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Strategic Alliances and Networks (Fach) / Lecture 10 (Lektion)
- Components of an alliance organization system - Composition Individual elements of the governance system, the firms - Environment Internal organization environment (specific production system of the organizations, cultures, relations among partner firms) External organizational environment (industry the organization is part of, national economy, collections of laws, regulations, societal culture, traditional) Alliance governance structure Static formal framework (for cooperatively pursuid activities of at least 2 firms, displays how alliance is managed, organized and regulated. - Alliance governance mechanisms Instruments (by which the management organization, regulation and organization, control and influence are operationalized so that the cooperating firms have desired to achieve specified objects)
- Design parameters Structure Centralization : Locus of authority and its dispersion Formalization : Predifinitionof rules and regulations, fixed contingencies and adequate responses Standardization: alliance specific positions/units within the firms Mechanisms: Coordination: mutual adjustment, standardization, direct supervision, price Monitoring (Performance measurement): formal(performance indicatiors, cooperative scorecard) and informal (macroculture) Incentives(Motivation): Safeguards (equity, nonrecoverable investments, informal safeguards), Synergy allocation rule
- Coordination mechanism in alliances Mutual adjustment : Constitutional element, always present: at least in alliance governance boards Direct supervision: Authority voluntarily transferred by the partners to (1) a partner firm or to (2) a separate management unit Standardization of outputs : constitutional element, always present, at least codified in alliance agreement Standardization of work processes: Programs: standard operating procedures, rules, regulations which are negotiated and agreed upon by the alliance governors board Transfer price: requirements: (1) only for coordination of exchange in the alliance, (2) always negotiated by alliance governance board), (3)decisional discretion for the exchanging units
- Contingency Factors Member firm culture member firm size member firm alliance experience external environment power relation alliance size uncertainty/trust aim and scope
- Benefits and limitations of the configurational approach Typology: Ideal Types Ideal types are only rarely found in reality, they are necessary "overstatements" Are ideal types useful? Aims: Provide basis for understanding and explaining alliances and their governance systems, provide points of reference to support practical alliance management and setup instruments to describe alliances, to understand alliances by highlighting essential characteristics and interdependencies Reference points facilitate actual design question and tasks sicne differences and similarities between ideals and the practical design task are assessible, and by these means, the explanation and choice of different means to their realization is facilitated
- Primus Configuration High degree of vertical and horizontral centralization, asymmetric authority distribution in the alliance board senior executives communicate directly and are highly commited to the alliance direct supervision is the main coordinational device low degree of formalization low specialization : only governors are explicitly involved positions of the partner firms Self enforcing safeguards dominate (equity), simple synergy allocation rules Conditions: high degree of trust, low number of partner firms, found in dynamic and complex environments, small member firms
- The senate configuration High degree of vertical, low horizontal centralization, symmetric authority distribution in the alliance governors board mutual adjustment main coordinational advice alliance actively concentrated in the alliance governance board (low specialization) high degree of formalization (time consuming bargaining) set of performance indicators Third party safeguards, complex synergy allocation Small number of firms, high degree of behavioural uncertainty, efficiency aims, narrow scope, simple and stable environments
- Technocratic configuration Low degree of vertical centralization, horizontal centralization, daily operations delegated to alliance managers, central management unit standardization primary coordination mechanism high formalization, utmost elaboration of alliance monitoring system complex synergy allocation conditions: broad scope, high number of partners, which are large and experienced, moderate degree of trust, growth oriented aims
- Advocate Configuration Horizontal and vertical decentralization importance of alliance manager as most striking feature primary coordination is mutual adjustment secondary coordination : standardization moderate specialization: alliance managers are dedicated positions third party enforced safeguards conditions: balanced alliances, growth oriented aims, low behavioural uncertainty, large member firms, experienced in allying, small number of partners, complex and stable environments
- Commitee configuration Horizontal and vertical decentralization Meta-structure, general and unspecific to encourage "grassroots" sub-alliance formation for mutual benefits mutual adjustments nearly exclusively used democratic forums and committees on all levels, invoving partner firms delegates, hardly interlink low spec: alliance comissioner rather than alliance manager low formalization: vague use of incentive mechanisms and safeguards center ofactivities in the individual initiatives(sub-alliances) which take on the (governance systems) they need conditions: broad scope, balanced alliances, low behavioural uncertainty, experienced firms, among firms with market oriented or sectarian cultures
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