Lecture 7: Strategic Alliances

Question 1

Strategic alliances definition

Answer 1

Agreement between 2 or more organisations that are voluntary and have a specific business purpose.

Become increasingly important for companies, because they allow to share knowledge and collaborate.

Question 2

Resource-based view

Answer 2

Resource-based view:
firms can create a competitive advantage based on their resources.
The resources should be VRIN–>
valuable
rare
inimitable
non-substitutable

Typical resources that create competitive advantage: knowledge of R&D, distribution channels, good relationships with suppliers.
These resources tend to be “sticky”–>
hard to transfer from company to company.

Strategic alliances allow to access VRIN resources, without owning them. But takes time and should be carefully evaluated.

Question 3

Reasons to form strategic alliances

Answer 3

1. Exploiting complementaries
   resources become more valuable if combined with another company’s resources.
   Idea: alliance can quickly but temporarily expand resources base with complementary resources. Difficult to produce everything on our own.
2. Accessing outside ideas and knowledge.
   Struggle: new business models/technologies require them to revise the way they create value.
   Idea: provide new perspectives of reconfiguring resources in a different way to respond to external developments.
3. Learning from alliance partners
   2 main domains:
   *information- easily codifiable and can be transmitted without loss.
   *know-how- knowledge that is “sticky” and difficult to codify, difficult to transfer.

Gaining relationship specific assets–> lead to observation, understanding, learning know-how.

Question 4

What are relationship specific assets?

Answer 4

Assets that are valuable only in a specific relationship context. Difficult to imitate and substitute by competitors, making them critical for companies.

Question 5

3 main types of relationship specific assets

Answer 5

1. Partner-specific absorptive capacity
   Ability to learn, understand and evaluate the knowledge of a specific partner.
   Created when alliance partners get to know each other well enough to know which partner possesses which information, where to find critical expenses in each firm.
2. Knowledge sharing routines
   Interactions allowing to share specific knowledge.
   Exchange programs, joint R&D, cross functional teams.
   Risky- must have trust to not lose competitive advantage
3. Trust
   Trust ensures not abusing focal firms resources and know-how.
   Difficult, takes time.

Question 6

Learning from alliance partners

Answer 6

Difficult, does not happen by itself.
Needs to be intended by management and employees to work together.
When learning happens knowledge should be codified and diffused in companay.

Question 7

Knowledge transfer- what is needed

Answer 7

When companies have COMPLEMENTARY RESOURCES it creates a better opportunity for them and leads to good cooperation initiatives.
Easier if companies have COMPATIBLE organisational structure and culture.

Question 8

Partner complementarity

Answer 8

Knowledge base resources should be:
1. Similar enough- can make use of each others resources
2. Different enough- valuable learning, can create different resources.

Question 9

Partner compatibility

Answer 9

How compatible are partner firms in decision making?
Organisational structure- hierarchy or not
Interactions- informal or formal
Decision making- slow or fast

If too different can be a challenge and reduce exchange of knowledge.