The Contingent Value of the Dedicated Alliance Function

Abstract

Scholars have underscored the merits of a dedicated alliance function that promotes standardization, formalization, and centralization of alliance management practices, but some recent research finds no support for the claim that a dedicated alliance function creates value. We contribute to this debate by offering a contingency approach. Specifically, we conjecture that the contribution of the dedicated alliance function to value creation in an alliance increases with general partnering experience that the firm has accumulated with its various partners but declines with partner-specific experience that the firm has accumulated in recurrent alliances with the same partner. Our analysis of more than 15,000 alliances involving U.S.-based software firms supports these conjectures and identifies boundary conditions for this function’s effects. We conclude that instituting an organizational infrastructure that is meant to enhance a firm’s ability to leverage its experience with various partners can restrict its gains from experience with specific partners. Nevertheless, by appropriately leveraging its dedicated alliance function, the firm can manage conflicting routines and overcome the tradeoff between efficient use of alliance management practices and responsiveness to partners in its alliance portfolio.