Alliances With Competitors: How to Combine and Protect Key Resources?
Abstract
Our study addresses two main questions: First, what types of alliances do firms tend to create when combining different kinds of resources? Second, what governance mechanisms do firms set up to coordinate and protect resources when they use them for different alliances? We examine 227 alliances between competitors in Asia, North America, and Europe. We first identify two types of alliances: scale alliances in which the partner firms contribute similar resources, and link alliances in which the partners contribute complementary resources. We find that firms contributing R&D and production resources tend to form scale alliances, while firms contributing marketing resources tend to enter into link alliances. We also find that firms are more likely to choose stronger protection mechanisms for link alliances, which create greater appropriation risks, while they tend to seek higher levels of coordination in scale alliances.