Weathering the storm: A study of strategic alliance change using multiple methods

Abstract

The purpose of this research was to explore common assumptions about alliance change, to identify key determinants and outcomes of alliance change, and to increase our understanding of the ways in which changes evolve by identifying common patterns or processes. In Study 1, a multiple case study was conducted, accompanied by a questionnaire, to explore strategic alliance changes in entrepreneurial, high-tech firms. Qualitative analysis of the cases showed that an alliance change typically ends in one of three ways: (1) the alliance dissolves immediately, (2) the alliance is sustained and strengthened, or (3) the alliance is sustained but weakened and eventually dissolves. I also found, in support of the literature, that numerous factors lead to alliance changes, although the most common predictors of major changes were: (1) poor alliance management, (2) dissatisfaction with partners' relationship, (3) abuse of trust, and (4) putting acquisition of partner's skills/capabilities ahead of achieving alliance goals. Analysis also led to the development of a theoretical model that predicts whether an alliance will be sustained following an alliance change. The key factors in the model that determine whether an alliance is sustained following a change are: (1) mutual partner dependence, (2) joint decision making, (3) inter-firm trust, (4) inter-firm interaction, (5) the manner in which the change was planned, and (6) the impact of the change. Using quantitative methods in Study 2, I found that two of these factors best predict whether an alliance will be sustained following a change, joint planning of the change and the impact of the change. The study also provided evidence that two other factors, inter-firm trust and the extent to which an alliance change is planned, are related to sustainment even though they are not significant predictors. This research suggests, in support of previous literature, that major unplanned changes are harmful to alliances. It also suggests that an alliance may be weakened by a change, which increases the likelihood that it will dissolve. A variety of conditions were found to increase the likelihood of alliance changes, indicating that, if firms are willing to take the substantial risk of engaging in alliances, they must constantly work to manage the health of the alliances if they want to sustain them and prevent potentially costly negative outcomes. This research also suggests that an alliance may be strengthened by a change, increasing the likelihood that it will be sustained. However, an alliance is more likely to be sustained following a change if the partners have developed a trusting, mutually dependent relationship and they have developed communication and decision routines that enable them to foresee, prevent, and solve problems together.