Prior Alliance Experience Research Articles

Determinants of alliance productivity and performance: evidence from the automobile industry

PurposeThis study aims to identify critical factors and examine their impact on alliance performance from an organizational learning point of view.Design/methodology/approachA modified total interpretive structural modeling (M-TISM) methodology was used in this study. The different paths/links in the developed M-TISM model were further validated by using the Mahindra-Ford alliance case study.FindingsIn this study, a total of seven critical factors were identified using an extensive literature review, and a hierarchical model was developed. Results show that prior alliance experience, inter-partner learning, knowledge transfer, absorptive capacity and knowledge internalization have a positive on the alliance productivity and performance. Furthermore, the findings indicate that prior alliance experience remains essential for alliance productivity and performance, while knowledge transfer and absorptive capacity can contribute to inter-partner learning and knowledge internalization in strategic alliances.Research limitations/implicationsThis study can help managers and policymakers to understand the identified critical factors from an organizational learning perspective and understand their impact on the alliance performance in a competitive environment. The managers should know that previous alliance experience, learning from partner firms, building an absorptive capacity, etc., are necessary to achieve superior alliance productivity and performance. For academicians, the M-TISM methodology used in this study can provide a mechanism to perform exploratory research and build a hierarchical model in different management research fields.Originality/valueThe study fills research gaps by identifying key factors, developing a hierarchical model, and examining their impact on the performance of strategic alliances in the Indian automotive industry.

Depth and breadth of knowledge and the governance of technology alliances

Abstract This paper focuses on technology alliances between R&D intensive biotechnology firms and larger pharmaceutical companies. It aims to investigate whether the biotech partners can leverage the depth and the breadth of their knowledge resources to retain their equity ownership when forming an alliance, and whether prior alliance experience adds to their overall leverage. Using a sample of 390 alliances formed between US biotechnology and pharmaceutical companies, we find that biotech firms with deeper technological resources are more likely to retain their equity ownership, and that this relationship is stronger when the biotech firm has more alliance experience.

Cohabitation before marriage: do prior alliances enhance post-merger performance?

We investigate the impact of prior alliance relationships on subsequent mergers between partner firms. We argue that an acquirer’s prior alliance experience with the target reduces information asymmetry, which helps improve acquisition performance. Alternatively, agency problems arising from familiarity may lead to inefficient decision making. Examining mergers between 1986 and 2014, we find evidence that prior alliance collaboration is positively associated with the acquirer’s long-term profitability and growth. This positive effect is more pronounced when target-specific learning and experience are more crucial to merger success, such as targets in knowledge-intensive or organizational-capital-intensive industries as well as cross-industry mergers. However, we cannot formally rule out the possibility that our results are partly driven by the small size of our sample.

ALLIANCE EXPERIENCE, INDUSTRY CONDITIONS, AND EXTERNAL TECHNOLOGY COMMERCIALISATION

External technology commercialization (ETC) is one strategy firms use in order to appropriate value from innovation. In view of the complexities associated with managing partner relationships, firms are likely to draw on their prior alliance experience when considering ETC strategies. Applying an organisational capabilities perspective, we investigate the extent to which prior alliance experience shapes a firm’s propensity to engage in external commercialisation. Because the motivations and risks of ETC vary across industries, we further consider how industry effects may influence this relationship. Our study examines the ETC initiatives of 1,642 firms in the US manufacturing sector between 1990 and 2006. The results suggest a curvilinear relationship between alliance experience and ETC. We also find that this relationship is moderated by the nature of the industry appropriability regime, rate of technological change, and competitive intensity.

Divergent Learning Effects from Alliance Experience and Cross-border M&A Entries

Drawing on a learning perspective, we argue that prior alliance experience may have divergent learning effects on subsequent M&A entries into a host country depending on whether the alliances were made as an institutionally embedded choice when regulations restrict foreign M&As or as a strategic choice when regulations encourage foreign M&As. While in the former case, MNCs that had M&A in mind might stretch themselves and learn beyond what alliance relationship offers, whereas in the latter case, MNCs just focus on learning about the particularities of managing alliances. Thus, alliance experience before the change in regulations from restricting to encouraging cross-border M&As in the host country may also change from a positive effect on subsequent M&As to a negative effect. Additionally, we argue that this effect is moderated by economic distance. Analyses based on a sample of 1,561 MNCs from 40 different home countries entering China through M&As over an 11-year period (2003–2013) provide considerable...

An integrated perspective of social exchange theory and transaction cost approach on the antecedents of trust in international joint ventures

This study investigates the antecedents of trust in International Joint Ventures (IJVs). Building on social exchange theory (SET) and transaction cost theory (TCT), we develop an integrated framework in which trust development requires two sets of antecedents: (1) social antecedents (prior alliance experience with partner, partner’s cultural sensitivity and reputation, inter-partner communication, expected longevity of the IJVs), and (2) structural antecedents (interdependence, ownership share, resource complementary). The developed framework is tested using web-survey data collected from 89 IJVs established by Nordic firms in Asia, Europe and America. Empirical data analysis based on structural equation modelling suggests that a partner’s cultural sensitivity and reputation, inter-partner communication, and expected longevity are the social antecedents from SET that enhance trust. From TCA, the structural antecedent of resource complementary develops trust, while balanced interdependence and balanced ownership are unrelated to trust. These findings have important implications for managers planning to form and manage IJVs.

Antecedents for forming simultaneous alliances or one-by-one alliances

This article extends existing alliance portfolio studies by exploring differences of antecedents for forming simultaneous alliances and one-by-one alliances using data from 1,029 alliances in the global pharmaceutical industry. The research’s findings suggest that firms are inclined to form simultaneous alliances when they have more prior alliance experience, conduct exploration alliances, or are in high level of technological diversification. Second, although simultaneous alliance formation may decrease a firm’s performance, greater alliance experience and inter-industry alliances may mitigate such the negative effect of simultaneous alliance formation on firm performance. Low levels of technological diversification may increase firm performance as forming simultaneous alliances. Moreover, propensity to form simultaneous alliances is increased with the increased number of formed alliances as larger firm size, organizational experience, and alliance experience take place. This article contributes to the current strategic alliances and organizational learning literature by introducing the concept of simultaneous and one-by-one alliances.

Experiential Antecedents of Alliance Portfolio Diversity: Evidence from India

This study examines the experiential antecedents of alliance portfolio diversity (APD). Drawing primarily on organizational learning perspective, it argues that a focal firm’s learning from prior experiences enhances its abilities to manage diverse alliance portfolio. An experienced firm may take decisions to expand its alliance portfolio, as experience enables it to reap the benefits and mitigate the disadvantages of high level of APD. In particular, this study hypothesizes that a focal firm’s product diversification experience, prior alliance experience, and alliance experience heterogeneity are positively associated with its APD. The study validates the hypothesized relations using two samples - primary and within-study replication- of Indian firms. The primary and within-study replication samples comprise 70 and 63 firms respectively, taken for the years 2014 and 2010 respectively. Results provide support for the hypothesized relations. By examining the experiential antecedents of APD, this study cont...

Alliance Experience, IT-Enabled Knowledge Integration, and Ex Ante Value Gains

An important theme in the alliance research has been the study of how prior alliance experience translates into value gains from alliances. Despite the strong theoretical argument regarding the value-enhancing role of alliance experience, past research has reported mixed results. In an attempt to resolve the inconclusive findings, we provide a more fine-grained view of alliance experience by examining characteristics such as relatedness and diversity, which are defined based on the functional focus and the industry of the partner. Furthermore, we argue that since leveraging alliance experience is a learning process, a firm’s knowledge integration capabilities enabled by information technology (IT) should influence the extent to which the firm benefits from alliance experience. Using data from 1,030 alliances made by 89 firms across 11 industries, we test the effects of relatedness and diversity on abnormal returns following alliance announcements. We find that functionally related experience is positively related to abnormal returns, whereas partner industry-based related experience affects the expected value negatively. We also find that a firm’s IT-enabled knowledge integration positively moderates the effects of both related and diverse experience on abnormal returns. Our findings highlight that although knowledge gained through prior experience is important, complementary capabilities that enable firms to leverage and utilize such knowledge are also necessary for ex ante value creation in alliances. We interpret these findings and discuss their implications for research in both strategic management and information systems.

Technology alliances in emerging economies: persistence and interrelation in European firms' alliance formation

We analyse the patterns and determinants of technology alliance formation with partner firms from emerging economies with a focus on European firms' alliance strategies. We examine to what extent European firms' alliance formation with partners based in emerging economies is persistent – that is, to what extent prior collaborative experience determines new alliance formation – and we compare this pattern with alliance formation with developed country partners. Second, we examine to what extent prior engagement in international alliances with partners from developed countries increases the propensity to form technology alliances with partners based in emerging economies, and vice versa (interrelation). We find that both persistence and interrelation effects are present, and that they are generally not weaker for emerging economy alliances. Alliance formation with Indian and Chinese firms is significantly more likely if firms have prior alliance experience with Japanese firms. The findings suggest that building on their prior international alliance experience firms extend their alliance portfolios across both developed and emerging economies, increasing the geographical diversity of their alliance portfolios.

The effect of prior alliance experience on acquisition performance

Information asymmetry usually results in acquiring a target where post-acquisition performance is often disappointing. In this study, we examine whether previous bidder–target alliances mitigate the negative effect of information asymmetry. Further, in cases when the target firms in an acquisition are from the high technology or service industries or privately held firms, whereby the firms are composed of unique knowledge, intangible assets and less disclosed information, respectively, we test whether there are significantly more acquisitions when prior bidder–target alliances exist, as it is assumed that these alliances reduce the level of information asymmetry. We find on average the post acquisition stock performance is better when the purchasing firm acquires a prior alliance partner. Furthermore, when acquiring privately held target firms, the target firms are more likely to be previous alliance partners. Finally, when the target firms are ‘more informed’ (i.e. high technology, service or privately held firms), the post acquisition performance is disappointing. However, bidder–target alliances reduce the amount of value destroyed.

Technology Alliances in Emerging Economies: Persistence and Interrelation in European Firms' Alliance Formation

We analyze patterns and determinants of technology alliance formation with partner firms from emerging economies, with a focus on European firms' alliance strategies. We examine to what extent European firms' alliance formation with partners based in emerging economies is persistent, that is: to what extent prior collaborative experience determines new alliance formation, and we compare this pattern with alliance formation with developed country partners. Second, we examine to what extent prior engagement in international alliances with partners from developed countries increases the propensity to form technology alliances with partners based in emerging economies and vice versa (interrelation). We find that both persistence and interrelation effects are present, and that they are generally not weaker for emerging economy alliances. Alliance formation with Indian and Chinese firms is significantly more likely if firms have prior alliance experience with Japanese firms. The findings suggest that firms extend their alliance portfolio from developed to emerging economies, increasing the geographic diversity of their alliance portfolio and building on their prior international alliances experience.

Manager's intentions toward entering into strategic marketing alliances: an empirical investigation

The precursors, processes, and outcomes associated with strategic alliances are shaped in important ways by the background of the decision-makers involved in alliance formation. Building on the theory of planned behavior and employing a multi-industry sample, the research reported investigates the relationship between a manager's attitudes, subjective norms and perceived behavioral control and intention to enter into strategic alliances, and the moderating effect of the manager's prior strategic alliance experience. The hypotheses are tested in the context of strategic marketing alliances. We discuss managerial isomorphism as a competing explanation for the study findings.

Experience Spillovers Across Corporate Development Activities

This study develops and tests a theory of experience spillovers across corporate development activities. In particular, we investigate the impact of prior alliance experience on the performance implications of corporate acquisitions. We start with the simple suggestion that such experience spillovers will depend on the similarity among the managerial processes characterizing these activities. The empirical evidence confirms that the more the focal acquisition is managed in ways that are typical of partnerships (e.g., with low integration or with high relational quality levels), the more positive is the effect of past alliance experience on acquisition performance. However, we also find that alliance experience can be detrimental under certain circumstances, such as when the acquisition is managed with more aggressive post-acquisition integration approaches. This paper proposes a more sophisticated model of experience spillovers that can accommodate both positive and negative experience spillover effects across complex organizational tasks.

Global innovation generation and financial performance in business-to-business relationships: the case of cross-border alliances in the pharmaceutical industry

The past few decades have witnessed a significant increase in the number of cross-border strategic alliances among firms. We focus on the role of alliance expertise (alliance experience and diversity of partners) and alliance governance (horizontal vs. vertical alliances and joint venture vs. other alliances) in global innovation generation. We also examine the effect of these variables on the financial performance of the focal firm. The conceptual model is tested using an empirical analysis of cross-border alliances formed by U.S. pharmaceutical companies from 1985 to 2008. We find that while prior alliance experience has a positive association with global innovation generation, diversity of partners has a negative relationship. In addition, whether the alliance is horizontal or vertical has no bearing on the innovation generation, but joint ventures are associated with more global innovation generation than other types of alliances. Finally, as global innovation generation increases, financial performance increases up to a point but thereafter exhibits a negative relationship.

External knowledge sourcing in biotechnology through acquisition versus alliance: A KBV approach

Knowledge sourcing is important for firms, especially in fast-paced industries. However, few studies explore the effects of knowledge-based predictors on the comparative choice of employing acquisitions versus alliances for sourcing external knowledge. This study extends the limited existing research on this topic. It simultaneously examines the effects of knowledge domain attributes, seeker and source experience-based knowledge, and dyad knowledge similarity and digestibility on whether a firm chooses an acquisition or alliance when sourcing external knowledge. Data is comprised of 209 research-driven acquisitions and alliances of biotechnology firms based in North America. Our findings reveal that external knowledge sourcing through acquisition is more likely when the knowledge domain is more complex and valuable. Acquisition is also preferred when the seeker has greater acquisition experience and when the source has accumulated a moderate level of alliance experience. Alliance, in contrast, is the chosen mode for accessing external knowledge when the knowledge is high in specificity and when the seeker has prior alliance experience. In addition, increasing similarity and digestibility of the dyad's knowledge bases strengthen the relationship between knowledge value and the probability of acquisition versus alliance. These results extend understanding of how firms decide to augment their knowledge resources in a knowledge-intensive industry. They also demonstrate that a multilevel KBV approach emphasizing knowledge characteristics uncovers important predictors of strategy and structure in research-driven organizations.

Transportation Collaboration: Partner Selection Criteria and Inter-Organizational System (IOS) Design Issues for Supporting Trust

The empty truck problem is a costly logistics issue that many companies have faced. Collaboration among competitors providing logistical solutions is very difficult and might not take place at all without support and intervention by the government. This study addresses the horizontal transportation collaboration among competitors that has been initiated by a government agency in Thailand. A survey was carried out of two groups comprising 31 “would be” collaborators – shippers and carriers – using a convenient sampling scheme. The study was designed to explore partner selection criteria during the formation stage and to explore the related design factors of an inter-organizational system (IOS) that supports trust among these collaborators. The result includes a comparison of the pre- and post-exposures to the IOS paper-based prototype that has incorporated some theoretically desirable features of collaboration. The results show positive relationships between direct prior alliance experience and some elements of trust and also between commitment and trusting intention in potential partners.

Strategic alliance termination and performance: The role of task complexity, nationality, and experience

Fewer than 50% of strategic alliances are successful [Das, T. K., & Teng, B. (2000). Instabilities of strategic alliances: An internal tensions perspective. Organization Science, 11, 77–101]. This study examines the role of task complexity, nationality, prior alliance experience, and disparity in alliance experience in strategic alliance termination and performance. Based on survey responses from 85 parties in biopharmaceutical alliances, it is found that strategic alliances are more likely to be terminated and have poor performance when they have (1) both R&D and marketing elements, (2) domestic partners, (3) limited prior strategic alliance experience, and (4) large strategic alliance experience disparity between partners. Some of the findings are new and deserve additional investigations.

The role of trustworthiness in the formation and governance of construction alliances

The ensuing globalization of the construction industry as well as the highly fragmented and divisive nature of the industry are among the forces that are influencing it to seek management approaches such as strategic alliances that could leverage the capabilities of the various participants. This paper reports on a study that investigated the factors considered by firms when selecting alliance partners, and the influence of trustworthiness in deciding the governance structures of the alliances. A study of key partners in existing and potential construction alliances in Botswana that was carried out using a postal questionnaire and structured interviews determined that firms consider complementarity, similar status, indirect prior alliance experience and reputation before they make a selection of an alliance partner. The study also determined that partner trustworthiness eliminates the need of contractual clauses in the operation of the alliances. The paper concludes that trustworthiness of a partner is an influencing factor in all stages of the alliance development.

Experience effects and collaborative returns in R&D alliances

Focusing on the link between prior alliance experience and firm benefits from RD and (2) to diminish at high levels of experience. Results from a sample of 464 R&D alliances in the telecom equipment industry generally match these expectations. The positive benefits of prior experience in complex alliances suggest that a broader set of alliance management processes allows the firm to manage situations of ambiguity more readily. The lack of cumulative benefits from prior experience appears to be partly due to knowledge depreciating over time, since only recent experience has a positive impact on collaborative returns. Overall, these results provide empirical evidence of the effect of prior experience on collaborative benefits, both directly and conditionally on alliance characteristics, and have implications for learning to manage organizations more generally. Copyright © 2005 John Wiley & Sons, Ltd.