperation and the utilization of resources within these four categories, showing how they relate to one another.
In the realm of awareness-raising, NGOs use activities based on negative advocacy and campaigning strategies to highlight development-related issues associated with business operations. In such cases, the company in question does not engage directly with the NGO.73 Thus, this is not considered a form of collaboration within the scope of this work; however, it is included for the sake of completeness. In contrast, the act of information sharing can be classified as a form of collaboration. In this arrangement, both parties exchange information, but no other resources are shared.73 Businesses provide details about their operations and industry-specific knowledge, while, as noted by Jonker and Nijhof, NGOs contribute specialized knowledge about the community and related issues.74 Additionally, Stekelorum et al. assert that NGOs supply information relevant to CSR activities.75
The next category, which reflects a higher level of collaboration, is resource contribution. In this form of partnership, the exchange extends beyond information, involving the sharing of tangible resources by both parties. The expectation is that the resources provided by businesses will support the work of NGOs, while those offered by NGOs will generate more positive development outcomes for the business.73 The corporate sector typically contributes a significant portion of financial resources but may also provide production systems to collaborate with NGOs in developing new products. On the NGO side, material resources are generally more limited. According to Chaudri and Hein, NGOs primarily offer community networks, inspiration, and volunteer resources.76
Resource pooling represents an even more advanced stage of collaboration. In this form, resources are not just exchanged but combined.73 By pooling resources, both parties work together within a newly created institution, sometimes even formulating entirely new business models aimed at jointly addressing problems or filling a market gap with innovative products or services.77
2.4 Driver and Motivations
There are numerous drivers and motivations for the formation of an inter-organizational partnership between NGOs and business firms. These drivers and motivations can vary greatly depending on the specific context. A variety of drivers can be identified, including common management theories from management research that often lead to the establishment of such partnerships. When examining the specific motivations for these collaborations, notable differences arise, often due to the distinct backgrounds of the involved organizations. Gray and Stites identified four broad categories of motivations: legitimacy-oriented, competency-oriented, resource-oriented, and society-oriented motivations.78 In contrast, Selsky and Parker propose a three-tier classification of motivations: metagoals or common causes, individual partner goals, and specific individual goals, with individual partner goals being the primary focus of the literature.79 The following section provides a detailed explanation of both theoretical frameworks and the specific motivations involved.
One key driver behind the formation of partnerships between NGOs and businesses is the stakeholder theory and the subsequent stakeholder dialogue. Stakeholder theory views organizations, particularly companies, as nodes in a network of relationships with various parties involved in their activities.80 According to this theory, managers are responsible for addressing the needs, expectations, and demands of stakeholders while simultaneously managing any potential conflicts.81 A positive correlation has been established between stakeholder engagement and organizational performance, as shown by studies in stakeholder engagement research.82 Maintaining a positive and productive relationship with a company’s primary stakeholders is essential for long-term profitability.80 This indicates that organizations should not only consider stakeholder involvement but also actively engage with them. This aligns with a trend in stakeholder literature, where Goodstein and Wicks suggest that stakeholder theory should encompass a two-way conversation, with stakeholders playing an active role.83 This two-way dialogue goes beyond information exchange, involving stakeholder participation in decision-making processes. Frequently, this engagement manifests as stakeholder dialogue.84
A stakeholder dialogue typically begins with the exchange of information, followed by discussions of opinions and expectations. This often leads to mutual influence between the company and the involved stakeholders. However, there is no general consensus in the literature on the precise definition of stakeholder dialogue.30 Some authors define stakeholder dialogues as attempts to reach an agreement between the two parties, aiming to develop common standards for corporate practice.85 Others, such as Isaacs, view dialogue as an effort to understand the fundamental issue, the underlying assumptions held by stakeholders and the organization, and to identify the root cause of the problem.86
In the context of NGO-business partnerships, stakeholders on both sides, corporate and NGO, play roles in directly or indirectly encouraging the formation of such partnerships.87 In the corporate sector, consumers and society at large have increasingly demanded a stronger focus on sustainability and environmental protection in recent years.88,89 This includes NGOs, which, according to Burchell & Cook, are considered key secondary stakeholders for companies.90 NGOs have been some of the most vocal critics of businesses, particularly for failing to adequately address sustainability and social issues. This has resulted in increased pressure on businesses to engage in dialogue with key stakeholders, such as NGOs, in an effort to enhance mutual trust and understanding, as well as reduce misunderstandings.87 Pedersen & Pedersen highlight that dialogue serves as a motivation to reduce potential misunderstandings and gain new insights.71 Harangozo & Zilahy add that, alongside access to new knowledge, opportunistic motivations also drive companies to engage in dialogue with NGOs, such as the potential to enhance profits. By partnering with NGOs, companies can neutralize potential criticisms and avoid negative headlines, at least temporarily.91
Despite some scepticisms on the part of NGOs regarding the motivations of companies to engage with them, NGOs themselves also have motivations for entering into dialogue and cooperation with businesses.90 According to Molina-Gallart, the motivations for NGOs can be broadly categorized as funding, realpolitik, credibility, outreach, and change.92One key driver is the competitive environment in terms of securing funding. The changing landscape of NGOs has prompted these organizations to engage more frequently with private-sector entities. As the number of NGOs actively promoting their projects has risen, competition for public funding has intensified, making it increasingly difficult for NGOs to secure funding from traditional public sources.93 To meet the expectations of their own stakeholders, NGOs have been compelled to explore alternative funding avenues, including partnerships with businesses.36 Beyond financial motivations, Burchell & Cook argue that NGOs engage with companies to actively represent their organization’s interests and members, gain a deeper understanding of their counterparts, and influence business practices.90
Another significant driver of NGO-business partnerships is resource dependency theory. According to this theory, organizations lack essential resources to operate effectively and must establish relationships with other market participants to obtain these resources.94 Samii, Van Wassenhove & Bhattacharya argue that a certain level of dependency is necessary for a successful partnership, where the achievement of specific goals would not be possible without the involvement of another party.95 According to den Hond, de Bakker & Doh, firms and NGOs are interdependent: NGOs typically lack financial resources, while companies often lack reputation and legacy.94 This resource dependency influences organizational behavior, compelling them to act in specific ways and generating uncertainty.36 Hillman et al. suggest that managers can mitigate this uncertainty and dependency.96 Two strategies are proposed for addressing resource dependency: buffering and bridging.94 Buffering involves protecting processes, functions, or units from external influences, reducing the need for external resources.97 In contrast, bridging aligns activities with external expectations. Martinez posits that bridging can also help NGOs and businesses transcend differences, pool resources, and collaborate.98Therefore, bridging would be the initial strategy that leads to partnerships. Yaziji & Doh argue that the choice of strategy depends on previous experience and the extent of resource deficiencies within the company.23 However, Liu et al. warn that dependency can lead to challenges and negative consequences.99 These challenges, along with other risks, will be addressed in later sections of this thesis.
In addition to resource dependency theory, the difference in resources between businesses and NGOs can also serve as a motivation for collaboration. Chaudhuri and Hein have examined the contrasting resources and competencies that each party can contribute to a partnership, demonstrating that these differences can create mutual benefits.76 In this context, the resource-based view is often applied as an explanatory framework. This approach posits that resources are attributes heterogeneously and imperfectly distributed among organizations.100 The value of resources can be evaluated based on their rarity, inimitability, and non-substitutability within the environment, such as supply and demand dynamics.101According to den Hond, de Bakker & Doh, the perceived value of the other party’s resources is a critical factor in the likelihood of forming a partnership. If the resources are deemed strategically valuable, the organization will be more inclined to enter into the partnership.94 Potential strategic resources that could motivate a partnership are listed in Figure 4.
NGOs and businesses possess different resources and skills that may interest the other party, providing the basis for a partnership when both sides seek certain resources. In addition to tangible assets such as money or production systems, intangible assets can motivate collaboration between the two sectors. Resources like trust and legitimacy are particularly valuable, as they are difficult for individual organizations to build independently.76 Trust is especially crucial for businesses, which are sometimes perceived as lacking credibility in their sustainability efforts.102 Eweje and Palakshappa suggest that collaboration with the social sector can enhance a company’s legitimacy and trustworthiness.103 Legitimacy, as defined by Suchman, refers to the perception that an organization’s actions are appropriate within a socially constructed system of norms, values, and beliefs.104 From an institutional perspective, gaining legitimacy is essential for companies seeking alignment with broader societal expectations. Furthermore, companies are motivated not only by economic rationality but also by the desire for social legitimacy, which enhances their long-term success in the market.105 By partnering with NGOs, companies can access intangible benefits that are difficult to obtain independently, improving both reputation and strategic positioning.76 Figure 4 outlines various resources and competencies from both businesses and NGOs that can be exchanged and serve as key motivating factors for entering into an NGO-business partnership.
The question of legitimacy is of particular importance for companies in the context of CSR. From a business perspective, CSR represents a significant driver and motivation to engage in partnerships with NGOs.33 The topic of CSR has been widely debated and discussed in academic literature. CSR can be defined as a commitment to enhancing social welfare through the use of business practices and corporate resources, with the aim of benefiting employees and other stakeholders.106,107 According to den Hond, de Bakker, and Neergaard, NGOs play a direct role in defining, shaping, and measuring corporate social responsibility.108 Given the increasing expectations from a wide range of stakeholders for organizations to integrate social responsibility into their operations, managers are showing greater willingness to shift their short-term financial focus toward a long-term perspective that includes social and environmental impacts.33 The most significant challenge businesses face is justifying their CSR activities.109 Both partners and society have expressed doubts about the sincerity of CSR efforts. There is a perception that these actions may be primarily motivated by a desire to project a positive image rather than by genuine commitments to achieving meaningful goals.36 To address this issue, companies have implemented measures to verify the authenticity of their actions. Poret suggests that NGOs can act as third-party certifiers, attesting to the company’s adherence to its stated commitments, due to their reputation and credibility in this area.36 According to Jamali & Keshian, NGOs act as a counterbalance to the business side, using their reputation to validate the company’s activities, with NGOs being seen as agents of change.33 Furthermore, Stekelorum et al. assert that companies need this support from NGOs to meet the standards expected of them and to retain their customers.75
Additionally, the business sector has another motivation for partnering with NGOs: the desire to enhance its reputation, improve its social impact, and learn from NGOs through collaboration on CSR initiatives. From the NGO perspective, there are two primary motivations for engaging in CSR. The first is financial, as NGOs seek funding for their operations. The second is the desire to improve the sustainability of businesses, particularly in light of growing social needs within communities.36 However, NGOs can also benefit from collaborating with businesses. By leveraging a company’s reputation, NGOs can boost their own reputation and build a stronger brand. This can be achieved by capitalizing on the company’s market position to raise awareness and build a positive public image.101
2.5 Creation of Shared Value and Benefits
2.5.1 Value in Interorganisational Partnerships
There is no consensus in the literature as to the criteria for determining the success of a relationship between NGOs and corporate firms. In principle, according to Barroso-Mendez et al., a social partnership can be considered as successful if it generates positive results for both partners and for society at large, and if both partners are satisfied with the results.62 The definition of a positive outcome is contingent upon the specific organisational context. However, as Le Pennec & Raufflet contend, the specific forms of added value are of secondary importance. It is assumed that value creation is the ultimate motivation for entering into an inter-organisational collaboration.110 The existing literature offers a range of perspectives and methodologies for conceptualising and examining the value of inter-organisational collaborations, with NGO-business partnerships representing a particular area of interest. Furthermore, it demonstrates the various values that can be generated through cross-sector collaboration.111
In the context of academic literature, the term “value” is open to interpretation, with a range of perspectives emerging on its precise meaning. The concept of value has been a central focus of business and society studies for decades. From a neo-classical standpoint, the concept of value is exclusively economic in nature.112 This is exemplified by Koller’s (1994) assertion that value can only be created if a company invests capital at a rate of return that exceeds its costs.113 This exclusively economic perspective on value, which excludes social aspects, has been the subject of increasing criticism over time. Consequently, there was an increase in the number of definitions of value, each with a different label. Examples of this include the concepts of shared value, blended value and sustainable value.112
In the academic literature, there is a diversity of definitions pertaining to the value of a partnership between NGOs and corporations. This is predominantly considered in the context of the relationship between NPOs and the business sector, although it can also be applied to the partnership between NGOs and firms.110 A generalised view is presented by Kivleniece and Quelin, who define the collaboration value of the partnership as the sum of the benefits created by the exchange and include added value for both parties involved, as well as for the general public.114 A comparable approach is presented by Austin and Seitanidi (2012) as part of their Collaborative Value Creation framework. They define the value of such a partnership as “the transitory and enduring benefits relative to the costs that are generated due to the interaction of the collaborators and that accrue to organisations, individuals, and society” (p. 945).111 Both approaches emphasise that added value is generated for different areas and/or actors simultaneously. Therefore, it can be referred to as shared value. Porter and Kramer posit that shared value is created through policies and activities that enhance a company’s competitiveness while also improving the economic and social conditions in its operating area. Their approach emphasises the interconnection between societal and economic value.115 Given that the majority of extant definitions of value in NGO-business partnerships posit the generation of multiple values between the two stakeholders simultaneously, it is also possible to speak of synergetic value in this context. The term “synergetic value” is defined as the combination of multiple stakeholder interests, resulting in the generation of multiple values simultaneously.116 In this case in the economic and the social/public area.
2.5.2 Types of Value Creation
The value generated in an NGO-business partnership can be considered and analyzed from multiple perspectives and in various forms. In the context of this research, such partnerships are predominantly seen as cross-sector collaborations. Studies into these types of partnerships have identified three general types of value.112 Firstly, value can be generated directly from specific engagements, such as the development of new products. Secondly, value may emerge from an ongoing partnership. Finally, value can also result from the learning and conclusions drawn from such a collaboration.111,114,117 This framework provides a straightforward conceptualization of value creation. However, Steijn offers a more comprehensive approach, identifying three forms of value creation: the generation of novel outcomes (which can be classified as innovations and regarded as direct value), the reduction of associated costs and improvement of process efficiency, and the increase in desired outcomes or overall effectiveness.118
The impact of NGO-business partnerships can be evaluated at various levels, considering the diverse stakeholders involved or affected by the outcomes. Clarke and Fuller leveraged this concept to examine outcomes from six different perspectives: plan-centered results, process-centered results, partner-centered results, stakeholder-centered results, person-centered results, and environment-centered results.119 These categories help contextualize results based on the underlying goals and intended beneficiaries. For example, plan-centered results address a social issue or challenge identified as a priority by the partnership, while partner-centered results refer to outcomes relevant to both the NGO and the business at the organizational level.62 Similarly, Austin and Seitanidi’s Collaborative Value Creation (CVC) framework adopts a comparable methodology, analyzing value creation at different levels and distinguishing between internal and external value.111 They also explore the potential for value creation at various levels and examine the types of value that can be created for both the NGO and business sides.
In analyzing internal value creation within the CVC framework, Austin and Seitanidi focused on the value generated for the two organizations involved, similar to Clarke and Fuller’s partner-centered results.112 Austin and Seitanidi identified four distinct types of value: associational value, transferred resource value, interaction value, and synergistic value, each offering specific benefits to the partners.61 The type of value generated for the business and the NGO varies depending on the specific form of collaboration.
Associational value refers to the benefit an organization derives from engaging in a collaborative relationship with another entity.61 From the NGO perspective, forming a partnership with a business can lead to enhanced visibility120, credibility,121 heightened public awareness of relevant social issues,122 and increased support for the organization’s mission.123 Conversely, businesses may benefit from associational value in the form of improved credibility,121 corporate reputation,22 brand image,23 legitimacy,12 and increased sales.122
Transferred resource value involves the benefits gained from the exchange of resources between partners.61 The magnitude of these benefits depends on specific circumstances and factors such as the type of resources exchanged and how they are utilized.112 For NGOs, this could include traditional financial support,23 along with increased volunteer capital.124 Additionally, NGOs may benefit from complementary, organization-specific assets.61 For businesses, classifying these benefits is somewhat more complex, though they may enhance competitiveness115 or attract new customers.120
Interaction value encompasses the intangible benefits that emerge from the processes of cooperation between partners, requiring joint value creation.61 From the NGO’s perspective, these intangible benefits include opportunities to expand knowledge, acquire new skills,115 broaden their network,23 and improve relationships with the corporate sector.124 For businesses, interaction value may include the potential to strengthen their network, meet the needs of government and business partners, and improve operational efficiency.120 Economic benefits may also arise, such as reduced long- and short-term costs, as outlined by Austin and Seitanidi.111 Moreover, engagement with NGOs can foster better relationships within the workforce, leading to enhanced psychological satisfaction and the development of new connections.120
The final form of internal value creation in Austin and Seitanidi’s framework is synergistic value.61 Through collaboration, both economic and social value are generated simultaneously by combining the resources of both organizations, producing outcomes that would not be possible individually. This can lead to innovations seen as positive results for both the business and the NGO.112,125 In the sustainability context, Adams et al. identify three types of innovation: eco-efficiency innovations, which reduce harm; new market innovations, which generate shared value; and societal change innovations, which have a net positive impact on society.126 Beyond innovations, the combination of resources can also expand the influence and power of both parties within their respective sectors and in society as a whole.120 Furthermore, synergy value can involve the acquisition or enhancement of new or existing skills, increasing long-term value potential.63
In addition to the benefits for the two organizations in an NGO-business partnership, the collaboration can also create added value for the broader environment. Austin and Seitanidi refer to this as macro-level value, which affects not only society but also other organizations and businesses, either directly or indirectly.111 Stafford argues that such partnerships may foster the development of environmentally conscious technologies, potentially improving environmental conditions. Moreover, these advancements can set new standards within the respective sectors.59 In turn, these improvements can have broader effects, enhancing societal conditions and benefiting employees from other organizations and companies.111Furthermore, enhancements to environmental and social standards, such as reductions in pollution, mortality rates, and improvements in environmental awareness and benchmarks, also improve societal conditions, contributing to a better overall quality of life.111 Kolk et al. found that these partnerships also provide direct value to business customers.127
2.5.3 Measurement
The measurement of the outcomes of NGO-business partnerships presents a range of challenges for both the existing literature and the practitioners involved in these collaborations. Firstly, there is a scarcity of academic literature that specifically addresses the measurement of outcomes within the context of NGO-business partnerships. Secondly, as Pedersen and Pedersen point out, there is often insufficient measurement of results by the companies and NGOs themselves. This lack of measurement complicates efforts to draw precise conclusions regarding the value of the outcomes achieved and makes it difficult to assess the success of individual partnerships in detail.71
In their examination of business-NPO collaborations more generally, Selsky and Parker propose a methodology for assessing the impact of such partnerships at three levels. Firstly, the direct impact on the targeted problem and the stakeholders involved can be measured. Secondly, the capacity-building impact, such as enhancing knowledge or reputational capital that attracts new resources, can be evaluated. Thirdly, the broader influence on social policy or systemic change can be assessed. Of these levels, direct impact remains the most commonly measured. However, there are discrepancies in how companies and NPOs approach this measurement.10 Direct impact measurement is more prevalent in corporate contexts than in NPOs. Additionally, Weisbord notes that performance measurement for NPOs remains underdeveloped.128 Hansen, Lenssen, and Spitzeck also demonstrate that direct benefits at the output and impact levels are more quantifiable for the business sector than for NGOs. Furthermore, they differentiate between community and business benefits in performance measurement and identify three fundamental levels commonly used to assess performance.129 According to Epstein, performance is typically evaluated based on input, output, and the ultimate impact of the results.
However, overall, the measurement of inputs, outputs, and outcomes from NGO-business partnerships remains limited.71Classic input and output metrics, such as cash flow, used to measure key performance indicators for companies, can be applied to both business and NGO contexts. However, this approach would not provide a comprehensive understanding of the partnership as a whole.129 One key challenge in measuring outcomes is the generation or enhancement of intangible values, such as reputation. Accurately quantifying these intangible benefits is complex. Furthermore, as Pedersen and Pedersen observe, it can be difficult to determine whether the partnership is the sole driver of value creation or if other factors are influencing the outcomes. A pertinent example is the domain of training and the acquisition of new competencies. The true impact of these activities may only become apparent later and can be affected by numerous other factors in the interim. As a result, quantifying the precise impact of NGO-business partnerships is not always straightforward.71
2.6 Challenges and Risks
As in any partnership, NGO-business collaborations face inherent challenges that, if not effectively addressed, can impede or even prevent success. Failure to overcome these obstacles also presents risks for both parties. One of the central challenges in this context is that no partnership is power-neutral.12 A partnership forms within the framework of pre-existing resources, social status, and political influence, which cannot be neutralized by formal rules alone.92Furthermore, as previously discussed, resource dependency is a key motivating factor for forming an NGO-business partnership. One party may be more dependent on the other’s resources, leading to a potential power imbalance that could be exploited by the less dependent party.99 For instance, NGOs may enter into a partnership with a company out of necessity to secure financial resources for their mission. In such cases, the company may exert greater control over the partnership’s terms, possibly limiting the NGO’s ability to publicly share its concerns.130 Whether this financial support is used or not, the parties are in unequal positions, subjecting both the NGO and the business to different risks.99 In this regard, Bendell et al. found that NGOs should be particularly concerned about maintaining their integrity and independence when working with businesses, while companies should focus on balancing economic goals and managing stakeholder dialogue effectively to avoid excessive resource expenditure.131
Disagreements may also lead to additional challenges and tensions.132 These often arise from the differing mandates and objectives of businesses and NGOs. While businesses are primarily driven by profit maximization, NGOs aim to improve environmental or social conditions. If these disparate objectives are not aligned, tensions and negative outcomes may emerge.1,99 Although partnerships have the potential to enhance the reputations of both businesses and NGOs, they can also lead to reputational loss for either party. This risk is particularly severe for NGOs, as reputation and credibility are their primary capital. In extreme cases, a loss of reputation and credibility can result in the dissolution of the NGO.17,132A specific risk for NGOs, stemming from differing objectives, is the possibility of the company engaging in greenwashing. Poret (2014) defines greenwashing as “the practice of disseminating disinformation by a corporation to present an environmentally responsible public image, the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, or the practice of supporting efforts to go green while damaging the ecosystem by manufacturing harmful products” (p. 9).36 In such cases, the NGO may be exploited to enhance the company’s image without the company fulfilling its commitments. If the greenwashing becomes public knowledge, it would severely damage the company’s reputation and legitimacy, resulting in a significant drop in profits. These negative headlines would also affect the NGO, undermining its credibility, legitimacy, and trust, which represent its core assets. Moreover, not only greenwashing but also other negative press associated with the company can spill over onto the NGO through the partnership, leading to adverse outcomes for both.132
Another challenge arises from the fundamental differences between NGOs and commercial enterprises. The typical divergence in goals, approaches, and backgrounds between these two types of organizations leads to distinct actions. Despite both parties’ intent to collaborate constructively and effectively, it is not always possible to predict the actions of the other party with certainty. As a result, there is a degree of behavioural uncertainty. For instance, the NGO cannot fully rule out the possibility that the company may engage in greenwashing.99 This uncertainty fosters mistrust. Mistrust, in turn, can lead to reservations and ultimately hinder the success of the partnership. Furthermore, as Moshtari and Vanpoucke assert, differences in working methods and organizational cultures can lead to tensions. If these differences are too significant to overcome, effective collaboration may become infeasible.1 This situation may also give rise to misunderstandings, especially in partnerships that extend beyond simple sponsorship arrangements.17
2.7 Future Research
After presenting the current state of the scientific literature on the topic of NGO-business partnerships, this literature review will now conclude by providing an outlook and identifying research gaps, as well as potentially interesting topics for future investigation. In theory, NGO-business partnerships can evolve through different stages over time. However, as noted by de Lange et al., this progression has not yet been sufficiently examined. Future research could address this by conducting longitudinal studies to gain a more detailed understanding of the key reasons behind such developments and how they were achieved.16
The existing literature on NGO-business partnerships typically approaches the topic from one of two perspectives: either from the viewpoint of the NGO or the business. In my opinion, the NGO perspective remains underrepresented. Future research could focus more on this perspective, offering a more balanced analysis. Such studies could examine partnerships in different configurations and explore how these variations affect the partnership. Specifically, future research could investigate the differences and challenges that arise when a partnership involves either an internationally active corporation or a local SME, and how these partnerships vary depending on the type of NGO involved.
Additionally, the current literature often concentrates on the success factors of such partnerships, detailing the elements that contribute to successful collaboration. However, it would also be valuable to explore cases where partnerships fail, investigating the reasons behind these failures. By doing so, researchers could gain a more comprehensive understanding of NGO-business partnerships by complementing the existing research on success factors with insights into failure.
Another important area for future research involves the development of clear tools and methodologies for measuring the social impact of these partnerships. This would enhance the ability to evaluate the broader societal benefits that result from such collaborations.
Finally, while the literature frequently discusses NGO-business partnerships within the framework of cross-sector partnerships, it often lacks clear distinctions between NGO-business partnerships and other types of cross-sector collaborations. In my view, this is an area where the literature could benefit from more precise definitions and demarcations. Future research could focus on clarifying these distinctions, contributing to a more nuanced understanding of the dynamics and characteristics unique to NGO-business partnerships.
3 Practical Implications
Following an examination of the extant literature on NGO-business partnerships, this thesis will proceed to delineate a series of practical implications and recommendations. These implications are principally designed to assist managers of companies and NGOs in the formation of mutually beneficial partnerships. The thesis will present implications for the phases preceding the partnership, during the partnership, and after the partnership, and will also present suitable best practice examples for enhanced comprehension.
3.1 Prior to the Establishment of the Partnership
3.1.1 Partner Selection for Strategic Fit
Before forming a partnership between a company and an NGO, it is crucial that both parties identify a suitable partner. Selecting an appropriate partner is paramount, as it significantly increases the likelihood of a successful collaboration with favourable outcomes while simultaneously reducing the risks associated with such ventures.111 In the worst-case scenario, however, an ill-suited partner could lead to the partnership’s dissolution.133 It is essential to acknowledge that no partner can be considered perfect. Instead, the focus should be on assessing whether a good fit exists between the partners, while recognizing that every partner may have certain limitations. The term “perfect match” is often used to describe an organizational fit.134
The first step in the partner selection process requires managers to develop and communicate a clear vision to potential partners. This helps prevent disagreements, avoids ambiguities, and ensures that the partnership is not formed with an organization whose goals are incompatible.134 At the same time, both organizations should consider the type of interaction required to achieve their objectives and factor this into their partner selection process.135 Beyond aligning missions, several other parameters should be evaluated to minimize risks and challenges. These include assessing whether each party possesses resources the other needs (resource fit), the degree of mutual understanding between leadership teams (management fit), compatibility of working methods and organizational culture (cultural fit), alignment on how success will be evaluated (evaluation fit), and the strategic alignment of the company’s and NGO’s positions to create shared value (Product/Cause Fit).54 The importance of these criteria will vary on a case-by-case basis, depending on the type of cooperation being sought.
To identify a suitable partner, organizations must ascertain a compatible organizational fit. Since many partnerships are formed for reasons of resource dependency or resource complementarity, it is advisable to first assess the organization’s current status and objectives before seeking a partner. This involves evaluating internal resources and capacities alongside the potential contributions of a prospective partner.134 Various tools can be employed for this purpose, such as resource mapping, which assesses the resources available within the organization and highlights the complementary skills, knowledge, and assets of potential partners. Resource mapping aims to determine whether the organization’s resources can be combined with those of a potential partner to create mutually beneficial synergies. It also identifies any resource gaps and helps assess whether a partnership would be advantageous. A brainstorming session could be conducted to explore the potential resources that typical organizations in the sector could offer, along with the resources within the organization itself. Conducting this exercise across sectors enables managers to identify the sectors with the greatest compatibility. The main advantage of resource mapping is that it provides an initial overview of potential partners or sectors, though its primary limitation is that it relies on subjective assumptions that may or may not be accurate.136 Other methods, such as resource analysis or the SWOT model for evaluating competencies, may also be used.
Once the preliminary assessment is complete, the active search for a partner can begin. Companies and NGOs have several options for locating potential partners. The most straightforward and cost-effective method is to search within existing networks.137 Organizations can rely on recommendations from current partners and consider their experiences. Additionally, potential partners can be proactively sought out at conferences, or organizations from within the network can be directly engaged.138 This approach, known as network-reinforcing, can reduce the risk of opportunistic behaviours by the partner, lower search costs, and establish trust early in the partnership. However, it may not always yield the optimal partner, as the search may not be based on specific criteria, potentially excluding other suitable candidates.137
Stakeholder mapping is another tool that can be used to identify and evaluate potential partners. Stakeholder mapping enables organizations, including NGOs, to identify all entities or individuals affected by a planned project who could be relevant to its implementation. The process involves compiling a list of relevant stakeholders and mapping them in a Boston Square to visualize the relationship between their level of influence on the issue or partnership goal and their level of interest. The resulting data informs decisions regarding the viability of each stakeholder as a potential partner.136 The advantages of stakeholder mapping include gaining a deeper understanding of stakeholder interests, providing a comprehensive overview of potential partners, and identifying partnership opportunities with key stakeholders such as NGOs.139 However, a limitation of stakeholder mapping is that it relies on limited initial information, and stakeholders’ positions may evolve over time, which cannot be fully captured in the mapping process.136,139
As posited by Bierly and Gallagher, it is not always advisable for organizations to select the most readily available or trusted partner. Instead, a more strategic approach would involve broadening the search and considering a wider range of potential partners.140 Network broadening is a suitable strategy in this context.137 Rather than limiting the search to the organization’s existing network, this approach actively seeks to identify the optimal partner based on predefined criteria, often extending beyond the current network.141 Although this approach may entail higher costs and require more time, it offers the potential to identify a better-fitting partner and expand the organization’s network.137
Figure 5 provides a summary of the fundamental process for partner selection.
3.1.2 Negotiation
Engaging in negotiations with potential partners before entering into an NGO-business partnership is a prudent step. The negotiations involved in establishing an alliance provide the earliest opportunity for direct interaction between the prospective partners, allowing them to assess whether a compatible fit exists between their respective organizations. Additionally, these discussions offer a chance to build trust. However, it is essential to approach negotiations not merely as a means of reaching an agreement, but also as a tool for minimizing potential misunderstandings.17 To prevent misinterpretations during the negotiation process, all parties involved must clearly communicate their intentions, objectives, and expectations regarding the proposed partnership. Failure to do so can result in what Garcia describes as the illusion of transparency in negotiations. This phenomenon occurs when individuals overestimate the extent to which their intentions are understood by outsiders, leading to a gap between perceived and actual transparency.142 In the context of NGO-business partnerships, this illusion of transparency is often more pronounced than in firm-firm partnerships due to the significant discrepancies in organizational objectives and characteristics between businesses and NGOs, which are typically greater than those between two firms.93 In cases where differing viewpoints exist, but there is overall compatibility, involving intermediaries may be beneficial. These intermediaries, such as foundations or third parties, can act as translators or mediators between the business and the NGO, helping to bridge communication gaps.17
A best practice example of utilizing an intermediary in negotiations between a business and an NGO is the partnership between Unilever and Oxfam for their joint project in Indonesia. This partnership aimed to explore the role of business in poverty alleviation, focusing specifically on Unilever’s activities in Indonesia.143 During the negotiation and dialogue process, where the rules of engagement were established, both Unilever and Oxfam appointed independent participants and external reference groups to contribute to the discussions. These external members introduced new perspectives, helping to reduce the differences between the two organizations. Although this extended the negotiation process beyond the initial timeline, Unilever noted that it led to a greater learning effect by facilitating a deeper mutual understanding.144
3.1.3 Partnership Scope
One crucial topic to address during negotiations aimed at forming a partnership between an NGO and a business entity is the scope and specifics of the activities to be undertaken by the partnership. The scope of the partnership serves as an essential governance mechanism.17 This mechanism can regulate the partnership’s scope, limiting access to information and knowledge if a narrower scope is selected.145 For instance, a common approach is to shift the focus from core activities to non-core activities from the company’s perspective, or to limit the partnership to areas such as CSR.17 In sectors with high uncertainty, such as the high-technology industry, a narrow scope can act as a protective measure. Generally, a narrower scope is particularly effective in guarding against opportunistic behavior that may result from differing objectives between the partners.146
From a company’s perspective, a narrower scope decreases the risk of NGOs gaining access to sensitive information that could have adverse consequences if made public.147 Simultaneously, a narrow scope also provides NGOs the benefit of reducing the risk of reputational damage due to potential negative press surrounding the business. Furthermore, beginning with a limited partnership can enhance the NGO’s acceptance among its stakeholders by ensuring that its independence remains intact. Additionally, restricting the scope of activities can not only serve as a safeguard but also enable both parties to concentrate their efforts on specific issues, potentially yielding greater added value.17
A noteworthy example of a successful, focused partnership is that of Coca-Cola and the World Wildlife Fund (WWF), which initially limited their collaboration to a singular issue. At the outset of their partnership, Coca-Cola and WWF focused on water stewardship.148 Their goal was to tackle various water-related challenges, such as water scarcity, pollution, and access to clean water, by implementing climate-friendly solutions to restore ecosystems and improve agricultural practices. This focused approach proved successful, as evidenced by their securing of 77.7 billion cubic feet of freshwater in Guatemala through the establishment of institutionalized water reserves, a direct outcome of their commitment.149 As the partnership demonstrated positive results, the two organizations expanded the scope of their activities to improve the environmental performance of Coca-Cola’s entire supply chain. They also began addressing broader issues, including reducing emissions and minimizing the use of plastic packaging. This example illustrates how a narrow focus on specific activities can generate substantial impact and lay the foundation for a long-term partnership with potential for future expansion.148
3.1.4 Forms of Partnerships
Before entering into a partnership, it is essential to determine the most suitable form of collaboration to achieve the desired objectives. In the context of NGO-business partnerships, a variety of partnership forms are available, each offering distinct advantages and disadvantages. As outlined in the literature review, the nature of such partnerships may evolve over time, assuming different forms throughout the course of collaboration. Thus, it is prudent to select an optimal form at the outset to achieve the best possible outcomes.
The first potential form is sponsorship, which represents the most straightforward type of collaboration. This partnership involves a company providing recurring financial support to an NGO. In return, the NGO may allow the company to use its logo for marketing purposes or CSR campaigns. For companies, sponsorship offers the advantage of enhancing their image and legitimacy with minimal effort. However, NGOs benefit financially but risk damaging their credibility or being associated with greenwashing.150 A notable example of sponsorship in cause-related marketing is the Krombacher Rainforest Project. This initiative, while promoting corporate environmental responsibility, also highlights the complexities of balancing CSR with transparency. Krombacher pledged to contribute a specific amount towards rainforest conservation for each crate of beer sold, in collaboration with WWF.151 As a result, the company claims to have protected 97 million square meters of rainforest.152 However, at the start of the campaign in 2002, Krombacher faced criticism regarding its environmental practices and the authenticity of its commitment to sustainability. Additionally, the Federal Court of Justice criticized the project for a lack of transparency.153 This example illustrates the dual expectation placed on businesses: they are expected to engage with NGOs, yet transparent communication remains vital.
The second potential form of collaboration is where the NGO assumes the role of a service provider. This approach is particularly beneficial for partnerships focused solely on CSR. In this model, NGOs offer their expertise or practical assistance to the corporate partner’s CSR initiatives.150 A notable example is the collaboration between Chiquita Group and the Rainforest Alliance NGO, which monitors and certifies banana plantations that meet sustainability standards. The certification is indicated by a logo on the banana label, informing consumers that the product complies with these standards.154,155 This form of partnership offers two main advantages compared to pure sponsorship. First, it enhances the credibility of the company’s CSR activities in the eyes of the public. Second, it allows NGOs greater influence in promoting the enforcement of standards. However, the autonomy of the NGO may be compromised due to the closer nature of this collaboration.150
A third relatively common form of cooperation occurs through multi-stakeholder initiatives and stakeholder dialogue. In this form, both parties contribute their respective expertise and resources with the goal of developing new solutions, often in the form of environmental or social standards that benefit an entire sector.150 This form tends to foster a more balanced relationship between companies and NGOs, with both serving as negotiating partners and investing equal amounts of resources and knowledge to create and implement standards.156 However, achieving this type of collaboration requires a significant investment of time and resources, particularly in terms of negotiation and partnership management. Examples of standard-setting through such collaborations include the work of the Marine Stewardship Council, the Roundtable on Sustainable Palm Oil, the Rainforest Alliance, and Utz Certified.157
Each of these partnership forms presents unique advantages and challenges, and the decision on which to pursue will depend on the specific goals of the partnership and the nature of the collaboration sought by both the company and the NGO.
3.1.5 Alliance Contract and Agreements
To record and visualize the intention for a joint partnership, and simultaneously minimize potential opportunistic behaviour, it is advisable to document all agreements in written form.17 The formation phase of a partnership offers several potential considerations, depending on the progress made. At the early stage of negotiations, once favourable responses have been received and a decision to pursue a partnership is reached, an informal agreement may be established. One way to achieve this is through the use of a letter of commitment, which can later serve as a foundation for further negotiations.158
If the partnership extends beyond mere sponsorship and involves more complex forms of collaboration with higher levels of involvement, it may be beneficial to draft a memorandum of understanding at the conclusion of negotiations or during the discussions. A memorandum of understanding is recommended when final agreements are still under negotiation or when a preliminary agreement is required before the specifics of the final contract are settled. This document outlines only the most critical points.159 For example, the memorandum of understanding between Unilever and Oxfam included not only the collaboration’s objectives and rules of engagement but also the roles of third parties and mechanisms for resolving disputes.144
It is important to note that a memorandum of understanding does not formally establish the partnership, which only occurs with the conclusion of an alliance contract. However, the existence of a memorandum of understanding is not a prerequisite for an alliance contract. When such a document has been drafted, it is typically incorporated into the final contract.159 A contract, in general, is a formal document that outlines the specific activities, agreements, contributions, and benefits of each partner.160 It may also include mechanisms for resolving conflicts. Although the contract sets the parameters of the partnership, it is usually not exhaustive, given the complex nature of collaborations between profit-driven organizations and NGOs. Not all potential scenarios can be anticipated and addressed within the confines of a single contract.17
Regardless of whether a formal contract or some other form of agreement is established between a company and an NGO, it is essential that three key aspects are addressed. The first step is to define clear goals and objectives for the partnership or project. To facilitate subsequent monitoring, it is advisable to select measurable goals whenever possible. Secondly, the scope of work should be explicitly included in the agreement to ensure that the objective can be achieved with the available resources. The scope should detail the necessary company elements and clearly outline the departments and resources needed to accomplish the objective. Additionally, it is important to specify the anticipated social and/or environmental benefits. Lastly, it is recommended that the time horizon of the partnership be clearly defined, as companies and NGOs may operate under different timelines.161
3.2 During the Partnership
3.2.1 Strategic Bridging
For the successful establishment of a partnership between companies and NGOs, overcoming the differences between the two entities is crucial. These differences may not only reflect divergent worldviews but also encompass variations in culture and working methods. To ensure the success of the partnership, it is essential that both parties reach a consensus on a fundamental principle, which applies to both the pre-partnership negotiation phase and the partnership itself. In this context, the concept of strategic bridging can be highly beneficial. Strategic bridging involves a third organization acting as an intermediary to help resolve discrepancies and mediate between the partners to address any outstanding issues.162 A bridging organization can only fulfil this role effectively if it is regarded as credible, trustworthy, and legitimate by both the company and the NGO.58
It is advisable, whether a third party is involved as a mediator or the company and NGO resolve their differences independently, to first seek an understanding of their respective differences before taking any further action. One effective method to address these differences is to utilize Hofstede’s cultural dimensions, which offer an excellent framework for comprehending the nuances of cultural variation.163 Discrepancies may arise in dimensions such as power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence.164
In cases where bilateral resolution of the differences proves difficult, involving a mediator may be advantageous. Foundations, in particular, can serve as effective bridge-building organizations. Foundations can assist in three primary ways. First, they can facilitate face-to-face meetings between the two parties, thereby fostering trust and positively influencing the exchange of information and knowledge between the company and the NGO. Second, foundations can act as translators, mediating between different interpretations and understandings of specific topics or goals with the aim of fostering a unified perspective across all relevant domains. Lastly, foundations can serve as mediators in the event of a dispute during the partnership, helping to identify a mutually acceptable resolution.165
However, it is not always necessary to eliminate all differences between NGOs and corporations to form a productive partnership. While differences can be challenging and add complexity to the partnership, they can also offer unique advantages and value. The integration of diverse perspectives, for example, can enhance the collaborative process, leading to more effective outcomes. To gain a deeper understanding of the NGO perspective from the company’s viewpoint, it may be useful to involve individuals with experience in collaborations with NGOs or those who have previously held roles within NGOs. This approach helps foster a more comprehensive understanding of the NGO’s stance.166
3.2.2 Managing, Monitoring and Communicating in the Partnership
Managing, monitoring, and communicating effectively within a partnership between NGOs and companies during the project phase requires a well-structured approach. This structure must be managed efficiently, accompanied by consistent monitoring and supported by a well-implemented communication strategy. According to the Framework for Effective Cross-Sector Partnerships to Advance the Global Goals for Sustainability Development by KPMG, successful management of such partnerships necessitates substantial investment from both partners in terms of human, financial, and organizational resources.167 In terms of human resources, this can be realized by forming a cross-functional team comprising experts from relevant departments of both organizations, and if necessary, external experts can be consulted. This approach helps aggregate expertise from both entities and ensures organizational accountability.161 The cross-functional team is responsible for the development of the partnership and the management of its day-to-day operations, which facilitates the optimal utilization of the partnership’s potential.167 Furthermore, this structure allows for the dissemination of information about the project and its objectives to a broader audience, while simplifying the onboarding of new personnel.161 Another key personnel investment is the appointment of individuals known as partnership champions. These champions are individuals who exhibit a strong commitment to the partnership, its objectives, and its success. Typically, these champions are involved throughout the entire lifecycle of the project, from conceptualization to implementation, assisting in navigating both internal and external challenges.161,166,167 Their involvement ensures that each organization has a designated point of contact for the partnership from the beginning, and they also act as motivational figures for other employees.
Implementing an effective communication strategy is critical for the successful establishment and long-term management of an NGO-business partnership. Communication plays a pivotal role in determining the success or failure of such collaborations.167,168 Communication strategies can be divided into two levels: internal communication between the NGO and the company, as well as within each organization, and external communication with stakeholders or the general public.169 It is essential for the company and NGO to establish a common language for both internal and external communication to prevent exacerbating existing differences.167 This process begins with the communication of the terms of the partnership agreement. Such information should be shared with internal personnel within the company and the NGO, as well as with external stakeholders. The mode of communication will depend on the situation; internal communication might take the form of informational meetings, internal newsletters, or other tools.169 External communication, by contrast, could be conducted through organizational websites, media outlets, or through in-person engagements at conferences or similar events.11
Effective internal communication between the partners serves as a crucial foundation for the development of trust, which is essential for the success of NGO-business partnerships.167,168 Clear and honest communication is necessary to address fundamental issues such as power dynamics and influence. To ensure successful communication and build trust, there must be regular exchanges between the partners. These exchanges should include written communications as well as regular meetings and interactions. At the beginning of the partnership, face-to-face meetings during regular interactions can help establish a deeper relationship and build mutual trust.156,167,169
In addition to effective communication, it is crucial that partnerships incorporate monitoring processes within their governance structures to ensure that the agreed-upon goals are met and that the partnership is progressing as planned. As previously noted in the literature review, NGO-business partnerships frequently encounter challenges in implementing effective monitoring mechanisms.67 Monitoring can generally be categorized into three main areas: first, the activities undertaken and the outcomes generated; second, the overall impact of the partnership; and third, the underlying processes.170 To implement such mechanisms effectively, NGOs and companies should agree on the parameters to be measured, the methods for measuring them, and the responsibilities of each party. This should be established in the partnership agreement.169 Since NGO-business partnerships often generate both economic and social or environmental benefits, it is essential to monitor both aspects with clearly defined parameters. The parameters should be chosen based on the specific objectives of the partnership. Economic benefits can be measured by assessing whether costs have been reduced or avoided, whether revenue has increased, or how risks have evolved. Environmental parameters could include evaluations of resource usage, emissions levels, and behavioural changes.161 Additionally, the impact of the partnership on each organization should also be monitored alongside the output of the collaboration.
For effective monitoring, the ORSE organization recommends setting up a reporting system where all results are consistently documented. To derive meaningful insights from this reporting, it is also recommended that regular meetings take place to critically assess the partnership’s progress and discuss the most effective path forward.169
3.2.3 Brand Strategies
External communication of the partnership also involves sharing results with the public and stakeholders. From the company’s perspective, this often includes signalling the implementation of CSR or adherence to specific standards within the production and supply chain to its customers. This can be achieved through branding initiatives and the use of specific labels. Various branding strategies exist, which can be categorized based on a ‘make or buy’-decision. The partnership may either create a new sustainable brand that reflects new standards and values or leverage an existing brand.132 Another option for NGO-business partnerships is co-branding, where the respective brands of the company and the NGO are combined. Co-branding can effectively convey a unified message about the partnership’s commitment to social or environmental goals.89
If branding is used on products sold by the company to indicate compliance with environmental or social standards in production and supply chain management, it is crucial that consumers fully understand the label’s significance. If consumers grasp the importance of the branding, this could generate goodwill and potentially increase sales. However, if the branding lacks transparency or customers perceive that it has no tangible impact, scepticism may arise, leading to a potential decrease in sales.89 Additionally, when a brand incorporates multiple concepts, the overall message may become unclear, resulting in similar negative outcomes.36 Therefore, it is essential to ensure that the meaning behind the branding is communicated clearly and that the partnership’s commitment to sustainable business practices is authentically reflected in its marketing efforts.
Beyond branding, there are other methods for communicating the progress or success of the partnership to external stakeholders. These methods include publishing corporate social responsibility reports, issuing sustainability reports, holding press conferences, or releasing press statements when specific milestones are reached.161 Several reporting frameworks, such as ISO 14000, SA 8000, and the Global Reporting Initiative (GRI) guidelines, provide structures for preparing sustainability reports. Each of these frameworks has its own focus, with varying advantages and challenges. For reporting on NGO-business partnerships, the GRI guidelines may be the most suitable as they comprehensively cover economic, social, and environmental issues. However, these guidelines are often complex and may be time-consuming and expensive to implement.171 The advantage of producing a detailed report, as opposed to relying solely on branding, is that it allows for more in-depth communication of the partnership’s progress, thus enhancing the partnership’s credibility.
3.3 Following the Conclusion of the Partnership
As is the case with most partnerships, an NGO-business partnership will eventually come to an end. The termination of such a partnership can result from various factors. One potential cause is that the partnership was established for a fixed period, and this period has now come to an end. Another reason may be the successful achievement of the partnership’s pre-defined objectives, leading to its natural conclusion. Alternatively, the partnership may be terminated prematurely due to unforeseen reasons that vary depending on the circumstances. However, the conclusion of a partnership does not necessarily preclude the possibility of future collaborations with the same partner.172 A prime example of this is the partnership between the WWF and Coca-Cola, as previously mentioned. Their partnership was initially limited to a specific timeframe, but after a joint evaluation, it was extended several times and continued on an ongoing basis.148 This demonstrates the value of post-partnership evaluations and analyses, as they allow for the continuation of a well-managed collaboration with necessary adjustments.
To ensure a smooth conclusion, a transparent exit strategy can be established at the beginning of the partnership. During the initial negotiations, parameters for terminating the partnership can be agreed upon. As previously noted, this may involve setting a specific time horizon or identifying conditions that would trigger the end of the partnership, such as when the partnership’s objectives are met or if certain conditions that support the partnership are no longer in place, potentially endangering the shared goals. Establishing an exit strategy from the outset clarifies the finite nature of the resources available to both partners, making it evident that the collaboration is not open-ended. This understanding can lead to more strategic and judicious use of resources, as both the company and the NGO are aware that the partnership may end if the shared objectives are not met.134
Once the partnership has concluded, it is advisable to conduct a critical reflection on the collaboration and obtain feedback from all parties involved. This evaluation provides insights into the strengths of the partnership and highlights areas for improvement in future collaborations. The review process should take place both internally within each organization and through direct dialogue with the partner. However, this process requires transparent and honest communication, along with a willingness to critically assess and learn from the experience.167,169 This kind of reflection may even lead to the extension or expansion of the partnership with certain modifications, as was the case with the WWF and Coca-Cola collaboration.149
3.4 Influencing Factors for the Implementations of NGO-Business Partnerships
The practical implementation of NGO-business partnerships is influenced by several factors, some of which facilitate the formation of such partnerships, while others may hinder their development. One key factor is the size of the organisations involved, both the business entity and the NGO. Larger organisations are typically able to contribute more human and financial resources, which is particularly advantageous when integrative or transformational partnerships are sought. In contrast, smaller organisations may find it more difficult to allocate their limited resources, which can impede their ability to engage at higher levels of partnership.173
The heterogeneity of NGOs presents another significant factor that influences the establishment of NGO-business partnerships. As discussed in the literature review, NGOs vary in type, and this diversity shapes their principles and attitudes toward collaboration with the corporate sector. For example, partnerships with protest NGOs are unlikely, as these organisations are reluctant to accept financial support from companies they may criticise or from which they prefer to remain independent. Such reluctance is less common with other types of NGOs. However, the growing trend toward hybrid entities complicates the predictability of NGO willingness to compromise their principles and engage with profit-driven organisations.20 Even when this does not present an obstacle, the differing worldviews and principles between NGOs and companies can still result in conflicts during the partnership, which will require adept management. To ensure the success of the partnership, it is crucial that both entities have clearly aligned goals and a shared understanding of the objectives. Without this alignment or consensus, maintaining a successful long-term collaboration becomes challenging.62,99,132
The opinions of stakeholders, from both the NGO and corporate perspectives, can significantly influence the formation and progression of a partnership. Stakeholders may exert pressure on companies to prioritise sustainability, and partnering with an NGO can facilitate this process. In such cases, stakeholder pressure acts as a facilitating factor. However, if the stakeholders of the NGO are critical of a partnership with a corporation, this could hinder its development.87
Experience also plays a decisive role in the formation of NGO-business partnerships. It can act as both a barrier and a catalyst, depending on whether or not experience exists and whether it has been positive or negative. A lack of experience may lead to reservations or a lack of awareness about the potential benefits of such partnerships, as indicated by Neergaard et al., and this can impede the formation of the partnership. However, partnerships may still be established even in the absence of experience, although they tend to remain purely philanthropic in such cases. When experience is present, especially if it has been positive, deeper and more engaged partnerships are more likely to be established. Even negative experiences can lead to successful partnerships if the appropriate lessons have been learned. On the other hand, negative past experiences may also result in avoidance of such partnerships.173
One of the most critical elements in establishing an NGO-business partnership is trust. Given the numerous differing viewpoints and perspectives inherent in such collaborations, a lack of trust can impede the success of the partnership. Conversely, when trust exists from the outset or is cultivated over time, it can act as a powerful catalyst, fostering a mutually beneficial and successful collaboration.121
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