Alliances with Competitors: How to Combine and Protect Key Resources?

Our study addresses two main questions: First, what types of alliances do firms tend to create when combining different kinds of resources? Second, what governance mechanisms do firms set up to coordinate and protect resources when they use them for different alliances? We examine 227 alliances between competitors in Asia, North America, and Europe. We first identify two types of alliances: scale alliances in which the partner firms contribute similar resources, and link alliances in which the partners contribute complementary resources. We find that firms contributing R&D and production resources tend to form scale alliances, while firms contributing marketing resources tend to enter into link alliances. We also find that firms are more likely to choose stronger protection mechanisms for link alliances, which create greater appropriation risks, while they tend to seek higher levels of coordination in scale alliances.

[1]  Malcolm Rutherford.  Institutional Economics: Its Place in Political Economy , 1989 .

[2]  Bernard Garrette,et al.  Anticipating the Evolutions and Outcomes of Strategic Alliances Between Rival Firms , 1996 .

[3]  J. R. Moore,et al.  The theory of the growth of the firm twenty-five years after , 1960 .

[4]  Rudi K. F. Bresser.  Matching collective and competitive strategies , 1988 .

[5]  S. Winter,et al.  An Evolutionary Theory of Economic Change.by Richard R. Nelson; Sidney G. Winter , 1987 .

[6]  Christos N. Pitelis,et al.  The Nature of the Transnational Firm , 1991 .

[7]  K. R. Harrigan.  Strategies for joint ventures , 1985 .

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

[9]  Jean‐Franois Hennart,et al.  The transaction cost theory of the multinational enterprise , 1991 .

[10]  W. Mitchell,et al.  Path-dependent and path-breaking change: reconfiguring business resources following acquisitions in the U.S. medical sector, 1978–1995 , 2000 .

[11]  W. Mitchell,et al.  SURVIVAL OF BUSINESSES USING COLLABORATIVE RELATIONSHIPS TO COMMERCIALIZE COMPLEX GOODS , 1996 .

[12]  Nicholas Argyres.  CAPABILITIES, TECHNOLOGICAL DIVERSIFICATION AND DIVISIONALIZATION , 1996 .

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

[14]  G. Dosi,et al.  Learning in Evolutionary Environments , 1996 .

[15]  K. R. Conner.  A Historical Comparison of Resource-Based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm? , 1991 .

[16]  J. Oxley.  Institutional environment and the mechanisms of governance: the impact of intellectual property protection on the structure of inter-firm alliances , 1999 .

[17]  W. Barnes,et al.  Joint Venture Survival in Multinational Corporations. , 1973, American Journal of International Law.

[18]  Paolo Leon.  The Economic Institutions of Capitalism , 1986, The Antitrust Bulletin.

[19]  Bernard Garrette,et al.  An empirical study of hybrid forms of governance structure: the case of the telecommunication equipment industry , 1994 .

[20]  E. Zajac,et al.  FROM TRANSACTION COST TO TRANSACTIONAL VALUE ANALYSIS: IMPLICATIONS FOR THE STUDY OF INTERORGANIZATIONAL STRATEGIES* , 1993 .

[21]  R. Gulati,et al.  The dynamics of learning alliances: competition, cooperation, and relative scope , 1998 .

[22]  G. Pisano.  Using Equity Participation to Support Exchange: Evidence from the Biotechnology Industry , 1989 .

[23]  A. Millington,et al.  Transnational Joint Ventures Between UK and EU Manufacturing Companies and the Structure of Competition , 1995 .

[24]  J. Killing,et al.  Strategies for joint venture success , 1983 .

[25]  W. Davidson.  Competition in Global Industries , 1987 .

[26]  O. Williamson.  Credible Commitments: Using Hostages to Support Exchange , 1983 .

[27]  Mariko Sakakibara,et al.  HETEROGENEITY OF FIRM CAPABILITIES AND COOPERATIVE RESEARCH AND DEVELOPMENT: AN EMPIRICAL EXAMINATION OF MOTIVES , 1997 .

[28]  S. Park,et al.  When competition eclipses cooperation: an event history analysis of joint venture failure , 1996 .

[29]  D. Teece,et al.  The Dynamic Capabilities of Firms: an Introduction , 1994 .

[30]  George J. Stigler,et al.  The Organization of Industry , 1969 .

[31]  Hiroyuki Itami.  Mobilizing invisible assets , 1987 .

[32]  W. Mitchell.  Dual clocks: Entry order influences on incumbent and newcomer market share and survival when specialized assets retain their value , 1991 .

[33]  Tailan Chi.  Trading in strategic resources: Necessary conditions, transaction cost problems, and choice of exchange structure , 1994 .

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

[35]  W. Mitchell,et al.  Death of the Lethargic: Effects of Expansion into New Technical Subfields on Performance in a Firm's Base Business , 1993 .

[36]  R. Gulati.  Alliances and networks , 1998 .

[37]  Frederic M. Scherer,et al.  Life after Takeover , 1987 .

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

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

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

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

[42]  C. Oliver.  Determinants of Interorganizational Relationships: Integration and Future Directions , 1990 .

[43]  Joan V. Robinson,et al.  The Nature of the Firm , 2004 .

[44]  O. Williamson.  / STRATEGIZING, ECONOMIZING, AND ECONOMIC ORGANIZATION , 1991 .

[45]  Harbir Singh.  Managing for Joint Venture Success , 1986 .

[46]  G. Dosi,et al.  Learning how to govern and learning how to solve problems: on the co-evolution of competences, confl , 1995 .

[47]  C. Barnard.  The Functions of the Executive , 1939 .

[48]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[49]  W. Mitchell,et al.  Resource redeployment following horizontal acquisitions in Europe and North America, 1988-1992 , 1998 .

[50]  D. Teece,et al.  Innovation and Cooperation: Implications for Competition and Antitrust , 1990 .

[51]  J. Hennart,et al.  Trojan horse or work horse? The evolution of U.S.-Japanese joint ventures in the United States , 1999 .

[52]  S. Ghoshal,et al.  Bad for Practice: A Critique of the Transaction Cost Theory , 1996 .

[53]  R. Nelson.  Why do firms differ, and how does it matter? , 1991 .

[54]  Stephen Tallman,et al.  Control and Performance in International Joint Ventures , 1997 .

[55]  I. Cockburn,et al.  Measuring competence?: exploring firm effects in pharmaceutical research , 1994 .

[56]  Benjamin Gomes-Casseres,et al.  Firm Ownership Preferences and Host Government Restrictions: An Integrated Approach , 1990 .

[57]  Peter P. Pekar,et al.  Smart Alliances: A Practical Guide to Repeatable Success , 1998 .

[58]  B. Wernerfelt,et al.  A Resource-Based View of the Firm , 1984 .

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

[60]  Birger Wernerfelt,et al.  The link between resources and type of diversification: Theory and evidence , 1991 .

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