Strategic Alliances: What Can We Learn When They Fail?

Abstract

ABSTRACT Purpose. The purpose of this research is to develop a theory-based model of alliance failure with a specific focus on alliance lifecycle phases that have, for the most part, been ignored in extant literature. The fundamental premise of this research is that alliances fail because decisions (not) made by managers “set up” alliances for failure long before an alliance is formed (i.e., in the strategic planning stage and partner evaluation and selection stage) and long after an alliance should have been terminated (i.e., the termination stage). It is posited that some factors may lead to alliance failure but have no influence on alliance success. Furthermore, it is suggested here that by focusing on failure, managers may be able to take steps to correct and prevent future alliance failures. Methodology/Approach. This is a theoretically based conceptual paper. Empirically testable propositions are developed. Findings. Following the theory posited in this paper, one may draw the following conclusions: 1. Top managers must be careful to develop strategic alliances that are associated directly with the strategic needs of the company. That is, make your alliances fit your strategy, not your strategy fit your alliances. 2. Top managers should prioritize alliances based on strategic needs and allocate resources accordingly. 3. Organizations should develop an alliance competence or capability-focused alliance function. 4. If resources dedicated to an alliance are not utilized, then they should be returned to the contributing party or at least not considered when distributing alliance-derived proceeds. 5. When alliances cease creating value, objectively evaluate whether or not they should be terminated. Originality/Value/Contribution of the paper. This paper advances alliance theory and practice by taking a complementary view of alliance failure and articulating how managers' decisions and (in)actions influence the likelihood of alliance failure at various points in the alliance lifecycle (Table 1). By highlighting factors that lead to failure, managers can take actions to improve the likelihood of success of strategic alliances.