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Strategic Alliances and Networks (Fach) / Lecture 6 (Lektion)
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- Criteria for selecting partners Task related criteria: Patents, Technical know-how, financial resources Partner-related criteria: Partners national or corporate culture compatibility of partners top management teams partners organizational size or structure
- Strategic Fit Definition „[A] good strategic fit is likely to involve partners of similar size and/or strength, with a similar degree of mutual resource or skill need, and with congruent or at least not overtly conflicting objectives, possessing such complementary assets and potential mutual synergies as are likely to enable them to achieve and retain competitive advantage through optimal use of their joint value chains over at least the medium term.“
- Elements and Implications of strategic fit Mutual competitive advantage: - Are companies complementary in terms of assets and capabilities? - Is there sufficient realizable synergy potential? Balanced Power relations: - Alliances of partners of similar strength tend to be more stable - power imbalance may arise if partners are of significantly different size Resource Dependence: - Alliance of strategic importance to both parties? - Are the partners mutually dependent for achieving their objectives? Matching long term goals: - Partners alliance and corporate strategy compatible?- Partners share strategic vision on developments in the alliance? Market Acceptance: - Joint activities have added value for the clients and partners? - Will the alliance be accepted by the market?
- What is culture? Collective programming of the mind which distinguishes the members of on group of peope from another patterns of thoughs, feelings, behaviours, symbols, give meaning to tactions and behavious and provide interpretations of situations for people culture publicly shared and accepted by a given group at a given time, building members together and defining or separating one group from other groups taken for granted beliefs and practices distinguish: national and organizational culture
- Concept of corporate culture Characteristics: Holistic Historically determined related to anthropological concepts socially constructed soft difficult to change
- What are possible roles of culture? Culture as Barrier : different social, national and ethical worldviews are often source of fundamental conflicts and lead to misunderstanding Culture as challenge: Different cultures require mutual trust and call for precision in defining the operational processes Culture as resource: complementarity of culture leads eventually to a specific culture of the alliance, combining advantageous aspects of their original cultures
- What is trust? Expectation that an actor (1) can be relied on to fulfill obligations, (2) will behave in a predictable manner, and (3) will act and negotiate fairly when the possibility for opportunism is present
- What are the levels of trust Interpersonal level : At the interpersonal level, trusting action is exhibited in the form of a manager's behaviour INter-group level: for groups of managers, trusting action is exhibited b y group-level aciion ( based on group decision making) inter-firm level: at the inter-firm level, trusting action is signified by firm-level actions and policies ( i.e. based on corporate board votes or top management team decisions)
- What are the different types of trust? Calculus based trust : Weighing costs and benefits of exposing one's own vulnerability to the partners actions; intentional risk taking -> Knowledge-based trust : Founded expectations on the partner'S behaviour based on knowledge; reasonable predictions on the partner's future bgehaviour --> Identification-based trust : Partners take each others wants and desires into account: based on emotion, inter-partner bonds
- Building trust in strategic alliances Trust from risk taking: Trust is intimately associated with risk and risk taking, risk --> trust Trust is most likely to be the accumulation of prior satisfactory experiences Trial and error approach in building interfirm trust Trust from Equity preservation In order to build trust among partners equity and fairness need to be preserved Equity is an important source of trust and lack of equity might undermine turst Trust from Communication: Communication and proactive information exchange enhance trust building among partners Trust from interfirm adaptation Sometimes, the nature of an alliance calls for mutual adaptation A willingness to do this, although possibly painful in economic or other terms, would earn much trust from the partner
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- Benefits from trust from a managerial perspective Trust --> Willingness to overcome cultural differences Willingness to work through other difficulties Encourages partners to work together with unforeseen circumstances provides an alternative to incurring the costs and potentially de-motivating effects of close control and heavy reliance on contracts encourages the openness in exchanging ideas and information, which is necessary for innovation Trust is a particular vital ingredient in the success of global alliances and teams
- Relation between risk and Trust Trust : Since trust is based on positive expectations regarding goodwill and competence, it reduces the perceived risk in a relationship Goodwill trust reduces a partner firms received relational risk in an alliancce competence trust redcues a partner firms perceived performance risk in anlliance Risk Risk perception also serves as a source for trust underlying logic: in alliances, partner firms can accept risk only up to a certain level. Thus depending on how much risk they can accept, different levels of trust will be needed.
- Trust-Risk-Control relationship Trust-Control relationship Both output control and behaviour control will undermine goodwill trust and competence trust in an alliance social control will enhance both goodwill trust and competence trust goodwill trust and competence trust will enhance the effectiveness of all control modes Risk-Control relationship Perceived relational risk in an alliance tend to be re duced by behaviour control perceived performance risk in an alliance tend to be reduced by output control social control in an alliance will reduce both peceived relational risk and perceived performance risk