Strategic interaction in alliances

Abstract

Research summary: This article studies strategic interactions between firms that form alliances to exploit synergistic benefits. Firms cooperate to create value, but they can also compete to capture value. Fundamental questions rarely addressed by strategy scholars relate to how the configuration of control over resources influences firms' strategies, the potential for termination, and the emergence of cooperation and trust. The formal results reveal crucial aspects of the interorganizational rent‐generating process and yield testable implications. With greater synergistic benefits, firms invest more, but they also compete more intensively to capture more value. With symmetric control, more value gets created, which limits the potential for termination, but also exacerbates the competition for value; from a relational perspective, this form of control augments the calculative rationale of cooperation and trust . Managerial summary: When forming an alliance to exploit synergies, firms engage in a complicated strategic interaction that is part cooperation and part competition. What happens when partner firms cooperate and invest to create value while competing and using costly adversarial tactics to capture value? The analysis reveals that with greater synergistic benefits, firms invest more in value creation, but the fear of opportunism pushes them to waste more resources on value capture tactics. The balance between value creation and value capture, and the possibility that the alliance is terminated depend on the configuration of control over resources. The analysis further reveals under what conditions there can be trust between the partners, such that they focus on value creation and avoid wasting resources in the competition for value . Copyright © 2016 John Wiley & Sons, Ltd.

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