Alliances between For-Profit and Non-Profit Organizations as
Transcript Of Alliances between For-Profit and Non-Profit Organizations as
sustainability
Article
Alliances between For-Profit and Non-Profit Organizations as an Instrument to Implement the Economy for the Common Good
Carmen Talavera and Joan R. Sanchis *
Business Administration Department, Faculty of Economics, University of València, Tarongers Av., 46022 València, Spain; [email protected] * Correspondence: [email protected]
Received: 29 October 2020; Accepted: 13 November 2020; Published: 15 November 2020
Abstract: The model of the Economy for the Common Good (ECG) has cooperation as one of its main principles. This alternative economic model proposes to prioritize cooperation over competition to favor the creation of social value. From this point of view, strategic alliances between organizations can be used as an instrument that supports implementation of the ECG model. In recent years, alliances between for-profit and non-profit entities have been strengthened as a method to facilitate actions focused on social responsibility and sustainability. Moreover, the ECG model has become an adequate management framework for corporate sustainability. This work aims to connect alliances between for-profit and non-profit organizations with the ECG model. First, this connection is manifested in a theoretical way. This paper is going to analyze how such alliances can contribute to increasing the values of the ECG model: human dignity, solidarity and social justice, environmental sustainability, and transparency and codetermination. Afterwards, this work analyzes two cases of this type of alliance—Grupo Vips-Fundación Hazlo Posible and Danone Foods-Grameen Bank—to determine the benefits that this type of cooperation can provide to society. We study their motives and the benefits that they bring to the organizations and the community. Therefore, this work assesses how these types of alliances influence the different topics included in the Common Good Matrix. Moreover, we conduct a comparative analysis between both cases. This work demonstrates that, by implementing this type of strategic alliances, the creation of social value is favored, thus contributing to implementation of the ECG model.
Keywords: economy for the common good; cooperation; strategic alliances; sustainability; shared value; non-profit organizations
1. Introduction
Cooperation between organizations is a practice for which history dates back to the beginning of economic exchanges. Nevertheless, it becomes more relevant when the environment starts to be considered a significant variable in strategic analysis during the second half of the twentieth century. The economic dynamism and the globalization of markets restrict an organization’s capacity to respond individually, an aspect that forces them to establish cooperation agreements to face environmental challenges. In consequence, alliances become a critical strategic tool for business success [1]. The literature on this subject is extensive [2], and the names used to refer to it are diverse: cooperation agreements [3,4], alliances [5,6], or coalitions [7], among others. Furthermore, alliances are analyzed from multiple perspectives and approaches [8]. Most authors focus on aspects such as their motives [9], the process of formation of the agreement [10], or their management [1].
Sustainability 2020, 12, 9511; doi:10.3390/su12229511
www.mdpi.com/journal/sustainability
Sustainability 2020, 12, 9511
2 of 22
Nowadays, a more recent source of research analyzes alliances and their relationship with ethical behaviors, social responsibility, and sustainability in corporations [11,12]. These studies affirm that the success of cooperation agreements depends on the absence of opportunistic behaviors, mutual respect, and trust. These fundamental aspects for the management of alliances connect with the social values derived from social responsibility and business ethics. Therefore, alliances between for-profit and non-profit entities are being promoted in order to develop critical competencies to create social value [13–17].
Furthermore, there is another aspect which is currently generating a broader literature on the subject of corporate sustainability. Such an aspect is the relevance of social value creation and its relationship with economic value through what Porter and Kramer [18] refer to as shared value [19–24]. Dyllick and Muff [25] establish a matrix in which they explain the process through which a company can reach “true sustainability”. The process allows for identification of a typology formed by four different stages: (1) business-as-usual (economic concerns), (2) business sustainability 1.0 (three-dimensional concerns), (3) business sustainability 2.0 (triple bottom line), and (4) business sustainability 3.0 (outside-in). These authors point out that the Economy for the Common Good (ECG) model is an organizational framework that focuses on business sustainability 3.0 [25] (p. 169).
The ECG model is an organizational framework created in 2010 in Europe (Austria) by economics professor and social activist Christian Felber [26]. According to this model, corporations can measure their contribution to the common good through the Balance Sheet for the Common Good. This tool uses a strategic matrix—the Matrix for the Common Good—to quantify the company contribution to the creation of social and environmental value. This contribution is related to four principal values (human dignity, solidarity, social justice, environmental sustainability, and codetermination and transparency) with five different stakeholders (suppliers, investors, employees, customers, and social environment) [27]. This model replaces profit for the common good, and it gives priority to cooperation over competition. In this sense, the ECG is an organizational model that highlights the cooperation between companies, both internally (intra-cooperation) and externally (inter-cooperation).
When analyzing the literature on strategic alliances, we can find a few works concerning the importance of strategic alliances between for-profit and non-profit organizations. From an empirical point of view, the literature is even scarcer. In this sense, the present work provides new literature on this subject. Furthermore, we intend to relate this type of cooperation agreement with sustainability models such as the ECG one to prove that such alliances can help implement this model. Once the work establishes the theoretical relationship between both, future investigations could quantify the contributions of these alliances to the ECG model by applying the Common Good Matrix.
The objective of this work is to relate the study of alliances with the ECG model to establish a theoretical connection between the two. To this end, this work analyzes empirically the contribution that alliances between for-profit and non-profit organizations can make to the ECG model.
Cooperation agreements between these two types of organizations contribute to the creation of social value, which is the principal purpose of the ECG model. Therefore, establishment of these types of alliances can contribute to implementation of the ECG model in companies. This work intends to establish the theoretical connection between both approaches and the empirical contributions that these types of alliances can make to the Common Good Matrix.
With this purpose, our work is structured as follows. After this introductory section, we introduce Section 2, which includes the literature review. We divide such segments into three different subsections: (1) “2.1. Cooperation between for-profit and non-profit organizations”, (2) “2.2. The Economy for the Common Good organizational model”, and (3) “2.3. Cooperation in the ECG model”. Following this segment, we describe the work method in Section 3. Afterwards, Section 4 focuses on the description of case studies. This segment is divided into two different parts: (1) “4.1 Grupo Vips–Fundación Hazlo Posible” and (2) “4.2. Danone Foods–Grameen Bank”. After this, Section 5 analyzes the results of the empirical study conducted previously, employing a comparative analysis between both cases. To finish, Section 6 discusses the results of this work, and Section 7 contains the conclusions.
Sustainability 2020, 12, 9511
3 of 22
2. Theoretical Framework
2.1. Cooperation between For-Profit and Non-Profit Organizations
Interfirm cooperation as a field of academic study within the economy began to gain relevance in the 1970s. Since that time, numerous papers have highlighted the importance of cooperation to obtain a competitive advantage [28–30]. The first papers on this subject affirmed that cooperation was a cover-up practice that restrained competition [31–36]. However, in the 1980s, the cooperation approach experienced a change due to application of the “Transaction Costs Economics” [37,38]. Nowadays, cooperation is analyzed as a hybrid or intermediate form between the market and the company. Interfirm cooperation reduces market inefficiencies (reducing transaction costs), and it facilitates access to resources and capabilities that the entities could not obtain individually [39,40].
From an organizational perspective, cooperation begins to gain interest as a field of academic study when the environment starts to be considered a critical element in the competition between organizations [41]. Even though there are previous references [42], the most relevant works emerge when cooperation is studied within the resource dependency approach. Such an approach states that cooperation between entities occurs as a consequence of mutual dependence [43,44]. This fact leads to a strategic approach to cooperation, which is considered an alternative strategy to mergers and vertical integration (internalization of activities). This approach comprises two main types of reasons why companies cooperate: (1) to access new resources and capabilities that the entities do not possess [45,46] and (2) to organize certain activities of the value chain [7,47,48].
The existing literature indicates that cooperation can be implemented through different methods—functional agreements, franchising, outsourcing, joint ventures, networks, etc.—which share common characteristics that help define the concept [28]. Such attributes are as follows: (1) partners keeping their legal independence, (2) the explicit and long-term nature of the collaboration, (3) partners sharing common and compatible goals, and (4) the organizations involved sharing their resources and capabilities.
The strategic perspective of organizations focuses the study of alliances on two different aspects [7,9,47,49]: (1) their motives and causes, and (2) their consequences (benefits and results of the alliances). Moreover, this perspective includes the study of the process of negotiating and managing the cooperation agreements [50–52].
With this work, we are interested in introducing a new motive that has been little analyzed by the academic field: the use of alliances to promote the implementation of socially responsible practices, ethical behaviors, and sustainability criteria [11,53,54]. Table 1 summarizes the main contributions concerning the relationship between strategic alliances and corporate social responsibility.
Table 1. Main contributions of alliances to corporate social responsibility.
Authors Canzaniello et al. (2017) [30]
Altamira (2000) [55] Michavilla (2011) [56] Renart Cava (1999) [57] Pérez López (1993) [58]
Browning et al. (1995) [59]
Contributions
This paper analyzes the vertical alliances between companies and their suppliers in the supply chain under sustainability criteria.
This paper studies how ethical behaviors on alliances can avoid opportunistic behaviors and distrust between partners.
This work states that the success of an alliance depends on mutual trust between partners.
The author concludes that the failure of an alliance depends on unethical behaviors and the loss of trust between partners.
This paper states that the transcendent motivations are the ones that avoid opportunistic behaviors, thus favoring the success of alliances.
The authors state that the success of alliances increases when the commitment between the people involved in the agreements goes beyond the contractual obligations. These ethical bonds create a moral community.
Sustainability 2020, 12, 9511
4 of 22
In Table 1, we can see that different authors have focused their studies on the relationship between ethics and the success of strategic alliances between organizations. Such studies have been conducted using different approaches, such as corporate governance [60], stakeholders’ theory [61], and the territorial perspective [62]. More recently, a big part of the literature on business cooperation has focused on the impact that social responsibility policies have on this type of agreements. The new studies emphasize aspects such as the formation, development, and control of the alliances [11,53,54].
To assess the impact that social responsibility measures have on cooperation agreements, Kliksberg [63] defined corporate social responsibility as a way of understanding the business world in which organizations are allies and drivers of environmental and social development. The author adds that capitalism and its individualistic ethics cannot be suitable to underpin social responsibility. Therefore, this system does not meet the needs of today’s society. Ethics must be based on cooperation and mutual contribution [64].
Related to this aspect, Pulgar and Pelekais [11] identified the importance of strategic alliances as a tool to guarantee the effectiveness of social responsibility measures. By cooperating, partners in different or similar industries can unite their strengths in order to meet the needs and requirements of the society in which they operate. Additionally, Morales et al. [65] affirmed that social responsibility policies can be more effective if they are carried out through cooperation with entities that possess the key competencies for their implementation, that is, through strategic alliances with non-profit organizations. Consequently, these authors, together with Porter and Kramer [18], introduced the importance of alliances between for-profit and non-profit organizations for the creation of shared value.
The number of publications on strategic alliances between for-profit and non-profit organizations is still scarce and very recent. With regards to this subject, we can find papers that focus on diverse topics. Some of these topics are health and education [66], intersectoral alliances [67], cooperation agreements between private entities and non-profit organizations [68], intersectoral alliances that focus on corporate websites [69], alliances centered on the use of the balanced scorecard [70], cooperation agreements that focus on the implementation of marketing strategies [71], intersectoral alliances centered on reputation [72], alliances focused on strategic development [73], and alliances centered on the mediating role of altruism [74]. Table 2 summarizes the main contributions concerning the relationship between alliances between for-profit and non-profit organizations and corporate social responsibility.
Table 2. Main contributions of alliances between for-profit and non-profit organizations to corporate social responsibility.
Authors Muthuri et al. (2009) [75] and Porter and Kramer
(2011) [18]
García et al. (2011) [14]
Contributions
Hybrid corporations are those that are capable of creating shared value as the intersection between economic and social value.
The authors state that these alliances are created as a response to the new interests of the stakeholders. In this sense, the work establishes three perspectives or approaches:
(1) Transaction: occasional philanthropic actions that do not create value.
(2) Transition: continuous dialogue between the companies involved in the alliance but without considering the rest of the stakeholders.
(3) Transformation: continuous dialogue between all of the stakeholders, thus creating shared value throughout the development of the alliance.
Sustainability 2020, 12, 9511
5 of 22
Table 2. Cont.
Authors Berger et al. (2004) [66]
Shumate and O’Connor (2010) [69]
Hansen et al. (2010) [70] Arya and Salk (2006) [67], Rivera-Santos and Rufin (2010) [68], Liu and Ko (2011) [71], Im (2011) [72],
Al-Tabbaa (2014) [73], and Rim et al. (2016) [74]
Contributions
This paper studies the holding of events to raise funds for cancer research through an alliance between American Express and Share Our Strength (a non-profit organization against hunger) in 1991.
This paper studies successful alliances between 11 private entities and 59 non-profit organizations based on a sample of 155 companies from the US Fortune 500 and 6965 NGOs.
The authors study the positive social impacts for local communities derived from the alliance between Merck, Ltd. Thailand (a subsidiary of a German pharmaceutical multinational) and local organizations.
This work’s contributions are related to the benefits obtained from alliances created to establish socially responsible practices.
With regards to cooperation between for-profit and non-profit organizations, Porter and Kramer [18] stated that, on the one hand, for-profit corporations can embrace the social and environmental aspects predominating in the non-profit entities. On the other hand, the authors affirm that non-profit organizations can ensure their economic viability to continue operating. Then, the existing boundary between for-profit and non-profit organizations blurs. By cooperating, both entities complement their deficiencies, thus guarantying their survival. Therefore, these strategic alliances lead to the creation of shared value, which is based on the idea that organizations create economic and social value through their economic activity.
In the same line of thinking, Rodríguez et al. [16] focused on the impact that this type of cooperation has on both organizations. According to their studies, the positive impacts and benefits derived from strategic alliances between for-profit and non-profit organizations can be seen in three different factors: (1) for-profit organizations experience an increase in their number of partners as a consequence of improvement in their corporate image derived from the alliance; (2) employees from both entities undergo an increase in their motivation derived from a higher general and operative implication at work; and (3) these alliances promote the exchange of tangible and intangible resources and capabilities between both organizations. It is worth noting that this last aspect leads to a process of in-depth learning, which will remain with each one of the entities if the cooperation agreement ceases in the future. Moreover, the authors mention that this knowledge derived from the alliance will allow both organizations to compete in meeting the needs and requirements of every single stakeholder of the society in which the companies operate.
Concerning this topic, Carreras and Iglesias’ [15] work shares some of the benefits explained above, but they added some new ones. On the one hand, with regards to the benefits experienced by capitalist organizations, they included (1) an improvement in their internal processes and the potential for innovation in their human resources policies, (2) the retention of employees due to an increase in their motivation, (3) higher visibility of the organization’s value, (4) increase in the company’s awareness of the reality of the society in which they operate, and (5) the implementation of social responsibility measures becoming easier thanks to the knowledge obtained from the non-profit entity. On the other hand, the positive impacts experienced by the non-profit entities are (1) access to economic and technical resources, (2) creation of new products and services as a consequence of the know-how acquired, (3) increase in their channels of distribution, (4) access to a broader number of partners due to the networks of the for-profit company, and (5) increase in their visibility.
Therefore, we can conclude that different benefits exist for both types of entities, which explain the increase in the importance of this type of alliances during recent years [76]. Nevertheless, the importance
Sustainability 2020, 12, 9511
6 of 22
of these agreements does not reside in this aspect, since alliances between for-profit organizations also present benefits for the entities involved. Therefore, many papers focus on the impact that these agreements constitute for the community where they are developed [13]. Concerning this aspect, Abenoza et al. [17] indicated that there are three positive impacts for the community derived from this type of cooperation.
In the first place, they stated that entities can solve a social problem more efficiently due to the exchange of resources and capabilities that takes place between them.
In the second place, the authors mention that organizations are able to generate social innovation as well [17]. As a consequence of the cooperation between for-profit and non-profit entities, organizations can develop new products, services, and technologies with significant social impact. That is, these alliances lead to the creation of innovative offers aimed at solving the social problems mentioned above. On the one hand, the non-lucrative entity detects the environmental or social challenge by bringing its knowledge about this aspect, while on the other hand, the for-profit organization brings its professional experience related to product or service development.
Finally, the third community benefit that Abenoza et al. [17] indicated in relation to these types of alliances is related to the local and global changes they promote. The authors referred to these cooperation agreements as strategic alliances developed to promote ethical practices. They named these practices “global action networks”, which are described as coalitions created to promote not only local changes but also global ones. These agreements are based on (1) shared learning and (2) the establishment of innovative networks emerging from the technological exchange between the organizations involved. According to the authors, these agreements are created to encourage social transformation. Such social transformation is the reason why these alliances are not restricted to the local community in which the organizations operate, but they pretend to have a positive integral impact through innovation.
In this line of thinking, Callejas and Salazar [77] indicated that the exchange of knowledge and technology that takes place between for-profit and non-profit organizations leaves a communitarian footprint globally and locally. Furthermore, the authors added that this footprint can be seen at the social and environmental levels. These types of alliances allow, through innovation, the development and implementation of new models of production and distribution of products and services designed for the common good. Moreover, these new models are environmentally friendly, and they do not need to be limited to the locality in which the organizations are established.
As a conclusion, we can state that the transcendence of the strategic alliances between for-profit and non-profit organizations resides on the impact that they have on the community. The creation of economic and social sustainable value is only possible through this model of cooperation since these strategic alliances allow social development through the economic one and vice versa [78].
2.2. The Economy for the Common Good Organizational Model
The ECG model was created in the year 2010 during the financial crisis that began in Central Europe in 2008. The model was created by Christian Felber, professor of Economics at the University of Vienna and social activist of Attac. Hence, the model has social origins, being created as an alternative perspective to the current global economic model. The underlying topic that this model suggests is that economic growth and money cannot be considered an end or an objective; these must be instruments used in order to create social welfare and to improve the quality of people’s lives. From this perspective, Felber proposes the substitution of “for-profit” by “common good” and the replacement of competition by cooperation [26]. The substitution of “for-profit” by “common good” does not imply that organizations are not going to obtain benefits; this means that entities must favor the general interest through the creation of social value.
Cooperation and competition are two factors that have been analyzed together in business literature. Firstly, they were considered two opposing terms (when cooperation increases, competition decreases) [31–33]. Later, they were contemplated as two concepts directly related (cooperation favors
Sustainability 2020, 12, 9511
7 of 22
competition) [4]. Nevertheless, it is important to mention that competition and cooperation are not incompatible concepts; they can be supplemented by what is known as co-petition [79]. This concept arises from game theory application. According to this theory, companies must follow a win-win strategy in which success in the market does not require the failure of competing companies, as there may be multiple winners [80–84]. Cooperation is used by organizations to be more competitive without the need to reduce or eliminate competence.
The ECG model was created as a proposal for a global economic model. Nevertheless, its implementation focuses on the organizational sphere. With this purpose, the model uses a tool known as the Common Good Balance Sheet (CGBS), in which its utility is to assess the impact that an organization produces on society (social impact) and the planet (environmental impact) [85]. The CGBS works as a complementary tool to the balance sheet and to the profit and loss statement, which measure the economic and financial structure of an entity. The CGBS consists of the Common Good Report, the Common Good Matrix, and the company’s improvement plan.
The Common Good Matrix is a strategic matrix that relates the four fundamental values of the ECG model (human dignity, solidarity and social justice, environmental sustainability, and transparency and codetermination) with five main groups of stakeholders (suppliers, owners and financial service providers, employees, customers, and their social environment). Through the matrix, organizations can quantitatively measure their contribution to the common good. According to the score range obtained in the matrix, the company can be placed at the following rating levels: beginner (0–1), advanced (2–3), experienced (4–6), and exemplar (7–10). The highest possible score is a thousand points. Furthermore, this matrix can be applied to any organization, whether they are private (for-profit and non-profit corporations) or public. The matrix structure can be seen in Table 3.
Table 3. The Common Good Matrix.
Value/ Stakeholders
Human Dignity
Solidarity and Social Justice
Environmental Sustainability
Transparency and Codetermination
A Suppliers
A1. Human dignity in the
supply chain
A2. Solidarity and social justice in the supply
chain
A3. Environmental sustainability in the supply chain
A4. Transparency and codetermination in the
supply chain
B Owners, equity, and financial service
providers
B1. Ethical position in
relation to financial resources
B2. Social position in
relation to financial resources
B3. Use of funds in relation
to social and environmental impacts
B4. Ownership and codetermination
C Employees, including coworking employers
C1. Human dignity in the
workplace and working environment
C2. Self-determined working arrangements
C3. Environmentally friendly behavior
of staff
C4. Codetermination and transparency within
the organization
D Customers and other
companies
D1. Ethical customer
relations
D2. Cooperation and solidarity with other companies
D3. Impact on the environment of the use and disposal of products/services
D4. Customer participation
and product transparency
E Social environment
E1. Purpose of products/services and their effects on society
E2. Contribution to the
community
E3. Reduction of environmental impact
E4. Social codetermination
and transparency
Source: https://www.ecogood.org/apply-ecg/common-good-matrix/. Note: This matrix corresponds to the 5.0 version, created in 2017. The original matrix (from 2010) has been modified based on the changes that have been introduced over time. As a consequence of these changes, nowadays, there are five different versions of the matrix. The first one was implemented through 100 German and Austrian organizations in 2010.
2.3. Cooperation in the ECG Model
Cooperation appears implicitly and transversally in every single one of the 20 topics comprised within the matrix. In order to quantify these topics, the matrix uses different types of indicators. Detailed information on the matrix structure and the process through which the scores are obtained
Sustainability 2020, 12, 9511
8 of 22
can be found on the website of the International Association for the Common Good Economy [86]. By analyzing each one of its indicators, we can identify those aspects related to cooperation which appear explicitly in the matrix. Therefore, throughout the study of the ECG Matrix, we can find references to cooperation in both ways, implicitly and explicitly. The next section Section 2.3. of the work focuses on these references.
In the first place, by studying the first interest group of the matrix (suppliers), we analyze the relationship between the organization and the suppliers across the supply chain. In this case, alliances have significant relevance, since we consider these types of relationships as vertical alliances within the supply chain. This block of the matrix introduces the concept of “sustainable supply chain”. A sustainable supply chain is one in which a situation of abuse of market power between the company and its suppliers does not take place. Moreover, it includes the establishment of cooperation agreements with local suppliers, thus favoring proximity sourcing and relationships.
Furthermore, this block includes the conditions of the cooperation agreement between the company and the supplier. Sustainability criteria bring these conditions, which are specified through the four values placed horizontally in the matrix. Such values represent a sustainable supply chain management. Cooperation is reflected explicitly in the fourth value corresponding to “A.4. Transparency and codetermination in the supply chain”. In this case, the ECG model suggests establishing cooperative relations with suppliers based on transparency and participation.
In the second place, by studying the second interest group of the matrix (owners and financial service providers), the company’s relationship with its financial providers (primarily credit institutions) is analyzed. In this block of the matrix, horizontal alliances between the organizations and the financial entities take place. These alliances—when we apply the sustainability criteria—can be understood as coalitions with ethical and social banks. This aspect implies the establishment of cooperation agreements with financial providers, which are based on socially responsible investments. In this case, the company can participate in solidarity-based financing in order to implement projects with a positive social and environmental impact. The implementation of these projects will be conducted employing subordinated loans, microcredit, and crowdfunding or by providing financial aid directly. It is important to mention that this matrix includes a negative indicator (it implies subtracting points from the matrix): the possibility that the organization participates in a hostile takeover bid.
In the third place, by studying the third interest group of the matrix (employees), the relationships between people by using tools based on participation and co-decision are analyzed. In this case, cooperation is studied from an internal perspective known as intra-cooperation. This one uses different types of methods, such as cooperative work or collaborative decision-making. This block of the matrix shows that an organizational culture based on respect, trust, and appreciation fosters cooperation between people, thus including an open, transparent, and bottom-up communication system.
Moreover, the matrix includes indicators related to diversity—age, gender, ethnicity, and religion—and equal opportunities. Nevertheless, the aspect that focuses the most on cooperation is the one related to transparency and codetermination or internal democratic participation. In this sense, the first aspect valued is transparency or access to the company’s relevant information; by accessing information, people can build their own opinion and can participate actively. A second important aspect to consider is the legitimacy of the organization’s management; employees are the ones who must legitimate directors through dialogue, contribution, and participation. There is also a third aspect related to participation of employees in the decision-making process of the company; workers can give ideas, and they can take action in the entity’s decision-making process. To this end, ECG theory suggests the following concrete actions: making bottom-up decisions, sharing responsibility, covering all levels of the organization, and applying direct democracy in relevant decisions.
In the fourth place, by studying the fourth interest group of the matrix (customers and other companies), the relationship of the company with its clients (favoring their participation in those decisions that directly affect them) and with other entities (enhancing inter-cooperation) is analyzed.
Sustainability 2020, 12, 9511
9 of 22
With respect to the customers, ECG theory proposes to maintain a transparent, honest, and horizontal relationship with them. Furthermore, the model suggests facilitating their access to the purchasing process by actively participating in decisions that affect them. According to ECG theory, such access could be promoted by creating customer groups, working committees, etc. Clients can participate in the improvement or development of existing products or services as well as in facilitating their diffusion among customers.
With regards to cooperation with other entities, collaboration should be based on an attitude of appreciation and equal and horizontal treatment. This section of the matrix is based on three aspects: (1) considering organizations in the same sector as complementary in the market, (2) working with other companies to offer joint solutions to the customers, and (3) offering disinterested support to other entities in a situation of need. These three aspects form a condition that, in the theoretical framework, was referred to as co-petition. Some of the matrix indicators related to co-petition are (1) the percentage of time and resources spent on collaborative product and service development, (2) the percentage of time aimed at enhancing cooperation with other organizations from the same or different market segments and sectors, and (3) the number of civil society projects shared with other entities. Finally, solidarity towards other organizations is implemented by promoting mutual disinterested assistance through the exchange of employees, assignments, financial resources, and technology. In this block of the matrix, hostile behavior towards other organizations, the abuse of its competitive position in the market, and seeking win-lose strategies are activities negatively assessed.
In the fifth and last position, by studying the fifth interest group of the matrix (the social environment), the relationship of the company with society is analyzed. This block focuses on the relationship between the organization and the region where it develops its economic activity. Here, we can include alliances between for-profit organizations and NGOs or other non-profit entities as well as cooperation agreements with other groups of interest such as neighborhoods, ecologist associations, etc. The theoretical aspects previously analyzed in this work with regards to alliances between for-profit and non-profit organizations can be applied to this block of the Common Good Matrix.
Moreover, this section of the model comprises different ways to collaborate with the community by means of voluntary contributions. Such contributions can be monetary or in-kind. They can also take place by using the company’s network to support civil society projects. Besides, cooperation with interest groups of the community, such as local institutions and NGOs, represent another way to collaborate.
These contributions and impacts are based on transparency; they are possible because the organization provides to the external interest groups truthful and complete information with regards to the entities’ actions and their direct effects on the social environment. In connection with this, direct and active participation with the community’s interest groups should be encouraged by consulting them and by involving them in the decision-making process of the company, especially in those aspects that directly affect the social environment. Information manipulation and lack of transparency are valued negatively in the matrix.
By studying the indicators proposed and reflected in the Common Good Matrix, we can quantify the role that cooperation plays in the implementation of the ECG model.
3. Method
The present study adopts a qualitative methodological approach, more specifically, the case study method. According to Yin [87], this methodology is the most appropriate one due to the critical and peculiar character of the cases and the unique object of study that they comprise. This approach enables investigating and drawing conclusions in a way that would not be possible otherwise. Moreover, multiple case studies (research in which several cases are analyzed at the same time) enables the investigation and comparison of examples and facts so that, finally, reality can be described [87]. In the same line of thinking, authors such as Rule and John [88] state that it is possible to test and affirm theories with the case study method. Their study indicates that qualitative methodologies can test
Sustainability 2020, 12, 9511
10 of 22
and verify theories through the study of cases employing deductions that move from the general to the specific.
This generalization is described by Yin [89] as “analytic generalization”, a process that takes place when a theory can be used as the basis to compare the empiric results obtained with the case study.
Since the final objective of this work is to demonstrate the theories exposed in the theoretical framework, this work conducts an empirical study consisting of the analysis and comparison of two different cases. These cases have been selected for two main reasons: (1) visibility of the participating organizations and (2) the amount of information published with regards to the cooperation agreements between them.
The study of the two selected cases has been conducted based on the information obtained in such cases. We have chosen the cases based on the impact that they have on the community and the ease of getting sufficient and adequate information. This information has been obtained from two different types of sources: (1) from the institutional websites of the entities that are part of the alliances and (2) from different papers published on academic journals and other public documents.
In order to meet the work’s purpose, the study is divided into three sections: (1) an individual study of the strategic alliance between Grupo Vips and Fundación Hazlo Posible, (2) an individual study of the strategic alliance between Danone Foods and Grameen Bank, and (3) a comparative analysis of both cases with the aim of discerning if there is a common pattern concerning the implications of these cooperation agreements for the community and their relationship with the ECG.
4. Case Study Participants Description
4.1. Grupo VIPS–Fundación Hazlo Posible Case Study
On the one hand, Grupo Vips is a family business founded in Madrid in 1969, when Plácido Arango (the founder) decided to open the first establishment under the name Vips. Although initially the organization had only one chain of restaurants, nowadays, the group is formed by six big chains and ten restaurants with more than 350 establishments and a workforce of more than 10,000 employees [90].
On the other hand, Fundación Hazlo Posible is a private non-profit organization founded by José Martín and Catalina Parra in 1999 to stimulate the involvement of society in solidarity and social causes by using information and communication technologies. With this objective, they created an online portal web under the name Canalsolidario.org [90]. This portal web was intended to work as a bridge between the activities of the NGO and the society. Today, Canalsolidario.org is a digital newspaper specialized in social information, while the foundation is focused on three action lines: awareness-raising and communication, volunteering, and knowledge management. The entity has a workforce of 17 employees and a census of 500 volunteers who support the organization guided by the values of commitment, diversity, energy, and creativity [90].
Cooperation between both organizations began when Maite Arango (vice-president of the Vips Group Council) and Elena Acín (director of Fundación Hazlo Posible) met at the first Internet Fair in Madrid in 1999. Acín attended the fair to present their new portal web Canalsolidario.org with the aim of accessing private funding, while Arango was looking for a social project to which Grupo Vips could commit [90]. After several meetings, both entities decided to start to collaborate on the portal web Canalsolidario.org in 2000. When cooperation started, the portal was renamed Hacesfalta.org after Grupo Vips made an initial investment of 106.000 €. The decision to start cooperating was taken quickly since both organizations shared the same goal. Such a goal was to increase the visibility of a new type of volunteering in Spain, that is, virtual volunteering. With this purpose, both entities unified their knowledge: Grupo Vips contributed with its customer service experience and Fundación Hazlo Posible contributed with its consulting skills. After this first contact, during the following years, in order to avoid complications related to compliance with the agreements, both entities set up formal governance mechanisms such as the signing of annual agreements and the submission of monthly reports to monitor the development of the project [90].
Article
Alliances between For-Profit and Non-Profit Organizations as an Instrument to Implement the Economy for the Common Good
Carmen Talavera and Joan R. Sanchis *
Business Administration Department, Faculty of Economics, University of València, Tarongers Av., 46022 València, Spain; [email protected] * Correspondence: [email protected]
Received: 29 October 2020; Accepted: 13 November 2020; Published: 15 November 2020
Abstract: The model of the Economy for the Common Good (ECG) has cooperation as one of its main principles. This alternative economic model proposes to prioritize cooperation over competition to favor the creation of social value. From this point of view, strategic alliances between organizations can be used as an instrument that supports implementation of the ECG model. In recent years, alliances between for-profit and non-profit entities have been strengthened as a method to facilitate actions focused on social responsibility and sustainability. Moreover, the ECG model has become an adequate management framework for corporate sustainability. This work aims to connect alliances between for-profit and non-profit organizations with the ECG model. First, this connection is manifested in a theoretical way. This paper is going to analyze how such alliances can contribute to increasing the values of the ECG model: human dignity, solidarity and social justice, environmental sustainability, and transparency and codetermination. Afterwards, this work analyzes two cases of this type of alliance—Grupo Vips-Fundación Hazlo Posible and Danone Foods-Grameen Bank—to determine the benefits that this type of cooperation can provide to society. We study their motives and the benefits that they bring to the organizations and the community. Therefore, this work assesses how these types of alliances influence the different topics included in the Common Good Matrix. Moreover, we conduct a comparative analysis between both cases. This work demonstrates that, by implementing this type of strategic alliances, the creation of social value is favored, thus contributing to implementation of the ECG model.
Keywords: economy for the common good; cooperation; strategic alliances; sustainability; shared value; non-profit organizations
1. Introduction
Cooperation between organizations is a practice for which history dates back to the beginning of economic exchanges. Nevertheless, it becomes more relevant when the environment starts to be considered a significant variable in strategic analysis during the second half of the twentieth century. The economic dynamism and the globalization of markets restrict an organization’s capacity to respond individually, an aspect that forces them to establish cooperation agreements to face environmental challenges. In consequence, alliances become a critical strategic tool for business success [1]. The literature on this subject is extensive [2], and the names used to refer to it are diverse: cooperation agreements [3,4], alliances [5,6], or coalitions [7], among others. Furthermore, alliances are analyzed from multiple perspectives and approaches [8]. Most authors focus on aspects such as their motives [9], the process of formation of the agreement [10], or their management [1].
Sustainability 2020, 12, 9511; doi:10.3390/su12229511
www.mdpi.com/journal/sustainability
Sustainability 2020, 12, 9511
2 of 22
Nowadays, a more recent source of research analyzes alliances and their relationship with ethical behaviors, social responsibility, and sustainability in corporations [11,12]. These studies affirm that the success of cooperation agreements depends on the absence of opportunistic behaviors, mutual respect, and trust. These fundamental aspects for the management of alliances connect with the social values derived from social responsibility and business ethics. Therefore, alliances between for-profit and non-profit entities are being promoted in order to develop critical competencies to create social value [13–17].
Furthermore, there is another aspect which is currently generating a broader literature on the subject of corporate sustainability. Such an aspect is the relevance of social value creation and its relationship with economic value through what Porter and Kramer [18] refer to as shared value [19–24]. Dyllick and Muff [25] establish a matrix in which they explain the process through which a company can reach “true sustainability”. The process allows for identification of a typology formed by four different stages: (1) business-as-usual (economic concerns), (2) business sustainability 1.0 (three-dimensional concerns), (3) business sustainability 2.0 (triple bottom line), and (4) business sustainability 3.0 (outside-in). These authors point out that the Economy for the Common Good (ECG) model is an organizational framework that focuses on business sustainability 3.0 [25] (p. 169).
The ECG model is an organizational framework created in 2010 in Europe (Austria) by economics professor and social activist Christian Felber [26]. According to this model, corporations can measure their contribution to the common good through the Balance Sheet for the Common Good. This tool uses a strategic matrix—the Matrix for the Common Good—to quantify the company contribution to the creation of social and environmental value. This contribution is related to four principal values (human dignity, solidarity, social justice, environmental sustainability, and codetermination and transparency) with five different stakeholders (suppliers, investors, employees, customers, and social environment) [27]. This model replaces profit for the common good, and it gives priority to cooperation over competition. In this sense, the ECG is an organizational model that highlights the cooperation between companies, both internally (intra-cooperation) and externally (inter-cooperation).
When analyzing the literature on strategic alliances, we can find a few works concerning the importance of strategic alliances between for-profit and non-profit organizations. From an empirical point of view, the literature is even scarcer. In this sense, the present work provides new literature on this subject. Furthermore, we intend to relate this type of cooperation agreement with sustainability models such as the ECG one to prove that such alliances can help implement this model. Once the work establishes the theoretical relationship between both, future investigations could quantify the contributions of these alliances to the ECG model by applying the Common Good Matrix.
The objective of this work is to relate the study of alliances with the ECG model to establish a theoretical connection between the two. To this end, this work analyzes empirically the contribution that alliances between for-profit and non-profit organizations can make to the ECG model.
Cooperation agreements between these two types of organizations contribute to the creation of social value, which is the principal purpose of the ECG model. Therefore, establishment of these types of alliances can contribute to implementation of the ECG model in companies. This work intends to establish the theoretical connection between both approaches and the empirical contributions that these types of alliances can make to the Common Good Matrix.
With this purpose, our work is structured as follows. After this introductory section, we introduce Section 2, which includes the literature review. We divide such segments into three different subsections: (1) “2.1. Cooperation between for-profit and non-profit organizations”, (2) “2.2. The Economy for the Common Good organizational model”, and (3) “2.3. Cooperation in the ECG model”. Following this segment, we describe the work method in Section 3. Afterwards, Section 4 focuses on the description of case studies. This segment is divided into two different parts: (1) “4.1 Grupo Vips–Fundación Hazlo Posible” and (2) “4.2. Danone Foods–Grameen Bank”. After this, Section 5 analyzes the results of the empirical study conducted previously, employing a comparative analysis between both cases. To finish, Section 6 discusses the results of this work, and Section 7 contains the conclusions.
Sustainability 2020, 12, 9511
3 of 22
2. Theoretical Framework
2.1. Cooperation between For-Profit and Non-Profit Organizations
Interfirm cooperation as a field of academic study within the economy began to gain relevance in the 1970s. Since that time, numerous papers have highlighted the importance of cooperation to obtain a competitive advantage [28–30]. The first papers on this subject affirmed that cooperation was a cover-up practice that restrained competition [31–36]. However, in the 1980s, the cooperation approach experienced a change due to application of the “Transaction Costs Economics” [37,38]. Nowadays, cooperation is analyzed as a hybrid or intermediate form between the market and the company. Interfirm cooperation reduces market inefficiencies (reducing transaction costs), and it facilitates access to resources and capabilities that the entities could not obtain individually [39,40].
From an organizational perspective, cooperation begins to gain interest as a field of academic study when the environment starts to be considered a critical element in the competition between organizations [41]. Even though there are previous references [42], the most relevant works emerge when cooperation is studied within the resource dependency approach. Such an approach states that cooperation between entities occurs as a consequence of mutual dependence [43,44]. This fact leads to a strategic approach to cooperation, which is considered an alternative strategy to mergers and vertical integration (internalization of activities). This approach comprises two main types of reasons why companies cooperate: (1) to access new resources and capabilities that the entities do not possess [45,46] and (2) to organize certain activities of the value chain [7,47,48].
The existing literature indicates that cooperation can be implemented through different methods—functional agreements, franchising, outsourcing, joint ventures, networks, etc.—which share common characteristics that help define the concept [28]. Such attributes are as follows: (1) partners keeping their legal independence, (2) the explicit and long-term nature of the collaboration, (3) partners sharing common and compatible goals, and (4) the organizations involved sharing their resources and capabilities.
The strategic perspective of organizations focuses the study of alliances on two different aspects [7,9,47,49]: (1) their motives and causes, and (2) their consequences (benefits and results of the alliances). Moreover, this perspective includes the study of the process of negotiating and managing the cooperation agreements [50–52].
With this work, we are interested in introducing a new motive that has been little analyzed by the academic field: the use of alliances to promote the implementation of socially responsible practices, ethical behaviors, and sustainability criteria [11,53,54]. Table 1 summarizes the main contributions concerning the relationship between strategic alliances and corporate social responsibility.
Table 1. Main contributions of alliances to corporate social responsibility.
Authors Canzaniello et al. (2017) [30]
Altamira (2000) [55] Michavilla (2011) [56] Renart Cava (1999) [57] Pérez López (1993) [58]
Browning et al. (1995) [59]
Contributions
This paper analyzes the vertical alliances between companies and their suppliers in the supply chain under sustainability criteria.
This paper studies how ethical behaviors on alliances can avoid opportunistic behaviors and distrust between partners.
This work states that the success of an alliance depends on mutual trust between partners.
The author concludes that the failure of an alliance depends on unethical behaviors and the loss of trust between partners.
This paper states that the transcendent motivations are the ones that avoid opportunistic behaviors, thus favoring the success of alliances.
The authors state that the success of alliances increases when the commitment between the people involved in the agreements goes beyond the contractual obligations. These ethical bonds create a moral community.
Sustainability 2020, 12, 9511
4 of 22
In Table 1, we can see that different authors have focused their studies on the relationship between ethics and the success of strategic alliances between organizations. Such studies have been conducted using different approaches, such as corporate governance [60], stakeholders’ theory [61], and the territorial perspective [62]. More recently, a big part of the literature on business cooperation has focused on the impact that social responsibility policies have on this type of agreements. The new studies emphasize aspects such as the formation, development, and control of the alliances [11,53,54].
To assess the impact that social responsibility measures have on cooperation agreements, Kliksberg [63] defined corporate social responsibility as a way of understanding the business world in which organizations are allies and drivers of environmental and social development. The author adds that capitalism and its individualistic ethics cannot be suitable to underpin social responsibility. Therefore, this system does not meet the needs of today’s society. Ethics must be based on cooperation and mutual contribution [64].
Related to this aspect, Pulgar and Pelekais [11] identified the importance of strategic alliances as a tool to guarantee the effectiveness of social responsibility measures. By cooperating, partners in different or similar industries can unite their strengths in order to meet the needs and requirements of the society in which they operate. Additionally, Morales et al. [65] affirmed that social responsibility policies can be more effective if they are carried out through cooperation with entities that possess the key competencies for their implementation, that is, through strategic alliances with non-profit organizations. Consequently, these authors, together with Porter and Kramer [18], introduced the importance of alliances between for-profit and non-profit organizations for the creation of shared value.
The number of publications on strategic alliances between for-profit and non-profit organizations is still scarce and very recent. With regards to this subject, we can find papers that focus on diverse topics. Some of these topics are health and education [66], intersectoral alliances [67], cooperation agreements between private entities and non-profit organizations [68], intersectoral alliances that focus on corporate websites [69], alliances centered on the use of the balanced scorecard [70], cooperation agreements that focus on the implementation of marketing strategies [71], intersectoral alliances centered on reputation [72], alliances focused on strategic development [73], and alliances centered on the mediating role of altruism [74]. Table 2 summarizes the main contributions concerning the relationship between alliances between for-profit and non-profit organizations and corporate social responsibility.
Table 2. Main contributions of alliances between for-profit and non-profit organizations to corporate social responsibility.
Authors Muthuri et al. (2009) [75] and Porter and Kramer
(2011) [18]
García et al. (2011) [14]
Contributions
Hybrid corporations are those that are capable of creating shared value as the intersection between economic and social value.
The authors state that these alliances are created as a response to the new interests of the stakeholders. In this sense, the work establishes three perspectives or approaches:
(1) Transaction: occasional philanthropic actions that do not create value.
(2) Transition: continuous dialogue between the companies involved in the alliance but without considering the rest of the stakeholders.
(3) Transformation: continuous dialogue between all of the stakeholders, thus creating shared value throughout the development of the alliance.
Sustainability 2020, 12, 9511
5 of 22
Table 2. Cont.
Authors Berger et al. (2004) [66]
Shumate and O’Connor (2010) [69]
Hansen et al. (2010) [70] Arya and Salk (2006) [67], Rivera-Santos and Rufin (2010) [68], Liu and Ko (2011) [71], Im (2011) [72],
Al-Tabbaa (2014) [73], and Rim et al. (2016) [74]
Contributions
This paper studies the holding of events to raise funds for cancer research through an alliance between American Express and Share Our Strength (a non-profit organization against hunger) in 1991.
This paper studies successful alliances between 11 private entities and 59 non-profit organizations based on a sample of 155 companies from the US Fortune 500 and 6965 NGOs.
The authors study the positive social impacts for local communities derived from the alliance between Merck, Ltd. Thailand (a subsidiary of a German pharmaceutical multinational) and local organizations.
This work’s contributions are related to the benefits obtained from alliances created to establish socially responsible practices.
With regards to cooperation between for-profit and non-profit organizations, Porter and Kramer [18] stated that, on the one hand, for-profit corporations can embrace the social and environmental aspects predominating in the non-profit entities. On the other hand, the authors affirm that non-profit organizations can ensure their economic viability to continue operating. Then, the existing boundary between for-profit and non-profit organizations blurs. By cooperating, both entities complement their deficiencies, thus guarantying their survival. Therefore, these strategic alliances lead to the creation of shared value, which is based on the idea that organizations create economic and social value through their economic activity.
In the same line of thinking, Rodríguez et al. [16] focused on the impact that this type of cooperation has on both organizations. According to their studies, the positive impacts and benefits derived from strategic alliances between for-profit and non-profit organizations can be seen in three different factors: (1) for-profit organizations experience an increase in their number of partners as a consequence of improvement in their corporate image derived from the alliance; (2) employees from both entities undergo an increase in their motivation derived from a higher general and operative implication at work; and (3) these alliances promote the exchange of tangible and intangible resources and capabilities between both organizations. It is worth noting that this last aspect leads to a process of in-depth learning, which will remain with each one of the entities if the cooperation agreement ceases in the future. Moreover, the authors mention that this knowledge derived from the alliance will allow both organizations to compete in meeting the needs and requirements of every single stakeholder of the society in which the companies operate.
Concerning this topic, Carreras and Iglesias’ [15] work shares some of the benefits explained above, but they added some new ones. On the one hand, with regards to the benefits experienced by capitalist organizations, they included (1) an improvement in their internal processes and the potential for innovation in their human resources policies, (2) the retention of employees due to an increase in their motivation, (3) higher visibility of the organization’s value, (4) increase in the company’s awareness of the reality of the society in which they operate, and (5) the implementation of social responsibility measures becoming easier thanks to the knowledge obtained from the non-profit entity. On the other hand, the positive impacts experienced by the non-profit entities are (1) access to economic and technical resources, (2) creation of new products and services as a consequence of the know-how acquired, (3) increase in their channels of distribution, (4) access to a broader number of partners due to the networks of the for-profit company, and (5) increase in their visibility.
Therefore, we can conclude that different benefits exist for both types of entities, which explain the increase in the importance of this type of alliances during recent years [76]. Nevertheless, the importance
Sustainability 2020, 12, 9511
6 of 22
of these agreements does not reside in this aspect, since alliances between for-profit organizations also present benefits for the entities involved. Therefore, many papers focus on the impact that these agreements constitute for the community where they are developed [13]. Concerning this aspect, Abenoza et al. [17] indicated that there are three positive impacts for the community derived from this type of cooperation.
In the first place, they stated that entities can solve a social problem more efficiently due to the exchange of resources and capabilities that takes place between them.
In the second place, the authors mention that organizations are able to generate social innovation as well [17]. As a consequence of the cooperation between for-profit and non-profit entities, organizations can develop new products, services, and technologies with significant social impact. That is, these alliances lead to the creation of innovative offers aimed at solving the social problems mentioned above. On the one hand, the non-lucrative entity detects the environmental or social challenge by bringing its knowledge about this aspect, while on the other hand, the for-profit organization brings its professional experience related to product or service development.
Finally, the third community benefit that Abenoza et al. [17] indicated in relation to these types of alliances is related to the local and global changes they promote. The authors referred to these cooperation agreements as strategic alliances developed to promote ethical practices. They named these practices “global action networks”, which are described as coalitions created to promote not only local changes but also global ones. These agreements are based on (1) shared learning and (2) the establishment of innovative networks emerging from the technological exchange between the organizations involved. According to the authors, these agreements are created to encourage social transformation. Such social transformation is the reason why these alliances are not restricted to the local community in which the organizations operate, but they pretend to have a positive integral impact through innovation.
In this line of thinking, Callejas and Salazar [77] indicated that the exchange of knowledge and technology that takes place between for-profit and non-profit organizations leaves a communitarian footprint globally and locally. Furthermore, the authors added that this footprint can be seen at the social and environmental levels. These types of alliances allow, through innovation, the development and implementation of new models of production and distribution of products and services designed for the common good. Moreover, these new models are environmentally friendly, and they do not need to be limited to the locality in which the organizations are established.
As a conclusion, we can state that the transcendence of the strategic alliances between for-profit and non-profit organizations resides on the impact that they have on the community. The creation of economic and social sustainable value is only possible through this model of cooperation since these strategic alliances allow social development through the economic one and vice versa [78].
2.2. The Economy for the Common Good Organizational Model
The ECG model was created in the year 2010 during the financial crisis that began in Central Europe in 2008. The model was created by Christian Felber, professor of Economics at the University of Vienna and social activist of Attac. Hence, the model has social origins, being created as an alternative perspective to the current global economic model. The underlying topic that this model suggests is that economic growth and money cannot be considered an end or an objective; these must be instruments used in order to create social welfare and to improve the quality of people’s lives. From this perspective, Felber proposes the substitution of “for-profit” by “common good” and the replacement of competition by cooperation [26]. The substitution of “for-profit” by “common good” does not imply that organizations are not going to obtain benefits; this means that entities must favor the general interest through the creation of social value.
Cooperation and competition are two factors that have been analyzed together in business literature. Firstly, they were considered two opposing terms (when cooperation increases, competition decreases) [31–33]. Later, they were contemplated as two concepts directly related (cooperation favors
Sustainability 2020, 12, 9511
7 of 22
competition) [4]. Nevertheless, it is important to mention that competition and cooperation are not incompatible concepts; they can be supplemented by what is known as co-petition [79]. This concept arises from game theory application. According to this theory, companies must follow a win-win strategy in which success in the market does not require the failure of competing companies, as there may be multiple winners [80–84]. Cooperation is used by organizations to be more competitive without the need to reduce or eliminate competence.
The ECG model was created as a proposal for a global economic model. Nevertheless, its implementation focuses on the organizational sphere. With this purpose, the model uses a tool known as the Common Good Balance Sheet (CGBS), in which its utility is to assess the impact that an organization produces on society (social impact) and the planet (environmental impact) [85]. The CGBS works as a complementary tool to the balance sheet and to the profit and loss statement, which measure the economic and financial structure of an entity. The CGBS consists of the Common Good Report, the Common Good Matrix, and the company’s improvement plan.
The Common Good Matrix is a strategic matrix that relates the four fundamental values of the ECG model (human dignity, solidarity and social justice, environmental sustainability, and transparency and codetermination) with five main groups of stakeholders (suppliers, owners and financial service providers, employees, customers, and their social environment). Through the matrix, organizations can quantitatively measure their contribution to the common good. According to the score range obtained in the matrix, the company can be placed at the following rating levels: beginner (0–1), advanced (2–3), experienced (4–6), and exemplar (7–10). The highest possible score is a thousand points. Furthermore, this matrix can be applied to any organization, whether they are private (for-profit and non-profit corporations) or public. The matrix structure can be seen in Table 3.
Table 3. The Common Good Matrix.
Value/ Stakeholders
Human Dignity
Solidarity and Social Justice
Environmental Sustainability
Transparency and Codetermination
A Suppliers
A1. Human dignity in the
supply chain
A2. Solidarity and social justice in the supply
chain
A3. Environmental sustainability in the supply chain
A4. Transparency and codetermination in the
supply chain
B Owners, equity, and financial service
providers
B1. Ethical position in
relation to financial resources
B2. Social position in
relation to financial resources
B3. Use of funds in relation
to social and environmental impacts
B4. Ownership and codetermination
C Employees, including coworking employers
C1. Human dignity in the
workplace and working environment
C2. Self-determined working arrangements
C3. Environmentally friendly behavior
of staff
C4. Codetermination and transparency within
the organization
D Customers and other
companies
D1. Ethical customer
relations
D2. Cooperation and solidarity with other companies
D3. Impact on the environment of the use and disposal of products/services
D4. Customer participation
and product transparency
E Social environment
E1. Purpose of products/services and their effects on society
E2. Contribution to the
community
E3. Reduction of environmental impact
E4. Social codetermination
and transparency
Source: https://www.ecogood.org/apply-ecg/common-good-matrix/. Note: This matrix corresponds to the 5.0 version, created in 2017. The original matrix (from 2010) has been modified based on the changes that have been introduced over time. As a consequence of these changes, nowadays, there are five different versions of the matrix. The first one was implemented through 100 German and Austrian organizations in 2010.
2.3. Cooperation in the ECG Model
Cooperation appears implicitly and transversally in every single one of the 20 topics comprised within the matrix. In order to quantify these topics, the matrix uses different types of indicators. Detailed information on the matrix structure and the process through which the scores are obtained
Sustainability 2020, 12, 9511
8 of 22
can be found on the website of the International Association for the Common Good Economy [86]. By analyzing each one of its indicators, we can identify those aspects related to cooperation which appear explicitly in the matrix. Therefore, throughout the study of the ECG Matrix, we can find references to cooperation in both ways, implicitly and explicitly. The next section Section 2.3. of the work focuses on these references.
In the first place, by studying the first interest group of the matrix (suppliers), we analyze the relationship between the organization and the suppliers across the supply chain. In this case, alliances have significant relevance, since we consider these types of relationships as vertical alliances within the supply chain. This block of the matrix introduces the concept of “sustainable supply chain”. A sustainable supply chain is one in which a situation of abuse of market power between the company and its suppliers does not take place. Moreover, it includes the establishment of cooperation agreements with local suppliers, thus favoring proximity sourcing and relationships.
Furthermore, this block includes the conditions of the cooperation agreement between the company and the supplier. Sustainability criteria bring these conditions, which are specified through the four values placed horizontally in the matrix. Such values represent a sustainable supply chain management. Cooperation is reflected explicitly in the fourth value corresponding to “A.4. Transparency and codetermination in the supply chain”. In this case, the ECG model suggests establishing cooperative relations with suppliers based on transparency and participation.
In the second place, by studying the second interest group of the matrix (owners and financial service providers), the company’s relationship with its financial providers (primarily credit institutions) is analyzed. In this block of the matrix, horizontal alliances between the organizations and the financial entities take place. These alliances—when we apply the sustainability criteria—can be understood as coalitions with ethical and social banks. This aspect implies the establishment of cooperation agreements with financial providers, which are based on socially responsible investments. In this case, the company can participate in solidarity-based financing in order to implement projects with a positive social and environmental impact. The implementation of these projects will be conducted employing subordinated loans, microcredit, and crowdfunding or by providing financial aid directly. It is important to mention that this matrix includes a negative indicator (it implies subtracting points from the matrix): the possibility that the organization participates in a hostile takeover bid.
In the third place, by studying the third interest group of the matrix (employees), the relationships between people by using tools based on participation and co-decision are analyzed. In this case, cooperation is studied from an internal perspective known as intra-cooperation. This one uses different types of methods, such as cooperative work or collaborative decision-making. This block of the matrix shows that an organizational culture based on respect, trust, and appreciation fosters cooperation between people, thus including an open, transparent, and bottom-up communication system.
Moreover, the matrix includes indicators related to diversity—age, gender, ethnicity, and religion—and equal opportunities. Nevertheless, the aspect that focuses the most on cooperation is the one related to transparency and codetermination or internal democratic participation. In this sense, the first aspect valued is transparency or access to the company’s relevant information; by accessing information, people can build their own opinion and can participate actively. A second important aspect to consider is the legitimacy of the organization’s management; employees are the ones who must legitimate directors through dialogue, contribution, and participation. There is also a third aspect related to participation of employees in the decision-making process of the company; workers can give ideas, and they can take action in the entity’s decision-making process. To this end, ECG theory suggests the following concrete actions: making bottom-up decisions, sharing responsibility, covering all levels of the organization, and applying direct democracy in relevant decisions.
In the fourth place, by studying the fourth interest group of the matrix (customers and other companies), the relationship of the company with its clients (favoring their participation in those decisions that directly affect them) and with other entities (enhancing inter-cooperation) is analyzed.
Sustainability 2020, 12, 9511
9 of 22
With respect to the customers, ECG theory proposes to maintain a transparent, honest, and horizontal relationship with them. Furthermore, the model suggests facilitating their access to the purchasing process by actively participating in decisions that affect them. According to ECG theory, such access could be promoted by creating customer groups, working committees, etc. Clients can participate in the improvement or development of existing products or services as well as in facilitating their diffusion among customers.
With regards to cooperation with other entities, collaboration should be based on an attitude of appreciation and equal and horizontal treatment. This section of the matrix is based on three aspects: (1) considering organizations in the same sector as complementary in the market, (2) working with other companies to offer joint solutions to the customers, and (3) offering disinterested support to other entities in a situation of need. These three aspects form a condition that, in the theoretical framework, was referred to as co-petition. Some of the matrix indicators related to co-petition are (1) the percentage of time and resources spent on collaborative product and service development, (2) the percentage of time aimed at enhancing cooperation with other organizations from the same or different market segments and sectors, and (3) the number of civil society projects shared with other entities. Finally, solidarity towards other organizations is implemented by promoting mutual disinterested assistance through the exchange of employees, assignments, financial resources, and technology. In this block of the matrix, hostile behavior towards other organizations, the abuse of its competitive position in the market, and seeking win-lose strategies are activities negatively assessed.
In the fifth and last position, by studying the fifth interest group of the matrix (the social environment), the relationship of the company with society is analyzed. This block focuses on the relationship between the organization and the region where it develops its economic activity. Here, we can include alliances between for-profit organizations and NGOs or other non-profit entities as well as cooperation agreements with other groups of interest such as neighborhoods, ecologist associations, etc. The theoretical aspects previously analyzed in this work with regards to alliances between for-profit and non-profit organizations can be applied to this block of the Common Good Matrix.
Moreover, this section of the model comprises different ways to collaborate with the community by means of voluntary contributions. Such contributions can be monetary or in-kind. They can also take place by using the company’s network to support civil society projects. Besides, cooperation with interest groups of the community, such as local institutions and NGOs, represent another way to collaborate.
These contributions and impacts are based on transparency; they are possible because the organization provides to the external interest groups truthful and complete information with regards to the entities’ actions and their direct effects on the social environment. In connection with this, direct and active participation with the community’s interest groups should be encouraged by consulting them and by involving them in the decision-making process of the company, especially in those aspects that directly affect the social environment. Information manipulation and lack of transparency are valued negatively in the matrix.
By studying the indicators proposed and reflected in the Common Good Matrix, we can quantify the role that cooperation plays in the implementation of the ECG model.
3. Method
The present study adopts a qualitative methodological approach, more specifically, the case study method. According to Yin [87], this methodology is the most appropriate one due to the critical and peculiar character of the cases and the unique object of study that they comprise. This approach enables investigating and drawing conclusions in a way that would not be possible otherwise. Moreover, multiple case studies (research in which several cases are analyzed at the same time) enables the investigation and comparison of examples and facts so that, finally, reality can be described [87]. In the same line of thinking, authors such as Rule and John [88] state that it is possible to test and affirm theories with the case study method. Their study indicates that qualitative methodologies can test
Sustainability 2020, 12, 9511
10 of 22
and verify theories through the study of cases employing deductions that move from the general to the specific.
This generalization is described by Yin [89] as “analytic generalization”, a process that takes place when a theory can be used as the basis to compare the empiric results obtained with the case study.
Since the final objective of this work is to demonstrate the theories exposed in the theoretical framework, this work conducts an empirical study consisting of the analysis and comparison of two different cases. These cases have been selected for two main reasons: (1) visibility of the participating organizations and (2) the amount of information published with regards to the cooperation agreements between them.
The study of the two selected cases has been conducted based on the information obtained in such cases. We have chosen the cases based on the impact that they have on the community and the ease of getting sufficient and adequate information. This information has been obtained from two different types of sources: (1) from the institutional websites of the entities that are part of the alliances and (2) from different papers published on academic journals and other public documents.
In order to meet the work’s purpose, the study is divided into three sections: (1) an individual study of the strategic alliance between Grupo Vips and Fundación Hazlo Posible, (2) an individual study of the strategic alliance between Danone Foods and Grameen Bank, and (3) a comparative analysis of both cases with the aim of discerning if there is a common pattern concerning the implications of these cooperation agreements for the community and their relationship with the ECG.
4. Case Study Participants Description
4.1. Grupo VIPS–Fundación Hazlo Posible Case Study
On the one hand, Grupo Vips is a family business founded in Madrid in 1969, when Plácido Arango (the founder) decided to open the first establishment under the name Vips. Although initially the organization had only one chain of restaurants, nowadays, the group is formed by six big chains and ten restaurants with more than 350 establishments and a workforce of more than 10,000 employees [90].
On the other hand, Fundación Hazlo Posible is a private non-profit organization founded by José Martín and Catalina Parra in 1999 to stimulate the involvement of society in solidarity and social causes by using information and communication technologies. With this objective, they created an online portal web under the name Canalsolidario.org [90]. This portal web was intended to work as a bridge between the activities of the NGO and the society. Today, Canalsolidario.org is a digital newspaper specialized in social information, while the foundation is focused on three action lines: awareness-raising and communication, volunteering, and knowledge management. The entity has a workforce of 17 employees and a census of 500 volunteers who support the organization guided by the values of commitment, diversity, energy, and creativity [90].
Cooperation between both organizations began when Maite Arango (vice-president of the Vips Group Council) and Elena Acín (director of Fundación Hazlo Posible) met at the first Internet Fair in Madrid in 1999. Acín attended the fair to present their new portal web Canalsolidario.org with the aim of accessing private funding, while Arango was looking for a social project to which Grupo Vips could commit [90]. After several meetings, both entities decided to start to collaborate on the portal web Canalsolidario.org in 2000. When cooperation started, the portal was renamed Hacesfalta.org after Grupo Vips made an initial investment of 106.000 €. The decision to start cooperating was taken quickly since both organizations shared the same goal. Such a goal was to increase the visibility of a new type of volunteering in Spain, that is, virtual volunteering. With this purpose, both entities unified their knowledge: Grupo Vips contributed with its customer service experience and Fundación Hazlo Posible contributed with its consulting skills. After this first contact, during the following years, in order to avoid complications related to compliance with the agreements, both entities set up formal governance mechanisms such as the signing of annual agreements and the submission of monthly reports to monitor the development of the project [90].