Horizontal alliances as an alternative to autonomous production: product expansion mode choice in the worldwide aircraft industry 1945-2000

This study investigates why firms choose to undertake product expansion through alliances with competitors rather than on their own. We highlight product heterogeneity as a determinant of this make or ally choice. We propose that firms turn to horizontal alliances in order to implement product expansion projects that require greater resources than those available to them. More precisely, we hypothesize that a firm is more likely to launch a new product through a horizontal alliance rather than autonomously when the resource requirements of the project are greater, the resources available to the firm are more limited, there is a mismatch between resource endowment and requirement, and the firm's collaborative competence allows it to better cope with the interorganizational concerns that collaboration with competitors raises. We find support for our arguments on a sample of 310 new aircraft developments launched between 1945 and 2000, either by a single prime contractor or as a horizontal alliance in which prime contractorship is shared with another industry incumbent

[1]  G. Hamel.  Competition for competence and interpartner learning within international strategic alliances , 1991 .

[2]  R. Gulati.  Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances , 1995 .

[3]  Maurizio Zollo,et al.  Deliberate Learning and the Evolution of Dynamic Capabilities , 2002 .

[4]  Loet Leydesdorff,et al.  Scaling trajectories in civil aircraft (1913–1997) , 2000, 1001.1312.

[5]  K. Eisenhardt,et al.  Resource-based View of Strategic Alliance Formation: Strategic and Social Effects in Entrepreneurial Firms , 1996 .

[6]  K. R. Conner,et al.  A Resource-Based Theory of the Firm: Knowledge Versus Opportunism , 1996 .

[7]  J. Hennart,et al.  A transaction costs theory of equity joint ventures , 1988 .

[8]  Steven White,et al.  Distinguishing costs of cooperation and control in alliances , 2005 .

[9]  Rachelle C. Sampson.  Experience effects and collaborative returns in R&D alliances , 2005 .

[10]  W. Mitchell,et al.  Learning from competing partners: outcomes and durations of scale and link alliances in Europe, North America and Asia , 2000 .

[11]  B. Kogut.  The Stability of Joint Ventures: Reciprocity and Competitive Rivalry , 1989 .

[12]  Louis E. Yelle.  THE LEARNING CURVE: HISTORICAL REVIEW AND COMPREHENSIVE SURVEY , 1979 .

[13]  W. Shan.  An empirical analysis of organizational strategies by entrepreneurial high-technology firms , 1990 .

[14]  D. Teece.  Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy , 1993 .

[15]  Toby E. Stuart.  Network Positions and Propensities to Collaborate: An Investigation of Strategic Alliance Formation in a High-Technology Industry , 1998 .

[16]  B. Kogut.  Joint ventures: Theoretical and empirical perspectives , 1988 .

[17]  John Hagedoorn,et al.  A note on international market leaders and networks of strategic technology partnering. , 1995 .

[18]  J. Barney.  How a Firm's Capabilities Affect Boundary Decisions , 1999 .

[19]  Karel Cool,et al.  Asset stock accumulation and sustainability of competitive advantage , 1989 .

[20]  S. Winter.  On Coase, Competence, and the Corporation , 1988 .

[21]  S. Masten.  The Organization of Production: Evidence from the Aerospace Industry , 1984, The Journal of Law and Economics.

[22]  J. Liebeskind,et al.  Knowledge, Strategy, and the Theory of the Firm , 1996 .

[23]  Todd R. Zenger,et al.  Testing Alternative Theories of the Firm: Transaction Cost, Knowledge-Based, and Measurement Explanations for Make-or- Buy Decisions in Information Services , 1997 .

[24]  Will Mitchell,et al.  Incumbents' use of pre-entry alliances before expansion into new technical subfields of an industry , 1992 .

[25]  O. Williamson.  Comparative Economic Organization: The Analysis of Discrete Structural Alternatives , 1994 .

[26]  B Kogut.  Theoretical and empirical perspectives , 1988 .

[27]  F. Rothaermel,et al.  The Effect of General and Partner-Specific Alliance Experience on Joint R&D Project Performance , 2005 .

[28]  N. Nohria,et al.  Global strategic linkages and industry structure , 1991 .

[29]  A. Zaheer,et al.  Does Trust Matter? Exploring the Effectsof Interorganizational and Interpersonaltrust on Performance , 1998 .

[30]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[31]  T. Das,et al.  A Resource-Based Theory of Strategic Alliances , 2000 .

[32]  Bernard L. Simonin.  The Importance of Collaborative Know-How: An Empirical Test of the Learning Organization , 1997 .

[33]  Jeffrey H. Dyer,et al.  Alliance capability, stock market response, and long‐term alliance success: the role of the alliance function , 2002 .

[34]  G. Ahuja.  The duality of collaboration : Inducements and opportunities in the formation of interfirm linkages , 2000 .

[35]  R. Gulati.  Network location and learning: the influence of network resources and firm capabilities on alliance formation , 1999 .

[36]  T. Khanna,et al.  Do Firms Learn to Create Value? The Case of Alliances , 2000 .

[37]  R. Gulati,et al.  The Architecture of Cooperation: Managing Coordination Costs and Appropriation Concerns in Strategic Alliances , 1998 .

[38]  J. Jarillo.  On strategic networks , 1988 .

[39]  Kyle J. Mayer,et al.  Learning to Contract: Evidence from the Personal Computer Industry , 2004, Organ. Sci..

[40]  F. Rothaermel,et al.  Old technology meets new technology: complementarities, similarities, and alliance formation , 2008 .

[41]  Kyle J. Mayer,et al.  Capabilities, Contractual Hazards, and Governance: Integrating Resource-Based and Transaction Cost Perspectives , 2006 .

[42]  H. Simon.  Bounded Rationality and Organizational Learning , 1991 .

[43]  Arvind Parkhe.  Strategic Alliance Structuring: A Game Theoretic and Transaction Cost Examination of Interfirm Cooperation , 1993 .

[44]  Douglas J. Miller,et al.  An empirical examination of transaction- and firm-level influences on the vertical boundaries of the firm , 2003 .

[45]  J. Papastavrou,et al.  Accounting for Endogeneity When Assessing Strategy Performance: Does Entry Mode Choice Affect Fdi Survival , 1998 .

[46]  Harbir Singh,et al.  Complementarity, status similarity and social capital as drivers of alliance formation , 2000 .

[47]  Bernard Garrette,et al.  Determinants of Success in International Strategic Alliances: Evidence from the Global Aerospace Industry , 1995 .

[48]  Harbir Singh,et al.  Asset redeployment, acquisitions and corporate strategy in declining industries , 1997 .

[49]  O. Williamson,et al.  STRATEGY RESEARCH: GOVERNANCE AND COMPETENCE PERSPECTIVES , 1999 .

[50]  Jeffrey H. Dyer.  Specialized supplier networks as a source of competitive advantage : Evidence from the auto industry , 1996 .