How To Make Strategic Alliances Work

Keywords

strategic alliances, alliance capability, knowledge management

Abstract

Strategic alliances — a fast and flexible way to access complementary resources and skills that reside in other companies — have become an important tool for achieving sustainable competitive advantage. Indeed, the past decade has witnessed an extraordinary increase in alliances.1 Currently, the top 500 global businesses have an average of 60 major strategic alliances each.

Yet alliances are fraught with risks, and almost half fail. Hence the ability to form and manage them more effectively than competitors can become an important source of competitive advantage. We conducted an in-depth study of 200 corporations and their 1,572 alliances. We found that a company’s stock price jumped roughly 1% with each announcement of a new alliance, which translated into an increase in market value of $54 million per alliance.2 And although all companies seemed to create some value through alliances, certain companies — for example, Hewlett-Packard, Oracle, Eli Lilly & Co. and Parke-Davis (a division of Pfizer Inc.) — showed themselves capable of systematically generating more alliance value than others. (See “A Dedicated Function Improves the Success of Strategic Alliances, 1993–1997.”)

Original Publication Citation

Dyer, Jeffrey H., Prashant Kale & Harbir Singh (2001). “How to Make Strategic Alliances Work.” Sloan Management Review, Summer, Vol. 42, No. 4, 37-43.

Document Type

Peer-Reviewed Article

Publication Date

2001

Publisher

Sloan Management Review

Language

English

College

Marriott School of Business

Department

Marketing

University Standing at Time of Publication

Full Professor

Link to Full Text

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