Eisenhardt and Schoonhoven, (1996) examine the formation of strategic alliances through two themes - strategic needs for cooperation and social opportunities for cooperation. They posit that firms form strategic alliances when they are in vulnerable strategic positions – which can be because they may be struggling with unstructured markets or ambiguous/uncertain scenarios – such as competing in emergent or highly competitive markets or introducing pioneering technical strategies. For instance, for innovative firms, the role of complementary assets becomes crucial for diffusion of new innovation. Complementary assets reflect the interdependencies of assets and they must evolve in parallel with the new innovation; otherwise it becomes a constraint …show more content…
In fact failure to enter into strategic alliances can transfer competitive advantage to rival firms. The complementary assets framework of Teece (1986) analyses the predicament of many firms which despite being the first to commercialize a new product or process in the market fail to extract economic benefits as they lose out to competitors and imitators who end up profiting up more than the first firm that commercialized the innovation.
According to Eisenhardt and Schoonhoven, (1996), “a high payoff for cooperation is particularly likely when firms are in vulnerable strategic positions” akin to a game theoretic approach. For instance, firms “in highly competitive markets have vulnerable strategic positions because margins are low and product differentiation is difficult”. Vulnerability can also be induced due to unanticipated changes in the economic structure in an industry, referred to as ‘Schumpeterian shocks’ that can render some, if not all, resources irrelevant while some
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Firms occupying central positions in a network can have unparalleled access to information which they can take advantage of. Such firms may find it relatively easier to develop new innovations more frequently. Consequently, central firms may act as conduits for innovation diffusion within the social network. Diffusion may be faster or slower or may not happen at all – which depends on the innovative behavior of the central firms. We expect that under specific circumstances, firms in central positions would be better off to uptake new innovations more than firms in other positions. This theorizing is at a more granular level and can help develop deeper insights into the role of a firm’s structural position within a social
Technological advancement is another condition that enhances complex linkage. The Apple Company should employ modern technology to link its suppliers. The method of coordinating the suppliers sho...
The evaluation of the strategic alliance from a TCE perspective has identified bounded rationality and opportunism as sources of potential economic hazards that could create inefficiencies in the vertical chain. Further investigation would be required to identify the extent of these efficiencies.
How can firms minimize or manage the bumps, hurdles, or conflicts that often occur when firms join together in an alliance or partnership?
Zhang, H., Shu, C., Jiang, X., & Malter, A. (2010) 'Managing Knowledge for Innovation: The Role of Cooperation, Competition, and Alliance Nationality'. Journal of International Marketing, 18 (4) 74-94.
Schumpeter’s view of competition is that companies’ innovation is continuously destructive to processes and assets. In that respect, new technologies displace the older ones making way for greater growth than in the conservative and stable markets. The authors’ review of the failure by IBM and Microsoft provides a good description of that Schumpeterian competition and diseconomy of scope. In that analysis, the author’s address the question on the causes of creative destruction through which they challenge the view that failure in new technological areas by companies that have been successful in theindustry is explained by two scenarios. One being that the companies fear the cannibalization hence ends up under-investing in the new market. The other explanation challenged is that the companies tend to develop cognitive frameworks and organizational capabilities that slow their identification and response to new opportunit...
However, the concerns of partnering with a firm can lead to exploitation or copy/take away proprietary, competency, technique or technology, which will harm future long term gains.
Tsang, E.W.K. (2000), ‘Transaction Cost and Resource-Based Explanations of Joint Ventures: A Comparison and Synthesis’, Organization Studies, 21(1): pp. 215-242.
Here we are interested in the strategic nature of competition between firms. "Strategic" means the dependence of each person's proper choice of action on what he expects the other to do. A strategic move of a person influences the other person's choice, the other person's expectation of how would this particular person behave, in order to produce the favourable outcome for him.
significant activities in the strategic way better than the rivalry firms (Lüsted, 2012). It is
Before the alliance the two firms were in totally different market and they were also in different country but the industry was of same type. Both of the firms were aware about their future plan and lacking.
The topic under review is strategic alliances. This particular form of non-equity alliance between firms in the same industry (competitors) is becoming an increasingly popular way of conducting business in the global environment. Many different reasons of why such alliances are occurring have been recognized. These include: the increasing globalization of the world's economy resulting in intensified global competition, the proliferation and disbursement of technology, and the shortening of product life-cycles. This critique will use Kenichi Ohmae's viewpoint on strategic alliances as a benchmark for comparison. Firstly, a summary of Ohmae's article will be provided. Secondly, in order to critique Ohmae's opinion, it will be necessary to review other literature on the topic. Thirdly, a discussion of the various viewpoints and studies, that have hence arisen, will be discussed in detail. Finally, conclusions will be drawn with implications for companies operating in today's global environment, together with suggestions for future research on strategic alliances.
Competitive advantage is the advantage for the competitors and gained by the offerings from the consumers that have the greater value either by the low prices of the products and by providing the benefits and services to the consumers that denotes the high price. It is a set of the innovative and different features of the company and the products and services sale to the consumers so that company can achieve the targets what they have decided and it is the betterment for the enterprise in the competitive market (Porter, 2011). There are three determinants which can be used in the competitive advantage that what the company produce for their consumers, their target market that what they have to achieved and the competition from the other entity
Organisational change can arise due to a change in strategy and this begins with examining capabilities and the internal environment. This is portrayed in the Strategy diamond. Firstly through arenas the organisation can plan where they will be active in and which part to place most emphasis on for example technologies or value creation strategies. Only after determining this can they implement a positive change, leading to the next element, vehicles to get them where they need to be such as alliances. This can lead to change in management along with strategic partnerships, and the way managers transition to this change will determine if the strategy impacts on the overall organisation in a way that reinforces its purpose and goals. Partnerships indicate how an organisation can strengthen its capabilities by merging with businesses who possess the skills they lack. (Carpenter et al. 2010)
examines the motivation for inter-organisational collaborations and information exchange in her article titled, “Why do Managers from Different Firms Exchange Information? A Case Study from a Knowledge-intensive Industry”. The article focus on the knowledge intensive companies like the Finnish games industry which is seen as complex and one that only changes through an evolutionary process. The ever increasing amount of information and importance of knowledge in business are factors which lead to the creation of new types or patterns of information firms (Glazer, 1991) as such, the forms of interaction among the firms are either competition or market transactions. Peltoniemi (2007) argues that besides competition and market transactions, firms interact by exchanging information and knowledge. This has an effect on what the firms do and that in turn has an effect on how the industry evolves or changes (Peltoniemi, 2007). The article further argues that although the significance of information and knowledge exchange has been acknowledged, it has not been the subject of thorough examination. Nonetheless, Muller & Pénin (2006) states that disclosing knowledge is a way of increasing a firm’s reputation in the eyes of potential partners as well as a firms way of easily accessing external knowledge in the long run as it appears
Having both complementary and compatible alliance partners was essential fundamental for MDT’s alliance strategy. In the second-degree perspective, interrelated-partner relationships are examined (Greve et al., 2014). Although each partner have their own alliances, not one interrelated partnership among MDT’s partners has been found. Therefore, MDT has a hub-and-spoke configuration and it is actually the same picture as Figure 1. Because MDT is at the centre of a hub-and-spoke portfolio, MDT has an easy access to new information, cooperation and power from each alliance partners that allow MDT to create new innovations (Greve et al., 2014). The medical device industry can be considered rather dynamic. As mentioned, the macro-environment of