Success of Alliances and Collaborations

Some factors which contribute to the success of an alliance include:

  • The alliance is perceived as important by all partners.
  • A collaboration champion exists.
  • A substantial degree of trust between partners exists.
  • Clear project planning and defined task milestones are established
  • Frequent communication between partners, in particular between marketing and technical staff.
  • The collaborating parties contribute as expected.
  • Benefits are perceived to be equally distributed.

Mutual trust is clearly a significant factor, when faced with the potential opportunistic behaviour of the partners for example, failure to perform or the leakage of information. Trust may exist at the personal and organizational levels, and researchers have attempted to distinguish different levels of qualities and sources of trust. For example, the following bases of trust in alliances have been identified:

  1. Contractual – honoring the accepted or legal rules of exchange but can also indicate the absence of other forms of trust.
  2. Goodwill – mutual expectations of commitment beyond contractual requirements,
  3. Institutional – trust based on formal structures
  4. Network – because of personal family or ethics/ religious ties
  5. Competence – trust based on reputation for skills and know how
  6. Commitment – mutual self-interest committed to the same goals.

These types of trust are not necessarily mutually exclusive although over reliance on contractual and institutional forms may indicate the absence of the types of trust. Good will is normally a second order effect based on network competence, or commitment. In the case of innovation problems may occur where trust is based on the network, rather than competence or commitment, as discussed. Clearly, high level of interpersonal trust is necessary to facilitate communication and learning in collaboration but inter-organizational trust is a more subtle issue. Organizational trust may be defined in terms of organizational routines, norms and values which are able to survive changes in individual personnel. In this way organizational learning can take place, including new ways of doing things (operational or lower level learning) and doing new things through diversification (strategic or higher level learning). Organizational trust requires a longer time horizon to ensure that reciprocity can occur as for any particular collaborative project one partner is likely to benefit disproportionately. In this way organizational trust may mitigate against opportunistic behaviour. However, in practice this may be difficult where partners have different motives for an alliance or differential rates of learning.

Conceiving of the firm as a bundle of competencies, rather than technology or products suggests that the primary purpose of collaboration is the acquisition of new skills or competencies rather than the acquisition of technology or products. Therefore a crucial distinction must be made between acquiring the skills of a partner and simply gaining access to such skills. The latter is the focus of contracting licensing and like whereas the internalization of partner’s skills demands closer and longer contact, such as formal joint ventures or strategic alliances. An example would be Kodak which for many years dominated the photographic market exploiting its competencies based on wet chemistry in the dark. However, the advent of digital photography threatened many (but not all) these competencies and through a combination of corporate ventures, alliances and acquisitions Kodak successfully managed the transition from chemistry to digital photography unlike its rival Polaroid.

It is possible to identify three factors that affect learning through alliances: intent, transparency and receptivity. Intent refers to a firm’s propensity to view collaboration as an opportunity to learn new skills rather than to gain access to a partner’s assets.  Thus where there is intent, learning takes place by design rather than by default which is much more significant than mere leakage of information. Transparency refers to the openness of each partner and therefore the potential for learning receptivity or absorptiveness refers to a partner’s capacity to learn.  Clearly, there is much a firm can do to maximize its own intent and receptivity and minimize its transparency. Intent to learn will influence the choice of partner and form of collaboration. Transparency will depend   on the penetrability of the social context, attitudes towards outsiders, i.e. clannishness and the extent to which the skills are discrete. Explicit knowledge such as designs and patents, are more easily encoded than tacit knowledge. This suggests that a harmonious alliance may not necessarily represent a win-win situation. On the contrary, where two partners attempt to extract value from their alliance in the same form whether in terms of short term economic benefits or longer term skills acquisition managers are likely to frequently engage in arguments over value sharing. Where partners have different goals, for example one partner seeks short term benefits whereas the other seeks the acquisition of new skills, the relationship tends to be more harmonious at least until one partner is no longer dependent on the other.