IMD International

SLEEPING WITH THE ENEMY FOR COMPETITIVE ADVANTAGE

Corporation & NGO partnerships

By Professor Michael Yaziji (July, 2006)

Professor Michael Yaziji

Excerpt from webcast: The NGOs are coming. Are you ready? (2:30)

Most company managers consider NGOs a pest. Yet increasingly, they are strange bedfellows in non-market partnerships. As in all good relationships, there are benefits for both sides.

Hand in glove – complementary strengths
At first glance, it may seem absurd: why partner with organizations that seem to be pursuing goals contrary to those of your own organization? The fact is, NGOs offer perspectives, competences and resources that you will find hard to acquire alone, yet which may perfectly dovetail your strengths. For example, money can’t buy you…

  • Legitimacy
    According to polls, European and American citizens find NGO spokespersons more credible than those representing a corporation. By partnering with NGOs, you can leverage their greater legitimacy.
  • Awareness of social forces
    Companies live and die by the markets in which they are active. NGOs operate through the ebb and flow of people’s concerns about global conditions. NGOs’ attunement to social shifts can provide companies with opportunities for first mover advantages.
  • Distinct networks
    NGOs' networks consist mostly of other NGOs, as well as donors, regulators, legislators, and public-interest lobbyists. Partnership with NGOs offers access to the information in their networks generally unavailable in standard company networks.
  • Specialized technical expertise
    NGO members are often considered young, unsophisticated malcontents. In reality, the more established NGOs are full of lawyers, policy analysts and technical specialists, whose knowledge can be a valuable asset.

The five benefits of partnership

  1. Head-off trouble
    Established NGOs recognize that negotiating directly with companies helps them attain their goals. For companies, involving motivated experts instead of committed adversaries makes negotiation more promising. Private negotiations are preferable to public demonstrations.
  2. Accelerate innovation
    By focusing on the wider effects of companies' practices rather than on cost or profitability, NGOs can demand more than companies demand of themselves. This can result in radical solutions that improve some societal or environmental aspect while also increasing competitiveness.
  3. Foresee shifts in demand
    NGOs often lead social movements, initiate new norms and values that will eventually influence consumers' tastes. Ultimately, they can endanger or create entire industries. Close involvement with NGOs keeps you on the ball.
  4. Shape legislation
    NGOs have access to like-minded legislators and regulators that even the best-connected corporate lobbyists may not know well. Often, NGOs hear of legislative initiatives long before they reach the committee level and may be willing to report these to companies they trust.
  5. Set industry standards
    Cooperating with NGOs allows companies to reshape their industry, sometimes for their own benefit. They can do this by establishing new technology and process standards with the aid of NGOs. These may be enforced by government mandate or market preference.

Overcoming difficulties
The above sounds rosy. Yet even while partnerships with NGOs are often a good idea, they carry their own particular risks. But sustainable competitive advantage is never easily acquired. While the made-for-TV clashes between NGOs and corporations continue to grab the headlines, the smart money’s on partnerships.

Professor Yaziji teaches on several IMD programs including the Program for Executive Development and the Managing Corporate Resources program.


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