In 2021, we published an article in Business & Society that unpacks how governance in cross-sector collaborations (CSCs) affects value creation and capture. We observed three governance mechanisms used by collaboration orchestrators to navigate tensions in collaborative value creation.
1) Orchestrators safeguarded proprietary/sensitive information. For example, to make progress in reducing the use of toxic chemicals in garment production, companies were reluctant to share their ‘secret recipes’. Orchestrators gathered this information but did not distribute it to the CSC members.
2) Orchestrators bundled information (e.g., specifications for collectively produced fabric) to make it more general for collective decision making.
3) Orchestrators also connected and matched members to participants outside and inside the CSC (e.g., suppliers or experts).
Through these governance mechanisms – safeguarding, bundling, and connecting – the orchestrators built deep, unique knowledge of each CSC member and were in a unique position to steer the CSC towards goal achievement.
While collaborative value creation lies within the boundaries of the CSC, value capture lies outside. Private value capture refers to a member’s ability to capture value from the collaborative value creation.
We observed value creation as a collective act and value capture as private act, dependent on the member’s organizational or individual readiness to learn and gain benefits from the CSC. We also observed that in the absence of private value capture, members were likely to lose interest, disengage and exit the CSC, jeopardizing value for society. This implies a formidable challenge for orchestrators: to ensure continued collaborative value creation, members must privately capture value, yet private value capture lies outside the span of orchestrator governance or control.
We suggest that besides using the above mechanisms to manage CSCs, orchestrators should also adapt the use of the mechanisms depending on the emergence and disappearance of tensions. For example, a new CSC may need to use safeguarding for managing tensions around the alignment of interests. As the CSC progresses, however, safeguarding may be less necessary. Orchestrators should also pay attention to the individual needs and beneficial outcomes (i.e., private value capture) of the members. By keeping track of private value capture, orchestrators can intervene and ensure the continuity of the CSC.
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