Centrality Asymmetry and Partner Complementarity as Influences on Alliance Dissolution

Research on interfirm alliances indicates that partner firms’ asymmetry in network centrality increases the likelihood of alliance dissolution because it gives rise to a power imbalance and opportunism in the partnership. We contend that this view of centrality asymmetry does not consider the binding force that network resource complementarity can provide in an alliance, which motivates partners to ally for the long term. We propose that centrality asymmetry can have both divisive and cohesive forces in an alliance, which – when considered together – lead to a prediction that centrality asymmetry has a U‐shaped relationship with alliance dissolution. Moderate levels of asymmetry lead to lower rates of dissolution than high and low levels of asymmetry. The degree of cooperation between partners and the degree of external competition reduce the effects of centrality asymmetry on alliance dissolution because they mitigate power imbalances while encouraging partners to strengthen the alliance to withstand competitive challenges.     

Technological alliance portfolio configuration and firm performance

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.     

Too much of a good thing? Alliance portfolio size and alliance expansion

Drawing from the organizational learning, transactions costs and resource based theories, we argue that the larger the Alliance Portfolio Size (APS) of the partners, the lower the likelihood that the alliance will be expanded. We also argue for an interactive effect by proposing that high levels of experience will neutralize some (but not all) of the detrimental impact of a large APS on the likelihood of alliance expansion. We deploy the case-control methodology to select a sample of 182 alliances from the biotechnology and pharmaceutical industries spanning the period 1980–2004. Results from logistic regression analyses support our predictions.     

The Impacts of Alliance Purpose and Partner Similarity on Alliance Governance

It is generally recognized that the governance structure of an alliance has an impact on its probability of success. In this study, we examine the choice between two alternative alliance governance structures: equity and non-equity. Drawing from transaction cost economics, two sets of factors, namely alliance purpose (R&D or marketing) and cultural distance between partners, are hypothesized to influence the above choice. We further hypothesize that collaborative R&D alliances, where both parties contribute technical knowledge, are more likely to lead to the formation of equity alliances than non-collaborative research agreements, where only one partner may be doing the research work. Based on a sample of 2407 alliances formed in the global biotechnology industry, we find partial support for the hypothesized relationships. Specifically, we find that collaborative R&D alliances are more likely to be equity alliances, whereas non-collaborative R&D alliances do not have any impact on the choice of the governance form. We also find that alliances formed with a marketing purpose are less likely to be equity alliances. We did not find any relationship between cultural distance and the choice of equity alliances.     

Credibly reducing information asymmetry: Signaling on economic or environmental value by environmental alliances

This article focuses on strategic alliances that strive for economic profit while contributing to environmental sustainability. These so-called environmental alliances operate on a spectrum between the goals of economic and environmental value. New environmental alliances signal in announcements to their external stakeholders where they position themselves on this spectrum of alliance goals in order to reduce information asymmetry and enhance their credibility. In this article, we predict the type of external signal that environmental alliances send by studying alliance processes and structures that embed the latent alliance goals. We built an original dataset by combining data on 389 environmental alliances from the SDC Platinum database for the period 2013–2017 and data on signals in 650 alliance announcements. Our findings show that announcements signaling on economic value are mainly used by environmental production and marketing joint ventures, thereby reducing the information asymmetry on their latent goal of economic value. Conversely, announcements signaling on environmental value are mainly used by environmental R&D contracts that focus on the latent goal of environmental value. Our article thus illustrates that alliances aim to enhance their credibility by achieving signal fit between external signals and latent alliance goals. Even though environmental alliances operate on a spectrum of economic and environmental value, we demonstrate that they prefer to avoid sending mixed messages and hence only signal on one of the alliance goals. Our article contributes to the literature on environmental alliances by applying signaling theory to explain these counterintuitive findings and to improve our understanding of how environmental alliances aim for credibility through their communication on their alliance goals.     

Staying Close to the Core: Lessons from Studying the Costs of Unrelated Alliances in Spanish Banking

This article analyses whether alliances create shareholders value, and if this value differs depending on the similarity of the partners' businesses, or on the similarity of the partners' businesses with that of the alliance. Using data from 467 equity and non-equity based strategic alliances from 1996-1999 involving at least one listed Spanish bank, we find that, overall, alliances create shareholder value, but that the returns to shareholders are significantly higher when alliance activity is closer to the core business of the banks, than when alliances involve unrelated activities. Although there is no evidence that unrelated strategic alliances destroy value on average, the results obtained show that banks need to assess the benefits and costs of diversification strategies carefully, as their likelihood of success is initially smaller.     

Motivations for Environmental Alliances: Generating and Internalizing Environmental and Knowledge Value

Environmental alliances are a common response to societal sustainability demands. In environmental alliances, firms collaboratively exploit and explore environmental technologies to address market opportunities while simultaneously generating positive environmental impacts. A striking idiosyncrasy is that in addition to economic value, environmental alliances generate two types of external value: environmental value from positive effects on air, water, land and biodiversity, and knowledge value from innovations in environmental technologies. Research on motivations for environmental alliances is dispersed and underdeveloped compared to the well‐established literature on motivations for strategic alliances that emphasize economic value. This study therefore develops a classification of motivations for environmental alliances by combining the literature on strategic alliances and that on environmental and knowledge value. The resulting classification includes motivations for environmental alliances to generate environmental and knowledge value as well as motivations to create economic value by internalizing environmental and knowledge value. A systematic review of 123 articles on environmental inter‐firm alliances identifies specific motivations to populate the new classification. We show that alliance partners are motivated to share sustainable resources, reduce sustainability risk, respond to stakeholders or invest in specific sustainable assets to generate external value. They collaborate to reduce costs or enhance competitive advantage, reputation or legitimacy to internalize external value. The resource‐based view, resource‐dependence view, institutional theory and transaction cost economics have not previously distinguished between motivations to generate and internalize external value. We extend their area of application from strategic alliances to environmental alliances, and thus beyond the exclusive pursuit of economic value.     

Agent and Task Complexity in Multilateral Alliances: The Safeguarding Role of Equity Governance

Multilateral alliances are an inherently complex organizational form; managing these complexities is particularly difficult for alliance partners because alliances are plagued by both internal and external uncertainty. Using insights from transaction cost economics, our study identifies, articulates and tests different forms of alliance complexity and their impacts on alliance governance structure. Specifically, we investigate two forms of alliance complexity: agent and task. We decompose agent complexity into organizational and partner complexity, and decompose task complexity into geographic, transaction and technological complexity. Using a sample of 327 trilateral alliances, the most frequent form of multilateral alliances, we find that three forms of alliance complexity involving internal uncertainty (organizational, partner and technological complexity) favor equity-based governance, whereas external uncertainty in the form of geographic complexity discourages equity-based governance.     

Is experience valuable in international strategic alliances?

This study investigates whether firms benefit from prior alliance experiences as they undertake international strategic alliances. Different from previous studies that mostly focus on equity joint ventures, this study investigates non-equity alliances. This specific investigation is essential, because the complexity and uncertainty associated with such alliances potentially magnify the benefits of experiential learning. With a sample of 629 international, non-equity alliances formed by US firms, our results confirm the contribution of ISA experience in general, as well as that of experience specific to partner's country of origin and alliance activity type. The results also reveal a contingent benefit of ISA experiences, where experience of technological cooperation and experience with alliance partners from emerging countries both add more to firm value. We derive consistent evidence, as performance is assessed either by the market's perception of ISA value creation, or by the post announcement operating earnings in practice.     

Improving the Progress of Research & Development (R&D) Projects by Selecting an Optimal Alliance Structure and Partner Type

This paper extends the study of alliance governance structure by examining what alliance structure, coordination mechanisms and partner type best enhance the likelihood of Research and Development (R&D) progress or performance. We specially focus on the coordination and interaction mechanism of alliances, through which we classify the alliance governance structures in order to reflect the more complex alliance types and contracts used in today's R&D. Using data from 255 biopharmaceuticals between the years 2000 and 2004, we found that, ceteris paribus, a moderate degree of inter‐partner interaction and a moderately complex (non‐equity‐based) alliance contract contributes more to a better R&D alliance performance than those structures that are too simple or too organizationally embedded (e.g. equity joint ventures), which possibly increase the risk of misalignment and miscommunication between allies. In addition, due to the reduced opportunism and the diverse resource (e.g. technology) pooled in the alliance, allying with diverse organizational partners such as non‐profit research institutes and universities is more likely to enhance the R&D performance. Our findings provide insightful strategic implications to practitioners in designing an appropriate alliance governance structure and choosing the right partner type for a successful R&D collaboration.     

Competition,formal governance and trust in alliances: An experimental study

We study the role of alliance governance in the behavior of partners in alliances with different degrees of competition. Using data from a lab experiment on 1,009 alliances and 31,662 partners' choices, we explore whether and how alliances succeed in different competitive scenarios, contingent on the use of formal governance mechanisms (termination clauses) and the number of partners in the alliance. We find that trust, an informal governance mechanism, emerges as a complement to formal governance in order to establish success in our experimental alliances, especially when competition is high. In particular, we document the significance of “trust-building” in initial stages and “trust repair” in later stages of our experimental alliances.     

Coping with Diversity in Alliances for Innovation: The Role of Relational Social Capital and Knowledge Codifiability

Alliances are increasingly considered a key element for innovation, especially in knowledge‐intensive firms. While this is true, the mere membership to alliances does not explain innovation performance, and thus the alliance's characteristics that determine high performance must be examined. This research address the question of how the diversity of partners in a certain alliance for innovation affects innovation performance, and how this influence can be moderated by certain characteristics, such as the relational dimension of social capital and the type of knowledge shared among partners. The empirical analysis of a sample of 90 biotech companies shows that there is an inverted U‐shaped relationship between alliance partner diversity and innovation performance and confirms the positive moderating effects of relational social capital and knowledge codifiability. These findings contribute to the current research on alliances for innovation by providing empirical evidence on why some alliances perform better than others. Also, the results suggest that the study of alliance partner diversity, as a determinant of alliance performance, should not be addressed in isolation.     

Embedded Networks and Suboptimal Resource Matching in Alliance Formations

Interest has been growing in alliance networks, and research has demonstrated several advantages of embedded networks, including joint problem solving. How embedded networks function as social capital and promote alliance formation has also been explored. However, less is known about constraints that they impose on firms’ extensive search for partners. In this study, we advance our understanding of the downsides of embedded networks by proposing that embedded networks facilitate alliance formations, but they may also cause suboptimal resource matching in alliance formations. Specifically, we predict that, in alliances where initial resource matching is more important than ex post collaborative activities, suboptimal resource matching is more likely when firms ally with partners with which they have pre‐existing direct or indirect ties and that such alliances decrease firm‐level resource utilization performance in operations. Using codeshare alliance data from the global airline industry, we find support for our predictions.     

International alliance formation and stock market responses:: Industry globalization as an environmental contingency

This study examines the effects of the degree of industry globalization on international alliance formation in terms of the type of alliance chosen by partner firms and stock market responses to the chosen type of alliance. Using a sample of 244 international alliances formed between U.S. and non-U.S. firms for the 1992–97 period, we find that nonjoint venture (joint venture) alliances take place relatively more frequently in global (multidomestic) industries than in multidomestic (global) industries. We also find that in global industries, abnormal returns to nonjoint venture partners are relatively greater than those to joint venture partners, whereas in multidomestic industries, abnormal returns to nonjoint venture partners are relatively smaller, though insignificant, than those to joint venture partners. Our findings suggest that the degree of industry globalization plays an important role in explaining which type of international alliance is likely to be chosen by partner firms when entering an alliance and how stock markets tend to respond to the chosen type of alliance.     

The Impact of Alliance Management Capabilities on Alliance Attributes and Performance: A Literature Review

The literature on alliances has identified a variety of inter‐firm antecedents of performance, including information and knowledge sharing between partners, shared partner understanding, and a focus on collective objectives. Recent studies have focused on alliance management capabilities (AMC) – firms' abilities to capture, share, store and apply alliance management knowledge – as an important antecedent of performance. This paper reviews 90 studies on AMC and makes two important contributions to the literature. First, the review provides an overview of and classification scheme for the different types of AMC to better organise the diverse empirical findings that have been presented in the literature. The novel classification distinguishes between general and partner‐specific AMC and between AMC stored within the firm and within the alliance. Second, consistent with the dynamic capabilities perspective, this paper offers a more detailed understanding of why AMC improve performance, by highlighting the intermediate impact of AMC on alliance attributes. In particular, the review demonstrates how the different categories of AMC influence alliances in terms of information and knowledge‐sharing between partners, shared partner understanding and the pursuit of collective goals. The review also demonstrates that these attributes improve performance. The authors note promising avenues for future empirical research that involve combining the classification scheme with research on the impact of AMC on alliance attributes and performance.     

The Dynamics of Research Alliances: Examining the Effect of Alliance Experience and Partner Characteristics on the Speed of Alliance Entry in the Biotech Industry

Few studies have moved beyond the dyadic level of an ongoing alliance and examined factors contributing to the success of entering a series of alliances. In this paper we expect biotechnology firms over time to learn from their alliance experience and to develop general alliance capabilities. Specifically, we expect the speed with which they enter into new research alliances, e.g. their alliance formation rate, to be affected by capabilities built up in prior alliances as well as by characteristics of their partners. We use longitudinal event history data for the complete population of US biotechnology firms for 1973–1999 to test four hypotheses about factors affecting the rate of new alliance formation. Our analysis suggests that the speed of entering research alliances is affected by prior experience of the focal firm, but not by partner characteristics. Our findings provide evidence that biotech firms learn how to learn more effectively from multiple research alliances; however, this effect is generalized and not tied to specific characteristics of the alliance partner.     

Alliance‐building Process as Inhibiting Factor for SME International Alliances

This study examines how the alliance‐building process affects the intention to enter into international alliances in the case of small and medium‐sized enterprises (SMEs). From a psychological perspective (Perceived Behavioural Control), the authors analyse the alliance‐building process as an inhibitor of the international collaboration intention, considering to what extent the experience affects the intention of the partners involved. The study explores these hypotheses based on a sample of 220 Spanish SMEs. The results provide empirical evidence showing that the intention to develop international alliances is negatively affected by the search and the selection process as well as by the negotiation of the agreement, which reduces the intention to establish an international agreement. In addition, the intention is moderated by the experience of the SME manager. Moreover, there is a negative relationship between the extent of the SME manager's international experience and the intention to develop an international alliance.     

Dynamic evolution of alliance portfolios

This research advances in the conceptualization and the operationalization of the factors or microdynamics that determine the choice of partners. Most of the literature in this area of research has centered on the individual alliance without taking into account the set of alliances that a firm makes. This research applies a holistic approach, analyzing the set of alliances as a whole and points to the factors related to alliance portfolios that affect the choice of partners. The authors propose a longitudinal model that allows us to analyze the evolution of interorganizational networks. A Simulation Investigation for Empirical Network Analysis (SIENA) has been applied to a sample of 229 firms, analyzing 10,556 strategic alliances established between them over a 12 year period. The results show that certain factors over which managers exercise a degree of control (deliberate endogenous microdynamics) exert significant influences on the choice of partners by the focal actor and thereby on the dynamic configuration of alliance portfolios.     

Patterns in Cross Shopping for Groceries and their Implications for Co-operation in Retail Location

One determinant of the success of a retail outlet is its location. The location strategies adopted by many retailers of convenience products, including those marketing groceries, have been based upon the principle of siting stores away from competition. Recent moves by leading grocery retailers to develop out of town and other sites jointly, where they would trade side by side, mean that methods are needed to appraise the selection of location partners to supplement or replace traditional, spatial analyses. A method based on similarity of image and cross-shopping behaviour is proposed and tested on two substantial data bases. A concept, drawn from theory on brand switching, that customers would treat outlets seen as similar in a similar way, is found not to apply to source switching. Source switching behaviour is found instead to vary with the source itself, according to two distinct patterns. In one, shoppers cross shop more to retailers perceived to be similar; in the other, shoppers cross shop more to retailers perceived to be different. The strategies currently adopted by four grocery retailers in joint site development are appraised against the model of source switching that can be defined from these patterns. Some location alliances are predicted to be potentially more valuable to one partner than another both in the short and long term. The anomalies identified in the selection of location partners are analysed by reference to concepts drawn from the literature on co-operation. Two different types of relationship exist between the various retail partners; a longer term alliance at each site and shorter co-operation between head offices. It is suggested that the nature of the second could prejudice the outcome of the first.     

How Japanese partners help US manufacturers to raise productivity

Cross-border alliances are useful strategies for technological innovation and as a basis for the adaptation of foreign technologies. This study provides evidence that through strategic alliances US automotive firms are effectively adopting manufacturing technologies from Japan, and are adapting them to the US industrial context.

The results show that US firms without foreign affiliations use fewer modern manufacturing technologies than US firms with Japanese strategic alliance partners. Furthermore, US firms with Japanese strategic alliance partners believe that manufacturing cycle times for product introduction are more efficient that US firms without foreign affiliations.