Business Collaboration

Updated on March 20, 2024
Article byAswathi Jayachandran
Edited byAswathi Jayachandran
Reviewed byDheeraj Vaidya, CFA, FRM

Business Collaboration Definition

Business collaboration is the process of businesses working together to achieve a specific and shared goal. It can be a short-term or long-term arrangement connecting business entities. All the entities part of the alliance or association benefit from it.

Business Collaboration

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Regardless of their size or industry, businesses can benefit greatly from collaboration. Through it, businesses can collaborate to solve issues and accomplish objectives that, when pursued independently, appear impossible. In addition, all network partners in the collaboration framework are more equipped to develop, grow and boost their competitiveness on various fronts by merging with the work and experience of other organizations.

Key Takeaways

  • Business collaboration uses business relationships inside and outside the company to produce ideas, find solutions, and accomplish shared objectives.
  • During the collaboration processes, businesses must consider their communication methods and tailor them to the needs of the entities they share information with to communicate and share knowledge effectively.
  • Saving time and increasing staff productivity, quality of work output, innovation, employee engagement, reduced turnover, growth, and profitability are benefits of collaboration among businesses.

How Do Business Collaborations Work?

Business collaboration uses business relationships inside and outside the company to produce ideas, find solutions, and accomplish shared objectives. An open, honest, and fruitful exchange of ideas is the basis of any partnership that is truly successful for both parties involved. 

Business network collaborations enhance reachability and access to resources that are otherwise out of reach for a single company. Businesses can often complement one another and specialize in diverse fields through collaboration, allowing them to compete in markets that are typically out of their reach. Specifically, small businesses may encounter several obstacles when attempting to compete in international markets. Partnering with international business owners helps them in both obvious and non-obvious ways.

Creating a culture of collaboration with effective communication strategies and knowledge sharing as critical element is essential to thriving in the modern world of competition. Therefore, businesses must consider their communication strategies and adapt them to the requirements of the people they share information with to communicate and share knowledge successfully.

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There are various types of collaboration, and some are listed below:

#1 – Internal Collaboration

Internal collaboration occurs when people or groups within a company collaborate and share knowledge. The term “collaboration” is a wide one that encompasses a variety of formats and organizational levels. However, it is advantageous to encourage internal collaboration to achieve objectives and finish tasks since it encourages transparency and enables employees from other departments to share knowledge and ideas. 

#2 – External Collaboration

Working with people outside the organization is referred to as external collaboration. Customers, suppliers, competitor businesses, and other organizations could all be considered external collaborators. Organizations can employ external cooperation for various business-related objectives, including data collection or introducing a new project or product. A company frequently looks for external partners because they can provide something that cannot be obtained internally.

#3 – Community Cooperation

When people with similar interests come together, it is called community collaboration. The aim of community cooperation is often knowledge sharing and learning. For example, if they learn anything or get an idea from another, they might share it with their team or place of business to further their work. 

#4 – Strategic Alliance Collaboration

When two or more organizations collaborate externally to achieve a common objective, it is a strategic alliance. They may make these agreements for short- or long-term goals. In such partnerships, the corporate partners exchange information and assets, frequently completing what the other lacks or cannot provide. This kind of collaboration can support various corporate goals. Binding agreements that outline each party’s obligations in the partnership are a part of some of these relationships. Conflicts may arise if their obligations aren’t met.

#5 – Network Collaboration

With network collaboration, businesses or organizations can cooperate to achieve compatible objectives. These networks are usually online, and their participants may not always be acquainted directly or personally. Businesses can contribute to the network by providing knowledge or innovative ideas that others can use to their advantage. Over time, network participants may forge closer bonds and depend on one another to assist with particular objectives or activities.


Let’s look into some examples to understand the concept better:

Example #1

XYZ is a toy manufacturing company with many departments, including production, sales, human resources, operations, and finance. Within the sales department, there are customer success teams that constantly provide data on feedback from customers. Now, this feedback can be shared with the production team to manufacture items according to consumer preferences.

In addition, the production team can share information about finances with the finance department, where they can work on areas to reduce costs. All these departments have their own assigned work. However, they all depend on each other and share vital information across them for one common goal, which is the growth of the business. It is an example of team collaboration.

Example #2

A new virtual credit card that can be added to the iPhone’s Wallet app has been created and introduced by Apple under the name Apple Card. The bank authorized to issue this consumer credit card is Goldman Sachs. It is an example of business collaboration where Apple, a technologically oriented company, has tied up with Goldman Sachs, an American multinational investment bank and financial services company.

Apple Inc. has teamed with Goldman Sachs and Mastercard for processing and handling payments. This new service was created to replace traditional credit cards with a more advanced, safe, and convenient payment option for online and offline establishments.


Some of the few benefits of collaborations by businesses are listed down:

Benefits of Business Collaboration

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  • Growth: Businesses that collaborate can benefit from various competitive advantages that increase their productivity, agility, and ability to innovate—all of which help them outstrip the competition.
  • Profitability: There is a high correlation between an organization’s profitability and its collaborative approach, much like with overall growth. A majority of the companies with notable increases in profitability over the previous years had collaborative strategies.
  • Quality of work output: More than one party is involved in collaboration, and they cooperate, coordinate, and complement each other. They complete each other’s tasks efficiently; even if one is lagging, the other party will compensate and complete the work. Hence, the quality of the output does not suffer.
  • Innovation: Iterative thinking can be sped up along with the innovative process and can go relatively quickly by working with a group of open-minded individuals. They can immediately assess an idea’s viability and assist in building upon it. Each unique idea can be collaborated on into something bigger and better.
  • Employee engagement and reduced turnover: Collaboration in terms of ideas, work, outcomes, and the process benefits the workers; they would be willing to participate actively. It prevents them from switching companies and hence reduces the turnover.
  • Saving time and increasing staff productivity: Collaboration helps efficiently complete tasks. Even after accounting for some time wasted, it is seen that most employees can efficiently complete tasks due to the shared responsibility systems in place. It saves a lot of money for the management, too.

Frequently Asked Questions (FAQs)

Why collaboration is important in business?

Businesses opt for collaboration to access the knowledge or expertise that they lack. It may be of process, financial or operational. Sharing information and efficient completion of work can be guaranteed most of the time due to collaboration. Moreover, it paves the way for innovation and ideas for growth.

What is global collaboration in business?

Global collaboration is collaborating beyond borders. It provides opportunities to engage with other cultures. Employees also benefit from having a more positive outlook on the world.

How do business collaborations work?

In collaboration, businesses cooperate with other entities to achieve growth. Collaboration brings in additional experience, exertion, and skills, which contribute to the company’s efficiency and, thereby, its growth. In addition, it helps businesses to explore complex ideas or problems from multiple viewpoints. Finally, it establishes intentional ties internally and externally to accomplish objectives or solve issues through collaboration.

This article has been a guide to Business Collaboration and its definition. We explain how it works, its types, examples, and benefits. You may also find some useful articles here –

Reader Interactions


  1. SULEIMA Ahmed Aremu says

    This is a very interesting material. It actually widen my knowledge on how collaboration can be used to stimulate innovation. Resourceful indeed.

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