Advantages & Disadvantages of Collaboration Between Businesses
Collaboration between businesses is the process of pooling knowledge, resources and relationships for the sake of pursuing shared aims. Because of the rapid development of digital and online media, businesses increasingly use digital tools for communicating and sharing information. Collaboration expands the toolbox that any business has available for networking and building a business model. However, openly sharing information requires trust and integrity, so it is best to limit collaborative partners to like-minded companies and individuals.
There are a range of technology products that facilitate collaboration between businesses, from online conferencing tools to cloud software for exchanging files. Using technology for business collaboration offers the advantage of being able to exchange information quickly, efficiently and securely without having to get in the car and drive across town to deliver files. However, online business collaboration tools can be an insufficient stand-in for face-to-face interpersonal communication, making it difficult to develop relationships and establish trust.
A business that collaborates with another company has the advantage of a wider pool of information available as the basis for business decisions and marketing opportunities. However, sharing information freely with other businesses can create the risk that other companies may use leads and proprietary information in ways that pose a competitive risk. In order to mitigate the risk of company information being misused in this manner, collaborative operating agreements should clearly spell out terms and limitations on the use of shared information.
Collaboration is a process of building relationships between individuals and companies and using these relationships for mutual benefit. Business relationships are powerful marketing tools, offering the advantages of expanded networks and sources of mutual referrals. However, collaborative business relationships must be nurtured and built over time. Maintaining collaborative business relationships involves establishing trust by acting with openness and integrity and addressing conflicts and issues proactively so they do not intensify.
Business collaboration increases the risk of compartmentalization, or focusing so strongly on a particular area that it is difficult to keep track of the big picture. Compartmentalization can be a disadvantage because it enables business stakeholders to develop a very narrow focus and avoid learning additional skills and information. However, this type of focus also can be an advantage because it allows business owners and employees to put time and energy into the areas where they excel rather than spinning their wheels trying to learn skills that do not come naturally.