What’s so good about collaboration anyway?
Learning how to form an alliance
for better performance.
Albert Jolink
Erasmus University Rotterdam
Outline
• Section 1: The resource-based view of
the firm and dynamic capabilities
• Section2: Dynamic capabilities and
alliances
• Section 3: Alliance management
capabilities and micro firms
Section 1
THE RESOURCE-BASED VIEW
OF THE FIRM AND DYNAMIC
CAPABILITIES
The Resource-based View of the Firm
Market-based View
• Firm as a unit in a
market.
• Distinct position in market
underpins competitive
advantage.
• Detailed knowledge of
market and competitive
conditions critical.
• Strategy based
competitive analysis and
appropriate value
creation.
Resource-based View
• Firm as a bundle of
resources and
capabilities.
• Distinct resources and
capabilities underpin
competitive advantage.
• Specific combination and
coordination of resources
critical.
• Strategy based on skilled
diagnosis and creative
solutions.
The Language of Resources and
Capabilities
• Resources: inputs into a firm’s operations so as
to produce goods and services.
• Capabilities: The ability to perform a task or
activity that involves complex patterns of
coordination and cooperation.
• Rents: a surplus of revenue over cost.
• Strategic assets / Core competencies:
resources and capabilities that can earn rents.
Core Competence
Core Competences
Collective
knowledge of how
to coordinate skills =
and technologies
Prahalad & Hamel
(1990)
Capabilities
Business
processes
connected to
customer needs
Stalk, Evans & Shulman
(1992)
Strategic Assets
Capacity to deploy
resources to effect
a desired end
=
Amit & Shoemaker
(1993)
The underlying capability that is the distinguishing
characteristic of the organization
Prahalad and Hamel (1990):
core competencies
• Management’s ability to consolidate technology and
•
•
•
•
production skills into competencies so the business can
adapt quickly to changing opportunities/circumstances.
Core competencies = collective learning of the
organisation about prod/tech/markets.
e.g. Sony’s miniaturisation skills.
Competencies have to be built over a long period.
They are difficult to identify precisely and hard to imitate.
Many firms fail to identify their own core competencies
and so fail to nurture them properly or exploit them fully
Chandler (1990): initial risky investments
• Chandler (1990): successful giants such as IBM and
Bayer derive from the initial heavy and risky
investments in building organisational knowledge and
capabilities which allowed them to exploit the
opportunities available to exploit scale and scope
economies.
Stalk, Evans, and Shulman (1992):
capabilities
• Competitive advantage is based on the ability to
respond to evolving opportunities which depends
on business processes or capabilities. Business
success involves choosing the right capabilities to
build, managing them carefully, and exploiting
them fully.
e.g. Honda, Canon.
Collis and Montgomery (1995): competing
on resources
• Competitive advantage derives ultimately from the
ownership of a valuable resource.
• Superior performance derives from developing a
‘competitively distinct’ set of resources and deploying
them in a well conceived strategy.
• Resources can be physical, intangible, or organisational
capabilities.
Identifying Intangibles
• Intellectual property rights of patents, trademarks,
•
•
•
•
•
•
•
•
copyright and registered designs
Trade secrets
Contracts and licenses
Databases
Information in the public domain
Personal and organizational networks
The know-how of employees, advisers, suppliers and
distributors
The reputation of products and of the company
The culture of the organization
The Value of a Core Competence
Strategic Industry Factors and Core
Competences
Matching Resources and Markets
Resources and Capabilities
The capabilities approach
• Question: What could give a particular
firm a sustainable edge over its rivals?
• A series of influential articles in the HBR
during the 90’s suggested a new
approach (although it turned out its
origins were much earlier)
Critiques to the resource-based
perspective
Excessive focus on the exploitation of existing
resources, rather than continuous development of
new ones to address changing markets: ‘It is
evident that the resource-based perspective
focuses on strategies for exploiting existing firmspecific assets’
How to address high-velocity markets, just
leveraging existing resources?
High velocity markets
• Rapid and unpredictable change in the
industry
• Hypercompetition
• Growing complexity
• Sudden and dramatic change in
markets
High velocity markets
Winners in the global marketplace have been firms
that can demonstrate timely responsiveness and
rapid and flexible product innovation, coupled with
the management capability of effectively
coordinate and redeploy internal and external
competencies.
Not surprisingly, scholars have remarked that
companies can accumulate even a large stock of
resources and still not have many useful
capabilities.
High velocity markets and dynamic
capabilities
In high velocity markets it is necessary to introduce
the concept of ‘dynamic capabilities’, emphasizing two
key aspects which were not the main focus of
attention in previous strategy perspectives. The term
dynamic refers to the higher ordered resource.
The term capabilities emphasises the key role of
strategic management in appropriately adapting,
integrating, and re-configuring internal and external
organizational skills, resources, and functional
competences toward changing environment.
Dynamic Capabilities Perspective
• Firms compete on the basis of product design,
product quality, process efficiency, and other
attributes. However, in a Schumpeterian world
(entrepreneurship=creative destruction), firms are
constantly attempting to improve their competencies
or to imitate the competence of their most qualified
competitors. Rivalry to develop new competences or
to improve existing ones is critical in a Schumpeterian
world.
• The dynamic capabilities approach places emphasis
on the firm’s internal processes, assets and market
positions, the path along which it has travelled, and
the paths that lie ahead.
Dynamic Capabilities/Some definitions
• Dynamic capabilities are the antecedent organizational
and strategic routines by which managers alter their
resource base–acquire and shed resources, integrate
them together, and recombine them–to generate new
value-creating strategies. As such, they are the drivers
behind the creation, evolution, and recombination of other
resources into new sources of competitive advantage’
• (Eisenhardt and Martin, 2000)
Dynamic Capabilities/Some definitions
• “A dynamic capability is a learned pattern of collective
activity through which the organization systematically
generates and modifies its operational routines in pursuit
of improved effectiveness”
• (Zollo and Winter, 2002).
Dynamic Capabilities/Some definitions
• We define dynamic capabilities as the firm’s ability to
integrate, build, and reconfigure internal and external
competences to address rapidly changing environments’.
They reflect an organization’s ability to achieve new forms
of competitive advantage
•
• (Teece, Pisano and Shuen, 1997)
Dynamic Capabilities
• The dynamic capabilities perspective sees strategic
initiatives as resulting from the multi-layered
recombination of firm-specific resources and
competences.
• Such recombination could be either intentional or
unintentional; can occur either at the environmental level
or within the organization; can be the result of managerial
choice or of blind external forces.
Dynamic capabilities and strategic
evolution processes
• According to this perspective, strategic evolution
processes are described as resulting from a continuous
recombination of routines and resources, based on a
limited repertoire of clearly traceable recursive
recombination patterns.
• This relative stable set of routines and resources which
are recombined through time can be defined as core
micro-strategies.
Section 2
Dynamic capabilities and
alliances
Alliance Literature
Early alliance literature:
Focus on inter-firm attributes to explain performance,
such as trust, complementary resources, knowledge
sharing.
(Reviews: Jolink & Niesten, 2012; Christoffersen, 2012)
Recent alliance literature:
Alliances failure rates:
between 30 – 70%
Focus on alliance experience and alliance management
capabilities to explain performance.
(Anand & Khanna, 2000; Kale & Singh, 2007; Heimeriks et al., 2010;
Schreiner et al., 2009)
Alliance Management Capability (AMC)
Ability of firms to capture and share knowledge of
alliances and alliance management, and to apply
this knowledge in ongoing and future alliances.
(e.g. Kale & Singh 2007)
Proxies are used to measure AMC:
- Alliance structures (alliance department,
alliance manager)
- Alliance processes (alliance training)
- Alliance tools (alliance guidelines, templates,
database)
A Literature review on AMC
- Empirical research focuses on measuring AMC
with proxies. Articles are mainly quantitative
studies that explain the variation in alliance
performance by counting alliance structures,
processes, and tools. (e.g. Heimeriks 2010).
- Explanations in qualitative and conceptual
articles focus instead on:
AMC  alliance attributes  alliance performance
Structure and main argument of
literature review
1. Classification of different types of AMC and
proxies
2. Impact of types of AMC on alliance
attributes
3. Impact of alliance attributes on performance
Classification of different types of
AMC and proxies
General AMC
1. - Structure: Alliance
Inside
the Firm department, vice-president of
alliances, alliance manager.
- Process: Alliance training,
alliance evaluation, (in)formal
knowledge sharing among
managers.
- Tool: Worksheets, guidelines,
templates for alliance contracts or
partner selection.
Inside
the
Alliance
3. - Structures: Alliance manager
in JV, external alliance specialist.
- Process: External alliance
training.
- Tool: Alliance guidelines and
shared intranet.
Partner-specific AMC
2. - Structure: Alliance department,
alliance manager, alliance team.
- Process: Forums and networks of
alliance managers, brainstorming
sessions.
- Tool: Logbooks, database with
information on alliance partner,
intranet.
4. - Structure: Inter-firm task force,
joint alliance team.
- Process: Joint alliance evaluation,
inter-firm routines for partner-specific
knowledge sharing.
- Tool: Communications matrix and
shared intranet.
Some findings
Firms with alliance structures, alliance processes
and alliance tools have a larger alliance
performance.
Alliance performance is measured by:
- short-term financial gains (e.g. abnormal stock
market returns after alliance announcement)
- managerial assessments
- patents or new product development
(e.g. Anand & Khanna 2000; Schreiner et al. 2009)
Theoretical perspectives of articles
-
Dynamic capabilities perspective
Resource-advantage theory
Resource-based view
Organizational learning theory
Evolutionary economics
 Large amount of studies refer to AMC as a
dynamic capability or as a higher-order
resource that must have an influence on
lower-order resources before performance is
affected. (e.g. Rocha-Goncalves & Conceição
Gonçalves, 2008).
Impact of AMC on alliance attributes I
- General AMC inside the firm: Firms have a superior
ability to communicate and design alliance contracts.
- Partner-specific AMC inside the firm: Firms with
greater knowledge of alliance partners.
Impact of AMC on alliance attributes II
- General AMC inside the alliance: Alliance partners with
inter-firm alliance structures, processes and tools (e.g.
joint teams, inter-firm task force, alliance specialist in
JV).
- Partner-specific AMC inside the alliance: Alliance
partners integrate partner-specific knowledge in
alliance structures, processes and tools.
Impact of alliance attributes on performance
- Regular sharing of information and knowledge
eases clashes in corporate culture, allows partners
to safeguard interests.
- Information sharing lowers costs and increases
efficiency of alliances, whereas knowledge sharing
improves innovative output.
Impact of alliance attributes on performance
- Partners with a shared understanding, shared
business vision, shared values identify with partners
and are more committed to the alliance.
- Variations or shifts in strategic directions of alliance
partners, away from collective goal, have a negative
impact on alliance success.
Contributions of the review
- It structures existing research
practices by offering a classification
of AMC.
- In line with DC perspective, it unveils
an explanatory mechanism of the
impact of AMC on performance, by
stressing intermediate impact of AMC
on attributes of alliance relation.
Section 3
Alliance management
capabilities and micro firms
Research questions
• Do micro firms employ alliance management
capabilities in the different phases of the alliance life
cycle?
• Do the alliance management capabilities of micro
firms influence alliance performance?
• How do the alliance management capabilities of micro
firms differ from those of larger firms?
Alliance management capabilities
Intra-firm antecedents of alliance success:
Alliance Management Capability: Ability of firms to
capture and share knowledge of alliances and
alliance management, and to apply this knowledge
in ongoing and future alliances.
(Kale et al., 2002; Heimeriks & Duysters, 2007;
Niesten & Jolink, 2012).
Alliance Experience: Number of alliances that a firm
has entered into in the past.
(Anand & Khanna, 2000; Hoang & Rothaermel
2005; Sampson, 2005).
Proxies for AMC
• Structures: Corporate alliance office; vice-president of
alliances; alliance department; alliance manager; external
alliance specialists: consultants, lawyers, mediators &
financial experts.
• Processes: Debriefing & rotation of alliance managers;
forums and networks for (in)formal knowledge exchange;
partner selection program; internal & external alliance
training; individual & cross- alliance evaluations.
• Tools: Alliance guidelines & manuals; alliance contract
templates; database with information on alliances;
contact list; intranet.
Contribution to the literature (1)
AMC of Micro Firms
• Large firm bias of recent literature on AMC : 500
largest companies of the world; firms with annual sales exceeding
$500 million; firms with more than 1000 employees (Draulans et al.,
2003; Kale et al., 2001, 2002; Heimeriks et al., 2007, 2009).
• A better understanding of the alliance structures,
processes and tools of micro firms that influence
alliance performance enhance the value
generated by these firms.
Contribution to the literature (2)
Alliance Life Cycle
Improved Alliance Performance
Alliance
Outcome
Phase of
Alliance Life
Cycle
Alliance Formation
& Partner Selection
Alliance Governance
& Design
Post-Formation
Alliance Management
Key Drivers
of Alliance
Success
- Partner
Complementarity
- Partner Compatibility
- Partner Commitment
- Equity Sharing
- Contractual Provision
- Relational Governance
- Aligning Activities
- Development of Trust
- Conflict Resolution
Figure 1. Drivers of Alliance Success in Alliance Life Cycle (Kale and Singh,
2009: 48)
Contribution to the literature (2)
AMC in Alliance Life Cycle
- Use of external
specialists, e.g. alliance
search bureaus
- Partner selection
program
- Alliance training
- Alliance database
- Intranet
- Alliance evaluation
Alliance Formation
& Partner Selection
- Use of external
specialists, e.g. lawyers,
accountants.
- Contract templates
- Alliance guidelines
- Alliance training
- Alliance database
- Intranet
- Alliance evaluation
Alliance
Governance &
Design
- Involvement of
external specialists,
e.g. management
consultants.
- Trust building
worksheet
- Alliance contact list
- Alliance training
- Alliance evaluation
Post-Formation
Alliance Management
Kale & Singh, 2009; Kale et al., 2002; Sluyts et al., 2010; Mascarenhas & Koza, 2008; Heimeriks, 2010
Survey
• A questionnaire was sent to firms that participated in an
innovation competition of a large multinational
consultancy firm in 2011.
• The firms introduced an innovative product or service into
the Dutch market in the 3 years preceding the
competition.
• Response: 99 firms: 45 micro firms (≤ 5 employees) and
54 larger firms.
Survey
Independent variables:
• Alliance Structures / External Experts: Consultant, lawyer,
mediator, financial expert, alliance expert.
• Alliance Processes & Tools: Partner selection program,
external alliance training, alliance evaluation, intranet,
alliance manuals, contract templates, alliance database.
• Alliance Life Cycle: Alliance formation & partner selection
phase; alliance governance & design phase; postformation alliance management phase.
• Drivers of alliance success in three alliance phases
Survey
Dependent variable:
Alliance Performance:
- Extent to which the alliance is satisfactory;
- Extent to which the alliance helps the firm achieve its
objectives;
- Extent to which the competitive position of the firm
improves as a result of the alliance.
Control variables: Alliance experience; Firm size; Size of
alliance partner
Results – AMC of Micro Firms
• Micro firms use more external experts than alliance processes or
tools. They use lawyers most often, followed by consultants and
financial experts, especially in phase 2.
• Phase 1 & 2: alliance contract templates; phase 1: partner
selection program; phase 2: alliance manuals; phase 1, 2 & 3:
alliance evaluation
Table 1. Alliance structures, processes and tools of micro firms in alliance life cycle
Alliance Phase 1:
Alliance Formation & Partner Selection
Alliance Phase 2:
Alliance Governance & Design
Alliance Phase 3:
Post-formation Alliance Management
Sum (average per firm)
Alliance structures: Alliance
External experts
processes
23
9
Alliance
tools
13
23
5
13
16
10
7
62 (1.38)
24 (0.53)
33 (0.73)
Results – Impact on Alliance Performance
Results – Impact on Alliance Performance
Results – Comparing Micro & Larger Firms
Table 4. Comparison of AMC of micro and larger firms
Alliance Phase 1:
Alliance Formation & Partner Selection
Alliance Phase 2:
Alliance Governance & Design
Alliance Phase 3:
Post-formation Alliance Management
Sum (average per firm)
External Experts
Alliance Processes
Alliance Tools
Micro
Firms
Larger
Firms
Micro
Firms
Larger Firms Micro
Firms
Larger
Firms
23
34
9
32**
13
28**
23
31
5
19*
13
23*
16
16
10
17
7
12
62(1.38)
81(1.5)
24(0.53)
68(1.26)** 33(0.73) 63(1.17)**
* p < 0.10; ** p < 0.05
• Larger firms do not use different, but significantly more alliance
processes and tools (per firm), especially in phase 1 & 2, and
especially partner selection programs and alliance evaluation.
• Larger firms use significantly more AMC for relational governance
than micro firms do.
Conclusions
• Micro firms employ AMC. Their use of AMC varies along
the phases of the alliance life cycle.
• Alliance processes and tools of micro firms have a positive
impact on performance (especially in phase 1 & 3).
External experts have a negative impact on performance.
• Drivers: Micro firms that enter into alliances to access new
markets, and use alliance processes and tools for
contractual provision have a larger alliance performance.
• Larger firms use more external experts, alliance processes
& tools.
Discussion / Future research
Why do micro firms use so many external experts? Why
do larger firms employ more AMC?
- Micro firms have a structural lack of resources (Das &
He, 2006).
Why do external experts have a negative impact on
performance?
- Relatively high costs of external experts (Heimeriks et
al., 2009).
- Know-how of external expert is standardized too much
for micro firms with specific product and local market
(Poutziouris, 2003; Storey, 1982).
“What’s so good about collaboration
anyway?
Learning how to form an alliance
for better performance.”
Albert Jolink
Erasmus Universiteit Rotterdam