Managing Dynamic Capabilities in Alliance Portfolios

Diplomarbeit von Felix Arndt

Abstract:

The field of strategic management deals with understanding the ways how firms achieve competitive advantage and how they create superior value. Knowledge creation is carried out by explaining phenomena that can be observed in business life and by applying and developing theories and their implications. Often, new perspectives emerge through criticism of existing models. A similar process was necessary to discover the potential of the resource-based view, which had taken almost 30 years from its first systematisation to an increasing amount of literature dealing on the topic. The resource-based view nowadays reflects one of the most important perspectives on strategic management. Basically, the resource-based view is a platform for many research streams, underlying the same basic assumptions, that presently are creating new knowledge, a better understanding and will continue to do so in the future.

In fact, the resource-based view is a result from the critics of the industry structure view and has gained its popularity from the potential which it has proven by sourcing several research ideas. Initially, the resource-based view was seen as the opposite of the industry structure view, which is externally oriented whereas the resource-based view focuses on firm’s internal processes to achieve competitive advantage. From today’s point of view, an integrated ansatz is traced. Every different perspective relies on a certain number of similar assumptions with another perspective. Often, it seems possible to explain business phenomena by integrating theories into a consistent view.

This approach has had potential for highly-influential strategic management theories and it has still for future research. Especially, the transaction cost theory provides valuable extensions and explanations for observations within the resource-based view. The same statement is valid for the integration of the resource-based view and the industry structure view. In fact, Prof. Barney who established the most cited basis for the resource-based view in 1991 considered varying embodiments for the resource-based view since the perspective is highly related to micro-economics, evolutionary economics and the industry structure view. With respect to the foundation of the resource-based theory, many other perspectives emerged, such as the competence-based view, the routine-based view, the capability-based view, the dynamic capability perspective, the knowledge-based view and others. However, the resource-based view is probably the most influential theory within the field of strategic management.

This paper investigates the management of strategic alliances. Strategic alliances have been an emerging phenomenon since the early 1990’s. The research of strategic alliance is based on a mixture of theories. In fact, most of the theory development for strategic alliances built-up relative independently from research in other areas. Certainly, the complexity of the topic which integrates the perspectives of two or more firms while simultaneously retaining the perspective of the focal firm respectively the partner firm each of which pursue multiple targets with their alliance building. Thence, systematisation is difficult. Another elusive problem forms the empirical verification of performance-related frameworks.

The outcomes of strategic alliances are generally difficult to specify. Often, at least some of the outcomes are highly intangible. Many relationships rely on knowledge flows. In addition, the imposition of earnings and the costs of a strategic alliance are time-consuming or even impossible because of the difficulty of separating alliance deployments from daily business deployments. The most profound problem, however, is addicted to performance measurement. Stock market returns from alliance announcements, for example, may be ambiguous. Company reports on the other hand do not exemplify alliance outcomes.

Finally, empirical data will be hard to capture. Consequently, empirical research uses a wide variety of methods that seem to be more or less valid to measure performance. Alliance research concentrates on two aspects: the management of dyadic alliances and the field of networks. In addition, I assess alliance portfolios which represent the entirety of a firm’s alliances. Except for a research gap that I identified in that business area, alliance portfolio management appears to be a logic development from the increasing importance of strategic alliances for the market as well as the single firm. Thereafter, the research target of this book is described in detail in the following section.

Table of Contents:

Text Sample:

Chapter 3.1.:

During the past two decades, the phenomenon of strategic alliances has remodelled the business landscape. This observation is reflected by two facts. The number of alliances has increased remarkably altering the common forms of inter-firm collaboration because of a change in strategic purpose.

Strategic Alliances in the past were primarily equity joint ventures, responding to entrance modes for multinational firms because of developing country governments’ restrictions on foreign investment. Primarily, they were characterized by dealing with unilateral transfers – i.e. relatively simple contracts – of commodities. Today, the facets of strategic alliances are widespread. The single or multiple partners for collaboration vary from supplier to actual and potential competitors and across industrial sectors. The complexity of transfers includes tangible and intangible resources. Several alliance partners build joint forces to compete against other networks.

Although alliances are formative business constructs, they tend to be misapprehended. defines strategic alliances as “voluntary arrangements between firms involving exchange, sharing, or codevelopment of products, technologies, or services”. Kraege finds two constituents of strategic alliances:

the interdependence of the partners as coordination of explicit agreed, common activities the autonomy of the partners as boundary to hierarchical structures.

For the purpose of this book, a narrow definition of strategic alliances which excludes particular forms of exchange is not promising. Instead, the definition has to include the most important research and the most common features used by scholars. Therefore, a strategic alliance is defined as every hybrid form of exchange between the spot market and total possession, i.e. hierarchy. Table 2 shows prominent examples of strategic alliances. Besides the ownership structure that causes governance implications which I address later, one other attribute of alliance typology should be mentioned. The alliance type reflects the nature of partner relatedness. Horizontal alliances refer to alliances between immediate competitors whereas vertical alliances apply to firms operating upstream and downstream processes, e.g. supplier and buyer. For the purpose of this paper, the profile of a strategic alliance is comprehensive since a broad definition fits to the abstract level of discussion.

Strategic alliances occur in a variety of forms and specifications. This paper approaches with a broad definition to capture the abstract level of the theory which it is using and expanding. The application of the resource-based view will be presented next. There, some basic concepts will be discussed to facilitate the understanding of the application of dynamic capabilities to strategic alliances.