Learning from competing partners: outcomes and durations of scale and link alliances in Europe,North America and Asia

This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright © 2000 John Wiley & Sons, Ltd.     

Determinants of alliance partner choice: Network distance,managerial incentives,and board monitoring

Research Summary: We ask if managerial opportunism is a significant problem in alliance partner choice and examine the role of corporate governance mechanisms in explaining this choice. Using a sample of 313 alliances of U.S. firms from the pharmaceutical and biotechnology industries from 1992 to 2010, we find that managerial incentives lead to managerial preference for relationally risky distant partners over existing and new close partners. Further, board monitoring encourages managers to pursue existing and distant partners over new close ones, choices aligned with shareholder interests. In addition, we find that board monitoring substitutes for managerial incentives in alliance partner choice. We contribute to the literature on alliance partner choice to identify an important, and hitherto, unexplored perspective. Managerial Summary: This article examines whether managers and shareholders view alliance‐related risks differently, and how the divergent interests between managers and shareholders affect alliance partner choice. We argue that managers’ concern about their loss of employment and compensation from alliance failure impedes the choice of relationally risky alliance partners that may increase shareholder value. We also argue that managerial stock ownership and board monitoring mitigate this managerial propensity. Our findings suggest that stock ownership owned by managers and strong board monitoring are effective governance mechanisms to align managers’ interests with those of shareholders. Our study offers a novel perspective to understand alliance partner choice by viewing the firm as an entity comprised of fragmented interests.     

Resource ambidexterity through alliance portfolios and firm performance

Research summary : Partner resources can be an important alternative to internal firm resources for attaining dual and seemingly incompatible strategic objectives. We extend arguments about managing conflicting objectives typically made at the firm level to the level of a firm's alliance portfolio. Specifically, will a balance between revenue enhancement and cost reduction attained collectively through partner resources accessed via a firm's various alliances be similarly beneficial for firm performance? Additionally, how do strategic attributes of alliance portfolio configuration, specifically alliance portfolio size and partner resource scope, condition the balance‐performance relationship? Based on data from the global airline industry, we find support for the balance‐performance relationship, though such balance is less beneficial for firms in the case of access to a broader resource scope per partner . Managerial summary : Increasing revenue and reducing costs simultaneously can potentially enhance firm competitiveness. We highlight that an alliance strategy can be an important alternative to internal resources for attaining such dual strategic objectives, particularly when partner resources accessed through alliances are treated collectively as portfolios. We examine the importance of balancing product‐market extending and efficiency‐improving partner resources in the global airline industry as well as the impact of two alternate strategies for accessing resources through alliances: fewer partners with more resources per partner or more partners with fewer resources per partner. We find that resource balance at the portfolio level helps airlines improve performance. Our results also suggest that managers should be cautious of accessing too many resources through just a few partners . Copyright © 2015 John Wiley & Sons, Ltd.     

How does the partner type in R&D alliances impact technological innovation performance? A study on the Korean biotechnology industry

The number of strategic alliances for R&D activities in the biotechnology industry is sharply increasing. Some studies show that each alliance partner type has different alliance motives, resources and capabilities, organizational structures and cultures, and degrees of competition with partners, which can lead to different performances of strategic alliances. In this regard, this study conducts an empirical analysis of the different impact of each type of alliance partner on technological innovation performance and finds the moderating effect of absorptive capacity and potential competition by categorizing strategic alliances for R&D activities in the biotechnology industry into three types: vertical-downstream alliances, vertical-upstream alliances, and horizontal alliances. This study analyzed 206 Korean biotechnology firms and their strategic alliances for a total of 292 R&D activities. The results of the analysis showed that vertical alliances have a positive impact on technological innovation performance, while horizontal alliances have an inverted U-shaped relationship with technological innovation performance caused by the effect of competition. Additionally, it was confirmed that the R&D intensity of biotechnology firms has a moderating effect of increasing the impact of vertical-upstream alliances on technological innovation performance.     

Mitigating the Challenges of Partner Knowledge Diversity While Enhancing Research & Development (R&D) Alliance Performance: The Role of Alliance Governance Mechanisms

This article explores the answers to the following unresolved research question: How do firms mitigate the collaboration challenges associated with partner knowledge diversity and enhance alliance performance? The study provides an alliance performance enhancing framework by identifying two types of partner knowledge diversity: (1) technology base diversity and (2) R&D process experience diversity, and links them with R&D alliance performance. Additionally, the moderating effects of the two types of alliance governance mechanisms (i.e., interactive and contractual mechanisms) were examined to investigate which alliance governance mechanism is conducive to mitigate the collaboration challenges and enhance alliance performance. Using a data set of 316 alliances in the biopharmaceuticals industry, the study found that a moderate degree (not too low or high) of technology base diversity between alliance partners contributes more to R&D alliance performance. Similarly, there was also an inverted U-shaped relationship between R&D process experience diversity and alliance performance; too much diversity in R&D process experience may increase the likelihood of partner opportunism, and therefore negatively affect alliance performance. Additionally, the results showed that alliance governance mechanisms played different roles in alliance collaboration; while the contractual alliance mechanisms help reduce relational uncertainty (e.g., opportunism), the interactive mechanisms promoting a more intensive interaction between partners mitigates task difficulty and facilitates complex technology activities. These findings extend the knowledge-based view (KBV) of strategic alliance and advance research on alliance governance design.     

Exploration and exploitation alliances in biotechnology: a system of new product development

We link the exploration–exploitation framework of organizational learning to a technology venture's strategic alliances and argue that the causal relationship between the venture's alliances and its new product development depends on the type of the alliance. In particular, we propose a product development path beginning with exploration alliances predicting products in development, which in turn predict exploitation alliances, and that concludes with exploitation alliances leading to products on the market. Moreover, we argue that this integrated product development path is moderated negatively by firm size. As a technology venture grows, it tends to withdraw from this product development path to discover, develop, and commercialize promising projects through vertical integration. We test our model on a sample of 325 biotechnology firms that entered 2565 alliances over a 25‐year period. We find broad support for the hypothesized product development system and the moderating effect of firm size. Copyright © 2004 John Wiley & Sons, Ltd.     

The effect of uncertainty and asset co‐specialization on governance in biotechnology alliances

We explore transaction cost economics (TCE) and real option (RO) rationales for alliance governance and find the predictive power of each depends upon the type of uncertainty confronted. Our review of alliance activity from 1995 through 2000 for 642 alliances confirms that governance is influenced directly by partner, task, and technological uncertainty and by interactions among asset co‐specialization, partner uncertainty, and task uncertainty. Consistent with TCE, co‐specialized assets increased the likelihood of hierarchical governance. Partner and task uncertainty increased this effect. Consistent with RO, we find technological uncertainty decreased the likelihood of hierarchical governance. Copyright © 2005 John Wiley & Sons, Ltd.     

Learning to collaborate through collaboration: How allying with expert firms influences collaborative innovation within novice firms

Research summary : Strategic alliances have been recognized as a means for firms to learn their partners' proprietary knowledge; such alliances are also valuable opportunities for partner firms to learn tacit organizational routines from their counterparts. We consider how relatively novice technology firms can learn intraorganizational collaborative routines from more experienced alliance partners and then deploy them independently for their own innovative pursuits. We examine the alliance relationships between Eli Lilly & Co. (Lilly), a recognized expert in collaborative innovation, and 55 small biotech partner firms. Using three levels of analysis (firm, patent, and inventor dyad), we find that greater social interaction between the partner firm and Lilly subsequently increases internal collaboration among the partner firm's inventors. Managerial summary : Can collaborating externally advance internal collaboration? Yes. Our research found that collaboration among scientists at small, early‐stage biotechnology firms significantly increased after these firms formed highly interactive R&D alliances with a large pharmaceutical company known for its expertise in such collaboration. It is well known that alliances help new firms learn specific new technologies and commercialize innovations. Our study broadens the scope of potential benefits of alliances. New firms can also learn collaboration techniques, deploying them internally to enhance their own abilities in collaborative innovation. Managers should take this additional benefit into consideration in developing their alliance strategies. Pursuing alliance partners with expertise in collaboration and keeping a high level of mutual interactions with partner firm personnel should be important considerations to extract this value. Copyright © 2015 John Wiley & Sons, Ltd.     

Alliance Concentration in Multinational Companies: Examining Alliance Portfolios,Firm Structure,and Firm Performance

Research summary: This article explores the distribution of alliances across firms' internal structure. Focusing on multinational companies, we examine the impact of alliance portfolio concentration—i.e., the extent to which alliances are concentrated within a limited number of geographic units—on focal firms' performance. Relying on Knowledge‐Based View (KBV) insights, we hypothesize that an increase in alliance portfolio concentration positively influences firm performance and that alliance portfolio size negatively moderates this relationship. Our empirical results enrich the emerging capability perspective on alliance portfolios, point to the relevance of conceptualizing focal firms in alliance portfolio research as polylithic entities instead of monolithic ones, and provide new insights into how firms create value by potentially recombining externally accessed knowledge. Managerial summary: In the setting of multinational companies, we examine whether alliance activities are concentrated in a limited number of subsidiaries or are highly dispersed across multiple subsidiaries. We find that, over time, firms exhibit different patterns in terms of alliance portfolio concentration. In addition, the results show that, for MNCs with a relatively small alliance portfolio, an increase in alliance portfolio concentration is positively related to their financial performance. However, when MNCs' alliance portfolios are relatively large, the relationship between alliance portfolio concentration and firm performance becomes negative. Jointly, these findings suggest that the distribution of alliances across firms' internal structure is an important factor in shaping potential knowledge recombination benefits from alliance portfolios. Copyright © 2017 John Wiley & Sons, Ltd.     

Unveiling the temporally contingent role of codification in alliance success

While prior research highlights the importance of codifying alliance experience to achieve alliance success, it is unclear whether codification is equally useful in the different phases of an alliance. Based on a sample of 192 technology firms that report on over 3,400 strategic alliances, we find that in the partner selection and termination phases, reliance on codified knowledge is useful. However, in the partner management phase, reliance on codified knowledge is less beneficial and can be even negatively related to performance. Our findings have implications for the tension between flexibility and efficiency and the relationship between structure and performance. Copyright © 2013 John Wiley & Sons, Ltd.     

Strategic action and customer mobility: Antecedents and consequences of strategic actions in the Korean mobile telecommunication service industry

This paper investigates the sources and consequences of strategic actions in the Korean mobile telecommunication service industry. Based on competitive dynamics research and an organizational learning perspective, it suggests hypotheses and tests them with monthly data on service providers’ competitive and alliance actions, as well as statistics on monthly subscribers during 2002–2007. We show the positive effects of a firm’s own experience, other firms’ strategic actions, and firms’ alliance tendencies on the likelihood of firm-level competitive action and alliance. We also find that negative performance feedback accelerates the mimetic influence of rival firms’ competitive actions and that positive performance feedback strengthens the momentum effect of a firm’s own alliance experience on the likelihood of alliance. Both competitive actions and alliances appear to influence customer mobility across firms in a complex manner. Based on customer mobility data, this study finds that alliances increase market dynamism, that is, customer mobility. It also shows that competitive actions, in general, serve to effectively attract switching customers from rivals. This study partially answers questions regarding the triggers of competitive actions and alliance activities among mobile telecommunication service providers and their performance consequences.     

Mutual dependence,partner substitutability,and repeated partnership: the survival of cross‐border alliances

Drawing on the resource dependence perspective, this study suggests that alliance survival is an adaptive response to both environmental dependence and partner dependence independently and jointly. Based on a sample of cross‐border alliances formed and terminated by local and foreign firms in a longitudinal setting, the results suggest that the mutual trade dependence between a home country and a host country is positively related to the survival of cross‐border alliances in the host country. Whereas partner substitutability reduces the probability of alliance survival, repeated partnership increases the probability. Moreover, mutual trade dependence reduces the negative effect of partner substitutability on alliance survival. The findings support the idea that resource dependence theory provides an important framework for the study of cross‐border alliances. Copyright © 2010 John Wiley & Sons, Ltd.     

Does technological modularity substitute for control? A study of alliance performance in software outsourcing

Although control is presumed to be necessary to curb opportunism, its implementation in alliances can be costly and challenging. Paradoxically, some contemporary firms have counterintuitively developed successful alliances without extensive formal control. A widespread but untested assertion that might help reconcile this contradiction is that technological modularity reduces the need for alliance control. The objective of this study is to develop and test this assertion. Using data from 120 software outsourcing alliances, we show that, process control, outcome control, and modularity independently enhance alliance performance. However modularity and control are imperfect substitutes: modularity lowers the influence of process control but not of outcome control on alliance performance. Our theoretical development and empirical testing of the interactions of alliance control with modularity has significant implications for strategy theory and practice, which are also discussed. Copyright © 2008 John Wiley & Sons, Ltd.     

Alliance or Acquisition? A Mechanisms‐Based,Policy‐Capturing Analysis

Research summary : While alliance researchers view prior partner‐specific alliance experience as influencing firms' subsequent alliance or acquisition decisions, empirical evidence on the alliance versus acquisition decision is surprisingly mixed. We offer a reconciliation by proposing and testing an analytical framework that recognizes prior partner‐specific experiences as heterogeneous along three fundamental dimensions: partner‐specific trust, routines, and value certainty. This allows us to use a policy‐capturing methodology to rigorously operationalize and test our mechanism‐level predictions. We find that all three mechanisms can increase the likelihood of a subsequent alliance or acquisition, and in terms of the comparative choice between alliances versus acquisitions, partner‐specific trust pulls towards alliances, and value certainty pulls towards acquisitions. We conclude with a discussion of the theoretical and empirical implications of our approach and method . Managerial summary : This study focuses on an important corporate decision: When a firm has had an alliance with another firm, how would that experience affect the likelihood of a future alliance or acquisition with that same firm? We first suggest that it will depend on three factors: the level of trust that existed in that prior alliance, the extent to which specific work routines were developed, and the degree to which the firm was able to confidently assess the value of the partner firm's resources. We then find that trust is a particularly strong predictor of future alliances, while confidence regarding value more strongly predicts future acquisitions. In this way, we demonstrate more precisely how past corporate choices can affect (consciously or unconsciously) future ones . © 2017 The Authors. Strategic Management Journal Published by John Wiley & Sons Ltd.     

Honeymoons and Liabilities: The Relationship between Age and Performance in Research and Development Alliances

The use of strategic alliances by technology ventures has increased dramatically over the last 20 years. During this period companies not only have increased the use of alliances but also have used them in more strategically important areas, particularly in research and development (R&D) and new product development. Thus, successful management of strategic alliances in high‐technology industries has become critical to a firm's new product development and ultimately to firm performance. Yet little is known about what determines the performance of individual alliances. This article examines the relationship between the age of an alliance and the performance of the alliance. Two competing hypotheses regarding the form of the functional relationship between alliance age and alliance performance are developed and are tested. First, a liability of newness hypothesis, which posits that alliance performance increases in a linear fashion over time, is tested. Then a honeymoon hypothesis, which posits that the relationship between age and alliance performance is nonlinear with alliance performance decreasing initially but increasing over time, is tested. It is proposed further here that alliances that are more important to the focal firm exhibit longer honeymoon periods. A measure of individual alliance performance is developed based on our field study in the biotechnology industry. The competing hypotheses are tested using regression analysis on the sample of 115 R&D alliances. Then the analysis is extended by splitting the sample into high‐ and low‐importance alliances to enhance the robustness of the findings. Further, such a split‐sample approach enables testing for a potential moderating effect of alliance importance on the hypothesized relationship between alliance age and alliance performance. The results suggest that the relationship between age and alliance performance seems to be U‐shaped curvilinear rather than linear, with the minimum point of alliance performance occurring after approximately four and one‐half years. Thus, the results indicate that strategic alliances appear to face a liability of adolescence rather than a liability of newness. Contrary to expectations, it also is found that important alliances exhibit generally shorter honeymoons.     

Organizational differences,relational mechanisms,and alliance performance

In studying the antecedents of alliance performance, one stream of research has underscored the alignment between partners' characteristics whereas another has concentrated on relational mechanisms such as mutual trust, relational embeddedness, and relational commitment. We integrate these two perspectives by examining how congruence of the partners' cultures and organizational routines facilitates the emergence of relational mechanisms in non‐equity alliances. Our analysis of 420 non‐equity alliances in the information technology industry demonstrates how differences in partners' internal task routines undermine relational mechanisms that in turn impact alliance performance. Partners who acknowledge their latent differences can overcome some of these negative consequences. We advance alliance research by studying the performance implications of alliance partners' organizational differences and by demonstrating how these effects are mediated by relational mechanisms. Copyright © 2012 John Wiley & Sons, Ltd.     

Value-creation-capture-equilibrium in new product development alliances: A matter of coopetition,expert power,and alliance importance

Alliances are often thought to be longer lasting and lead to better results when they are perceived as equal and fair in terms of how efforts and rewards are distributed. This study conceptualizes the value-creation-capture-equilibrium (VCCE) as the relative inputs and efforts made by alliance partners to create and capture innovation-related value. We seek to better understand the determinants of the VCCE in dyadic new product development (NPD) alliances. We focus on three factors from a focal firm's perspective: (1) the coopetition intensity with the alliance partner (i.e. simultaneous competition and collaboration), (2) the expert power of the alliance partner, and (3) the relative importance of the particular NPD alliance. We hypothesize that coopetition intensity stabilizes the VCCE. Furthermore, we assume that the partner's expert power and the focal firm's relative alliance importance negatively moderate the relationship between coopetition intensity and the VCCE. Based on a dataset of N = 471 NPD alliances of high-tech firms, we find partial support for our hypotheses and contribute towards a better understanding of the factors influencing the VCCE in NPD alliances.     

Asymmetric performance: the market share impact of scale and link alliances in the global auto industry

This study investigates how participating in strategic alliances with rivals affects the relative competitive positions of the partner firms. The paper builds on studies that show significant differences in the outcomes of scale and link alliances. The study argues that the more asymmetric outcomes of link alliances translate into greater changes in the relative market shares of the partner firms, due to unbalanced opportunities for inter‐partner learning and learning by doing. We find support for this argument by examining 135 alliances among competing firms in the global automobile industry, from 1966 to 1995. Copyright © 2004 John Wiley & Sons, Ltd.     

Predicting and measuring alliance performance: a multidimensional analysis

The strategic alliance literature demonstrates that alliances create value for the partners, but also that many alliances fall short of expectations. This study addresses the complex issue of alliance performance. We follow 100 contractual alliances over a 5-year period, and study their performance in terms of abrupt termination, short-term performance, and long-term performance. The results indicate that alliances that are considered strategically important are less likely to be abruptly terminated. We also find that newly established alliances have a higher termination rate than older alliances. Short-term performance is primarily affected by access to complementary and strategically important resources, whereas long-term performance is related to specific investments in human capital combined with the partners' ability to develop and expand alliance activities over time. Copyright © 2007 John Wiley & Sons, Ltd.     

Stepping in and stepping out: Strategic alliance partner reconfiguration and the unplanned termination of complex projects

Research summary : I add to work that emphasizes the stability of strategic alliances by considering the consequences of alliance partner reconfiguration. I offer two contrasting perspectives: (1) alliance partner reconfiguration leads to disruption, hence increases the risk of subsequent project termination; (2) partner reconfiguration leads to adaptation, hence decreases this risk. Data on 1,025 interfirm Australian mining alliances (2002–2011) shows that on average alliance partner reconfiguration increases the risk of project termination. For firm exit from an alliance, the effect is contingent on a firm's resource base, but not for firm entry. Surprisingly, I do not find that alliance partner reconfiguration is beneficial in a dynamic environment. I discuss the implications of these findings for the literature on strategic alliance dynamics and that on strategic alliance outcomes. Managerial summary : This paper studies what happens when over time strategic alliances change their original membership. The research shows that both entry in and exit from an alliance increase the risk of project termination. Hence, weathering difficult times and managing conflict by keeping teams stable should be a prime directive if project survival is the alliance partners' overriding concern. In addition, I find that the exit of a firm with a comparatively large resource base increases the hazard of termination more than if the departing firm has a relatively small resource base. Therefore, one cannot underestimate the importance of trying to keep on board those alliance partners who bring a critical resource to the table. Copyright © 2015 John Wiley & Sons, Ltd.