Alliances

Abstract

Since the 1990s, alliances have become a common business practice in many industries, primarily in response to globalization and technological change. More relaxed regulations on competition have further favoured the formation of alliances. Many alliances associate firms competing in the same industry but in different geographies. In addition to the pursuit of explicit economic objectives (notably achieving economies of scale and leveraging complementary capabilities), alliances create opportunities for learning new skills from partners and fighting off competition. However, alliances are rarely optimally efficient arrangements because partners are torn between the will to cooperate and the temptation to behave opportunistically. The main pitfall in alliances is to strengthen competitors through unintentional capability transfers to partners.

This entry was originally published on Palgrave Connect under ISBN 978-1-137-49190-9. The content has not been changed.