Networked Horizontal LSP Cooperation I. Abstract of Part
IV. Resource-based View
3. Competitive Advantage of “Interconnected” Firms
3.1. Motives and Antecedents for Alliance Formation
More recently, the RBV has been applied to strategic alliances, and thus to an interfirm context (Das & Teng 2000; Tsang 1998; Eisenhardt & Schoonhoven 1996). Although this research field is still emerging (Das & Teng 2000), existing literature already provides
good insight into the motives and antecedents for the formation of interfirm alliances from the perspective of the RBV. Unsurprisingly, both motives and antecedents are related to resources, the focal concept in the RBV.
Motives associated with the formation of strategic alliances pertain to resource flows between firms that are mobilized with the objective of gaining otherwise unachievable competitive advantage by sharing, aggregating, or exchanging resources (Das & Teng 2000). Specific motives frequently identified fall into one of three categories: (1) obtaining resources, (2) retaining resources, or (3) disposing of resources. First, few firms possess all resources necessary to compete effectively in today’s dynamic market environment (Ireland et al. 2002:413). Hence, they engage in alliances toobtain resources owned by other firms in their environment to create otherwise unachievable rents by combining complementary or similar resources (see e.g. Das & Teng 2000:36f.; Gulati & Gargiulo 1999:1443; Tsang 1998:211ff.; Chen & Chen 2003b:1,4). The motive of obtaining resources refers to resource flows from partners to the focal firm. Second, firms may form alliances toretain control over their own resources by combining them with other firms’ resources (Das & Teng 2000:37f.). More specifically, firms may form an alliance to retain control over resources that are currently idle by temporarily deploying them within an alliance instead of divesting from them (Das & Teng 2000:37f.). The motive of retaining resources involves temporary flows of resources toward the alliance or partners. A comparison of motives for obtaining and retaining resources reveals that
“[t]he difference between the two motives, gaining access to additional re- sources possessed by others, and retaining ones own resources, is that, while obtaining resources is more about creating competitive advantage in the imme- diate present, retaining resources is concerned more with securing competitive advantage later on.” (Das & Teng 2000:38)
Finally, firms may form alliances in order todispose of resources. In this case, alliances are used as a vehicle to gradually transition resources toward partners that may otherwise be difficult to transfer (Tsang 1998:216f.; also see Bleeke & Ernst 1995; Das & Teng 2001:19). The motive of disposing of resources involves permanent flows of resources toward partners.
Antecedentsfor alliance formation are related to the underlying assumptions regarding re- source heterogeneity, immobility, inimitability, and non-substitutability. Tsang (1998:210) argues that
“[t]he greater the degree of heterogeneity among firms in the market, the higher is the chance of forming alliances which would create rents.”
High heterogeneity may facilitate alliance formation, as firms with highly heterogeneous
resource endowments likely lack critical resources required to implement value creating strategies. More specifically, Tsang (1998:210f.) argues that alliance formation is more likely between highly heterogeneous firms, as they are more likely to create scare resource combinations from which they can extract (Ricardian) rents. This may especially facilitate the formation of international alliances as firms in different countries tend to be more heterogeneous than those within countries (Tsang 1998:210f.; Shan & Hamilton 1991).
Generally, Das & Teng (2000:41) propose that firms with certain resource profiles are more likely to engage in alliancing:
“The more a firm’s resources are characterized by imperfect mobility, imperfect imitability, and imperfect substitutability, the more likely the firm will get involved in strategic alliances.”
However, alliances between heterogeneous firms only form, if resource transfers through factor markets and mergers and acquisitions (M&A) are inefficient (Das & Teng 2000:37;
also see Chi 1994). Scholars provide several specific conditions for this. Factor markets may be inefficient for obtaining resources if their prices cannot be determined due to in- formation asymmetries (Tsang 1998:216). Conversely, obtaining resources through M&A may be inefficient if the “target” firm owns additional resources that are of only little value to the “acquiring” firm (and thus would become idle after acquisition) and if these resources are difficult to dispose of after acquisition for asset specificity reasons (Das &
Teng 2000:37). Similarly, Chi (1994:284ff.) argues that the mode of resource transfer (alliance vs. acquisition) depends on the interactions of the properties of the resources that the buying firm intends to acquire and those the target firm additionally owns. More specifically, the degree of specialization and the severity of measurement difficulties of desired and additional resources determine the transaction mode. Chi (1994) argues that if severe measurement difficulties are associated with either the resources the “acquiring”
firm desires or with the “target” firm’s additional resources, alliances may be better than outright acquisitions.
Furthermore, Tsang (1998:214f.) argues that inimitability of resources (e.g. tacit knowl- edge) to be transferred between firms facilitates alliance formation, as alliances allow for gradual transfers of such resources through imitation via close interactions and learning, either openly (with partner consent) or secretly (also see Kogut 1988:323). In addition, if firms aim to retain resources, alliances may be formed if the discounted future value of deploying (currently idle) resources internally will be higher than the current selling price (Das & Teng 2000:38). Finally, Eisenhardt & Schoonhoven (1996) find empirical evidence that firms with vulnerable strategic positions such as being active in highly competitive markets characterized by low margins and a large number of competitors are more likely to cooperate with competitors, for example by sharing costs and risks and thus improving profitability.
The preceding paragraphs have reviewed the motives and antecedents for alliance forma- tion frequently associated with the RBV. Because resources are central to the RBV, both motives and antecedents are linked to them. Motives associated with the RBV align well with the general motives listed above (see Section C.II.2), especially for increasing revenue by gaining access to resources and reducing costs through economies of scale and scope.
Antecedents for alliance formation revolve around assumptions about resources, and they complement those antecedents associated with TCE, thus improving our understanding of alliance formation.