Small Business Economics

, Volume 9, Issue 1, pp 33–44

Alliance Strategies of Small Firms

  • Benjamin Gomes- Casseres
Article

Abstract

The paper concludes that small firms follow one of two alliance strategies. When the firms are small relative to their rivals and to their market, they tend to use alliances to gain economies of scale and scope; when they are large in relative terms, they avoid alliances. This behavior is consistent with alliance usage by large firms. The paper also analyzes the sources of profit for a small firm that uses a "constellation" of allies to compete in a scale-intensive industry. Its profits depend on a combination of the group-based advantages generated by the constellation, and the share of these profits that the firm can appropriate from the group. Small firms face particular hazards in this regard when their bargaining power within their constellation is weak. The paper illustrates these arguments with data froma small survey, with case studies from the computer industry, and with a simple mathematical model.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acs et al., this volume, ‘The Introduction: Small and Medium Size Enterprises in the Global Economy: A Policy Perspective’, Small Business Economics.Google Scholar
  2. Buckley, Peter J. et al., 1983, Direct Investment in the United Kingdom by Smaller European Firms, London: Macmillan.Google Scholar
  3. Buckley, Peter J. and Hafiz Mirza, forthcoming, ‘The Role of Small and Medium Sized Enterprises in Technology Transfer to Less Developed Countries – In the Case of the U.K.’, in Peter J. Buckley et al. (eds.), International Technology Transfer by Small and Medium Sized Enterprises: Country Studies, London: Macmillan.Google Scholar
  4. Caves, Richard E., 1982, Multinational Enterprise and Economic Analysis, Cambridge: Cambridge University Press.Google Scholar
  5. Caves, Richard E., Harold Crookell and J. Peter Killing, 1983, ‘The Imperfect Market for Technology Licenses’, Oxford Bulletin of Economics and Statistics 45(3), 249–267.Google Scholar
  6. Chandler, Alfred D., Jr., 1990, ‘The Enduring Logic of Industrial Success’ Harvard Business Review (March-April), 130–140.Google Scholar
  7. Church, Jeffrey and Neil Gandal, 1992, ‘Network Effects, Software Provision, and Standardization’, Journal of Industrial Economics (March), 85–103.Google Scholar
  8. Cusumano, Michael, Yiorgos Mylonadis and Richard S. Rosenbloom, 1992, ‘Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta’, Business History Review (Spring), 51–94.Google Scholar
  9. Gomes-Casseres, Benjamin, 1988), ‘Joint Venture Cycles: The Evolution of Ownership Strategies of U.S. MNEs: 1945–1975’, in Farok Contractor and Peter Lorange (eds.), Cooperative Strategies in International Business, Lexington, MA: Lexington Books, pp. 111–128.Google Scholar
  10. Gomes-Casseres, Benjamin, 1996, The Alliance Revolution: The New Shape of Business Rivalry, Cambridge, MA: Harvard University Press.Google Scholar
  11. Gomes-Casseres, Benjamin and Tomás Kohn, forthcoming, ‘Small Firms in International Competition: A Challenge to Traditional Theory?’, in Peter J. Buckley et al. (eds.), International Technology Transfer by Small and Medium Sized Enterprises: Country Studies, London: Macmillan.Google Scholar
  12. Conner, Kathleen, 1992, ‘Obtaining Strategic Advantage from being Imitated: When Can Encouraging “Clones” Pay?’, September, mimeographed.Google Scholar
  13. Hackett, Donald W., 1977, ‘Penetrating International Markets: Key Considerations for Smaller Firms’, Journal of Small Business Management (January), 10–16.Google Scholar
  14. Horst, Thomas, 1972, ‘Firm and Industry Determinants of the Decision of Invest Abroad: An Empirical Study’, Review of Economic and Statistics (August), 258–266.Google Scholar
  15. Kohn, Tomás O., 1988, ‘International Entrepreneurship: Foreign Direct Investment by Small U.S.-Based Manufacturing Firms’, D.B.A. Dissertation, Harvard University.Google Scholar
  16. Mascarenhas, Briance, 1986, ‘International Strategies of Non-Dominant Firms’, Journal of International Business Studies (Spring), 1–25.Google Scholar
  17. Namiki, Nobuaki, 1988, ‘Export Strategy for Small Business’, Journal of Small Business Management (April), 32–37.Google Scholar
  18. Newbould, et al., 1978, Going International: The Experience of Smaller Companies Overseas, New York: John Wiley & Sons.Google Scholar
  19. Noisi, Jorge, forthcoming, ‘Canadian Technology Transfer to Developing Countries by Small and Medium Enterprises’, in Peter J. Buckley et al. (eds.), International Technology Transfer by Small and Medium Sized Enterprises: Country Studies, London: Macmillan.Google Scholar
  20. Ozawa, Terutomo, forthcoming, ‘Technology Transfers by Japan's Small and Medium Enterprises’, in Peter J. Buckley et al. (eds.), International Technology Transfer by Small and Medium Sized Enterprises: Country Studies, London: Macmillan.Google Scholar
  21. Penrose, Edith T., 1959, 1980, The Theory of the Growth of the Firm, White Plains: M.E. Sharpe, 1980. Originally published by Basil Blackwell in 1959.Google Scholar
  22. Stopford, John and Louis T. Wells, Jr., 1972, Managing the Multinational Enterprise, New York: Basic Books.Google Scholar
  23. Sweeney, James K., 1970, ‘A Small Company Enters the European Market’, Harvard Business Review (September-October), 126–132.Google Scholar
  24. U.S. Department of Commerce, 1992, U.S. Direct Investment Abroad: 1989 Benchmark Survey Data, Washington, D.C.: Government Printing Office.Google Scholar
  25. Vernon, Raymond, 1970, ‘Organization as a Scale Factor in the Growth of Firms’, in Jesse W. Markham and Gustav F. Papanek (eds.), Industrial Orga.nization and Economic Development, Boston: Houghton Mifflin, pp. 47–66.Google Scholar
  26. Vlachoutsikos, Charalambos, 1989, ‘How Small-to Mid-sized U.S. Firms Can Profit from Perestroika’, California Management Review (Spring), 91–112.Google Scholar

Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Benjamin Gomes- Casseres
    • 1
  1. 1.Graduate School of International Economics and FinanceBrandeis UniversityWaltham

Personalised recommendations