Despite experiencing frequent failure, a large number of companies continue forming strategic alliances to ensure their continued growth. What is crucial is finding a good match in which the knowledge, experience, and strategic resources of the parties involved will complement each other.
Associate Professor Randi Lunnan of BI Norwegian School of Management, together with Sven A. Haugland from NHH, has conducted a comprehensive study of 100 strategic alliances which were followed over a period of five years.
The results of this study have now been published in the leading professional publication Strategic Management Journal.
‘The honeymoon period’
In the business arena, too, newly established relationships are much more vulnerable than those which have lasted for some time. The researchers found that five years after their formation, 66 of the 100 strategic alliances studied were still in existence.
Some third of the alliances (34) had been terminated during the five years. This does not necessarily mean that they were unsuccessful: some strategic alliances are formed for a particular purpose and a specific period. However, more detailed investigation found that 25 of the alliances investigated had been terminated before the end of their contract period.
This means that one in every four strategic alliances (25 per cent) was a failure. Among the reasons given for this were “We couldn’t work together,” “The alliance was not regarded as important,” or “The alliance didn’t work as intended.”
“Alliances that are still at the honeymoon stage are more likely to fail than ones that have survived a few problems,” explains Randi Lunnan.
Success in the short-term
The researchers into company strategy were interested in discovering the factors that are necessary in order for strategic alliances to succeed in both the short and the long-term.
They employed several different methods of measuring successful alliances and looked at the net contribution made by the alliance, company growth, market growth, new products, new expertise, and establishment in new markets.
“The alliances which fail are generally fairly recent and ones which are felt to have little strategic importance for the parties involved,” says Lunnan.
The most important factors for the success of an alliance in the short-term are that the partners can provide each other with resources that are complementary and have strategic importance.
Short-term success is far from being a guarantee that the alliance will succeed in the long-term. The factors which are vital for success in the short-term are not the same as those which produce positive results over a longer period.
Alliances must be nurtured
An alliance which produces good results shortly after being established will not necessarily be equally successful five years later. Similarly, an alliance with only modest initial results may blossom subsequently if the companies involved invest in the resources of their personnel and are willing to be flexible and to adapt to the changes required over a longer period.
The conclusion which Randi Lunnan draws from the study is that “The success of an alliance is relatively transitory.”
The researchers also show how management changes in one of the parties involved can have a negative effect on results over a period of time.
Lunnan, Randi, Haugland, Sven A. (forthcoming): “Predicting and Measuring Alliance Performance: A Multi-Dimensional Analysis”, Strategic Management Journal.
Audun Farbrot | alfa
New study: How does Europe become a leading player for software and IT services?
03.04.2017 | Fraunhofer-Institut für System- und Innovationsforschung (ISI)
Reusable carbon nanotubes could be the water filter of the future, says RIT study
30.03.2017 | Rochester Institute of Technology
More and more automobile companies are focusing on body parts made of carbon fiber reinforced plastics (CFRP). However, manufacturing and repair costs must be further reduced in order to make CFRP more economical in use. Together with the Volkswagen AG and five other partners in the project HolQueSt 3D, the Laser Zentrum Hannover e.V. (LZH) has developed laser processes for the automatic trimming, drilling and repair of three-dimensional components.
Automated manufacturing processes are the basis for ultimately establishing the series production of CFRP components. In the project HolQueSt 3D, the LZH has...
Reflecting the structure of composites found in nature and the ancient world, researchers at the University of Illinois at Urbana-Champaign have synthesized thin carbon nanotube (CNT) textiles that exhibit both high electrical conductivity and a level of toughness that is about fifty times higher than copper films, currently used in electronics.
"The structural robustness of thin metal films has significant importance for the reliable operation of smart skin and flexible electronics including...
The nearby, giant radio galaxy M87 hosts a supermassive black hole (BH) and is well-known for its bright jet dominating the spectrum over ten orders of magnitude in frequency. Due to its proximity, jet prominence, and the large black hole mass, M87 is the best laboratory for investigating the formation, acceleration, and collimation of relativistic jets. A research team led by Silke Britzen from the Max Planck Institute for Radio Astronomy in Bonn, Germany, has found strong indication for turbulent processes connecting the accretion disk and the jet of that galaxy providing insights into the longstanding problem of the origin of astrophysical jets.
Supermassive black holes form some of the most enigmatic phenomena in astrophysics. Their enormous energy output is supposed to be generated by the...
The probability to find a certain number of photons inside a laser pulse usually corresponds to a classical distribution of independent events, the so-called...
Microprocessors based on atomically thin materials hold the promise of the evolution of traditional processors as well as new applications in the field of flexible electronics. Now, a TU Wien research team led by Thomas Müller has made a breakthrough in this field as part of an ongoing research project.
Two-dimensional materials, or 2D materials for short, are extremely versatile, although – or often more precisely because – they are made up of just one or a...
28.04.2017 | Event News
20.04.2017 | Event News
18.04.2017 | Event News
28.04.2017 | Medical Engineering
28.04.2017 | Earth Sciences
28.04.2017 | Life Sciences