Sustaining Strategic Alliances: Options and Guidelines

Strategic alliances have become a popular competitive weapon in today's business environment. By definition, strategic alliances refer to interfirm co-operative arrangements aimed at pursuing mutual strategic goals. Examples of strategic alliances include joint ventures, joint R&D, product swap, equity investment and sharing, licensing, and others. The number of newly forged alliances has been growing at more than 25 per cent annually in recent years [1, 2]. Nevertheless, while many firms are rushing into such alliances as a quick-fix solution to their problems, the failure rate ofstrategic alliances has been consistently high [3]. A recent report on airline alliances found that fewer than 40 per cent of regional and fewer than 30 per cent of international alliances have been successful [4]. Many partners terminated their alliances before achieving intended objectives. It has been a busy twoway street: companies keep pulling themselves out of alliances even as more companies continue to forge new alliances. Hence, some theorists have suggested that strategic alliances may be a transitional governance mode, leading eventually to either more permanent organizational forms via mergers and acquisitions, or to dissolution. Thus, it is necessary to study alliances in some depth in order to understand the causes of alliance failures, and to provide effective guidelines for more sustainable alliances.