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What is Collaborative Business?

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  • Written By: Osmand Vitez
  • Edited By: Kristen Osborne
  • Last Modified Date: 03 December 2016
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Collaborative business is a concept where companies share information with each other in order to create stronger operations. While collaborative business can seem counterproductive to developing a competitive advantage, it actually helps companies to learn new processes or activities that can improve productivity or output. The collaboration functions as a symbiotic relationship, where each company has a product or service that will help the other; when they trade or share these items, both companies benefit.

In business, competencies are invaluable for creating a competitive advantage. These competencies include abilities or activities that allow one company to complete tasks or produce goods and services better than another. Competencies typically include information gathering, production methods, customer service, and employee development, among others. Collaborative business allows one company to work with another in order to develop these competencies. Core competencies, however, may not be transferable from one company to the next. These represent a company’s outstanding ability or abilities that competitors cannot easily imitate.

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An example of collaborative business is when companies use a technology platform to advance their operations. For example, social media networks reach thousands of individuals through websites, text messaging accounts, and other interactive items for both work and enjoyment. Companies of all types can work with social media companies to leverage the technology in these websites into a corporate-based structure. Additionally, companies may use the social media network to reach new and current consumers with product offerings. The collaboration results in new profit potential opportunities for companies, and social media companies will receive payments for their services.

Collaboration can also result when two companies produce goods that represent some value individually, but may be worth more when used together. For example, a computer manufacturer and software development company might collaborate for this purpose. While computer hardware is valuable on its own, the lack of an operating system significantly reduces the hardware’s worth. Creating a collaborative business environment system allows the hardware manufacturer to install the software company’s operating system into produced computers. This allows both companies to receive mutual benefits from the collaboration of their products into a single unit.

National economies can also engage in a form of collaborative business. This concept goes back to the economic theory of comparative advantage, where one country can produce goods or services cheaper than another country. Nations can take advantage of this by using the items from different countries to create valuable goods and services. Similar to business, this creates a mutually beneficial economic environment through collaboration.

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