Cross-sector Alliances for Corporate Social Responsibility Partner Heterogeneity Moderates Environmental Strategy Outcomes

This article provides a new mechanism in understanding how partner heterogeneity moderates an alliance??s ability to advance corporate social responsibility goals. I identified the antecedents for firms to select a more diverse set of partners and explored whether more diverse alliances (especially cross-sector alliances) may facilitate partners to achieve more proactive environmental outcomes. I employ 146 environmental alliances formed in the U.S. between 1990 and 2009 to test the assertions. Results suggest that firms with innovative orientation and alliance experiences tend to choose a more diverse set of partners (especially cross-sector partners); and such partner heterogeneity in turn moderates an alliance??s environmental outcomes??compared to inter-firm alliances, cross-sector alliances are more likely to facilitate partners to pursue more proactive environmental strategies.     

Functional and contextual dimensions of INVs’ alliance partner selection

Prior research on the selection of international alliance partners calls for investigation of the potential specificity of selection criteria for evaluating partners for alliances with different objectives or functions. The present study responds to this need and contributes to the development of the field of international entrepreneurship by examining the relation between the alliance function and the criteria chosen. We studied three alliance functions: R&D, production, and marketing. Second, for each alliance function, we analyzed the criteria selected within two contexts: developing countries and those that consider emerging markets in their partner choice set. Data were collected through semi-structured interviews with 25 executives from international new ventures (INVs) in two major North American biotechnology clusters, representing 239 alliances; 65.7 % of these were signed with international partners. Results indicate that, aside from compatibility/complementarity of resources (R&D and production alliances), all criteria used within a single function are unique to that function. Furthermore, these criteria differ somewhat when the potential partners considered by a firm include those from both emerging and developed markets, compared with firms that limit potential partners to those in developed market contexts. Finally, the study reveals that respondent firms integrate country, industry, and market attractiveness factors with partner selection criteria for marketing alliances. This suggests that, for many firms, market choice and partner selection are not successive steps. The study’s originality lies in its focus on the relationship between alliance function and partner selection criteria used by INVs as well as within different contexts.     

Negotiating alliance contracts: Strategy and behavioral effects of alternative compensation arrangements

A key issue in alliances (defined here as any cooperative or joint activity between two or more firms) is the payment or compensation structure stated in the formal agreement between the parties. These days, most agreements include a multiplicity of payment types, including royalties, lumpsum payments and returns on equity. The paper outlines reasons for this and presents a general framework for alliance negotiations. A simulation example shows key negotiation variables, together with non-zero-sum tradeoffs between them. Each map of variable pairs indicates a ‘zone of mutual benefit’ where the joint profits of both partners can increase. There is often a contradiction between profit maximization and other strategic, behavioral, tax and regulatory considerations which themselves point in non-congruent directions for structuring the alliance. No wonder alliances are such fragile things! Nevertheless, alliances are an indispensable part of the management landscape, and negotiators must know how to structure them. The approach outlined in this paper, the simulation method presented, the caveats indicated for non-financial variables, and the behavioral responses to each, will however help companies to craft better and longer-lasting alliances.     

Brand alliance and customer‐based brand‐equity effects

This research examines brand alliances, a specific marketing strategy designed to transfer the positive brand equity of two or more partner brands to the newly created joint brand. The study explores how customer‐based brand equity (that is, brand equity as seen from the customer's perspective) of partner brands affects consumer evaluations of an alliance brand; how the brand equity of one partner brand affects the other; how customer‐based brand equity of the partner brands affects consumers' evaluations of the search, experience, and credence attribute performance of the alliance brand; and how product trial influences such evaluations. Results suggest that merely the act of pairing with another brand elevates consumers' evaluations of the partner brands' customer‐based brand equity, and high‐equity partners enhance pretrial evaluation of experience and credence attributes that are relevant to the high‐equity partner. As hypothesized, product trial moderates the equity value of the alliance partner for experience attributes, and brand equity of the partner brands influences consumer perceptions of the alliance brand's equity. © 2004 Wiley Periodicals, Inc.     

Opportunism in the R&D alliances of SMES: The roles of the institutional environment and SME size

SME leaders with R&D alliances face significant challenges in balancing the need for resource acquisition in the innovation process and the potential for opportunistic behavior by alliance partners. This study, utilizing a sample of 456 SMEs from eight countries, examines how the resource capacity of the SME and the institutional environment are related to the perceptions that owners and managers have about the opportunistic behavior of alliance partners. The results suggest that firm size moderates the relationship between the technological munificence and the predominant culture of the domestic market of the SME and concerns about the opportunistic behavior of an SME alliance partner.     

Cultural distance and its implication for the duration of the international alliance in a high technology sector

This study examines the role of cultural distance in the duration of an international alliance in a high technology sector. The general view is that cultural distance between international partners can hamper the duration of the alliance. We propose the alternative argument that cultural distance can be a source of the alliance duration. We use cultural distance based on widely perceived five cultural dimensions (Hofstede et al., 2010). Overall, the result supports the proposition. The distance based on masculinity, uncertainty avoidance and long-term orientation tends to increase the duration of the alliance. The distance based on power distance and individualism tends to decrease the duration of the alliance. Nevertheless, the composite measure based on all five dimensions also shows a positive effect on the duration of the alliance. The study concludes that learning alliances prefer diversity of knowledge sources. Knowledge transfer is a context dependent phenomenon. The diversity of the context delays knowledge transfer. Therefore, learning alliances tend to be longer when there is a cultural distance between international partners. The article notes some implications and limitations for the future research.     

Success through commitment and trust: the soft side of strategic alliance management

This article argues that the success of international strategic alliances requires attention not only to the hard side of alliance management (e.g., financial issues and other operational issues) but, also, to the soft side. The soft side refers to the development and management of relationship capital in the alliance. Relationship capital consists of the socio-psychological aspects of the alliance that are positive and beneficial to the alliance. Two important areas of relationship capital are mutual trust and commitment. Based on our findings from two major studies of Japanese strategic alliances, we develop a dynamic model of trust and commitment based on mutual adjustments of alliance partners. We also show how the dynamics of trust and commitment affect the performance of international strategic alliances with the Japanese. The article concludes with a discussion of the managerial implications of our findings and the dynamic model.     

Entrepreneurial orientation and strategic alliance success: The contingency role of relational factors

This study extends entrepreneurship research into the domain of strategic alliances by hypothesizing a positive relationship between entrepreneurial orientation (EO) and firm-level alliance success. Drawing on a relational view, we further examine the focal relationship within a contingency framework, building on the distinction between cooperation (joint action and bonding) and conflict. Findings from a study of 197 partner firms suggest that a high level of joint action strengthens the positive relationship between EO and alliance success. Bonding moderates the relationship in an inverted U-shape manner such that the effect of EO on alliance success will be greatest when bonding exists at the moderate level. However, conflict has no significant moderating effect on the EO–alliance success relationship. Overall, this study provides novel insights into whether and when partner firms can translate an EO into final alliance outcomes.     

Strategic alliances by financial services firms

We examine a sample of strategic alliances made by financial services firms during 1986 to 2003. The market reacts positively to the announcements of alliances and seems to incorporate the information about the value of alliances at the time of alliance announcements. We find no evidence of abnormal stock performance after announcements. Our results also suggest that strategic alliances usually are used as a final form of cooperation rather than as a first step towards closer cooperation between firms. For instance, only about 5% of alliances are followed with joint ventures or mergers of partner firms. Nevertheless, strategic alliance firms are more likely to form joint ventures or merge than randomly selected and matched firms. Furthermore, the market reacts more favorably to the alliance announcements by firms that are subsequently acquired by the alliance partners.     

Inter firm diversity and the management of meaning in international strategic alliances

Cross-national alliances have become an increasingly salient part of the contemporary global environment. These alliances bring together firms embedded in diverse institutional environments. Diversity in institutional environments makes meaning creation difficult as well as necessary. Our paper suggests that the alliance partners need to manage three kinds of meaning, namely pragmatic, moral, and cognitive. It is the effective management of meaning, which determines whether an alliance is able to achieve legitimacy. Implications for alliance management are discussed.     

A preliminary typology of learning in international strategic alliances

The idea of gaining access to sources of know-how located outside of the organization through strategic alliances is increasingly popular. This article examines the issue of learning in strategic alliances. Two different objects of learning are discussed and compared. They are “learning the other partner’s skills” and “learning from strategic alliance experience.” Depending on whether the partners concerned focus on the same or different objects of learning, four patterns of learning, namely asymmetrical, non-mutual, competitive and non-competitive, are identified. It is expected that firms behave differently when engaging in different patterns of learning. Based on cross-pattern comparisons, research propositions are suggested and point to a fresh research direction. Moreover, managerial implications are discussed.     

International Strategic Alliances

Abstract

This paper reports the findings of an empirical investigation of strategic alliance agreements between UK firms and their European, Japanese and US partners. The aim of this paper is to shed some light on the international strategic alliance activity of UK firms and ascertain the objectives and motives of international strategic alliances. In addition, the perceived performance of the strategic alliance is considered together with the perceived level of satisfaction of a range of alliance activities. The findings should prove to be a useful guideline for researchers and practitioners engaged in understanding international strategic alliances. The analysis should allow managers to examine the important issues in the formation of international strategic alliances and allow them to understand the assessment of performance and satisfaction of the alliances formed.

Key Results: The findings have shown a definite pattern in UK international strategic alliance activity. The results of the study indicate that the majority of UK firms engage in international partnerships for marketing-related activities and are essentially driven by the financial cost and risk of entering a foreign market; access to overseas market and improving market share. The findings have also indicated that the majority of UK managers are satisfied with the overall performance of the international strategic alliance.     

Managing international strategic alliance relationships

The objective of this study is to investigate the development of international strategic alliances (ISAs) and to identify the important factors for each phase of an alliance relationship. We have developed a framework about the process development of alliances that is based on an extensive literature study. The framework is used to study and analyze three cases of ISAs. The findings and conclusions are presented in a manner that can help managers to recognize the stages they have to go through and, more important, to be aware of the determinant variables in each stage of an alliance life cycle. This study found that the continuity of an alliance relationship is highly dependent on how partners manage their operational phase. © 2007 Wiley Periodicals, Inc.     

One more only if it is one of us. The number of partners and the stock market reaction to domestic and international alliance formation in EU telecom firms

In this paper, we analyze the interaction between two dimensions of strategic alliances whose real impact on the potential value of an alliance has not yet been highlighted: the number of partners and the direct competition among them. Building on the resource-based view, as well as on the relational view of alliances, we argue that increases in the number of partners are positively valued by the stock market when the alliance is formed by competing firms that belong to different countries. Multiparty alliances are thus positively valued when they allow a quick internationalization by affording access to resources owned by competing firms from different countries. An empirical test of stock market reaction to alliances announced by European telecom firms between 1986 and 2001 has confirmed our hypotheses.     

Strategic alliances and the rate of new product development: An empirical study of entrepreneurial biotechnology firms

A key to success in industries populated by entrepreneurial high-technology firms is the rate at which the firm develops new products. Rapid product development creates significant advantages for entrepreneurial firms, including access to early cash flows, external visibility, legitimacy, and early market share. The higher a firm's rate of new product development, the more likely the firm is to achieve and maintain these first-mover advantages. This is particularly true in industries such as pharmaceuticals, where the effectiveness of patent protections leads to patent races in which a “winner take all” scenario exists. But even in industries where patent protection is weak, the advantages of being first, in terms of market preemption, reputation effects, experience curve effects, etc., can still be of major importance. We argue that one way an entrepreneurial firm can increase its rate of new product development is by entering into strategic alliances with firms that possess complementary assets.The basic proposition advanced is that a firm's rate of new product development is a positive function of the number of strategic alliances that it has entered. However, the relationship between strategic alliances and the rate of new product development may be nonlinear. Specifically, although strategic alliances may initially have positive effects on the rate of new product development, this relationship may exhibit diminishing returns. Moreover, past some point it is possible that negative returns may set in. Thus, the relationship between the number of alliances and the rate of new product development may be an inverted U-shape.Two reasons can be given to support such a relationship. First, not all alliances will make an equal contribution to increasing the rate of new product development. The economic “law” of diminishing returns suggests that the more alliances a firm engages in, the more likely it is to enter some alliances whose marginal contribution is relatively minor. Such a phenomenon on its own is enough to suggest diminishing returns.Second, gaining access to complementary assets through strategic alliances is not without risks. Malperformance may occur when the firm discovers that the complementary assets provided by the partner are a poor match, fail to live up to the promises made by the partner, or a partner may opportunistically exploit an alliance, expropriating the firm's know-how while providing little in return. These problems arise because the effectiveness with which the firm can select and manage alliance partners is likely to be negatively related to the number of alliances the firm is managing. Due to information processing requirements, the quality of partner search and the ability to monitor the partners' actions will decline as the firm increases the number of alliances in which it is involved. This reasoning leads to a prediction that past some point, alliances will be increasingly vulnerable to malperformance. This raises not only the possibility of diminishing returns to the number of alliances, but also negative returns as the number of alliances increases past some critical point.This proposed relationship between alliances and new product development was tested on a sample of 132 biotechnology firms. The results provide strong evidence to support the inverted U-shaped relationship between the number of strategic alliances and the rate of new product development. Therefore, at low levels strategic alliances are positively related to new product development, but as the number of alliances increases, the benefits begin to decrease, and at high levels the costs of an additional alliance actually outweigh the benefits.     

What do firms from transition economies want from their strategic alliance partners?

A financial system engaged in active transition from central planning to free market may be dubbed a transition economy. On today's global landscape, there are several important transition economies, all at various stages of transition and with differing degrees of success. Yet, much is not known about this important sector of the world economy. As outside enterprises seek alliances with firms from transition economies, it is important to know what these firms want from alliance partners. To learn more, we conducted a study interviewing managers of private firms from the two largest and most strategically important transition economies: China and Russia. We found that while Chinese and Russian firms often hope for some of the same things as their counterparts in mature economies as regards alliances, they are also interested in other things not normally associated with alliances: political influence, relief from paying bribes, and protection from extortion or even violence. Moreover, we discovered that because of differing institutional conditions in the two countries, Chinese firms are not always looking for the same things from alliances as are Russian firms—in spite of surface similarities between the two economies. Based on these findings, we provide guidelines for firms seeking alliance partners in transition economies, to assist them in determining if an alliance is right for them and planning accordingly.     

Global versus Local Strategic Alliances

The authors present a framework within which to decide when a firm should choose a single global strategic alliance partner, when regional alliances are more appropriate, and when it should use multiple local partners. Strategic factors proposed as determining this choice refer to: (1)economies of scale; (2)competitive pressure; (3)market and environmental certainty; and (4)global coordination. Operational considerations that constrain the choice involve: (1)market restrictions; (2)resource availability; (3)fiduciary risk; and (4)adaptation needs. These two sets of factors interact to suggest the appropriate geographical scope of strategic alliances. Two case examples are evaluated within this framework; one dealing with a global strategic alliance, the other with local strategic alliances.     

Strategic alliances by venture capital backed firms: an empirical examination

A growing body of literature examines the formation of strategic alliances as an important value-added role provided by venture capital firms. This paper contributes to this literature by examining two related questions: whether venture capital firms use strategic alliances as a substitute or compliment to capital infusion, and how venture capital firms use alliances to mitigate different types of risk. Results from 2505 venture-backed startups reveal that venture capital firms treat alliance formation as a substitute for capital infusion and that the breadth of the network of syndication partners investing in the startup increases the number of its strategic alliances. We also find intentionality in alliance formation. Specifically, firms operating in industry environments characterized by technical risk are more likely to form alliances with partners capable of mitigating technical risks, and firms operating in environments characterized by market risk are more likely to form alliances with partners capable of mitigating market risk. Our findings lend additional support to the perspective that alliances represent an important mechanism through which venture capital firms add value to their portfolio companies.     

Building trust in international alliances

Two facts stand out unambiguously in today's global business. One, international alliances are proliferating, underscoring the strategic importance managers increasingly attach to “competition through cooperation.” Two, trust is key to successful international alliances. Together, these two facts point to the need to better understand trust, a task that was attempted in an earlier article (Parkhe, 1998). Yet such understanding, while necessary, is not sufficient. This article, the second of a two-part series, shows how partners can proactively manage an alliance relationship in order to develop trust. Toward this goal, the discussion includes trust generation through process-based, characteristic-based, and institutional-based mechanisms, which are to a significant degree within alliance managers' control. Managers must also be mindful of several critical features of alliance dynamics. These are described in some detail, as is the need to appropriately “calibrate” trust level in an alliance to the lifecycle stage of the alliance. With proper management attention, too much and too little trust can be avoided.     

E-Alliance: A Negotiation Infrastructure for Virtual Alliances

In this paper we provide an overview of E-Alliance, a software infrastructure we are developing to support negotiation activities in concurrent inter-organisational alliances. Our baseline is to offer a collaboration framework which fully preserves the autonomy of organisations grouped in an alliance, while enabling concurrency of their activities, flexibility of their negotiations and dynamic evolution of their environment. We propose to support negotiation between the partners within such alliances by combining different technologies, such as software engineering techniques, middleware-level coordination facilities and multiagent systems support. We present our approach in the context of a sample scenario of an alliance where partners are printshops capable of (out/in) sourcing print jobs among them to better accomplish their customers' requests.