After a pause, the return of business alliances
AMSTERDAM AND BERLIN
The last two decades of the 20th century witnessed the explosive growth of corporate partnerships, ranging from global airline alliances to licensing partnerships between small biotech research firms and large pharmaceutical companies.
According to one recent study published in the Netherlands, approximately 35 percent of all 2002 corporate revenues worldwide were a direct result of alliances - up from just 2 percent in 1980.
While the bursting of the dotcom bubble in the late 1990s brought the formation of new alliances to a near standstill, the phenomenon appears to be back on track, though at a slower pace than in the past. The implications are important for workers, investors, and policymakers alike.
A successful alliance may spell the difference between success and failure for an entire company. They are not a cure-all, however. The same characteristics that make alliances so attractive at times - sharing costs or risk, for example - also may limit their usefulness. One question that frequently arises is obvious: Who's in charge? Sharing risk is one thing; sharing governance is quite another, especially when legal liability issues loom so large, as they do in the wake of recent corporate accounting scandals.
Not all business alliances are the same, of course. There are many types, serving a variety of different purposes, ranging from simple, short-term "transactional" relationships, between a company and one of its suppliers, to a full-fledged buyout, in which one company takes ownership of another: Disney's recently announced purchase of Pixar Animation, for example, or Ford's purchase of Jaguar and Volvo.
To understand what kinds of alliances are most successful, we recently analyzed 103 corporate alliances in the United States and Europe, involving 233 partners, both competitors and noncompetitors. We found four broad categories.
Expertise alliances bring together noncompetitors who wish to share specific expertise and capabilities: a small, specialized biotech-research firm, for example, entering into a licensing arrangement with a large pharmaceutical company to take advantage of its global sales and marketing capabilities.
New business alliances involve noncompetitors that join together to enter a new business or market. Examples include Microsoft's and Ericsson's alliance to create Web-enabled mobile telephones and the Japanese mobile-telephone company NTT DoCoMo's alliance with the Japanese credit card company Sumitomo Mitsui Card.