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.     

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.     

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.     

Alliance governance choices: Disentangling the effects of uncertainty and alliance experience

This article analyses the interaction between alliance experience and behavioural uncertainty to improve our understanding of alliance governance. We investigate the extent to which the effect of alliance experience on governance choices is explained by a reduction in “mundane” transaction costs or by a reduction in “opportunistic” transaction costs. Based on more than 12,000 firm experiences with equity and non-equity alliances, we demonstrate a reduction in mundane transaction costs over time by firms reusing the same governance structure in successive alliances. We also find that in high behavioural uncertainty alliances, firms rely on their experience as a substitute for equity governance to reduce opportunistic transaction costs.     

Turning Three Sides into a Delta at General Motors: Enhancing Partnership Integration on Corporate Ventures

General Motors had enjoyed global operations that were based on exports, acquisitions, joint ventures and strategic alliances throughout the 20th century. Its global-programme strategy appeared assured. However, the carmaker came unstuck when it came to creating a large-scale collaborative effort involving its own internal units. The Delta Small Car Program, involving three fully internal GM units, was terminated after its goals failed to materialise. The carmaker’s long-standing cultural tradition of autonomy for its units was what made collaboration between them difficult. We examine this GM global programme, placing it in its historical context. Our primary database consists of the perceptions and experiences offered to us by a cross-section of programme participants. By examining partner integration at the working level, we identify insights and offer recommendations pertaining to venture structure and dynamics and their role in venture success.     

Acquiring technological competencies through inter-organizational collaboration: An organizational learning perspective

Firms are becoming increasingly sophisticated in their technology strategies and are procuring know-how through a variety of collaborative methods including licensing agreements, joint ventures, minority investments, and equity acquisitions. This paper examines the relationship between an organization's learning capability and inter-organizational collaboration in acquiring technological competencies. Organizational learning is posited to be a mediating mechanism through which technological competencies are developed via varying levels of organizational interaction. A general model is developed which suggests an “efficient fit” relationship between an organization's ability to learn, characteristics of the technology, and mode of inter-organizational collaboration. The concept of a “learning gap” is introduced, and managerial implications are suggested. Finally, propositions are developed to facilitate future empirical research.     

Small firms in multipartner R&D alliances: Gaining benefits by acquiescing

This study highlights how smaller firms gain advantages through exchange strategies in alliances. Based on a sample of 141 firms involved in multipartner alliances governed by cooperative exchange norms, our findings support the hypothesis that smaller firms are more likely than larger firms to comply with cooperative exchange norms. This finding is especially valid for firms in manufacturing industries and can positively influence new product development. This study is a starting point for additional research investigating how, when, and why firms can benefit from engaging in multipartner alliances, even if they are a relatively small player.     

Task partitioning in new product development teams: A knowledge and learning perspective

R&D alliances and outsourcing elements of the new product development process are now commonplace practices among many firms. However, little previous work has examined how these organizational choices influence project knowledge and learning. Based on a comparison of three new product development projects in the software industry, this paper examines how task partitioning in the project influences learning and knowledge development within the firm. The paper suggests that internal development projects encourage synthetic learning and development of architectural and tacit knowledge; in contrast, outsourcing and joint ventures encourage analytic learning and development of component and explicit knowledge.     

Managing Instability in Cross-Cultural Alliances

Cross-cultural alliances and the global reach that they can offer would appear to be the strategic answer to companies’ international ambitions. Yet many alliances are doomed to failure because of tensions between the partners. This paper takes a case study approach to explore why instability can emerge in cross-cultural ventures. The examples involve two Japanese joint ventures with local partners in the UK and in Malaysia. The authors find that key factors affecting stability are trust, conflict and dependence. The relative importance of these factors varies according to partner nationality: the main driver for joint venture stability for the Japanese is trust; for the British it is dependence; while in the Chinese Malaysian’s case both trust and dependence are important.     

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.     

Safe and Sorry: Risk, Environmental Equity, and Hazardous Waste Management Facilities

Many empirical environmental equity analyses have attempted to determine if hazardous waste treatment, storage, or disposal facilities (TSDFs) are in disproportionately minority or low-income areas. These prior analyses did not explain the extent of the risks posed by TSDFs, nor did they weight the distribution of those risks by the individual characteristics of the TSDFs. This study evaluated the risks posed by TSDFs in general and then examined whether any such risks were distributed inequitably when each TSDF was weighted by the amount of hazardous waste that it managed. Based on an assessment of the nature of the hazardous wastes that TSDFs manage, the possible exposure paths to risk from TSDFs, the laws designed to minimize the risks that TSDFs pose, and TSDFs' safety records, the attention devoted to TSDFs by environmental equity researchers is greatly exaggerated. Furthermore, based on this study's analyses, there was no pattern of the TSDFs or the risks that they posed being inequitably concentrated in disproportionately minority or low-income areas. Most of the TSDFs and the hazardous waste that they manage are in areas that are either unpopulated or have fewer minority or low-income people than the national average. There are, however, some TSDFs that are in highly populated, heavily minority or low-income areas, which results in such people being more likely overall to be in close proximity to these facilities.     

The influence of industry structure on the entry mode choice of overseas entrants in manufacturing industries

This study examines the impact of industry structure on the foreign direct investment (FDI) entry mode decisions by multinational enterprises (MNEs) in manufacturing industries. We explore the notion that firms would seek to balance the risks due to industry structural barriers and liabilities of foreignness while seeking entry in international markets. A multinomial logistic regression model is used to test 336 entry decisions from 18 countries entering the United States over the period 1989–1994. Empirical evidence shows that underlying industries' structural characteristics influence a firm's preference for entry mode alternatives such as greenfield investments, acquisitions, and joint ventures. In concentrated and high-growth industries, foreign firms prefer entry by setting up greenfield operations rather than pursuing acquisitions or joint ventures. However, in industries characterized by high gross profits or higher plant scale, the preference is for joint ventures or acquisitions as an entry mode over greenfield operations.     

Technological and Output Complementarities, and Inter-Firm Cooperation in Information Technology Ventures

Firms whose profiles of technologicalcompetence are complementary to one another are morelikely to enter into technology-based cooperativeagreements, and a broad level of technologicalcomplementarity is necessary for these agreements toextend as far as a mutual coordination of learningprocesses (combined research ventures). Using data onagreements between the world's largest firms in thearea of information technology (IT) and the patternsof technological specialization of these firms in theIT fields as revealed by their corporate patenting inthe US, we show that the technologicalco-specialization of firms helps to explain allianceformation, over and above the effects of anyco-specialization in IT products. While firms whosetechnological efforts are less complementary are lesslikely to cooperate for technology purposes, if theydo cooperate it is to exploit the differences in theirfields of expertise, and hence they are likely to usequasi-market organizational forms such as licensing,while the purpose of the alliance is restricted to anexchange of knowledge without any joint coordinationof learning (research). Instead, equity jointventures are likeliest when at a broad level ofaggregation the profiles of technologicalspecialization of partners are complementary, but ata more detailed level of disaggregation there is agreater distance between them, such that thecoordination of learning efforts is feasible, butrequires a stronger organizational commitment.     

Curvilinear relationship between cultural distance and equity participation: An empirical analysis of cross-border acquisitions

We examine the relationship between national cultural distance and equity participation using an analysis of a sample of more than 100,000 cross-border acquisitions from 1976 to 2008. We find that cultural distance has a curvilinear (U shaped) relationship with equity participation: Acquiring firms make large equity acquisitions at both low and high cultural distances and small equity acquisitions at moderate cultural distances. In addition, we find that industry relatedness of acquisitions positively moderates the relationship between cultural distance and equity participation: Acquiring firms take a higher equity stake for a given cultural distance if the acquisitions are in a related industry. Our findings offer important insights into firms' market entry behavior and provide guidelines for managers about entry strategies.     

Value Chain Orchestration in Action and the Case of the Global Agrochemical Industry

This article examines the concept of virtual value chain orchestration, an emergent phenomenon of strategizing and organizing. Virtual value chain orchestration is defined as way of creating and capturing value by structuring, coordinating, and integrating the activities of previously separate markets, and by relating these activities effectively to in-house operations with the aim of developing a network of activities that create fundamentally new markets. The research is based on an in-depth analysis of the agrochemical and biotech industry and is illustrated by two case studies. Consideration is given to steps needed for orchestrating a successful virtual value chain, including the conditions which might indicate when strategic alliances, rather than joint ventures or acquisitions are used for capturing the value created. Based on the preliminary results of the case studies, the article concludes that the orchestration of an extended network of diverse partner companies leads to superior financial results.     

An Analysis of Strategic Determinants,Learning and Decision‐Making in Sino‐British Joint Ventures

This paper examines how partners’ strategic objectives, inputs and competencies affect the learning they achieve in joint ventures and their ability to influence decision‐making in such ventures. Quantitative and qualitative research in 20 Sino‐British joint ventures permits an investigation of these factors for both British and Chinese joint venture partners. Findings indicate that the transfer by British partners of technology and managerial expertise to joint ventures enhances their ability to achieve their strategic objectives by influencing decisions in such ventures. The learning achieved by British partners depends on their commitment of strategic inputs to joint ventures and is therefore associated with their influence. The case of Chinese partners is different, because they look to learn from the knowledge and resource inputs provided by the British partners. They therefore rely more on legal ownership rights to retain an influence over joint venture decision‐making. The achievement of Chinese partners’ strategic objectives depends more critically on the quality of the partnership itself.     

研发型战略联盟风险预警机制研究

研发型联盟对风险的识别和预警直接决定了研发活动的成败。本文针对研发型联盟面临的风险进行了风险预警设计,首先依据风险的来源划分了联盟可能面临的风险种类,其次明确了联盟风险识别程序;在此基础上,构建了包含六元素(目标、文化、方法、组织、信息、过程)的研发型战略联盟风险预警模式,六个元素构成了风险预警的有机整体,运用管理熵理论对研发联盟风险预警度量进行了量化处理,以熵权从内外两个来源确定联盟的风险度量,并以传递熵概念来明确预警信号指标的准确性,给出了一个较为完整和准确的量化预警模型,以期利于联盟决策者的风险防范应对策略制定。     

Valuation effects of corporate strategic transactions in the cleantech industry

This paper investigates capital market reactions to announcements of corporate strategic transactions in the clean technology, or cleantech, industry. Using the event study method in a multi-country setting, we exploit a dataset of 328 hand-collected announcements of mergers and acquisitions, joint ventures, and asset disposals that took place between 2001 and 2011. We provide strong evidence of significant wealth gains from cleantech deals. On average, cleantech companies earn significantly higher abnormal returns than non-cleantech companies, confirming the beneficial idiosyncrasies of the cleantech industry. These high premia are likely driven by government interventions that are believed to be a necessary pre-condition for development of clean technology. Alternatively, the premia are commanded by the acquisition of cutting-edge environmental innovations and the positive credibility spillover inherent in cleantech deals.     

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.     

Strategic alliances. Partnerships with a purpose

During the past few years, health care providers, managed care companies, and insurers around the country have formed a variety of strategic alliances aimed at stemming runaway costs, broadening referral bases, and generally preparing for the formal arrival of health care reform and the mandates it may carry. The list of such ventures is long and creative, and it grows as major changes in the health care delivery and financing system become more imminent. In interviews with physician executives and others whose organizations have undertaken integration efforts, the author explores some of the arrangements that are already in place or under development.