Abstract
To address climate change, firms are increasingly forming sustainability alliances. Pursuing sustainability via such alliances is challenging as it means working with multifaceted and not necessarily compatible goals. Moreover, it often requires collaboration among heterogeneous partners outside traditional industrial contexts as well as dealing with wicked problems. This article presents a multiple-case study of eight sustainability alliances in Sweden, identifying managerial challenges and solutions over three phases where such alliances unfold. It offers a framework, tailored to each phase, to help companies fulfill their goals by proactively addressing the challenges posed by the pursuit of sustainability through alliances.
Keywords
Against this background, firms increasingly engage in sustainability alliances, where two or more firms enter a co-dependent relationship to share resources and risks in developing solutions for improved sustainability outcomes. For example, in North America, the U.S. oil enterprise Occidental Petroleum has recently partnered with Canadian Carbon Engineering to build a novel carbon-capturing plant. 5 Similarly, in Europe, H2 Green Steel, which seeks to produce fossil-free steel using hydrogen technology, has created a sustainability alliance with diverse actors, such as Mercedes-Benz AG, Scania, Stena Metall Finans, and Marcegaglia. 6
A sustainability alliance offers many opportunities to a focal firm—access to complementary resources, improved reputation (e.g., among policymakers, NGOs, and customers), and sharing of risks and R&D costs. 7 In practice, however, sustainability alliances are prone to failure. Technology-oriented alliances per se are notoriously unstable. Studies have reported underperformance and premature termination rates of 40% to 60%, 8 caused by problems arising when alliance partners fail to align economic interests and coordinate activities. To these general problems, the pursuit of sustainability creates additional challenges.
First, environmental and social goals do not always generate profit and may conflict with economic goals. 9 For example, Shell, LanzaTech, SAS, and Vattenfall recently launched a sustainability alliance to develop sustainable jet fuels. 10 These firms may struggle to agree on the scope of their alliance to pursue both sustainability and economic viability—SAS has been under tight cost pressure in recent years. 11 Moreover, the partners have different sustainability ambitions and transition timelines. Vattenfall claims to apply science-based net-zero targets 12 while Shell is being sued for misleading targets that do not translate into operational plans and budgets. 13 Without properly aligned goals, sustainability alliances will be unable to achieve the positive impact desired. Therefore, they need specific activities that help address multifaceted goals.
Second, sustainable innovation often requires collaboration among many partners with diverse knowledge and skill sets 14 or even with actors outside established value chains and industries. 15 In the sustainable jet fuel example above, the partnership involves four firms that belong to vastly different industries—Shell (oil company), LanzaTech (biotech startup), SAS (airline carrier), and Vattenfall (electrical utilities). Consequently, they differ in routines, knowledge bases, and culture. Alliance work among such heterogeneous partners makes for complicated coordination, causes misunderstanding and delays, and may ultimately destabilize the alliance. 16 Thus, managers in sustainability alliances need routines that accommodate partner differences.
Third, pursuing sustainability has been labeled a “wicked problem” or a “grand challenge.” 17 Its pursuit is often uncertain and complex (bearing consequences for not just immediate partners, but for society at large), and how sustainability is defined can be subject to change. 18 For example, a jet fuel from captured carbon dioxide is a technologically complex and novel solution with difficult-to-predict commercialization potential. Moreover, the reused carbon dioxide is again unleashed into the atmosphere. 19 Alliance managers are likely confronted with puzzling questions on whether such a release is truly sustainable. In other words, sustainability alliance managers must be prepared to deal with challenges of an inherently wicked nature.
Research has recently begun to explore sustainability alliances 20 as a means of tackling grand challenges. However, studies on sustainability alliances or other inter-organizational relationships for grand challenges have been mostly conceptual or focused on structural components. 21 They have failed to offer practitioner-oriented and processual insights into how such alliances are managed. In particular, no empirical study has broken down sustainability alliance management into phases or demonstrated how to adequately respond to the unique challenges of pursuing sustainability via alliances. This leaves managers of sustainability alliances without research-based advice, and it calls for empirical investigations. 22
To address these shortcomings, we conducted a multiple-case study of eight sustainability alliances in Sweden. Drawing on a total of 44 interviews with senior executives, middle managers, and engineers, we provide a detailed, practical framework for establishing and operating a sustainability alliance. Specifically, we explain how these alliances frame the vision, select partners, and select the design tailored to the challenges of sustainability, and how they work to maintain the commitment of multiple stakeholders over time.
Theoretical Background
The Nature of Sustainability Alliances
Strategic alliances (referred to here as traditional alliances) are “inter-organizational relationships where two or more organizations pool their resources to achieve some common objective through formal and informal coordination.” 23 Examples include joint ventures, R&D partnerships, and buyer-supplier collaborations. A key defining feature is profound mutual interdependence, thus excluding relationships with independent partners (e.g., buy-and-sell deals) or one-sided dependencies (e.g., mergers and acquisitions). 24
Traditional alliances allow firms to pool resources and knowledge that are not readily available on the market. 25 This is also true for sustainability alliances—they help pool emergent technologies and circular materials, reduce costs, increase value-chain bargaining power, reduce liability risks, and improve the knowledge base. 26 Unlike traditional alliances, however, sustainability alliances pursue sustainability—not only economic value for shareholders, but also environmental and social benefits for society, natural systems, and distant populations. 27 Just as the literature distinguishes between other alliance types, such as R&D, co-branding, and international alliances, 28 the pursuit of sustainability makes sustainability alliances a distinct type of alliance, facing distinct challenges. 29 Thus, we draw on previous research on strategic R&D alliances, sustainable innovation, and the emerging literature on sustainability alliances to define 30 such alliances as inter-organizational relationships where two (or more) organizations cooperate to develop and commercialize new sustainable technologies, products, services, or production processes through formal and informal coordination. 31
Despite the potential upsides, sustainability alliances are difficult to manage due to three distinguishing attributes. First, sustainability involves the pursuit of multifaceted goals. 32 Multiple goals may also be prevalent in traditional alliances. Nevertheless, they are unidimensional—tied to economic matters, such as resources, profits, costs, and power positions. 33 In sustainability alliances, goals are multidimensional—in addition to economic goals, there are environmental and social goals. For example, a sustainability alliance would strive to reduce CO2 in a way that is also economically feasible. 34 Furthermore, it may need to balance environmental and social goals. Consider the recent discovery of Europe’s largest deposit of rare earth elements (REEs). 35 Although REEs are critical in electric vehicles and wind turbines, their exploitation could impact land use and the rights of indigenous peoples.
The second attribute is partner heterogeneity. 36 Traditional alliances may seek diverse knowledge and resources to pursue economic goals. 37 For example, an original equipment manufacturer might ally with a supplier to jointly develop new technology. 38 However, it is usually a dyad of partners from proximate industrial sectors and within existing value chains. 39 In contrast, sustainable innovation requires knowledge and skills from distant value chains, industries, and sectors. 40 For example, to improve sustainability in transportation, firms need to collaborate with actors beyond producing biofuels. They must create maintenance and distribution networks and fuel infrastructure in addition to the actual development, manufacturing, and sale of vehicles.
The third attribute is problem wickedness. 41 Undoubtedly, traditional R&D alliances work with complex and uncertain solutions. 42 However, the pursuit of sustainability is known to amplify these knowledge problems. Sustainable solutions have longer prediction timespans—compare, for example, forecasting the life cycle of products with a single sale point and products with multiple cycles of remanufacturing and maintenance. 43 Moreover, they are more complex because they can carry implications not only for partners, but also for distant stakeholders and value chains. 44 Moreover, sustainability is highly “evaluative”—the understanding and interpretation of what is “sustainable” is often shifting. 45 For example, although multiple companies are claiming net-zero targets, understanding what net zero means is highly contentious. 46
Does Traditional Alliance Management Fall Short in the Context of Sustainability Alliances?
Alliances unfold through three phases: alliance formation, alliance design, and post-formation management. Multifaceted goals, partner heterogeneity, and problem wickedness generate practical challenges in each of these phases (see Table 1). While insights from traditional alliance research are helpful, these challenges underscore why best practices cannot be directly transferred to sustainability alliances.
Practical Challenges of Pursuing Sustainability Through Alliances.
Alliance Formation
At alliance inception, individual firms envision the technology and determine what resources and skills are required for its development. 47 If they cannot gather all capabilities via markets or internally, they seek partners who would benefit from co-development. Due to the co-dependent nature of the proposed relationship, partners need to ensure compatibility (strategic, cultural, interpersonal, and operational fit) and commitment (willingness to make short-term sacrifices for long-term goals). Subsequently, prospective allies iteratively negotiate technological solutions, considering the scope of resources and the financial outcomes predicted. 48 Eventually, they agree on the way they see as mutually beneficial, setting one or more goals for technology development and commercialization and stipulating expected contributions and returns. The unique attributes of sustainability alliances complicate these activities in the following ways.
First, when it comes to multifaceted goals, the lack of consensus on profit versus sustainability priorities complicates the alignment within and among partner firms. 49 , For example, a recent study on the partnership between P&G and UNICEF highlighted early tensions in defining success for the collaboration—commercial or sustainability impact. 50 Second, partner heterogeneity makes it difficult to know upfront what can be accomplished with joint resources and how these resources can be combined synergistically. 51 When firms have different technological and industrial knowledge, they struggle to articulate their own needs and decipher partners’ requirements. 52 Third, problem wickedness makes it challenging for alliance partners to define stable goals and predict knowledge and resource requirements. For example, the Swedish company Unicykel aimed to commercialize an electric and circular bike with a subscription for use. 53 The initiative was halted early in the process due to issues in setting targets for lifetime costs. Bike subscriptions spelled a completely different customer use pattern, impossible to benchmark and predict prior to a large capital investment.
Alliance Design
Once a consensus on alliance goals, partner contributions, and returns is achieved, the alliance design must be formalized by making explicit how, in which order, and under which legal conditions alliance work is executed and appropriated. One purpose of formalization is to prevent opportunism, 54 deviation from agreed terms, or the withholding of information. Another purpose is to increase the effectiveness of coordination to avoid time and resource waste. These are usually achieved through structural arrangements, such as contractual clauses stipulating profit shares and sanctions in the case of transgressions 55 or a predictable work program with labor division, hierarchy, timelines, and reporting routines. 56 Alternatively, a relational approach may be considered where trust is expected to facilitate less formal management. 57 There are no one-size-fits-all alliance designs; they depend on the nature of the task and previous partner relationships. 58 Accordingly, the unique attributes of sustainability alliances require a specific design approach.
First, multifaceted goals make it difficult for alliance partners to devise work plans that suit both profit- and technology-oriented tasks and tasks geared toward sustainability. For instance, research on Patagonia has highlighted the need for informal and decentralized workflows to achieve sustainability goals. 59 However, without a predictable program of technology-development tasks, alliances are at risk of losing time and money and of failed partner expectations. 60 Second, heterogeneous partners without a prior history of collaboration often find it challenging to establish flexible contracts. This, in turn, hinders open information sharing. 61 Third, problem wickedness indicates that alliance outcomes are vulnerable to the actions of multiple diverse stakeholders 62 who are difficult to hold accountable through formal contracts. At the same time, managing them informally would be time-consuming—with each additional stakeholder, the number of dyadic relationships increases quadratically (e.g., four relevant actors mean six relationships to manage). 63
Post-Formation Management
In this phase, the alliance becomes operational. A high-quality relationship—involving trust, norms of reciprocity, and mutual care—is a cornerstone of alliance management as it evolves. 64 It facilitates partner commitment to the goal and keeps the alliance stable. 65 Key activities include building trust (e.g., honoring responsibilities and deadlines, unilateral commitments, reciprocally revealing vulnerabilities, teambuilding, and spending time to connect) and resolving conflicts (e.g., penalizing transgressors, seeking compromises). 66 While much of this makes sense in sustainability alliances, there remain specific and important challenges to be faced.
First, multifaceted goal conflict between profit and sustainability priorities amplifies tensions within and among partner firms. When goals compete for the same resources, they require managerial attention and prioritization. As attention is scarce, managers are tempted to leave the tradeoffs unattended, 67 eventually triggering tensions 68 and increasing the likelihood of alliance failure. 69 Second, partner heterogeneity often results in a higher risk of cultural and operational misunderstandings, which delay work and damage relationships. 70 When partners are different, they struggle to understand each other’s work processes and have different expectations regarding appropriate behavior. 71 Third, maintaining stability in an alliance that is working to resolve wicked problems is challenging. In addition to maintaining the commitment of alliance partners, success depends on continuous support from external actors who often reinterpret what sustainability means. 72 Consider the example of ethanol fuel—it was initially perceived as a solution to curb emissions but was later labeled by the UN as a “crime against humanity” for diverting corn from communities plagued by hunger. 73 Such reframing would render many ethanol fuel development projects commercially unviable.
In sum, sustainability alliances face a set of distinct practical challenges throughout the alliance life cycle, as summarized in Table 1. Yet, there is a lack of empirically grounded insights into how these challenges can be proactively addressed in the context of alliances. This leaves sustainability alliance managers without research-based management insights. It also constitutes a critical gap in theorizing on sustainability alliances, which have been increasing in popularity and importance. To address this need for practical and theoretical advancement, we have identified specific activities that help alliances address the challenges of pursuing sustainability.
Methods
Empirical Setting and Sampling of Sustainability Alliances
Our empirical investigation is an exploratory, multiple-case study 74 of eight sustainability alliances involving thirteen alliance partners. The setting is the unfolding sustainability transition in Swedish industries, which accounts for over 30% of total CO2 emissions in Sweden. 75 Sweden is home to world-leading engineering companies in the automotive industry (e.g., Volvo, Scania) and in industrial production (e.g., TetraPak, SKF), and it competes globally with its process industries (e.g., mining, steel, refined chemicals). These firms and industries face substantial regulatory and market pressure to decarbonize. For instance, EU and Swedish climate policy stipulates by law that a country’s net carbon emissions must reach zero by 2045 and follow a negative trend thereafter. 76 Furthermore, authorities are launching funding programs to support sustainability-themed R&D, such as the “industry leap” program or credit guarantees for green investments. 77 Against this background, we sampled alliances from higher-emitting Swedish industries, including upstream and downstream value chain actors, such as mining, steel production, power supply, electric vehicles, and heavy machinery firms. Each alliance consisted of two or more actors from different sectors, segments, or industries (see Table 2).
Cases Overview.
We used four main sampling criteria. First, we sampled alliances that had an explicit focus on sustainability. Second, to limit variation, we focused on R&D alliances where sustainable technology, processes, or products were developed and commercialized (as prior research has highlighted managerial variations by alliance type). 78 At the same time, to make insights more inclusive, we sampled alliances with different types of sustainable technologies and partner composition. Third, all alliances were in the post-formation management phase—the partnership had been formed, legally designed, and operational—allowing us to gather retrospective accounts of how alliance activities had unfolded. Seven of the eight alliances were still running, permitting us to capture ongoing activities and challenges. Fourth, we sampled alliances where we had access to different partners and stakeholders to avoid single-party and single-level analysis blind spots. 79
Data Collection
We collected primary data complemented by archival data. 80 Primary data consisted of 44 interviews with project leaders, engineers, and senior managers. Interviews are an established way of collecting data on inter-organizational relationships 81 because they capture unquantifiable areas of management, such as pre-empting tensions and building trust. 82 We also reviewed archival data consisting of 24 press releases and online pages, six internal documents provided by alliance managers (project slides and internal reports), and seven interviews with alliance leaders published online. They were chosen based on their ability to provide descriptive insights before and after interviews (e.g., project timelines, details about technology, and additional examples of identified activities). Press releases were used to review how alliances framed and promoted their initiative externally.
Data collection had three phases. First, our open-ended interviews with key alliance members documented the scope, activities, and work conducted, including alliance evolution, performance outcomes, and key challenges. Second, our semi-structured interviews focused on goal setting, partner selection, alliance design forms, development activities, relationship management, and other elements. Third, we conducted multiple knowledge-disseminating workshops to obtain feedback on emergent findings.
Data Analysis
Data analysis was an iterative process of data structuring and interpretation, 83 which is an established approach in case study research. 84 Prior literature on traditional alliances was used to focus on activities that were previously undertheorized. Sustainability research was used to identify challenges salient in pursuing sustainability. We structured the data using refining, merging, splitting, and sequencing categorization techniques. 85 First, we scrutinized the interview transcripts, noting differences and similarities between managing traditional and sustainability alliances, yielding a list of initial first-order codes. Second, we subsumed first-order codes under superordinate second-order categories that reflected managerial activities and then placed them under the umbrella of aggregate dimensions (key phases). This initial draft data structure guided subsequent data collection and literature search. Finally, after concluding all interviews, we optimized the data structure, framework, and narrative. Appendix 1 outlines the data structure.
Results
Promises and Perils of Sustainability Alliances
Our study confirms that sustainability alliances provide valuable opportunities for partners. First, respondents mentioned that sustainability alliances helped them tap into partners’ unique competencies (A, B, C, D, E, F, G, and H). As stated by the respondent from Alliance C, addressing sustainability is like building an ant nest, impossible without the contribution of multiple actors. For example, respondents reported pooling resources, sharing technological and market information, and creating value from waste material via circular flows. In Alliances B and C, informants described the importance of alliances to tap into partner networks.
Second, sustainability alliances were thought to help build partners’ legitimacy among external and internal stakeholders (A, B, C, D, F, G, and H). For instance, respondents described a sustainability alliance as a “license to permit” (H). Furthermore, some participants (A, B, D, F, and H) maintained that the alliance boosted employees’ satisfaction because they took pride in developing innovative solutions in collaboration with other industrial giants. Respondents from Alliances A, F, G, and H also explained that it was a way to improve investor relationships and avoid depreciation of their assets.
At the same time, our data show that the pursuit of multifaceted goals, partner heterogeneity, and wickedness elicited challenges for collaborating partners. Below, we mention some examples of how the challenges illustrated in Table 1 were empirically manifested. First, the pursuit of multifaceted goals spawned tensions among multiple stakeholders (A, B, D, E, F, and H). For example, internal resistance to the “foreign bird” of sustainability (A) was reported, such as skepticism over the need to expand the product portfolio with sustainable offerings (B) or confusion over prioritizing alliance work and operational activities (D). Between partners, it was challenging to align the divergent goals. For example, in Alliance F, the best option for the environment was to create a durable technology design. This was refuted by Partner L, who capitalized on maintenance. Alliance E faced external resistance—a road authority that was pro-sustainability was nevertheless hesitant to adapt procurement rules due to tight budgets.
Second, partner heterogeneity triggered misunderstanding, operational clashes, and information-sharing struggles (B, C, D, E, F, G, and H). For instance, partners in Alliance B struggled with understanding industry-specific terminology and product release traditions. Moreover, a respondent from Alliance D mentioned a reluctance to share confidential details for life-cycle analysis due to the lack of collaborative history. Similarly, Alliance F shared disappointment over the partner’s refusal to attend without an NDA.
Finally, the wicked nature of sustainability meant there were challenges in determining the scope of alliance goals and work programs (A, D, E, F, G, and H). For example, respondents from Alliance E confessed that they struggled to identify technological applications that would be commercially viable given the need to rethink the asphalt laying process. They also highlighted debates with external stakeholders over whether sustainable processes meant being “fossil-free” or “carbon-free.” Moreover, lower-level employees reported increased pressure on decisions to concretize work activities, which they felt were ill-defined (F, G, and H). In Alliance G, the result was a 6-month delay and loss of motivation.
Managerial Activities in Sustainability Alliances
Our findings describe the key activities required to establish and operate a sustainability alliance. Core to our findings are groups of activities that seek to address challenges of multifaceted goals, partner heterogeneity, and problem wickedness. The activities unfold during three phases: alliance formation, design, and post-formation management.
Alliance Formation: Envision Sustainability
The first set of activities refers to alliance formation when prospective partners conceptualize alliance goals and decide on the partner group. The key to that phase is to jointly develop and align the sustainability vision (labeled by respondents as mission, idea, hypothesis, or purpose) and embed it in the broader context.
Multifaceted goals complicate early negotiations with partners and the onboarding of internal stakeholders when sustainability and profit priorities are misaligned. To address this challenge, focal firms described what we call harmonizing sustainability attitudes. Rather than trying to solve the business case and merge profit and sustainability goals, interviewees (from Alliances A, B, and E) mentioned “qualitative” work to convince the other party that sustainability per se is ultimately good for business. They portrayed it as an inevitable future, thereby downplaying the importance of short-term losses. Managers from Alliance A referred to “calibrating worldviews” among partners—will the future involve a radical shift or conventional processes that are supported by carbon capture technologies? In discussing this, they accentuated the long-term economic benefits, such as first-mover advantage and company image improvements. Furthermore, managers from Alliance E mentioned “teasing and scaring,” suggesting that non-action is a bigger risk than sustainable innovation. A respondent from Alliance A recollected that ultimately the process of onboarding partners went “surprisingly smoothly.” We inquired of the senior vice presidents from Alliance A as to why they proceeded despite the uncertainty in the commercialization potential. They then sought to “harmonize attitudes” even with us, inquiring whether we believed that “the world would save itself by 2050” and referring to data that supported the rising stock of companies pursuing sustainability.
Notably, this harmonizing activity needs to be undertaken within organizations across the top and lower layers. Otherwise, it would trigger unproductive resistance (A, B, F, G, and H). For example, according to an Alliance A manager, the idea “dies out” if it does not resonate well internally. An engineer from the same alliance argued that to be motivated, you need to “build your house yourself”—you must believe in what you do. Early idea-gathering sessions were, therefore, proposed as a solution (A). Similar comments were made in Alliances F, G, and H—a manager active in these alliances wished that middle management had been involved early on to discuss what alliance work means for current business prospects. Overall, securing both between-partner and within-firm support for the vision was considered an important factor in maintaining a stable alliance.
Partner heterogeneity makes it difficult to know specifically what can be accomplished with partner resources and how they can be combined synergistically. To circumvent this challenge, sustainability alliances opted to scope the alliance jointly. Rather than a focal firm individually strategizing resources and selecting partners to fill the gaps, partners acted on the basis of prior connections and perceptions of common sustainability interests and jointly conceived alliance goals. For example, Alliances B, C, and E proceeded with prior interpersonal and professional connections, whereas F, G, and H used prior buy-and-sell relationships. Alliance A got underway when managers of partner organizations realized at a conference that they had similar views on the industrial future, and Alliance D sprang from a shared interest in creating sustainability benefits from processing mine waste. To start, prospective partners had only loosely defined technological ideas and beliefs about future business prospects. More formal discussions about possible goals followed, focused on aligning sustainability transition plans, capabilities, and financial interests. For example, in the case of Alliance H, one partner left early because its required contribution (development of sustainable underground machinery) did not match its timetable to shift to sustainable product portfolios.
Although this was helpful in devising alliance goals that fit partner competencies from different industries, it had a pitfall. It could create a partner “monopoly”—as a respondent from Alliance G described it—locking in partners without the optimal resources to maximize sustainability benefits. For example, as Alliance G progressed, it became obvious that one partner did not possess the competencies required. This led to Company B launching a parallel project (notwithstanding its lack of relevant expertise) that practically competed with the alliance. Yet, Company B would not halt the initiative for fear of destabilizing the relationship. A similar pitfall was faced by Alliance E. Alliance managers failed to contact equipment manufacturers early on (despite needing this capability) because they first wanted a period of gestation among prevailing partners. These findings demonstrate that resource scoping needs to be open-ended for optimum benefit—partners must be open to removing or adding partners mid-project, seeking a breadth of partners to complete an emerging value chain.
Problem wickedness makes defining stable goals and predicting resource requirements more complicated during the formation stage. Although the challenge was never fully resolved, the alliances we studied were actively attuning to external conditions—conducting analysis and contemplating how best to embed alliance goals in the broader context. For example, all the alliances we studied actively reviewed regulatory conditions. Interviewees from Alliance E described keeping abreast of communications about future regulation amendments; respondents from Alliance C mentioned exploring how regulators conceptualize sustainability criteria; respondents from Alliances F, G, and H described the importance of aligning with public funding programs.
Some alliances (A, D, and E) reported analyzing future market and value-chain readiness. Specifically, respondents from Alliance D reported using market intelligence to predict long-term prices and buying pre-made forecasts. In Alliance A, respondents reflected on the magnitude of change needed in the value chain before it reached the end customer. They contended that promoting sustainability in the petrochemical industry (green petrochemicals from carbon dioxide) was more complicated than the one they prioritized (green steel). In the former option, change meant more value chain “steps”—a carbon dioxide supplier, firms treating base chemical materials, firms upgrading chemical materials, firms turning the material into a product with the help of other materials, and retail stores. When the impact was perceived as high, the solution was seen as riskier.
In addition, some alliances (A, B, F, G, and H) reflected on the wider implications of their vision. For example, they discussed how the solution in question would change mining standards in the world (F, G, and H) or “what would be the best for the country” in terms of changing infrastructure (B). Respondents from Alliance A stated that they “cannot be everywhere” and must select projects “where it really matters” (in terms of the biggest CO2 cuts). In other words, they took time to reflect on the impact on wider society and whether their solution was truly beneficial in tackling the sustainability crisis.
Alliance Design: Honor Flexibility
The second group of activities aims to develop contracts and work programs to coordinate actions. Key to this phase is finding an optimal minimum level of safeguarding and formalization—keeping it as flexible as possible while creating plans, agreements, and structures on areas of major economic and sustainability-related risks.
Multifaceted goals pose challenges of how to plan profit- and technology-oriented activities in a predictable way while leaving space and creativity for sustainability ambitions. Our interviewees described the continuous work to split and fuse sustainability goals. In Alliances F, G, and H, goals were divided into separate time- and space-bounded technology-development tasks with varying foci on economic, social, and environmental benefits. This approach improved clarity concerning the work but could mean relinquishing goal synergies. An engineer from Alliance F explained that such approaches helped them stay focused and reduced the time taken to achieve results. At the same time, they reflected that, with only a partial focus (testing electric batteries toward improved environmental benefits), they could fail to consider safety concerns (employee risks if batteries burn in underground areas with poor ventilation).
To counteract this, the alliances regularly held sessions to discuss how these separate technology-oriented tasks contributed to the wider vision of sustainability in mining. These alliance managers created a roadmap that helped connect individual tasks and reflect on the broader implications. A senior manager connected to all three alliances explained that sticking to only the higher-level roadmap would create confusion and frustration among engineers. Alternatively, Alliance C created a parallel team to enter into broader-level discussions on scenarios such as: “We have a fossil-free bike, but, let’s say, it consumes millions of liters of water.”
Thus, splitting and integrating goals requires a delicate balance. We find that proper staffing can help to achieve that. Interviewees mentioned selecting credible managers who were trained to cope with uncertain and complex tasks (A), who “burn for” sustainability (B), and were known as innovative (E). An informant from Alliance A explained that poor staffing tended to increase pressure on staff. They mentioned that many employees took sick leave during the project. A lower-level engineer reasoned that their jobs now stretched beyond engineering simulations to also consider multiple affected stakeholders and partners.
Partner heterogeneity makes it difficult to opt for less formal and explicit contracts, which are usually relevant to innovation projects with multiple unknowns. Therefore, the studied alliances enforced semi-formal agreements—they tried to reach an optimal level of safeguarding by relying mostly on gentlemen’s agreements while contractually protecting only highly sensitive areas. Generally, informants suggested that some contractual safeguards were important (A and B). For instance, in Alliance F, one party was excluded when they claimed intellectual property rights mid-project—an outcome that could have been avoided with more carefully designed contracts. In addition to IP rights, we identified other sensitive areas that triggered economic disputes—decisions on large-scale investment (A and E), product pricing (B), and how to deal with valuable materials in waste streams (such as goal elements in Alliance D).
However, most interviewees (A, C, D, E, F, G, and H) stressed that developing all-encompassing contracts was counterproductive, given the unpredictable nature of sustainability. A respondent from Alliance C reflected that “legal kills it” when there is a need to move quickly. To balance this need for control and flexibility, most cases used detailed letters of intent. Apart from sensitive matters, the alliances enjoyed intrinsic partner accountability. This could be explained by the strongly shared conviction that all partners benefit from the transition (A, B, C, and E) and increased media exposure in the case of failure (D, F, G, and H). For example, a respondent from Alliance D explained that they wished to avoid becoming a scapegoat if Company B failed to achieve its sustainability goals.
Furthermore, many alliances (C, D, F, G, and H) emphasized the merit of agreements promoting open information sharing. Respondents reported the need for “radical transparency” (C) to devise creative solutions for sustainability, whether partners trust each other or not. Interestingly, the lack of safeguards on information was perceived as unproblematic due to the desire for public knowledge diffusion (C, F, G, and H). A manager in Alliance F commented on the lack of IP rights protection as follows: “We try to achieve something bigger here.” Alternatively, F and H were direct competitors, so information sharing required legal protection. To preserve open discussions, they engaged one of the partners as a mediator to filter out sensitive information. Moreover, they used digital platforms to simulate solutions without formal interactions.
Problem wickedness makes alliances vulnerable to the actions of external stakeholders, which cannot be regulated through typical bilateral contracts. Although that held true in the alliances studied, they devised other administrative ways to systematically coordinate external outreach. For example, Alliance A employed the public affairs unit from a partnering organization (Alliance C mentioned that it would create a public affairs unit in the future). The task was to systematically identify contingencies that could help or hinder alliance goals, such as how emission rating systems or renewable energy directives affected the alliance. It also had official responsibility for lobbying. The staff from that unit argued that outreach needed to be formally planned and aligned with alliance work because only a narrow “window of opportunity” exists when legislation is likely to pass. That “window” is defined by legislators’ current topics of interest and their specific timelines. Although the alliances studied could not bind external actors via contracts, they channeled resources into experts who engaged with external stakeholders.
Alternatively, Alliance B took the lead in establishing an “industry roadmap” to engage actors outside the alliance. This resulted in the launching of a forum of nearly 100 actors where public and private organizations could discuss barriers, exchange information, and demonstrate emerging technologies. The alliance set up a separate division to engage with actors needed to promote charging stations.
In comparison, Alliance E, which was later proven less effective in gaining external support, did not formally plan outreach in their work program. Instead, managers referenced informal dialogue and leveraging personal relationships with representatives from regulatory agencies. Subsequently, one interviewee from that alliance argued that they should have acted systematically to connect with actors in charge of establishing procurement rules rather than just inviting “the engineers that like the project.”
Post-Formation Management: Promote Sustainability Commitment
The third group of activities refers to the ongoing work in cooperating and coordinating alliance work. Key to this phase is nurturing the commitment not only of partners, but also of internal and external stakeholders who retained doubts about the alliance’s sustainability vision.
Multifaceted goals create continuous conflicts between and within partner firms over profit and sustainability ends. To address that issue, respondents expressed the need to continuously legitimize sustainability as a priority. In alliance firms, the activities mentioned included establishing key performance indicators for sustainability and providing sufficient resources (A and D). Managers from Alliance D explained that engineers need sufficient time to devote to the sustainability alliance to avoid constantly prioritizing operational activities. Furthermore, top management communication was deemed important (A, F, G, and H). Higher-level managers from Alliances F, G, and H stated that they communicated sustainability as a new boundary condition—the discussion on “if and why” is over, and it was only a question of “how” to get there. A manager from Alliance A explained that communication on change needs to happen proactively—“not that things are going to change tomorrow, but please be prepared for this. . .in 25 years, we’re not going to have any of those [conventional practices].”
The alliances studied were actively including CEOs to settle goal-priority conflicts (A, B, and D). For example, a respondent from Alliance D explained that, as the alliance unfolded, managers often struggled to undertake a financial analysis in support of environmental and social goals. They then explained that “the CEOs had told us to do this now, so we need to make it happen. How should we do it? The most effective way. We got into more of a solution-based collaboration.” In other words, continuous endorsement from the CEO created a more problem-solving mindset in team members. Notably, respondents from Alliances A and H reported subsequent self-reinforcing tendencies following strong top management support for sustainability. An engineer from Alliance H asserted, “If you believe in something, it’s one’s own responsibility to convince the other person.”
Partner heterogeneity creates a higher risk of cultural and operational misunderstanding, which delays work and risks deteriorating relationships. In response, the alliances sought to expose and embrace differences. On the one hand, some alliances sought to deliberately expose and merge partner culture and knowledge differences (A, B, and G). In Alliance B, managers developed a glossary to explain unfamiliar operational terms. In that same alliance, alliance managers set up “cultural awareness” sessions entailing discussions to learn about one another. Respondents from Alliance G described attempts to set “rules of the game,” such as explicitly communicating norms of behavior where it was more acceptable “to make nine mistakes and one brilliant idea than 10 mediocre ideas.” Respondents from Alliance A asserted the importance of learning about partners’ industries. Company C (energy provider) set up a research program to study their partner’s steel industry. Its message was: “Make sure you will spend the majority of the time on their side of the fence.”
Alliance companies stated that they sought to embrace differences and accept the inevitability of misunderstandings occurring. Building interpersonal relationships and promoting a sense of benevolence was helpful when such conflicts arose (B, C, D, and E). That could include provision for interaction between CEOs and operational teams. A respondent from Alliance D explained that they formally set up regular meetings between CEOs, prepping them in advance. Similar comments were made by Alliance B where CEOs scheduled meetings that were agenda-free. Even at the operational level, respondents from Alliance B cited the importance of promoting “help without charging.” Others asserted that promoting a sense of benevolence was helpful (C). For example, a respondent from Alliance C described it as “playing tennis,” meaning that, even if they became frustrated over differences, they had to respect diverging views, act with restraint, and play a game of reciprocity.
Problem wickedness means that interpretations of sustainability tend to change, which may undermine the commitment of external actors in pursuing alliance outcomes. The alliances actively promoted their sustainability narrative to prevent stakeholder opinion from drifting. We observed three key principles for improving the chances of regulators, other commercial actors, and society embracing an alliance’s sustainability solutions. First, it was important to garner knowledge and perspectives from multiple stakeholders to position the proposed solution in line with the broader value chain rather than the industry, the alliance, or the focal firm (A and B). A respondent from Alliance D mentioned engaging with downstream players to ascertain their needs, emission limits, and requirements for recycled materials. The public affairs unit from Alliance A described mapping key opponents (e.g., NGOs) and bilaterally approaching them with rationales. The need to push the value chain view was supported by governmental officials from Alliance E. They revealed that they now seek compromise not just with large contractors but also with upstream and downstream players.
Second, we noted the importance of making the alliance agenda more tangible (A, C, E, F, G, and H). For instance, managers from Alliance A hired a designer to make a candle holder from their green steel, which was supposed to signify hope for the future. Notably, Alliance A has gained significant support and visibility in Sweden and Europe. When we asked one of the respondents what they viewed as their key success factor, the reply was: “a simple idea.” Similarly, Alliance C presented a cube filled with gas that would showcase reduced CO2 emissions from a non-fossil-free bike on its website. Managers from Alliance E were active in describing their application as similar in principle to well-known technologies, such as the kitchen microwave.
Finally, alliances promoted the technological potential of the solution (A, B, C, and E). Specifically, respondents from Alliance B stated they were keen to promote the fact that charging electric vehicles was “possible.” For example, respondents from Alliance E engaged in technological demonstrations and published a supporting film. Respondents from Alliance A showcased their high investment in the technology, signaling the solution’s significant potential and mitigating the risk perception of others. Respondents from Alliance C claimed to be stimulating demand by showcasing the potential of electricity as a source of innovation to other industrial actors. They stated that they were often faced with amazement from other actors who were not fully aware that the technologies were that mature.
Discussion and Managerial Implications
Sustainability alliances play a crucial role in tackling the grand challenges of climate change, but practitioner insights into how to manage them are lacking. 86 This is problematic because sustainability alliances are challenging and often face problems with goal fulfillment. 87 To address this gap, we conducted a multiple-case study of eight sustainability alliances and identified the activities they used to deal with the challenges inherent in pursuing sustainability—namely, challenges stemming from multifaceted goals, partner heterogeneity, and problem wickedness. The corresponding activities throughout the alliance life cycle are summarized in Figure 1.
Activities to manage the challenges of sustainability alliances throughout the alliance life cycle.
The managerial implications of our research are threefold. First, we identify activities that can help firms participating in sustainability alliances deal with and leverage multifaceted goals. At alliance inception, organizations need to assess and harmonize attitudes to the proposed sustainability vision across home and partner organizations. Prior alliance research has focused mostly on inter-firm activities, 88 whereas our study underscores the importance of early work at the intra-firm level to prevent potential internal “political battlefields.” 89 In practice, it can involve idea-gathering workshops or dialogues with middle managers or pitches to top managers. However, achieving a completely unequivocal agreement among stakeholders and partners is not always feasible, and perhaps not even desirable. Regardless, alliance managers need to give prominence to sustainability goals. In fact, our study shows that focusing on sustainability goals can facilitate negotiations rather than hinder them, as is widely assumed. 90 This involves mostly qualitative rather than quantitative efforts—telling a story of an imaginary future, stressing the urgency of the transition, portraying non-action as an indisputable risk, and alluding to the long-term benefits of sustainability for competitiveness or the short-term benefits for the company image and attracting new talent. This could facilitate buy-in even if economic gains seem suboptimal at first sight, challenging the common advice of alignment relying predominantly on financial estimations. 91
Alliance design needs to be tailored to the complexities of sustainability goals. Established practice suggests the relevance of different routines for increasing the predictability of alliance work. 92 We extend this discussion by proposing that the sustainability vision could be split into smaller and predictable segments with varying foci on economic, social, and environmental goals. This helps to reduce confusion and delays across operational units. At the same time, we recommend that managers regularly hold open dialogues on “the bigger picture.” This ensures that potential goal synergies will not be missed. Reaching a balance between the two is delicate. In this regard, our findings allude to the need for careful selection of credible managers who are trained to cope with uncertain and complex tasks and sustainability trade-offs.
The post-formation management of multifaceted goals requires the full involvement of top management, even CEOs, to legitimize sustainability as a key priority among partners. In practice, this means frequent and clear communication that sustainability is a boundary condition, setting environmental and social KPIs in home organizations and allocating sufficient resources to achieve goals. This echoes suggestions from alliances with conflicting cooperative and competitive forces, where top management needs to intervene to alleviate tensions. 93 The sustainability alliances studied, however, point to a more intensive approach that deeply and structurally entrenches sustainability in partner organizations.
Second, we identify activities that can help firms in sustainability alliances cope with and make productive use of partner heterogeneity. Regarding alliance formation, best practice suggests that focal firms should strategize the alliance individually and seek partners with complementary resources and similar working styles. 94 In sustainability alliances, this process seems less straightforward. Rather, alliances in our study first gathered partners based on prior connections and the perception of similar interests in sustainability and jointly conceived the vision. The main risk in this approach is suboptimal capability combinations potentially hindering the maximization of sustainability benefits. Therefore, we suggest that managers avoid designating “monopoly roles” to the prevailing partners. They should keep the partner pool open-ended, cast the net widely for novel partners to complete the value chain, and explicitly discuss the course of action if adding or removing partners mid-project becomes relevant.
However, designing an alliance for partner heterogeneity is difficult. Established practice suggests the need for extensive contractual safeguards if the risk of opportunism is high 95 —as when partners have limited collaborative history or are different. At the same time, sustainable innovation calls for a flexible and empowering atmosphere, 96 which leverages the creative potential of partner heterogeneity rather than capping it. Our findings illustrate how sustainability alliances can strike such a balance. We suggest that managers identify and discuss sensitive economic areas early. For some, scaling the technology can involve a sizeable investment, intellectual property rights, changes in product pricing, or valuable materials in circular waste. The key lesson is that it is important to know where the sensitivities lie and to face those materialistic questions early on. Once these are resolved, it is important to abandon excessive safeguarding on minor issues (e.g., non-disclosure before entering a meeting) and create an empowering and decentralized work environment with extensive information sharing. Notably, the alliances in our study enjoyed intrinsic accountability due to the shared perception of need and urgency of transition, the desire for open knowledge dissemination, and the prospect of media coverage in case of transgression.
Managing relational quality in sustainability alliances requires special care because different partners are at greater risk of misunderstanding. Our research suggests that it is important to have informal and regular meetings where help is provided without charging. Building trust is a classic requisite in alliance management practice. 97 However, in sustainability alliances, pre-emptive action is needed to build goodwill for the inevitable conflicts that will arise when partners are heterogeneous. In our study, when seniors signaled their strong commitment, it contributed to the development of trust and problem-solving attitudes, even at the operational level. In addition, activities to expose and bridge partner differences can be useful—for example, by developing common glossaries and explicit norms of behavior.
Third, we identify activities to help firms in sustainability alliances better handle problem wickedness. During sustainability alliance formation, alliances need to: assess the regulatory landscape, evaluate the signals on future amendments, impact on the value chain and its dynamics, reflect on the wider societal implications (e.g., what will create the most impact in the sustainability crisis?), and map interdependencies and limitations where possible. This can be achieved by gathering experts, participating in industry forums, and tapping into financial market prognoses. Conventional alliance practice suggests technology- and profit-oriented early-stage assessments. 98 Our study also points to the need of assessing external implications and risks of unintended societal outcomes. In this way, it is possible to launch an alliance with a manageable yet impactful scope.
Our study contributes to the design of sustainability alliances to coordinate intricate connections with multiple stakeholders. Conventional practice shows how to coordinate close partners through bilateral contracts or work plans. 99 We extend this by finding that outreach is an important pillar of an alliance work program. That may mean creating a separate division, setting up a public affairs team, or assigning responsibility to an existing unit within a partner. Another way is to initiate or join an industry roadmap process with other actors. The key lesson is that sustainability alliances need to develop formal structures and divide labor explicitly to target external stakeholders. Assuming that outreach is merely a side or informal activity can lead to alliance stalling, as was the case with one alliance in our study.
Finally, managing commitments in alliances with “wicked” problems demands a tailored approach because interpretations of sustainability are often shifting 100 and can rapidly destroy alliance legitimacy. Our study underscores how capable sustainability alliances are proactive and propagate their own definitions, shaping narratives across their value chains. We identify three key principles in doing that. Alliance managers could consider framing alliance agendas from the interests of the value chain rather than the industry or individual alliance. Here, they would need to grasp the perspectives of a wide variety of actors (especially key opponents, such as NGOs). If they manage to build a diverse coalition, the alliance idea has a greater chance of wide acceptance and, therefore, has better prospects of succeeding in public affairs. Furthermore, it is essential to promote the solution as technologically optimal by demonstrating that it has the required maturity (e.g., via demonstrations) or by mitigating the perception of risk in others by showcasing high investment. Moreover, it is essential to make the solution seem tangible—for example, by investing in regular customer items and using metaphors or analogies with well-known practices. Notably, traditional alliance advice fails to outline such externally oriented efforts and focuses on commitment management between partners. 101
Our insights can offer useful lessons for policymakers. The studied alliances have highlighted the importance of mobilizing external actors. For instance, they mentioned the role of interacting with authorities to achieve alignment on the policy changes needed to speed up the transition. We therefore recommend that authorities create opportunities for a dialogue of this nature. Furthermore, the alliances we studied have demonstrated a lack of criteria defining sustainability, which has created narrative battles about the best way forward. We therefore encourage policymakers to facilitate discussion among industrial actors where they can share, merge, or relinquish the different interpretations of sustainability and appropriate solutions.
Our study is based on eight sustainability R&D alliances in the Swedish manufacturing and process industry. Sweden is environmentally proactive, 102 which may limit the generalizability of our findings. For example, managerial activities related to interaction with authorities may be difficult to transfer to contexts with less participatory government and/or settings where trust in the government is lower. Nonetheless, our research offers lessons for managers and policymakers from many contexts who can draw conclusions based on the analogy.
Conclusions
Solving the sustainability crisis is too daunting a task for any individual company. Therefore, companies across the globe are forging sustainability alliances to help them share information, resources, and risks when developing and commercializing novel sustainable solutions. Our research explores how to manage such alliances to meet their ambitious goals. Specifically, we identify groups of activities that sustainability alliances employ throughout the alliance life cycle—namely, how they conceptualize the alliance vision, choose the coordination mechanisms, maintain partner and stakeholder commitment in a way that helps them pursue multifaceted goals, deal with and leverage partner heterogeneity, and handle problem wickedness. We encourage alliance managers to use our framework as inspiration in addressing the challenges intrinsic to the pursuit of sustainability.
Footnotes
Appendix
Anna Brattström is now affiliated to University of St Andrews Business School, St Andrews, UK.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: We are grateful for the financial support from the Swedish Energy Agency, under the MESAM program.
Notes
Author Biographies
Elizaveta Johansson is a PhD candidate at Entrepreneurship & Innovation, Luleå University of Technology (email:
Johan Frishammar is a Professor at Entrepreneurship & Innovation, Luleå University of Technology, and a research fellow at the House of Innovation, Stockholm School of Economics (email:
Anna Brattström is a Chaired Professor of Entrepreneurship, University of St Andrews Business School (email: