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What are the key factors promoting harmonious and fruitful collaborative innovation between large groups and technology startups? How can we increase the chances of success of collaborative projects between these asymmetric partners from the outset? These are the questions that this article addresses by focusing on the relational and organizational dimensions upstream of collaboration. 

Collaboration between large companies and startups: the double effect of asymmetry

While research on collaboration between large groups and small technology companies is not new [1], it has been attracting increasing interest in recent years. There was indeed an increase of +81% in scientific articles on this subject between 2016 and 2020 compared to the period 2011-2015, which coincides with the exponential rise of information and communication technologies, Uberization in particular, and their strong impact on the existing business models of large groups in many sectors of activity [2]. While encouraging factors should be highlighted, this specific type of collaboration still requires a number of improvements [3], especially to establish symbiotic relationships where each partner wins [2].  

Collaborative innovation between large groups and technology startups can be considered as a strategic collaboration, a "voluntary agreement between companies involving exchanges, sharing or co-development of products, technologies or services" [4]. This definition reflects the importance of the relational dimension of strategic collaborations beyond the financial and legal dimension already widely highlighted in research [5], [6]. The management of this relational dimension is all the more crucial as the partners of the collaboration are asymmetrical and independent at the organizational and financial levels.

Purpose: complementarity at the service of competitiveness

The purpose of collaborative innovation between large companies and startups is linked to plural objectives: on the one hand, the partners pursue their own innovation and growth objectives with a view to generating or maintaining a competitive advantage, and on the other hand, the common objectives related to the collaboration itself. Thus, the intra-organizational benefits expected by each partner require alignment with the common, inter-organizational goals of collaboration. "Let's share the best we have and enrich ourselves with our mutual differences."
(Paul Valéry)

It is the value of complementarity in terms of resources and skills that each partner is able to offer to the other that will trigger a will, then a concretization of partnership, thus allowing each to pursue its own objectives of competitiveness. The collaboration will usually take the form of an innovative solution co-development (R&D partnership) or a customer-supplier relationship on an innovative solution developed by the startup (commercial agreement).

"Let's share the best we have and enrich ourselves with our mutual differences." (Paul Valéry)

The challenges posed by the encounter of these two different worlds
While large groups and startups have many complementary assets and are increasingly engaging in collaborations to innovate, these are not natural. Their intrinsic and organizational differences [7] can indeed be a source of too strong a cognitive distance [8] between these partners and generate misunderstandings hindering or even preventing the smooth running of the process of interaction and exchange of information and knowledge. This asymmetry, therefore, poses a number of challenges. On the one hand, cognitive distance is necessary for everyone to learn on the other, and on the other hand, if it is too strong, the partners cannot understand each other. Even when collaboration is engaged, challenges related to the differences between these actors can remain and generate disruptions to the relationship. The major differences identified [9] are:

• The strategic importance is given to the joint collaborative project
• The relationship to risk
• The relationship to time
• Organizational agility
• The culture of innovation
• Internal communication

Therefore, how can these asymmetric actors manage these differences in order to come together to collaborate effectively in the context of innovation projects and ultimately benefit from their complementarities? What are the key success factors of their collaboration?

There is no point in running, you must...above all, prepare!

Given the challenges posed by the differences between large groups and startups, their collaboration cannot be improvised. Also, a substantial organizational adaptation may be necessary on the side of the large group.

The different phases of the large company - startup collaboration

Recent work [2], [9] has highlighted the existence of two main phases of collaboration between large companies and startups, the Design phase (from the meeting to the decision of the parties to engage) and the Process phase (the joint work on the project, the interactions, until the achievement of the intended result). These two phases are preceded by an essential anticipation phase: the Upstream phase (factors existing before the beginning of the relationship). The latter aims to create the conditions conducive to the two phases of collaboration and, consequently, to its success.

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This work has shown that adequate preparation of this upstream phase by large companies is decisive in the success of their innovative collaborations with startups. 

Key factors in successful anticipation of collaboration

Anticipation by the large group via the Upstream phase takes place at two levels: internally and to/with the external. The key internal factors to optimize the collaborative relationship with startups sometimes require a profound transformation of the organization and consequently a substantial implementation time. 

"The whole success of an operation lies in its preparation."
(Sun Tzu)

The externally oriented key factors are linked to the development of an open innovation strategy [10], [11]. The main factors presented in the table below [2] underlie the idea that the creation of favorable conditions for collaborating with startups upstream goes hand in hand with the adoption of an open innovation strategy. The latter increases the ability of the large company to become ambidextrous, the ability both to exploit its own knowledge internally and to explore new ones externally to innovate. Organizational ambidexter is also necessary to connect the internal and external [12] and thus increase the ability to collaborate with startups [9].

Key factors internally

  • Management of collective intelligence 
    • A deployment of collective intelligence from top management to the company's operational actors allows an increase in the company's capacities in a context of evolution towards open innovation business models, assuming strong and fluid links between internal and external [13]. This type of management, based on the sharing of information and knowledge and on the transversality of activities, also contributes to the development of a culture of innovation in all strata of the organization.
  • Developing a culture of innovation
    • Its development, in particular through internal training and the establishment of a favorable working environment, gives the company a gain in terms of organizational agility, speed of decision-making, and better adaptation to changes [9]. The culture of innovation at all levels of the company increases cognitive proximity with startups and facilitates the advancement of collaborative projects with them. 
  • Definition of one's own innovation needs
    • When the large company has defined its own innovation needs upstream of collaboration, mutual understanding is facilitated, and the difference between stakeholders in the relationship to time is reduced due to decisions made more quickly.

Key factors to and with the external

  • Decentralization of power
    • In addition to the geographical proximity and frequency of exchanges, they allow autonomous regional offices in terms of decision-making to accelerate the progress of collaboration projects with startups, reducing the gap in the relationship to time between startups and large groups. A positive and significant link between decentralization and the company's innovation performance has been highlighted by research [14].
  • Integration of external stakeholders into the business model
    • Key stakeholders in the company's ecosystem (such as incubators, accelerators, open innovation clubs, digital management consultants, etc.) can support the company in its transformation, open its borders and enable it to engage in collaboration with startups that are relevant to the innovation needs of the large group. In addition, the large company can also offer its expertise (training, thematic conferences, etc.) to startups in its ecosystem. 
  • Deployment of an interface linking the internal and the external
    • This interface (person or team), competent in innovation management and with proven relational skills, is of paramount importance for the construction of trust, mutual understanding, the speed of decision-making of the large company, and the progress of the collaboration project.

 

Beyond the dyad...the local ecosystem, a breeding ground for collaboration

Thus, the keyword that presides over successful collaborations between large groups and startups is, above all, strategic and organizational anticipation. The objective of this anticipation is to bring asymmetric actors closer together, from the outset, by aiming for quality and fluidity of interactions exchanges of knowledge. The relational dimension and the human are thus placed at the heart of the process from the Upstream phase and prepare the foundations of the collaboration itself: the Design phase, then the process phase.

The success of the dyadic collaboration between large groups and startups also depends, to a large extent, on the local, regional ecosystem in which these partners are part. The community of actors (networks), the infrastructures of this ecosystem, and its contingency factors will be favorable to collaborative innovation projects. It is necessary for large groups to consider this ecosystem dimension, particularly in the context of the decision to deploy an autonomous regional antenna.

References:

[1] Doz, Y. L. (1987). Technology partnerships between larger and smaller firms: some critical issues. International Studies of Management & Organization, XVII(4), 31–57. 
[2]
Bertin, C. (2020). Driving factors for symbiotic collaborations between startups and large firms in open innovation ecosystems. Ph.D. Thesis in Management Science, speciality Innovation & Entrepreneurship, University of Strasbourg, BETA Research Center.
[3] Bouchez, J.-P. (2020). Innovation collaborative - La dynamique d’un nouvel écosystème prometteur. De Boeck Sup.
[4] Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19, 293–317. 
[5]
Yoon, E., & Hughes, S. (2016). Big Companies Should Collaborate with Startups. Harvard Business Review, 2–4.
[6]
Dyer, J. H., & Singh, H. (1998). The Relational View: Cooperative Strategy and Sources of Interorganizational Competitive Advantage. The Academy of Management Review, 23(4), 660–679. 
[7]
Minshall, T., Mortara, L., Valli, R., & Probert, D. (2010). Making asymmetric partnerships work. Research-Technology Management, 53(3), 53–63.
[8]
Nooteboom, B. (2000). Learning by Interaction: Absorptive Capacity, Cognitive Distance and Governance. Journal of Management and Governance, 4, 69–92.
[9] Bertin, C. (2019). Proximité et facteurs organisationnels pour la collaboration startup – grande entreprise en contexte d’innovation ouverte. Innovations, 58(1), 135–160.
[10]
Vanhaverbeke, W., Chesbrough, H., & West, J. (2014). Surfing the New Wave of Open Innovation Research. In New Frontiers in Open Innovation (pp. 281–295).
[11]
Bogers, M., Zobel, A.-K., Afuah, A., Almirall, E., Brunswicker, S., Dahlander, L., Gruber, M., Hilgers, D., Majchrzak, A., Rossi-lamastra, C., Milano, P., Hagedoorn, J., & Sims, J. (2017). The Open Innovation Research Landscape: Established Perspectives and Emerging Themes Across Different Levels of Analysis. Industry and Innovation, 24(1), 8–40. 
[12]
Lichtenthaler, U., & Lichtenthaler, E. (2009). A capability-based framework for open innovation: Complementing absorptive capacity. Journal of Management Studies, 46(8), 1315–1338. 
[13]
Bertin, C., & Schaeffer, V. (2020). Organizational impact of open digital innovation in retail banks: Managing external and internal pressure. In Managing Digital Open Innovation. Book Series "Open Innovation: Bridging Theory and Practice" (pp. 297–322). World Scientific Publishing. 
[14]
Rangus, K., & Slavec, A. (2017). The interplay of decentralization, employee involvement, and absorptive capacity on firms' innovation and business performance. Technological Forecasting & Social Change, 120, 195–203. 

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Clarice Bertin

Clarice Bertin

Doctor in Management Sciences and Management (specialization innovation & entrepreneurship) from the University of Strasbourg and researcher at the BETA laboratory, Clarice Bertin is a permanent Profe
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