The Good Fight: Conflict and the Multipartner Alliance

Abstract

A multipartner alliance experiences heightened conflict: The increased number of partners impedes communication and trust-building; and the strategic importance of the alliance’s projects often means the close and contentious involvement of external stakeholders. It is well-accepted that conflict is harmful to multipartner alliance performance, yet there exists a gap in understanding what specifically drives conflict between alliance partners and between the alliance and external stakeholders; and more importantly, what can lessen these instances of conflict. This study examines conflict through the lens of institutional diversity – a characteristic that is often necessary for alliances to build new capabilities or enter uncertain markets, but one that increases transaction costs. I posit that the conflict resulting from diversity is mitigated in instances when the financial structure of the alliance is highly asymmetrical – that is, a few partners in the alliance control a majority of financial resources. I test these hypotheses by creating a unique measure of the level of conflict experienced by the alliance through the coding of 345,000 pages of alliance documents across 2138 global alliances. Additionally, using over 25,000 interim status reports, I examine the performance of the alliance over time to empirically assess if conflict is as detrimental to performance as previously theorized. This research shows that the composition and structure of the multipartner alliance does matter for conflict and its prevention, and that not all fighting is indeed bad.