CHAPTER ONE INTRODUCTION
Background of the Study
In order for organizations to be successful and achieve superior performance, firms must continually anticipate, determine and deliver customer satisfaction to the target markets, keep abreast with the emerging market trends, monitor competitor activities and proactively adjust their products and service offering, reconfigure internal resources and operating routines more effectively and efficiently than competitors. Firms can achieve this by adopting collaborations which suggests that the long-term purpose of a firm is to satisfy customers’ needs while maximizing firm profits (Kohli & Jaworski, 2006).
The primary goal of adopting effective collaborations and strategic alliances is improved organizational performance. The concept of inter-organizational collaborations has emerged as a central area concerning improving organization performance (Brudan, 2010). However, the 21st century environment presents a challenging context created by global competition, technological developments and complexity of the current economic context drive companies to meet market requirements and needs by devising quicker and profitable solutions (Brudan, 2010). As a consequence, firms should focus on exclusive resources, such as knowledge and capabilities.
This trend has caused some changes in the structure of companies to go beyond the traditional geographical, industrial and organizational boundaries. Moreover, periods of market uncertainty have suggested to take advantage f r o m collaborations instead of facing limitations of self-sufficiency in order to access differ rent sorts of intangible assets. This new phenomenon requires organizations to learn and manage future opportunities as well as be able to manage existing ones. They must find new sources of improving their performance and engage in new forms of competition. This requires a clear understanding of the nature of the competition, as well as the competitive dynamics, (Huvej, 2008). Companies that rely on inter-organizational collaborations are more profitable and perform better than vertically integrated counterparts (Tully, 2008). Collaborations help firms strengthen the competitive position by enhancing market power (Kogut, 2008), increasing efficiencies (Ahuja, 2000), accessing new or critical resources or capabilities (Rothaermel & Boeker, 2008), and entering new markets (Garcia-Canal, 2012).
Sink and Tuttle Model (1989) describe organization performance as a complex inter- relationship between effectiveness, efficiency, quality, productivity, quality of work life, innovation and profitability. Organizational performance relates to the manner in which financial resources available to organizations are used to achieve overall corporate objectives. It comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Daft (2000) asserts that
Organizational performance is the organization’s to accomplish its goals effectively and efficiently using minima resources. Organizational performance encompasses three specific areas of firm outcomes: financial performance, product market performance and shareholders return (Richard, 2009). Measurement of performance gives an indication of organization’s financial capability, relevance, efficiency and effectiveness. Kaplan and Norton (1996) Balanced Scored Card proposes performance measurement to include both financial and non-financial measures such as customer satisfaction and retention. Silverman (2008) and Marta (2008) recommend key performance indicators for non-profit organizations as well as CBOs to include efficiency, effectiveness, impact, influence and financial leverage. These indicators will be adopted in the current study.