What really is alliance management capability and how does it impact alliance outcomes and success?

Strategy scholars have asserted that a firm's alliance capability provides competitive advantage. As interest in alliance capability has grown, we see two streams of research emerge that address different, but equally important, issues related to this subject: one stream that focuses on how alliance capability develops in firms, and a second stream that investigates what elements specifically constitute a firm's alliance capability. In recent literature, the question of how firms develop alliance capability has received greater attention than the question of what elements actually comprise it; therefore, in this study we address the latter issue in great depth. We do this by building on prior research and on our fieldwork, to conceptualize alliance management capability as a multidimensional construct that comprises three distinct but related aspects or skills to address the following aspects in managing a given individual alliance after it is up and running: coordination, communication, and bonding. We then test our conceptualization in a framework that also links this capability to relevant outcomes at the alliance and firm level. We use survey and secondary data from a large sample of interfirm relationships between software service providers and three major global software vendors. We find general empirical support for our conceptualization of alliance management capability and for its predictive validity in impacting certain alliance outcomes. Copyright © 2009 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.     

Exploration or exploitation? Small firms' alliance strategies with large firms

How do small firms manage their alliance strategies with large firms? This study compares the relative impacts of exploration and exploitation alliances with large firms on small firms' valuation. Integrating the literatures on the exploration/exploitation paradigm and alliance governance, we argue that exploitation alliances with large firms will on average generate higher values for small firms than exploration alliances with large firms due to a heightened risk of appropriation in exploration alliances. However, if small firms can manage their alliances with large firms via proper alliance governance, they will increase their valuations from exploration alliances with large firms. Analyses of the U.S. biopharmaceutical industry from 1984 to 2006 largely support our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.     

Network resource stocks and flows: how do alliance portfolios affect the value of new alliance formations?

We examine how new network resources accessed through alliance formations interact with network resources present in a firm's alliance portfolio. We test our theoretical model using event study methodology and data from the global air transportation industry. We find that the market rewards firms forming alliances that contribute resources that can be synergistically combined with firms' own resources as well as with network resources accessed through their alliance portfolios. Our results also indicate that the market penalizes firms entering into alliances that create resource combinations that are substitutes to resource combinations deployed by existing alliance partners. Copyright © 2011 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.     

Managing tensions in coopetition

Tensions are natural in coopetitive business relationships that simultaneously involve cooperation and competition. The purpose of this study is to investigate how tensions are managed in coopetitive business relationships and examine the potential outcomes of the management of such tensions. The study will focus on various kinds of coopetitive relationships and how the management of the different tensions produces specific outcomes. The empirical study is based on comparative case study research on coopetitive business networks that features two different kinds of cases. The findings of the study contribute to coopetition research by identifying several new perspectives on tensions. Different levels of cooperation and competition in a coopetitive relationship as well as other underlying issues cannot alone determine tensions, but aspects such as the management of tensions are crucial. Most tensions are managed by using styles of competition and avoidance and result in mixed outcomes, which implies both positive and negative perceptions.     

Strategic alliances as social capital: a multidimensional view

Defining social capital in terms of the information benefits available to a firm due to its strategic alliances we present a theory of social capital that conceptualizes it as a multidimensional construct. We draw from the literature to argue that social capital yields three distinctly different kinds of information benefits in the form of information volume, information diversity, and information richness. This extends current theoretical and empirical research by specifying and empirically demonstrating three interrelated yet distinct dimensions of social capital. Firms vary in their levels of social capital not just on their structural position in an alliance network but also in the dynamics that underlie alliance formation and maintenance. More importantly, the different dimensions of social capital theoretically provide differential benefits. We establish the construct validity of our proposed three‐dimensional conceptualization of social capital using longitudinal data on the population of strategic alliances formed during the period 1980–94 by firms in the global steel industry. In addition, we establish predictive validity by demonstrating that the information dimensions have differential effects on firm performance, using firm nationality as a contingency. Copyright © 2002 John Wiley & Sons, Ltd.     

Managing the Inter-Firm Cooperation Process: Exploratory Case Studies of Hong Kong Architects and Contractors

Researchers have suggested that both the contract and the process of inter-firm cooperation are important for its success. However, empirical knowledge of the inter-firm cooperation process is very limited. Drawing on extant literature on cooperation and competition and social exchange theory, we propose an action pattern model which describes the cooperating process in a parsimonious and systematic way. Twelve case studies were conducted on architect-contractor cooperation dyads in Hong Kong to explore the cooperation process using the lens of the action pattern model. Results gave rich anecdotal accounts of the three key parameters of the model: action acquiescence as a lubricant to deal with unspecified contractual situations, action simplicity as a signaling device to partners, and action reciprocity as a reward and punishment tactic. The implications of the action pattern model are discussed.     

Alliance capability,stock market response,and long‐term alliance success: the role of the alliance function

This paper addresses two key questions: (1) what factors influence firms' ability to build alliance capability and enjoy greater alliance success, where firm‐level alliance success is measured in two ways: (a) abnormal stock market gains following alliance announcements and (b) managerial assessments of long term alliance performance; and (2) are the two alternate ways of assessing alliance success correlated? We find that firms with greater alliance experience and, more importantly, those that create a dedicated alliance function (with the intent of strategically coordinating alliance activity and capturing/disseminating alliance‐related knowledge) realize greater success with alliances. More specifically, firms with a dedicated alliance function achieve greater abnormal stock market gains (average of 1.35%) and report that 63 percent of alliances are successful whereas firms without an alliance function achieve much lower stock market gains (average of 0.18%) and only a 50 percent long‐term success rate. We also find a positive correlation between stock market‐based measures of alliance success and alliance success measured through managerial assessments. In addition to providing insights into the development of alliance capability among firms, this paper is one of the first to provide empirical support for the efficient markets argument by demonstrating that the initial stock market response to a key event positively correlates to the long‐term performance and value of the event. Copyright © 2002 John Wiley & Sons, Ltd.