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7DEOH0RWLYHVDQG*RDOVRI6WUDWHJLF$OOLDQFHV
Technology know-how

Access to technology

Access to knowledge of production
processes

Access to knowledge of local
culture

Access to knowledge of local
market

Exchange of complementary
technology
Financial asset

Risk sharing

Exploit economies of scale

Faster payback on investment

Minimize capital investment

Reduce share cost of research

Financial status/financial resources
of partners
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competitor (including challenging
competitor in his home market)

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the industry & to set a market
standard

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Facilitates international expansion

Faster entry to market

Gain presence in new market

Conform to foreign government
policy/overcome trade barriers
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management experiences

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patents)

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channels & brand names)

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Complementary resources &
capabilities

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contribution

Capabilities to provide quality
product & services

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Glaister
&
Buckley
(1997,
1996)
Noote
boom
(1999)
Dacin
& Hitt
(1997)
Harbin
son &
Pekar
(1998
a)
Vyas
et al.
(1995)
Harrig
an
(1986)
Lewis
(1990)
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Example of
studies
Limitation of
previous
studies
Strength of
the
perspectives
Key
contribution to
ISA studies
Criteria
of
Relevance to
the ISA
Concept of
the ISA
Mostly
abstract:
the
implementation
of
an
incentive contract is not
sufficient
to
reduce
uncertainties; only focusing
attention on co-operation
between two types of actors;
and difficult to generalise
McClean Park & Conlon
(1995), Adams (1994), Arrow
(1985), Barney & Ouchi
(1986), Eisenhardt (1989),
Nikalant & Hayagreva (1994)
ISA relationship is one in

which each partner becomes
an agent for the other(s)
The determinant of the most
efficient contract governing
the relationship between
principal and agent; the
combination of incentives &
monitoring mechanism, the
transparency of information
The relationship of human
behaviour, organisation and
information
Agency Theory
game
Limit
to
foundation
characteristics with little
sense of dynamics and
change
Lack of analysis in the

personalities of the players,
their social ties, uncertainty
about what the other player
did
previously,
social
conventions and institutional
rules in which the players and
their interactions embedded
Rapoport
(1961),
Zagare
(1984), Axelrod & Keohane
(1986), Oye (1986), Axelrod
(1984),
Parkhe
(1993),
Majeski & Fricks (1995), Child
& Faulkner (1998)
Lu & Burton (1998), Child
& Faulkner (1998), Collins
&
Doorley
(1991),
Noteboom (1999)
Process variables and

inter-actor relations as a
foundation of co-operation
ISA foundation as a joint

decision
process
in
partnering firms
Partner selection criteria
and foundation
characteristics
Formation
Relational position of actors
Distinction of outcomes and

inter-actor relations in cooperation vs no co-operation
context;
the
role
of
communication
ISA as continuing
involving two partners
Game Theory
Table 2.2. A Summary of Theoretical Perspectives
Geringer (1991), Geringer &

Herbert 1991), Parkhe (1993),
Bleeke & Ernst (1993), Ouchi
(1977).
Partner motives of learning

and ISAs structure to promote
learning
Power relations, bargaining

behaviour, and various control
mechanism
and
their
influences in performance
Mostly abstract with little
analysis of internal processes
within partner firms and ISA;
lack of insight into ISA
environment relations
Doz & Hamel (1998), Kogut

(1988), Inkpen & Crossan
(1995), Inkpen (1997), Larson
et al. (1998), Khanna et al.
(1998), Bleeke & Ernst (1995),
Shenkar & Zeira (1992)
Oversimplification of
performance by attributing it to
learning; lack of adequate
analysis of learning processes
and internal system
Relationship between learning

competence and performance;
and
modes
of
inter
organisation
knowledge
transfer
Dynamics and complex nature

of inter-partners and ISA
partners
relationships;
relations of control and
performance
ISA as a mechanism for

partner firms learning
Learning Theory
ISA as a child organisation

under partner firms control
Organisation theories
Control of the ISA
26,
CHAPTER 2
,27

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Complementary
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Shared-supply
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Quasi-concentration
Alliances
Definition
A firm distributes in
its domestic market a
product initially
developed by a
competitor
The competing
firms develop
and/or manufacture
a common element
which is then
incorporated in their
respective products
A consortium of rival
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manufactures and
markets a final product
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Taking advantage of
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skills and assets of
the different partners
without duplicating
the corresponding
investment
Achieving
economies of scale
on a particular input
without turning to
an external supplier
Achieving economies
of scale on a complete
product while avoiding
conventional mergers
and acquisition
Impact on
competition
Direct competition is
avoided due to
differentiation of
partners product
Competition on the
end products is
unaffected
Competition on the joint

product is eliminated
Most frequent
organization
Each partner carries

out the tasks
corresponding to the
assets it controls.
Manufacturing or
marketing can be
entrusted to a JV
Allocation of R&D
work between the
allies and
manufacturing in
joint facility
The joint product is

divided into sub-units
whose development
and manufacture are
allocated among the
allies. Marketing may
be entrusted to a JV
Trend of
evolution
Extension or
continuation by one
partner
Natural end or
premature
termination
Extension
Strategic
consequences
for each partner
firm
One-way skill
appropriation
No consequence
Mutual specialization
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Stages
Anticipation
Engagement
Valuation
Co-ordination
Investment
Stabilisation
Decision
Alliance formation
Alliance create value
Interorganization dynamic
1. Identification
2. Valuation
3. Negotiation
4. Implementation
1. Rethinking the business
2. Crafting an alliance strategy
3. Structuring alliances
4. Evaluating alliances
1. The nature of co-operation

2. Establishing co-operation
3. Managing co-operation
4. Maturing Relationship
1. learning
2. re-evaluation
3. readjustment
1. Courtship and Commitment
2. Day to day relationship
3. Transformation
1. Formation
2. Adjustment
3. Evaluation
1. Formation
2. Management
3. Evolution
1. Formation
2. Operation
3. Outcome
1.
2.
3.
4.
5.
6.
7.
1.
2.
3.
1. Courtship
2. Negotiation
3. Start-up
4. Maintenance
5. Evolution
1. *) Initial conditions
<imprinting>
2. Executing conditions
3. Evaluating conditions
3.
4.
1.
2.
3.
4.
1.
2.
3.
3.
1.
2.
3.
4.
1.
2.
3.
1.
2.
2.
1.
3.
1.
2.
3.
1.
2.
2.
3.
informal (internal negotiation and stakeholder blessing) and formal phase (negotiation with partner, internal support and
establishment of personnel relationship)
how to fulfil the objective of their co-operation, the process socialisation, the adaptation of the changes in the environment, and
the exchange process between the partners and the joint venture
the evaluation process and decisions for the future co-operation.
different perspectives, trust, motives
partner and form selection, network and virtuality, negotiation and valuation
general management, control, human resources management, culture, emerging economies
organisational learning, the evolving alliance
environment, task, process, skills, goals
efficiency, equity, adaptability
task definition, partners routines, interface structure, expectation of: performance, behaviour, motives
motives, partner selection, dangers of whirlwind courtship
managing relationship and conflict: respect difference opinion, open communication, shared vision.
partnership maintenance: maintaining trust, differentiation & integration of function, enjoyment of the work.
in sickness and health; changing in partnership status, internal environment, external needs & sources, market place,
terminating a partnership, short-term partnership, end of partnership
Define strategy & objective, screening for partners
Assessing tradable and leverage, defining opportunity, assessing impact on stakeholders
Assessing bargaining power, planning integration
planning integration, implementing
strategic reassessment, establishing a role for alliances
evaluating each firms value activities, distributing value chain activities, leveraging in-house and partners resources, creating
fall-back positions, maintaining strategic options
importance of structures, framework for structures, key considerations, role of bargaining
assessing alliances, learning about alliances, rethinking the alliance strategy.
high level of collective strength, low level of inter-partner conflict, high level of interdependencies
two possibilities: Negative development (collective strength will downturn, the increasing opportunistic behaviour, conflict
increases) and positive ( interdependencies will go down, increase collective strength, conflict decreases)
four possible outcome: stabilization, reformation, decline, termination
form of alliances, motivation, partner selection
managing conflict, cross culture differences, commitment and trust, system information
perception of balance benefit, development of strong bonding power, development of new project, organisational learning
Bell & Boersma (2000)
Bruce & Steve (1994)
Yoshino &
Rangan
(1995)
Arino & de la Torre

(1998)
Berquist, et
al. (1995)
Harbinson &
Pekar
(1998a)
Pitts & Lei (1997)
Berquist et al.(1995)
Lorange & Roos

(1992)
Das & Teng (2002)
Lorange & Roos
(1991)
Probst and Buchel
(1997)
Ring and Van de Ven

(1994)
Das & Rahman (2002)
Larson (1992)
Lei & & Slocum (1991)
Buchel (2000), Arino &

dela Torre (1998),
Ring & van de Ven
(1994)
Dweyer et al. (1987)
Murray & Mahon
(1993)
Example of Relevant
Literatures
Dussauge &
Garrette(1998) Ring &
Van de Ven (1994)
Doz (1996)
Child &
Faulkner
(1998)
Buchel et al.
(1998)
Faulkner
(1995)
Das & Teng

(2002)
Spekman,et
al. (1998)
Spekman, et
al. (1998)
pre-alliance, competitive need & motivation emerge partner search

high energy, complementarily, strategic potential partner identification
financial focus, business
operational focus, task orientation co-ordination interfacing
commitment, resource reallocation, broadening scope expansion growth
high interdependence, assessment of relative worth and contribution adjustment
Where now? re-evaluation
trust, commitment, recognised interdependence, level of communication, strategic alliances, partner selection, relationship
configuration and alliance implementation, negotiating the legal and contractual parameter, equity issue
permit partners to talk with a louder voice &quickly grow market share, develop synergy, problem arise when expectation differ
high-level of efficiency & profitability, control (formal & informal), trust, development of informal network & information
1.
2.
3.
4.
5.
6.
7.
1.
3.
Buchel
&Killing
(2002)
*) initial relational quality, initial employee involvement, initial staffing

ongoing investment into relational quality, conflict-resolution mechanism, extensive information exchange, strong partner
interfaces.
equity (economic calculation and social indebtedness)
1.
2.
Authors
Muray &
Mahon
(1993)
Characteristic on each stage
Only the development of relationship explanation, no further information on the important element in each stages. The alliances will
evolute on five types of relationship: natural ends, extension, take over by one partner, premature termination, project continued by
one partner.
*) The same number between these two columns represent the important factors that need to be taken into account in each stages of an alliance life.
Strategy
Strategic
Alliance
Developme
nt
Developme
nt of
relationship
Area of
Interest
Life Cycle of
alliances
Table 3.1. Strategic Alliance Development: Comparison from Different Perspectives
46,
CHAPTER 3
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Commun
ication
Conflict
Control
Partner
Contribu
tion
Evolution
Performance
Intensity of Conflict
Dominant Issues of
conflict
excellent financial performance

fairly satisfied with the relationship
rapid growth of the bussiness
Continue but still struggling to find a solution
No fear of spill over of control, because:

type of the product
different expertise and priority of
business
medium
maintenance stop
the existence of the new partner
partner contribution and control
regular meeting two times in a year
representative manager take care of the
alliance relationship
Strategic action shift to communicative
action
Spill Over of
Control
operational control
financial control
Focus of Control
Partner 2
(American Partner)
Extent of Control
Partner 1
(Dutch company)
textile
Formation Phase
1995
Invent a high quality product, expand to a
new market
joint product development
market together the joint product
Avebe - Goodrich
regular meeting two times a year

excellent in the beginning but vanished
during the marketing period
strategic action
Evaluation Phase
unsatisfied economic performance
satisfied with the relationship
the objective is failed
Died out
Strong spill over of control by

divide the world into two market
not share the ingredient of the product
not apply the right patent
low
None
operational control
Operational Phase
input, capital
input, technology, man power, market
unequal (partner 1 have more
unequal (partner 1 have more
contribution)
contribution)
complementary contribution
complementary contribution
input
equal
equal
A shared management strategic alliance
Partner 1 has more power of control
Partner 1 has more control in the
product development
separate control in marketing and sales
1975
Secure supply of material, economies of
scale, growth of the business
product manufacture: Akzo supply
chlorinate and caustic to Huntsman
Huntsman deliver Hcl to Rovin
Year of creation
Initial Goals
Agreement on
Partner Contribution
chemical
Industry
Akzo Nobel-Huntsman
Table 9.1. Short Description on the Case Study Result

KLM - Northwest
excellent financial performance

satisfied with the relationship
the objective is achieved
Continue with a different type of contract
high
pricing policy, network, positioning the
alliance, short-term vs long-term orientation
partner contribution and control
regular meeting every three months
office representatives + alliance department
Communicative action

equal
(Alliance Steering Committee)
A split control depend on area of expertise
A dominant partner based on the market
expertise
Strategic control
Operational Control
Financial Control
No fear of spill over of control, because:
long-term agreement
huge scope of cooperation
input, capital, technology, man power, market

fairly equal
similar contribution
full coordination in North Atlantic route

cooperation in the cost of handling, catering,
joint purchasing and engineering on a worldwide basis
1991
Consolidation in trans-Atlantic market
airline
COMPARISON AND DISCUSSION: THEORY & PRACTICE
,219
220,
CHAPTER 9
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Definition
A firm distributes on
its domestic market
a product initially
developed by a
competitor
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develop and/or
manufacture a common
element which is then
incorporated in their
respective products
A consortium of rival firms

develops, manufactures and
markets a final product
common to all partner firms
Objective
Taking advantage of
the complementary
skills and assets of
the different partners
without duplicating
the corresponding
investment
Achieving economies of
scale on a particular input
without turning to an
external supplier
Achieving economies of
scale on a complete product
while avoiding conventional
mergers and acquisition
Impact on
competition
Direct competition is
avoided due to
differentiation of
partners product
Competition on the end

products is unaffected
Competition on the joint

product is eliminated
Most frequent
organization
Each partner carries

out the tasks
corresponding to the
assets it controls.
Allocation of R&D
between the allies and
manufacturing in joint
facility
The joint product is divided

into sub-units whose
development and
manufacture are allocated
among the allies.
Trend of evolution
Extension/continuati
on by one partner
Natural end or premature

termination
Extension
Strategic
consequences
One-way skill
appropriation
No consequence
Mutual specialization
Degree of
interdependency
High
Low
High
Intensity of conflict
Medium
Low
High
Example of this
type of alliance
Akzo NobelHuntsman
Avebe-Noveon
KLM-Northwest
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ISA relationship is one in

Lack of analysis in the

Process variables and

ISA foundation as a joint

Relational position of actors

Distinction of outcomes and

Table 2.2. A Summary of Theoretical Perspectives

Geringer (1991), Geringer &

Partner motives of learning

Power relations, bargaining

Doz & Hamel (1998), Kogut

Relationship between learning

Dynamics and complex nature

ISA as a mechanism for

ISA as a child organisation

THE GROWTH OF STRATEGIC ALLIANCES

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Competition on the joint

Each partner carries

The joint product is

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THE PROCESS DEVELOPMENT OF

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1. The nature of co-operation

Bell & Boersma (2000)

Bruce & Steve (1994)

Arino & de la Torre

Pitts & Lei (1997)

Lorange & Roos

Ring and Van de Ven

Buchel (2000), Arino &

Das & Teng

pre-alliance, competitive need & motivation emerge partner search

*) initial relational quality, initial employee involvement, initial staffing

Characteristic on each stage

Table 3.1. Strategic Alliance Development: Comparison from Different Perspectives

DEVELOPMENT OF STRATEGIC ALLIANCES

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