The evolution of interfirm collaboration: Strategic groups and alliance formation

This dissertation investigates the role of industry structure and competitive dynamics as they affect the emergence of intra-industry alliances. The thesis begins by building a transaction cost conception of intra-industry alliance formation, and concludes with an empirical investigation of the effects of industry structure and rivalry on alliance formation and performance. The objectives of the study are to (1) to trace the emergence of intra-industry structure; (2) to determine the relationship between industry structure and alliance formation; and (3) to determine the effect of alliance formation on competitive dynamics.;This thesis argues that intra-industry structure reflects asymmetries in the distribution of capabilities and rivalries both of which are expected to influence the likelihood of alliance formation and sustainability. A model of the relationships between industry structure and alliance transaction costs is introduced and tested in this study. The main goal of the thesis is to reveal new contingencies for alliance formation through the introduction of an intra-industry perspective.;The core argument for alliance formation is that firms will select alliance partners in a way that minimizes anticipated transaction costs. The location of a firm in a strategic group structure and intra- and inter-group rivalry is expected to alter the costs of engaging in and sustaining an alliance. The argument for the effects of alliance formation on industry structure is based on the hypothesis that groups engaging in alliances inefficient in transaction cost terms are more likely to converge with other strategic groups. Convergence among strategic groups reflects a diminishing ability for group members to sustain unique and competitively advantaged industry positions.;To examine the study's arguments and propositions, information on the communications equipment industry was collected for the period from 1988 to 1997, and a corresponding data set was constructed for 109 firms, 300 alliances, and more than 14,000 patents. Included is information about firm sales and profitability, alliance activity, and technological orientation evidenced by patent citations.;The empirical findings support the argument that group structure is associated with patterns of alliance formation, and that shared technological knowledge further influences these patterns. The findings also support the view that convergence of group structure is associated with increases in rivalry, validating the model's proposition that group structure can capture the intra-industry distribution of strategic capabilities. Results also show that alliances were more likely to form between rival groups. While the preliminary nature of the findings prevents normative conclusions, a clear implication is that strategic decisions about partnering with competitors should be informed by the distribution of capabilities, rivalries, and alliances within one's industry, and an awareness of the risks and benefits of allying with a competitor.