Boeing 787-8 Dreamliner, powered by Rolls Royce engines (Source: Wikipedia Commons)
Ideas for Leaders #232

In It Together: When Companies Collaborate

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Key Concept

When two or more companies work together – which is increasingly common – their partnership will attract a reputation among customers and other stakeholders. But firms’ management of their jointly-owned reputation has traditionally been relatively neglected. By giving it proper consideration, leaders can improve the way partnerships are perceived by others, boosting their success.

Idea Summary

In today’s networked world, business-to-business (B2B) inter-firm partnerships are increasingly common. At the same time, corporate reputation has been strongly identified as a key factor in companies’ success. But reputation has mostly been looked at from the perspective of a single organization and how its stakeholders perceive it. Much less attention has been paid to the importance of the reputations of organizations when they form a partnership. This is surprising given that partnerships are to be found in so many walks of life including business, sport, the arts and the media.

This report discusses the importance of corporate reputation and the characteristics and outcomes that result from B2B partnership reputations. Based on work conducted jointly at Henley Business School and Albers School of Business and Economics at the University of Seattle, the report provides an explanation of the concept of corporate reputation in relation to a single firm and then extends this view into an understanding of the characteristics of B2B inter-firm partnership reputation where organizations collaborate together.

The report notes that B2B partnerships are often the subject of significant investments, so it is important to understand their potential value. An example of a successful B2B collaboration is that of aircraft manufacturer Boeing with aero-engine supplier Rolls-Royce. The reputations of each are synergistic. Together, for example, they are seen as pioneers in greener air travel with the advent of Rolls-Royce’s new Trent 1000 range of multi-fuel (kerosene/biofuel mix), efficient and quiet jet engines used in Boeing’s 787 Dreamliner commercial aircraft.

Successful partnerships like this stem from close collaboration, synergistic skills and complementary outlooks. These partnerships have reputations and, in some cases, create a strong advantage over competitors by broadcasting a jointly fostered sense of identity and culture with employees, and a sense of community and loyalty that is attractive to other stakeholders.

The authors suggest that partnership reputation has three characteristics that are particularly relevant to B2B relationships: mutual understanding, flexibility of interaction, and synergy in a partnership. On the basis of these characteristics, stakeholders develop perceptions about the partnership, creating the partnership reputation. If their perception is positive it can result in “positive behaviours” towards the partnership, and also towards the individual partner firms. Such positive behaviours might reasonably include existing and potential customers being more inclined to purchase, suppliers being more flexible in their terms, and investors being more willing to provide finance. 

Business Application

This paper implies that business leaders should take steps to nurture the reputation of their companies’ inter-firm partnerships. It puts forward three practical implications:

  • When building a B2B partnership it is important that firms signal aspects to others of how the partnership works: how knowledge is shared, how conflict is resolved, and how each partner ‘brings something to the party’.
  • There is strong evidence that successful high profile partnerships can set standards that others live up to, so firms must ensure that these standards are well communicated across the supply chain.
  • When creating and communicating about partnerships, it will be valuable to include B2B partners that are consumer-facing. The needs of the consumer play an important role in driving behaviour across the supply chain.
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Authors

Institutions

Source

Idea conceived

  • December 2012

Idea posted

  • October 2013

DOI number

10.13007/232

Subject

Real Time Analytics