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The Growth in Strategic Alliances: Rationales and Types

Carol Evans, Georgetown University

What I would like to do in my presentation is talk about some of the emerging trends in international strategic alliances. For most people in the field of business such as myself, or even in economics, we have often talked about competition traditionally being between company A in one particular country and company B in another particular country. Currently, however, there are some very important implications for international interfirm teaming arrangements, such as those characterized by strategic alliances.

There has been a tremendous amount of strategic activity during the 1980s. In particular, the greatest jump or increase in alliance partnering internationally has been in biotechnology, the automotive industry, and the information technology industry. These three make up the large core of alliance partnering among the advanced industrialized countries.

Traditionally, the aviation and military industries have had international cooperative programs, many of which are on a government-to-government sponsored basis. Nevertheless, there is now a tremendous amount of private sector initiative in terms of collaboration.

One issue that I want to address is why international strategic alliances are on the rise. One way of looking at this is to look at an explanation from several different angles—an obvious angle being technological. There are a lot of very important technological factors driving strategic alliance partnering internationally. Other factors that I suggest are very much related to considerations inside firms.

We have heard a lot from, for example, Motorola, Siemens, and a number of distinguished companies, as to why they perceived the need for collaboration. When I talk about primary motivations, I want to discuss some of the generic ones that would apply pretty much across the high-technology field.

I will also address the need to look at the role of government. Government is extraordinarily important in shaping alliances, not only in terms of influencing the types of alliances that are being formed—an easy and obvious example is Airbus—but governments also shape which companies are going to be partners with whom, for example, the telecommunications industry. Governments are very important in the partnering decisions of companies.

TECHNOLOGICAL FACTORS

Obsolescence: One is the fast rate of technological obsolescence. This is very important in the semiconductor industry and in the computer industry, combined with escalating costs of R&D. This means that you have to get to the market quickly and you have to be able to generate those economies of scale so as to drive your prices down.



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