By Sylvia Feilhauer & Rüdiger Hahn

Sustainability management is a complex endeavor and many companies invest significant resources in cross-sector partnerships with NPOs to tackle this complexity. However, companies and NPOs operate from very different backgrounds and skepticism or even mistrust is not uncommon from both sides. There is thus a high chance for misunderstandings, which can lead to misallocations of resources or, in worst cases, even a misuse of sensitive information. Rigorously evaluating cross-sector partnerships is thus critical for guiding firms’ decisions on which partnerships to prioritize, adjust, or terminate. Furthermore, firms and their NPO partners are increasingly challenged to convincingly communicate the benefits of their partnerships.

However, rigorously evaluating benefits of partnerships is challenging because of the multifaceted sustainability problems which are usually addressed in such partnerships. Furthermore, partnership management in firms usually involves many actors with different skill levels, experiences, and individual judgements of partnership benefits, which can lead to inconsistent evaluations (Googins & Rochlin, 2000). Against this background, we interviewed experts from 17 firms and 14 partnering NPOs and analyzed secondary data on the partnerships to understand how firms formalize the evaluation of cross-sector partnerships, that is, how they use rules, systems, and procedures to make the evaluation less dependent on an individual’s skills, experience, or judgment.

Formalized evaluation practices, such as defining indicators or setting-up central teams and standardized reporting, are driven by firms’ limited resources due to the growing number of cross-sector partnerships. Interestingly, most firms seemed to regard sustainability management as a strategic investment. We expected that if a partnership is critical for reaching a strategic target, firms would put a considerable effort into tracking its progress. However, we found that they measured partnership results predominantly at the firm-level with the risk that societal interests are discounted. Evaluations are important to guide especially junior staff, and due to the fact that partnerships were spread across the companies. A central team and standardized reporting can mitigate these problems and reduce the dependency on individuals’ skills, experiences, or judgements by guiding managers.

Beyond such firm internal evaluation processes, firms and NPOs had also formalized joint evaluations, for example, regular review meetings. Such joint reviews not only help to ensure a good relationship development (Rondinelli & London, 2003), but also to provide input for firm’s internal evaluation and decision-making processes. Agreeing on joint evaluation standards, however, requires effort due to the often fundamental differences of the partners (Ashraf et al., 2017). It is nevertheless worthwhile as firms face the risk of being accused of greenwashing while NPOs might face a legitimacy threat when lending their names to support a firm’s cause. The use of joint standards helps mitigate these risks because it enables both partners to transparently communicate on partnership ambitions, progress, and results.

In sum, our study illustrated why and how firms implement formal evaluation practices. Both formal internal and joint evaluations together with the NPO partner are used to reduce the dependency on individuals’ skills, experiences, or judgments in evaluating partnerships. Such practices cover predefined targets and indicators, systematic measurements at regular intervals, and standardized reporting.

References:

Ashraf, N., Ahmadsimab, A., & Pinkse, J. 2017. From Animosity to Affinity: The Interplay of Competing Logics and Interdependence in Cross‐Sector Partnerships. Journal of Management Studies, 54(6): 793-822.

Googins, B. K., & Rochlin, S. A. 2000. Creating the partnership society: understanding the rhetoric and reality of cross‐sectoral partnerships. Business and Society Review, 105(1): 127-144.

Rondinelli, D.A., & London, T. 2003. How corporations and environmental groups cooperate: assessing cross-sector accliances and collaborations. Academy of Management Executive, 17(1): 61-76.