Collaborative and Competitive Forces within Networks and Alliance Formation

Abstract

Alliances often evolve into networks drawing in current or potential rivals as partners and infusing both collaborative and competitive forces in their relationships. We examine how the structure of such networks influences the subsequent formation of alliances of multinational corporations (MNCs) with local companies in an emerging market. Our empirical base is a dataset of 200 alliances formed by 132 MNCs operating within China, with cooperative and competitive relationships both among themselves and with local Chinese companies in the Internet sector from 2004 to 2013. We find that an MNC with greater network cohesion with other MNCs is less likely to form technology alliances, but more likely to form marketing alliances with local Chinese companies. An MNC with greater competitive embeddedness either with other MNCs or local Chinese firms is more likely to form technology alliances with local firms. Finally, an MNC with greater competitive embeddedness with local Chinese firms is also more likely to form a marketing alliance with local firms.