Towards an Integrative Approach to Alliance Failure

Büchler, Jan-Philipp

Towards an Integrative Approach to Alliance Failure

Zusammenfassung

Inhaltsangabe:Abstract:
The past decade has seen increased academic interest in strategic alliances because alliances have developed to a centerpiece of corporate strategy. The number of newly formed alliances has been growing at more than 25 percent annually throughout the last decade and most large companies have at least 30 alliances; many have more than 100 in their alliance portfolio. According to empirical studies about 90 percent of the questioned companies are embedded in one or more alliances, which seem to be proliferating with increasing competition and globalization.
Yet despite the ubiquity of strategic alliances, reality shows that many alliances fail. They do not meet the goals of the parent companies and fall short of expectation for different reasons i.e. alliances do not perform as intended. Empirical researchers find that between 30 percent and 70 percent of alliances fail. However, there is neither a comprehensiv understanding of alliance failure and success nor a managerial framework that would allow to improve alliance performance.
Although a number of theoretical approaches as well as empirical studies have developed possible answers for the understanding of alliance failure by examining single factors, the review of the existing literature and investigation into the different theories shows that the reasoning is of a narrow view. To date, researchers mostly pay attention to individual aspects, but do not hold a holistic perspective. Most studies attribute failure to a wide range of factors including cultural, technical, financial, structural, and strategic aspects. The identified factors are neither wrong nor right but based on different assumptions and views that still remain unclassified, unstructured and incomparable. Due to overlaps, imprecise terms and a missing conceptual framework, the outcome is very limited in terms of explanation of alliance failure and success. Thus, the literature on alliance failure does not provide an adequate view of the interdependence and system of the identified factors.
Furthermore, researchers have not developed a multidimensional and systematic framework for the analysis of alliance failure and success so far. The importance of the interdependence amongst different alliance failure factors is not reflected in the existing literature.
Due to the high rate of failure of strategic alliances and the lack of a systematic and coherent understanding of the influencing factors of failure, […]

Leseprobe

Inhaltsverzeichnis

ID 9312

Büchler, Jan-Philipp: Towards an Integrative Approach to Alliance Failure

Druck Diplomica GmbH, Hamburg, 2006

Zugl.: Universität zu Köln, Diplomarbeit, 2003

Dieses Werk ist urheberrechtlich geschützt. Die dadurch begründeten Rechte, insbesondere die

der Übersetzung, des Nachdrucks, des Vortrags, der Entnahme von Abbildungen und Tabellen,

der Funksendung, der Mikroverfilmung oder der Vervielfältigung auf anderen Wegen und der

Speicherung in Datenverarbeitungsanlagen, bleiben, auch bei nur auszugsweiser Verwertung,

vorbehalten. Eine Vervielfältigung dieses Werkes oder von Teilen dieses Werkes ist auch im

Einzelfall nur in den Grenzen der gesetzlichen Bestimmungen des Urheberrechtsgesetzes der

Bundesrepublik Deutschland in der jeweils geltenden Fassung zulässig. Sie ist grundsätzlich

vergütungspflichtig. Zuwiderhandlungen unterliegen den Strafbestimmungen des

Urheberrechtes.

Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in diesem

Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme, dass solche

Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei zu betrachten

wären und daher von jedermann benutzt werden dürften.

Die Informationen in diesem Werk wurden mit Sorgfalt erarbeitet. Dennoch können Fehler nicht

vollständig ausgeschlossen werden, und die Diplomarbeiten Agentur, die Autoren oder

Übersetzer übernehmen keine juristische Verantwortung oder irgendeine Haftung für evtl.

verbliebene fehlerhafte Angaben und deren Folgen.

Diplomica GmbH

http://www.diplom.de, Hamburg 2006

Printed in Germany

Contents

Contents ... i

List of figures ...iii

List of tables...iii

Abbreviations... iv

1 Introduction...

1.1 Research problem... 2

1.2 Procedure of the analysis ... 3

2 Alliances as a third form of coordination ...

2.1 The nature of alliances ... 6

2.2 Different forms... 8

2.3 Goals and motives... 10

2.4 Alliance life cycle ... 14

2.5 Success and risk factors ... 17

2.6 Alliance outcomes... 21

2.6.1 Problems of performance measurement... 21

2.6.2 Defining alliance failure... 23

3 Development of a framework for the analysis of

alliance failure ... 25

3.1 Theoretical development of a framework ... 26

3.2 Review of the existing approaches to alliance failure... 32

3.2.1 Environmental

approaches... 32

3.2.2 Strategic

approaches ... 34

3.2.3 Structure determined approaches ... 36

3.2.4 Behaviorist

approaches ... 40

3.3 Interdependence of determinants for alliance failure... 45

3.4 Synthesis ... 50

4 Integrated approach to alliance failure... 53

4.1 Driving forces of alliance performance (environment)... 54

4.2 Alliance strategy for competitive advantage (strategy) ... 57

4.3 Alliance governance, organization structure and

resources (structure)... 61

4.4 Alliance culture and process (behavior)... 64

4.5 Synthesis ... 66

5 Conclusion and future perspectives... 68

Bibliography ... 71

iii

List of figures

Figure 1: Numbers of alliances formed in selected industries ... 1

Figure 2: Strategic alliances as a third form of coordination... 5

Figure 3: Forms of alliances by direction of integration... 9

Figure 4: Taxonomy of alliance forms... 10

Figure 5: Motives for strategic alliance formation... 11

Figure 6: Motives for cooperation along the value chain ... 14

Figure 7: Linear life cycle model of alliance evolution ... 15

Figure 8: Dynamic life cycle model of alliance evolution... 16

Figure 9: Survey results: Alliance success factors... 18

Figure 10: Failure of strategic alliances... 23

Figure 11: Forms of termination of strategic alliances ... 24

Figure 12: Systemic conception of an integrated framework ... 29

Figure 13: Integrated framework for the analysis of

alliance failure ... 30

Figure 14: Forms of coordination, transaction costs,

and asset specificity... 37

Figure 15: Alignment of key failure drivers to alliance junctions ... 53

Figure 16: Interdependences of failure drivers ... 54

Figure 17: Integrated approach to alliance failure ... 67

Figure 18: Use of different forms of alliances ... 69

List of tables

Table 1: Characteristics of different governance modes... 7

Table 2: Key drivers of alliance failure by theory ... 44

Abbreviations

BA - British

Airways

cp.

compare

EDI -

Electronic Data Interface

e.g. -

exempli gratia

esp. -

especially

etc. -

et cetera

i.e.

id est

IT - Information

technology

Joint Venture

M&A -

Merger and acquisition

R&D -

Research and development

vs. - versus

1 Introduction

The past decade has seen increased academic interest in strategic alliances

because alliances have developed to a centerpiece of corporate strategy.

The number of newly formed alliances has been growing at more than 25

percent annually throughout the last decade.

Most large companies have

at least 30 alliances, and many have more than 100 in their alliance portfo-

lio

. According to empirical studies about 90 percent of the questioned

companies are embedded one or more alliances, which seem to be prolif-

erating with increasing competition and globalization.

Thus, the competi-

tion between single firms gave way to the global competition between

strategic alliances.

Figure 1: Numbers of alliances formed in selected industries

The figure above illustrates the increase in the use of alliances as an ex-

ample of four selected industries throughout the last decades.

Cp. C

HILD

/ F

AULKNER

(1998), p. 4; B

AMFORD

/ G

OMES

-C

ASSERES

/ R

OBINSON

(2003) p. 1; moreover R

IEHLE

(1997), p. 581, explaining the importance of alli-

ances in a global context; H

AGEDOORN

/ S

CHAKENRAAD

(1990) find that alli-

ances are within the core business of many firms.

Cp. B

LEEKE

/ E

RNST

(1995); Y

OSHINO

/ R

ANGAN

(1995).

Cp. B

AMFORD

/ E

RNST

(2002); also G

ULATI

(1998).

Cp. E

GGS

/ E

NGLERT

(2000); esp. the airline industry illustrates the importance

and advantages of complex alliances as shown by G

ALLACHER

/ W

OOD

(1998)

as well as the alliances of the global car manufactures, whereas here more often

direct equity investments play a major role.

Cp. G

OMES

-C

ASSERES

(1996), p. 53; also P

ICOT ET AL

. (2001), p. 3.

Source: Based on data collected at the Maastricht Economic Research Institute

on Innovation and Technology presented by H

AGEDOORN

(1993).

1.1 Research problem

Yet despite the ubiquity of strategic alliances, reality shows that many

alliances fail, i.e. they do not meet the goals of the parent companies. They

fall short of expectation for different reasons that mean alliances do not

perform as intended.

Over the years, empirical research has shown that

between 30 percent and 70 percent of alliances fail.

UNT

and

ORGAN

state that as many as one-third of alliances may be "outright failures."

Improving alliance performance, thus lowering failure rates requires a

comprehensive and complete understanding of strategic alliances.

Although a number of theoretical approaches as well as empirical studies

have developed possible answers for the understanding of alliance failure

by examining single factors, the review of the existing literature and inves-

tigation into the different theories shows that the reasoning is of a narrow

view.

To date, researchers mostly pay attention to individual aspects, but

do not hold a holistic perspective.

The mentioned studies attribute failure

to a wide range of factors including cultural, technical, financial, struc-

tural, and strategic aspects. The identified factors are neither wrong nor

right but based on different assumptions and views that still remain un-

classified, unstructured and incomparable. Due to overlaps, imprecise

terms and a missing conceptual framework, the outcome is very limited in

terms of explanation of alliance failure. Thus, the literature on alliance

Cp. D

/ T

ENG

(2003).

Cp. B

AMFORD

/ G

OMES

-C

ASSERES

/ R

OBINSON

(2003) p. 1; an extensive over-

view of results of more than forty empirical studies has been given by B

LAN-

CHOT

/ M

AYRHOFER

(1998); also P

ARKHE

(1991, 1993) supports these findings

in several empirical investigations. I

NKPEN

/ B

EAMISH

(1997) estimate instability

rates of around 50 percent. K

OGUT

(1988a) finds that, in the case of research and

development (R&D) alliances, 57 percent are likely to fail.

Cp. H

UNT

/ M

ORGAN

(1994), p. 23.

Cp. D

/ T

ENG

(2000a), p. 81-82, for an extensive overview of theoretical ap-

proaches to alliance failure. Empirical research distinguishes between several

different broad factors such as overly optimistic, poor communication, slow re-

sults or payback, lack of communication, financial or cultural mismatch as in

ILES

/ S

NOW

(1991, 1992);

ataquest data in "The Alliance Analyst", based on

a survey of 455 CEOs as shown in G

OMES

-C

ASSERES

(1999); similar results are

presented by F

RANCE

(2001).

The expression holistic perspective is applied here in the sense of comprehen-

sive or overarching. It does not refer to the philosophical concept of holism in

this context.

failure does not provide an adequate view of the interdependence and sys-

tem of the identified factors.

Furthermore, researchers have not developed a multidimensional and sys-

tematic framework for the analysis of alliance failure so far. The impor-

tance of the interdependence amongst different alliance failure factors is

not reflected in the existing literature.

Due to the high rate of failure of strategic alliances and the lack of a sys-

tematic and coherent understanding of the influencing factors of failure,

the theoretical development of an integrated approach to alliance failure is

more than overdue for scientific research.

The objective of this thesis is to enhance the understanding of alliance

failure. To this end, three sub-goals are derived:

(1) Development of a multidimensional and coherent framework for fur-

ther analysis of alliance failure. This framework will contain all of the

identified factors for the success and failure of alliances.

(2) Description of the interdependence amongst the dimensions of this

framework.

(3) Depiction of an integrative model of alliance failure taking the in-

terdependences into account.

1.2 Procedure of the analysis

This thesis consists of five major parts. After the introduction to the topic

of strategic alliances and their failure, the second chapter focuses on a

classification of alliances within the context of interorganizational forms

of cooperation, i.e. as a third form of coordination aside from market and

hierarchy. The basic nature of alliances is shown and the different forms

of alliances are explained as well as the goals and motives for their forma-

tion. The understanding of the life cycle of alliances gives an insight into

the dynamic evolution and change of alliances. Throughout the life cycle

an alliance has to manage different success and risk factors driving alli-

ance success or failure. The analysis of these factors along the life cycle of

an alliance also lays the foundation for the definition of alliance failure

due to a certain understanding of the outcome of alliances.

The development of a framework for the analysis of alliance failure is the

purpose of the third chapter. The framework interprets strategic alliances

as systems consisting of at least two individual companies. They have an

individual structure and they strive for their goals and strategies, the rela-

tionship among them, and the environmental constraints. This fourfold

framework allows the classification of the existing approaches to alliance

failure to the separate dimensions, thus capturing all separately identified

factors. Afterwards, setting each of the dimensions as the prevailing de-

terminant, whilst describing the influence on the other dimensions, shows

the interdependences of the four dimensions on two different levels: sin-

gle-firm level and alliance level. The third chapter closes with a synthesis

dealing with the question of fit of the four dimensions and their influence

on alliance performance by examining to what extent the junctions of the

four dimensions might contain risk and failure factors on the alliance

level.

The fourth chapter offers a first sketch of an integrated approach to alli-

ance failure according to the theoretically developed framework. It allows

situation-based hypotheses of alliance failure by offering functional chains

of cause and effect of each interdependent factor. The interdependences

between the networked junctions of the four dimensions will be closely

examined on the alliance level in order to understand the dynamics of the

failure factors. Finally, a synthesis of the fit of the different dimensions

and the integration of these dimensions that provide failure drivers present

a systemic and multidimensional approach to alliance failure analysis in

the last part of the fourth chapter.

The fifth and final chapter concludes with a summary of the outcome of

this approach, reflects it critically and describes the implications for fur-

ther research into strategic alliances. It also questions if different forms

and sizes of alliances could result in different constellations of failure

drivers, thus providing more or less stability of the alliance.

2 Alliances as a third form of coordination

For a long time, network organizations

have been viewed as a hybrid

mode of governance falling somewhere on the continuum between open

market transactions as the form of coordination at arm's length and hierar-

chy as the other extreme.

Severe criticism on this view has been brought forward by P

OWELL

stating

that alliances are a form of governance that is not intermediate between

markets and hierarchies.

He argues that strategic alliances are character-

ized through social governance mechanisms that are unique to these insti-

tutional forms and separate them clearly from market and hierarchy. Also

OSHAL

and M

ORAN

ar-

gue that social control

replaces contractual

mechanisms within stra-

tegic alliances character-

izing them as a third form

of coordination.

Major distinctions be-

tween these three forms

are the level of autonomy,

i.e. whether the members

of the organization are

In the organizational literature, researchers use the term network organization or

strategic network, which subsumes alliances as one possible form of network or-

ganization amongst other forms. As all characteristics of networks account also

for strategic alliances, in the following, the term strategic alliance is used instead

of network organization due to more relevance and accuracy for the research in

this thesis.

Cp. W

ILLIAMSON

(1975; 1985) on the choice of organizational governance

modes in accordance to the criterion of minimizing transaction costs. W

ILLIAM-

SON

finds just two governance modes in his early works on transaction cost the-

ory, namely market and hierarchy. This dichotomy is enhanced in his later works

by hybrid governance forms, for instance network forms of organization (cp.

ILLIAMSON

(1985), p. 79 and p. 83-84). He characterizes these forms as hybrid

because he finds that alliances provide characteristics of both governance forms.

Cp. P

OWELL

(1990), p. 298, p. 314-138, and p. 322.

Cp. G

OSHAL

/ M

ORAN

(1996).

Source: Adopted with modifications from W

ILLKE

(1995), p. 139.

Figure 2: Strategic alliances as a third form

of coordination

Hybrids

Level of autonomy

vel o

sio

high

low

high

Hierachy

Market

Strategic

Alliance

Hybrids

self-determined or other-determined and the level of cohesion, i.e. whether

the members strive for joint or individual goals.

In the figure above stra-

tegic alliances are illustrated as a third clear-cut form of coordination tak-

ing a medium position between hierarchies and networks that are "pieces

of a larger puzzle that is the economy."

Without further discussion at this point, strategic alliances are viewed in

the following as a third form of coordination due to their characteristics

and nature, which separates them from market and hierarchy. The next

section focuses on the nature of and characteristics inherent to alliances.

2.1 The nature of alliances

An inflationary use of the term strategic alliance can be observed involv-

ing several differing definitions.

Referring to the classification of alli-

ances as a third form of governance, some of the constitutional

characteristics of this form can be employed for the definition of this term.

Strategic alliances can be defined as cooperative inter-firm relationships

between two or more separate firms

that are characterized by a rela-

tively high degree of formality between the partners, while maintaining

their individuality and legal independence.

Within this relationship re-

sources, knowledge, and capabilities are shared and exchanged by com-

Whereas autonomy is maximal in market forms of organization and minimal in

hierarchies, it stands vice versa with cohesion. Alliances take a medium position

with both dimensions.

OWELL

(1990), p. 301.

Esp. the usage by American and European researchers reveals differing views on

strategic alliances. Whereas most European researchers view only horizontal co-

operations as strategic alliances (cp. A

LBERS

(2000), p. 12), American scholars

subsume horizontal as well as vertical and diagonal co-operations under this

term, thus, network forms or organizations (cp. e.g. G

ARRETTE

/ D

USSAUGE

(1995)). The American understanding is followed here, because of a more gen-

eral applicability.

Strategic alliances formed by multiple partner firms, i.e. forming a network

structure, are defined as alliance constellations in recent publications, as in G

O-

MES

-C

ASSERES

(1999) and similarly in D

/ T

ENG

(2002). In the following,

only two partner firms are assumed in an alliance for purposes of simplicity, al-

though the generated insights apply also to multipartner alliances.

Cp. A

LBERS

(2000), p. 10; similarly G

OMES

-C

ASSERES

(1999): Strategic alli-

ances are "short of acquisition and deeper than arm's length contract".

plementing each other. These idiosyncratic contributions of resources by

the specific alliance partners enable the alliance to create "supernormal"

profits.

The essential characteristics of alliance nature are shown in the

following table.

Character-

istics

Market Hierarchy Strategic

Alliance

Normative

basis

contract;

property rights

employment con-

tract; power

complementarity;

exchange

Coordination

Through

prices directives

and

routines

negotiations

Operational

medium

money power knowledge

Relation of

Actors

independent unilateral

dependent

mutual

dependent

Mode of

interaction

indifference;

opportunism

indifference; but

also mistrust

trust

Methods of

conflict resolu-

tion

bargaining;

negotiating

directives;

control;

supervision

norms of mutual

exchange; reputa-

tion; culture

Asset

Specificity

low high intermediate

Transaction

Frequency

occasional occasional;

recurrent

Table 1: Characteristics of different governance modes

The nature of an alliance agreement is close, long-term, and mutually

beneficial.

In order to ensure such an agreement, the governance struc-

ture is based on "incomplete" or open-ended contracts allowing a flexible

management of the alliance due to the impossibility to specify all potential

contingencies. G

OMES

-C

ASSERES

defines incomplete contracts as an

Cp. D

YER

/ S

INGH

(1998), p. 662.

Source: Adopted with modifications from P

OWELL

(1990), p. 300 and W

ILLKE

(1995), p. 137.

These characteristics correspond to the definition put forward by S

PEKMAN ET

. (1995), p. 4. Consequently, state supported and financed R&D programs are

excluded as well as franchising, licensing, and short-term arrangements such as

one-time marketing or technology purchase agreements.

"agreement (written or unwritten) between at least two firms that leaves

open important terms of exchange, usually because of contingencies that

cannot be accurately foreseen at the time of the agreement."

The essence

of an alliance is shown in such relational or evolving contracts. In order to

develop social governance mechanisms as trust, norms, and mutual under-

standing strategic alliances are coequally organized and consist of long-

term relations and recurrent, structured transactions.

In that point alli-

ances can be distinguished clearly from spot-market transactions. On the

other side, strategic alliances do not necessarily have a common owner-

ship or explicit legal framework, what separates alliances from hierarchi-

cal firms giving them more autonomy.

Thus, alliances are clearly identi-

fiable as a third form of coordination.

ARILLO

points out that alliances

combine the advantages of both governance modes: hierarchy and market

by combining flexibility and efficiency, thus creating a win-win-

situation.

According to these differentiating characteristics, strategic alliances, as a

network form of organization, are a clearly identifiable and viable mode of

economic exchange with its own logic under certain specifiable circum-

stances.

2.2 Different forms

The academic literature suggests that the term strategic alliance encom-

passes a great variety of taxonomies in organizational forms. Some schol-

ars classify strategic alliances according to their legal form

distinguish-

ing between joint venture (JV), minority equity exchange, licensing, joint

R&D, supplier or distribution relationship. Other scholars categorize alli-

Cp. G

OMES

-C

ASSERES

(1999).

Cp. K

RYSTEK

/ Z

(2002), p. 210.

In contrast to collusions, alliances are lawful forms of organizations although

they might not necessarily have a legal framework; cp. B

ARNEY

(1996), p. 255,

on the differentiation of collusive strategies and strategic alliances.

Cp. J

ARILLO

(1993), p. 144-145.

Cp. G

HEMAWAT

/ P

ORTER

/ R

AWLINSON

(1986); G

OMES

-C

ASSERES

(1999).

ances according to the direction of integration, i.e. the position of the alli-

ance in the value chain of the partners.

According to this criterion, verti-

cal, horizontal and diagonal alliances can be identified. The difference is,

that vertical alliances are formed between partners carrying out different

activities along the value chain, horizontal alliances between partners car-

rying out the same activity of

the value chain and diagonal

alliances apply to cooperating

partners in different industries.

Categorizations by functions,

e.g. sales and distribution,

manufacturing, or R&D, are

also very common.

A typol-

ogy in terms of conflict poten-

tial divides between procom-

petitive, noncompetitive, precompetitive and competitive alliances.

Moreover, different forms of alliances can be identified in terms of geo-

graphical range as regional, national or international.

Classifications by

equity participation differentiate between equity, minority equity, and

non-equity alliances.

A more eclectic approach to a classification of alli-

ances identifies opportunistic alliances, service consortia, and stakeholder

alliances.

While these concepts of classification remain unidimensional, i.e. focusing

on just one constitutional aspect of alliances, C

HILD AND

AULKNER

de-

veloped a three-dimensional taxonomy of alliance forms. It categorizes

alliances by scope, legal nature, and size of membership.

The alliance scope

is understood as the agreed upon breadth and depth

differentiating between focused alliances that are "set up to meet a clearly

Cp. B

RONDER

/ P

RITZL

(1992), p. 33.

Cp. P

UCIK

(1988).

Cp. Y

OSHINO

/ R

ANGAN

(1995), p. 19.

Cp. P

ORTER

/ F

ULLER

(1986); also C

ONTRACTOR

/ L

ORANGE

(1988), p. 72-73.

Cp. P

ISANO

(1989).

Cp. K

ANTER

(1994).

Cp. B

RONDER

/ P

RITZL

(1992), p. 33.

Figure 3: Forms of alliances by

direction of integration

customer

supplier

inside-

industry

competitor

outside-

industry

competitor

horizontal

dia

vert

ical

inside-

industry

competitor

outside-

industry

competitor

defined set of circumstances in a particular way"

and complex alliances

involving large parts of, or even the whole value chain.

The legal form

of the alliance is differentiated between the creation of legally separate

companies, e.g. JVs, and "mere" collaboration as the most flexible alliance

form in terms of boundaries, i.e. a high degree of permeability. The num-

ber of alliance partners can vary between at least two and several. Strate-

gic alliances can be classified by the characteristics of each dimension, as

depicted below.

Figure 4: Taxonomy of alliance forms

The last classification is the most comprehensive one, because of

considering various dimensions and criteria. It allows to subsume the

unidimensional classifications and to demonstrate the large variety of

slightly different forms of strategic alliances without neglecting their

commonalities. The large variety of different forms makes alliances

attractive for several different goals and motives that are examined in the

following section.

2.3 Goals and motives

Academics have not distinguished between goals and motives for the for-

mation of alliances on a common basis, but use these terms synony-

Cp. Spekman (1995), p. 8, for a definition of alliance scope.

Cp. C

HILD

/ F

AULKNER

(1998), p. 107.

The distinction in terms of function or position in the value chain (horizontal,

vertical and diagonal alliances) could be subsumed under this dimension.

Source: Adopted from C

HILD

/ F

AULKNER

(1998), p. 106.

Number of partners

Legal form

Scope

focused

complex

two

several

collaboration

mously.

Yet, it is widely accepted, that the overall goal for the formation

of strategic alliances is the development of a mutual long-term strategy in

order to generate collective competitive advantage.

Following the classic

strategic management literature, competitive advantage can be achieved

by cost leadership or differentiation, which is based on synergies evolving

from collective processing activities or combined resources in case of co-

operation.

Synergies are characterized by less input of resources while

staying with the same output level. In order to realize synergies by coop-

eration, collective activities need to be compatible along both partners'

value chains. On this basis, two categories of motives can be distin-

guished, mostly aiming at cost-leadership and differentiation at the same

time.

The motives can be grouped with respect to internal orientation,

i.e. resource-based motives or external orientation, i.e. market-based mo-

tives. The following figure and explanations follow this classification.

Figure 5: Motives for strategic alliance formation

In general, there are four resource-based motives to be distinguished. Re-

source dependence is "a key internal motivation for alliance formation ...

to gain requisite skills or resources needed to respond to an external chal-

Cp. A

LBERS

(2000), p. 5, on the difference of goals and motives; also other ex-

pressions are used, for example by S

PEKMAN ET AL

. (1995) using the term "alli-

ance domain" for the reason and purpose of the alliance.

Cp. S

YDOW

(1992), p. 79; also A

LBERS

(2000), p. 6.

Cp. P

ORTER

(1986), p. 31.

Academics have identified several reasons for the formation of alliances and

have developed different systematologies in order to give an overview. L

O-

RANGE

/ R

OOS

(1992) differentiate between offensive and defensive reasons.

OGUT

(1988b) identifies three basic motives, which are transaction-costs, stra-

tegic behavior and organizational learning. C

ONTRACTOR

/ L

ORANGE

(1988), p.

9, list seven "more or less overlapping objectives" for the formation of strategic

alliances. Combining the typology of C

HILD

/ F

AULKNER

(1998) and C

ONTRAC-

TOR

/ L

ORANGE

(1988) leads to the systematology applied here.

Resource-based motives

Market-based motives

Motives for strategic alliance formation

Resource dependence

Learning

Risk limitation

Speed-to-market

Market power

Market entry

Cost minimization

lenge or opportunity of some sort."

Additional capacities, concentration

of core competencies and the access to physical resources are aspects of

this motive that refer to tangible resources. It could include all activities

and resources across the whole value chain, for instance joint financial

resources in order to posses higher liquidity for investments or also co-

branding in order to utilize reputation and radiation effects of brand

names.

Moreover, access to intangible resources, e.g. managerial rou-

tines or specific processes, could be in the focus of this motive.

The

learning motive strives for the access to and transfer of knowledge and the

combination of complementary resources. Although the focus tends to be

rather on the transfer of explicit than tacit knowledge, the partnering firms

may also learn and adapt intuitively the other partner's culture and behav-

ior.

Knowledge sharing enables the alliance to generate a competitive

advantage. The formation of a strategic alliance for learning reasons often

aims at technology development within the support activities, i.e. an R&D

JV, but could also focus on the smooth management of the whole supply

chain.

Risk limitation aims at removing the partners from the price va-

grancies of the market place and allows risk sharing among the partners.

Many alliances spread financial risks in highly intensive R&D investments

by joining costly scientific research facilities or pooling their financial and

R&D resources.

The speed-to-market motive describes the joint devel-

opment of processes, routines and products in order to be faster vis-à-vis

the competition and to realize a first-mover advantage.

Regarding the market-based motives, one could differentiate between

three distinct motives. The motive of joint market power could be directed

HILD

/ F

AULKNER

(1998), p. 74.

Cp. K

APFERER

(1997) on co-branding and marketing JVs.

Cp. D

/ T

ENG

(2000b), p. 41-43.

Cp. K

OGUT

(1988a) finding that tacit knowledge (i.e. nonverbalizable, intuitive,

and unarticulated) can only be transferred by learning alongside the partner. In

contrast explicit knowledge is easier transmittable in formal, systematic lan-

guage and contains explicit facts, axiomatic propositions, and symbols.

Cp. H

AMEL

/ D

/ P

RAHALAD

(1989) and D

/ H

AMEL

(1997,1998) on learn-

ing as a central motive for entering strategic alliances.

Cp. S

TATA

(1989) on the motive of risk limitation in R&D alliances.

Cp. Y

OSHINO

/ R

ANGAN

(1995), p. 68, referring to the alliances of Xerox with

Novel, Lotus, Sun Microsystems, and Microsoft. These alliances enabled Xerox

to market innovative technology faster. Cp. also F

AULKNER

(1995).

at pushing through technological standards or enhancing attractiveness by

creating compatible interfaces in order to block competitors and prevent

them from market entry, i.e. securing a marketplace position. Technical

standardization might allow network economies and login effects, which

allow an even higher penetration of the market than the power resulting

from bundled market share. Moreover, the alliance could be meant for

improving the partners' image based on effects of reputation.

The motive

of market power may drive procurement activities as well. The bundled

purchasing power allows to source at lower costs. The focus might be on

primary activities, e.g. marketing and sales, as well as on support activi-

ties, e.g. procurement. Market entry can be among the motives to enter

into strategic alliances in order to gain a foothold in an emerging market

or access to politically blocked markets.

This motive does not only con-

sider the front-end of the value chain, i.e. the target market for additional

sales, but also the back-end, which aims at higher flexibility and security

for procurement activities and logistics allowing e.g. global sourcing. This

motive is of general interest for the firm, thus it considers the whole value

chain for partnering activities. The motive of cost minimization attempts to

realize economies of scale and scope in order to perform more efficient

vis-à-vis the competition in the market, thus it is market-driven.

Cost

minimization focuses on the primary value chain activities due to the col-

lective processing and production activities providing synergies, but in

principle could also be based on support activities such as joint procure-

ment or human resources management in order to reduce overhead costs.

Additionally to these two broad categories of motives for alliance forma-

tion, C

HILD

and F

AULKNER

offer also external catalysts, which can be sub-

sumed under the effects of globalization such as shortening product life

cycles, increasing instability of markets, and globalization of products and

markets.

Cp. D

OLLINGER

(1997) focusing on the reputation motive for JV formation.

Cp. C

HILD

/ F

AULKNER

(1998), p. 67-68.

Cp. W

ILLIAMSON

(1985) and K

OGUT

(1988b) on the efficiency criterion for the

formation of alliances according to transaction-cost theory.

Cp. C

HILD

/ F

AULKNER

(1998), p. 69-73; moreover cp. D

ELFMANN

(1998), p. 63,

for a specification of the term globalization.

Details

Seiten
Erscheinungsform: Originalausgabe
Erscheinungsjahr: 2003
ISBN (eBook): 9783832493127
ISBN (Paperback): 9783838693125
DOI: 10.3239/9783832493127
Dateigröße: 1.1 MB
Sprache: Englisch
Institution / Hochschule: Universität zu Köln – Wirtschafts- und Sozialwissenschaften
Erscheinungsdatum: 2006 (Februar)
Note: 2,0
Schlagworte: strategische allianz strategic alliance kooperation joint venture erfolgsfaktoren
Produktsicherheit: Diplom.de

Autor

Jan-Philipp Büchler (Autor:in)

Towards an Integrative Approach to Alliance Failure

Zusammenfassung

Leseprobe

Inhaltsverzeichnis

Details

Autor

Jan-Philipp Büchler (Autor:in)