Strategic Alliances : The Formation Of Alliances

1259 Words6 Pages
Gulati (1998, p. 293) defines strategic alliances as “voluntary arrangements between firms involving exchange, sharing, or co-development of products, technologies, or services”. For the author, there are five key issues related to the study of strategic alliances. First, the formation of alliances. According to Gulati, there are three main motivations that push firms to develop strategic alliances: optimizing transaction cost, learning new processes and skills (organizational knowledge), and enhancing competitive position or market power. Second, the governance structure of alliances. For Gulati, strategic alliances governance vary in terms of the degree of hierarchical elements they embody and the extent to which they replicate the…show more content…
Fourth, the performance of alliances. For Gulati, there are several factors that could be associated with the success and performance of strategic alliances such as flexibility, trust, information exchange, constructive management of conflict, personnel interactions, and partner expectations management among others. Moreover, there are factors that hinder the development of alliances and may cause the termination of them such as industry conditions (concentration and growth rates), partners country of origin, concurrent ties, partner asymmetry, age dependence and alliance duration, partners competitive overlap, and features of the venture (autonomy and flexibility) (Gulati, 1998, p. 307). The fifth key issue related to the study of alliances is related to the extent in which firms benefit from entering strategic alliances. Gulati posits that each alliance has different effects on firms’ performance. For Gulati, it is difficult to associate a firm performance to specific alliances because this is a complex process in which many factors take place. The author suggests that not all alliances provide equal benefits to their members, and some alliances are better than others. However, some studies suggest that “close vertical ties that are characterized by rich information exchange and long-term commitments can lead to greater cooperation and joint activities between the partners and higher levels of asset-specific investments, all of which translate into concrete
Open Document