Andreas Pyka, Paul Windrum
The Self-Organisation of Strategic Alliances
Abstract:
Strategic alliances form a vital part of today’s business environment.
The sheer variety of collaborative forms is notable - which include R&D
coalitions, marketing and distribution agreements, franchising, co-production
agreements, licensing, consortiums and joint ventures. Here we define a
strategic alliance as a cooperative agreement between two or more autonomous
firms pursuing common objectives or working towards solving common problems
through a period of sustained interaction. A distinction is commonly made
between ‘formal’ and ‘informal’ inter-firm alliances. Informal alliances
involve voluntary contact and interaction while in formal alliances cooperation
is governed by a contractual agreement. The advantage of formal alliances
is the ability to put in place IPR clauses, confidentially agreements and
other contractual measures designed to safeguard the firm against knowledge
spill-over. However, these measures are costly to instigate and police.
By contrast, a key attraction of informal relationships is their low co-ordination
costs. Informal know-how trading is relatively simple, uncomplicated and
more flexible, and has been observed in a number of industries.
A number of factors affecting firms’ decisions to cooperate or not cooperate
within strategic alliances have been raised in the literature. In this
paper we consider three factors in particular: the relative costs of coordinating
activity through strategic alliances vis-à-vis the costs of coordinating
activity in-house, the degree of uncertainty present in the competitive
environment, and the feedback between individual decision-making and industry
structure. Whereas discussion of the first two factors is well developed
in the strategic alliance literature, the third factor has hitherto only
been addressed indirectly. The contribution to this under-researched area
represents an important contribution of this paper to the current discourse.
In order to focus the discussion, the paper considers the formation of
horizontal inter-firm strategic alliances in dynamic product markets. These
markets are characterised by rapid rates of technological change, a high
degree of market uncertainty, and high rewards (supernormal profits) for
successful firms offset by shortening life cycles.
JEL: O31; O33; L2
Paper:
Paper available as pdf-file.
Beitrag Nr. 209, Volkswirtschaftliche Diskussionsreihe, Institut für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Andreas
Pyka, University of Augsburg, Department of Economics, Universitätsstr.
16, D-86135 Augsburg, Phone +49-821-598-4178; Fax +49-821-598-4223
E-Mail: andreas.pyka@wiso.uni-augsburg.de
Paul Windrum, Manchester Metropolitan University, Economics Department,
Aytoun Building, Aytoun Street, Manchester, M1 3GH
E-Mail: p.windrum@mmu.ac.uk
v.
K., 10.10.2001