1. UNIVERSITE CATHOLIQUE DE LOUVAIN
LOUVAIN SCHOOL OF
MANAGEMENT
and
KATHOLIEK UNIVERSITEIT
LEUVEN
The partnerships processes between firms in innovation:
types, (dis)advantages and success factors.
Summary
Supervisor at LSM: Prof. Benoit Gailly
Supervisor at KUL: Prof. Bart Van Looy
Research Master’s Thesis
Submitted by Maxime Georgin (2166-09-00)
INGE22MS
With a view of getting the degrees
Master of Business Economics: Business
Engineering (Leuven)
Master in Business Engineering
ACADEMIC YEAR 2013 -2014

2. This master thesis on the subject of open innovation has as a main objective to help managers
understanding which choices to make when engaging in partnerships for innovation.
After introducing the subject and a small typology in the first part, the second part – which is
the main one – contains the literature review of existing empirical studies concerning my
subject and a combination of the found results, which may serve as guidelines for managers
involved in alliances. This part is my main contribution to existing knowledge. In a third part,
interviews with four practitioners allowed me to confront theory with practice. Although it
does not cover each part of the theoretical recommendations, it helps to draw conclusions on
other important points felt by humans in practice. These meetings were conducted in French
with interviewees having background in large companies based in Wallonia. The fourth part is
a conclusion of that work.
Part%I%
Open innovation is a recent concept for an old practice: partnerships for innovation. When
collaborating, firms have access to external knowledge, research, and projects in order to help
internal development but also reach new markets or license out and partner to reach other’s
markets with their own technology.
The specific subject here is the partnerships between firms only, with two to five partners and
with exploration objectives as opposed to exploitation.
Part%II%
The outcomes from the literature review are separated in two periods: the factors occurring
before partnerships and the ones that are important during the alliance.
During the first period, the elements are separated in the antecedents to collaboration and the
initiation of the partnership. The firm’s culture plays a role in openness, orientation toward
learning, risk, future needs, and innovation, and knowledge exchange. The motivation of the
members influences the knowledge acquisition, the need and effectiveness of social and
formal control. The experience of the management team also plays a role in the success of a
partnership. The organisational as well as the internal context impact the choice between
focused strategy on exploration and ambidexterity. Ambidexterity means that partners make
both exploitation and exploration at the same time. These impacts come for example through
the perception of support and stability in the environment, and the characteristics of the
network and the position of the firm within it. The last important factor in the antecedents to
collaboration is the absorptive capacity of the firm. This is a central concept since it affects
the ability of the firm to understand and integrate the knowledge coming from the partner and
the environment. Being open is worth nothing if the firm is not able to understand and use

3. new knowledge. Internal R&D as well as partnering with firms having similar knowledge and
technology base support absorptive capacity.
The initiation of partnerships regroups the finding on partner’ industry, potential partners,
networks and number of collaborators. The partner’s industry or technological basis is
important because it defines whether the partner has the complementary but radically new
technology to respond to the firm’s needs but also whether it will be possible to integrate it or
not. The potential partner point concerns the position of the partner in the value chain
(customer, supplier, competitor) or outside the value chain (indirect competitor, potential new
supplier or client, unrelated company). Supplier collaboration is for example advised for firms
searching process innovation while customer alliance is oriented towards products.
Exploration networks are useful to find potential partners. Firms can find complementary
expertise either in strong ties and known partners or in the huge network of weak ties in order
to get access to a larger variety of technology. Both have advantages and disadvantages in
terms of access to knowledge, easiness of integration, and communication and coordination.
The thesis focuses on alliances with two to five partners. All the findings about the optimal
number of partners are regrouped in the last point of the initiation of partnerships.
The second period takes care of the characteristics of the arrangement as well as the mediators
to success of the alliance. Control is a key point to discuss when agreeing on the terms of the
partnership. One of the aspects of control is trust. Trust is necessary when collaborating and is
a powerful way to motivate and control without putting pressure and stress on employees.
However, trust is long to build and hard to maintain. This is done through frequent
interaction, long-term relationship, and reputation building. Besides trusts, other control
mechanisms are developed such as performance systems, milestones and guidelines in a
contract, and hierarchical structure. The difficulty in control is to keep flexibility as
exploration and innovation involve a lot of uncertainty. Another characteristic of partnerships
is the type of agreement in terms of ownership and pooling of resources. Resources may be
put together or task may be done separately with joint meetings for assessment and guidance.
Consistently, ownership may be shared or separated, with consequences in the flexibility but
also on the size of the investment. The last one is the complementarity of exploration
objectives with exploitation.
The mediators to success are the type and availability of resources, the knowledge acquisition
possibilities and the communication and coordination between partners. The resources of a
company impact its ability to manage uncertainty, to reach certain markets and technological
objectives, to exploit internally while exploring externally. Depending on the industry,

4. resources may be available or already committed. Therefore, discussions about resource
allocation are of interest. The knowledge accumulated from previous collaborations with the
same or even with different partners play a role in the effectiveness of new knowledge
integration. Consistently, communication capabilities also influence knowledge integration as
discussions help to understand new technologies. Coordination and day-to-day management
affect the way knowledge is exchanged and resources are used. It has direct effects on
performance.
The combination of these results is the subject of the fourth chapter of part II. A special point
is done for emerging economies due to the specificities of those countries’ institutions. Weak
legal framework (e.g. for IP protection) and bad reputation system make collaborations harder
or, at least, different to manage. Afterwards, there is information about how to better choose
the partner both geographically combined with the sectorial choice and directly in the choice
of the partner (customer, supplier, …). A following point contains the factors influencing the
ambidexterity versus exploration choice. The final section gives general recommendations on
how to perform better in partnerships for innovation. There is advice on absorptive capacity
improvement, organisational structure put in place by the top management, and trust and
resources development.
Part%III%
The third part includes a confrontation between the theoretical findings extracted from the
literature and the feeling of four practitioners active in the field of open innovation. Only parts
of the theory were covered during the interviews because of the theoretical focus of this
thesis. However, interviewees are clear on some interesting points. Besides what is
highlighted in the theory, choices in practice are mainly driven by complementarities in
expertise, technology, and knowledge. Whether partnership is inter-industry or not, with
clients or suppliers, or with shared ownership or separate financing has few importance as
soon as the solution to problems can possibly be found through the partner’s expertise.
Moreover, thanks to the meetings, the readers are now conscious that human relationships
matter much more than expected when reading theory. Even when the partnerships are with
previously unknown companies – because expertise was not present in strong ties –, a lot of
discussions occur in order to easier understand each other and therefore integrate knowledge,
to build trust as soon as possible, and to align objectives.

5. Part%IV%
In conclusion, the reader has know the ability to quickly identify specific literature related to
his needs, the possibility to find advised partnerships corresponding to its firm’s
characteristics, and a general view to key trade-offs to make. Still, one should stay conscious
of the human characteristics of partnerships and engage in discussion a much as possible.