Effects of technology cycles on strategic alliances

This study examines issues related to the formation of alliances---motivations, governance modes, and partner selection---by using the cyclical model of technological change constructed by Tushman & Anderson (1986). The association between the model and the formation of alliances is empirically tested in response to the statement that a missing link exists for empirically validating the model of technology cycles.;Research questions include: How will the context of cyclical stages of technological change affect the formation of alliances? Namely, will different types of resources/capabilities be most valuable at different stages of technological change? How well does Tushman and Anderson's theory of technology cycles explain technology's impact on the formation of strategic alliances?;Data were 594 alliances in the semiconductor industry from the Securities Data Corporation. Findings showed that the model of technological change is a useful framework in studying alliances. More specifically, at the technology variation stage, innovation-driven alliances are the most important motives. Firms with relatively fewer promising technologies tend to select firms with promising technologies. Firms with promising technologies tend to select firms with complementary capabilities. At the era of ferment, both innovation- and efficiency-driven alliances for old technologies are the most important motives. Dominant industry players in either the semiconductor industry or other industries surprisingly are not the favorable alliance partners. At the stage of selection, manufacturing-type of alliances for new technologies are the most important motives. The more frequently adopted alliance modes are the ones with high control mechanisms and with equity involvement. Partners located either upstream or downstream the focal firm are the most favorable choices. At the retention stage, market-driven alliances are the most important motives. However, firms in different industries or firms in targeted alliance regions are not preferred alliance partners.;This study contributes to the literature in two ways: First, it empirically tested the cyclical model of technological change by Tushman and Anderson (1986) and linked the effects of technology cycles with studies on strategic alliances. Second, it empirically validates the argument that certain types of resources are most advantageous under particular technological conditions at various stages of technology cycles.