This book explores the impact of information systems on the management of North-South asymmetric strategic alliances through a series of in-depth case studies which analyze different types of partnerships. Positioned at the heart of the value creation process, the choice of information system seems to be becoming a strategic issue which should be centered not only on the organizational decisions related to the type of alliance but also the management systems of each of the partners. The authors provide an understanding of the nature of this relationship between the organizational structure and the method of information system integration in asymmetric alliances. The in-depth analysis of strategic alliance case-studies illustrates the different methods of information system integration, which are themselves linked to the organisational and structural choices of the alliance. These methods are characterized by information-sharing and coordination mechanisms as well as the balance of control over shared activities developed by the distinct partners.
Strategic Alliances versus Asymmetric Alliances
1.1. Strategic alliances
A cooperation agreement between organizations relies on a range of partnership relations between corporations that seek to realize a joint production of information, products or commercial services. These agreements include different forms of contractual cooperation such as licensing contracts, R&D agreements and functional collaborations that aim to reinforce the value chain of both parties which can range from common participations to total integration (see Figure 1.1). This can be a number of autonomous entities participating in a network, applying one of many possible configurations: corporate collaboration - cooperation between two or more partners from different countries where each corporation remains autonomous within the areas that are not included within the collaboration perimeters including the common realization of activities and specific tasks.
Garrette and Dussauge [GAR 95] present an analysis grid of different forms of collaborations for strategic alliances, thus distinguishing agreements between competing corporations from agreements between non-competing corporations. A distinction can thus be made between market relations, mergers and acquisitions, and collaborations (see Table 1.1). The following analysis grid presents the differences in definitions of collaboration and the collaboration models between corporations. We will note that one of the most ubiquitous collaboration models remains is that of strategic alliance.
Figure 1.1. Configurations of alliances (Alliance Science, 2004)
Table 1.1. Analysis grid of the forms of relations and interorganization cooperation
(source [GAR 95, p. 97])
Stakeholders Relation Non-competing corporations Competing corporations Market relations Exports and imports Transactions Competition Mergers and acquisitions Local acquisitions Vertical integration Diversification Sector concentration Collaboration Multinationalization joint venture
Vertical partnerships Intersectoral agreement Strategic alliances between competitors
The notion of strategic alliance refers to a link between two or more individual corporations, deciding on the governance and structure of a common project while both maintaining their independence. They are therefore engaged in a partnership whereby they will share the benefits and the costs of the collaboration. Khanna et al. [KHA 98, p. 195] highlight other dimensions associated with the definition of alliance, citing the mutual transfer of information between strategic partners and the development of organizational knowledge. Resorting to strategic alliances is here justified by the act of: "mutually transferring information from one partner to another, allowing them to combine and grow their competences and key-knowledge to exploit them within common operations". However, Gulati [GUL 98] highlights goals other than the transfer of knowledge and learning, such as the desire to exchange, share or develop common products, technologies or services.
Jolly [JOL 01, p. 3], on the other hand, defines alliances as:
"A link established by at least two sovereign companies that do not belong to the same group, agreeing to pursue a common goal within a defined space by pooling or exchanging resources in order to obtain mutually beneficial results, while remaining independent outside of the alliance".
This notion of independence implies, for the partners, that they maintain their strategic autonomy outside of the areas covered by the mutual agreements. For their part, Contractor and Lorange [CON 88] put forward the importance of sharing financial and technological resources as well as the management and control model of the joint activity. Pooling complementary capital and manpower as well as production capabilities and information must therefore allow the creation of value [BUC 88].
Using these definitions as a basis, we can establish a theoretical framework that encompasses the different dimensions that characterize a strategic alliance, i.e.:
- - a strategic alliance encourages networking between non-competing companies, competing companies or potentially competing companies;
- - the decision to enter a strategic alliance must involve a formal, well-defined and appropriately structured contract;
- - when active, this contract will not remove the autonomy of either of the companies or their independence;
- - a strategic alliance involves pooling resources and capabilities as well as sharing the results by the contracting parties.
1.1.2. Organizational forms
Partnerships, functional collaborations, joint ventures and cooperation agreements are generic terms that refer to various organizational forms that companies can take on in order to mobilize the resources necessary to their competitiveness. These organizational forms can fall into one of two categories depending on whether the nature of the commitment is equity based or simply contractual.
184.108.40.206. Equity alliances
Joint ventures and equity investments (joint/unilateral) are representative of this type of alliance. Joint ventures, in particular, refer to the investment of capital into a new entity and the pooling of resources among a number of partners. This will take the form of a new administrative structure that operates on the basis of a new hierarchy. The objectives for a joint venture are most often expressed in a long-term context in the areas of R&D, production and product commercialization. Kogut [KOG 88], Pisano [PIS 89, PIS 91] and even Oxley [OXL 97] mention that joint ventures allow control over the behaviors of the partners in order to align their objectives, particularly in the context of an uncertain environment favorable to opportunistic moves and behaviors.
Members of a joint venture agree beforehand to commit their resources in order to determine ownership over the common subsidiary. This avoids any of the partners going back on their commitment. Furthermore, the partners wield their operational power via a formal administrative unit (the executive board of the joint venture), which allows them to efficiently exercise control over the joint activity and reduce transaction costs among partners.
Das and Teng [DAS 98] underline the fact that joint ventures allow control over decisions, resources, assets and partners through specific organizational routines and an elevated hierarchical control. This type of alliance ensures that the partners' interests are aligned and reduces the inherent costs that occur from incomplete contracts and opportunistic behaviors.
The works of Contractor and Lorange [CON 88, p. 6] emphasize the high level of co-dependency between partners during a joint venture who mobilize part of their personnel in a collaborative framework and rely on common resources, technologies and processes: "The joint venture is a cooperative arrangement characterized by a high level of organizational interdependency". Therefore, the partners are in constant interaction at all hierarchical levels in order to optimize the exchange of knowledge and expertise and to simultaneously direct added-value operations [GUL 98]. This is manifested by an integration of abilities and resources by both contracting parties allowing them to synergize in terms of commercialization capabilities, production capacities or even research and development.
Park and Russo [PAR 96] differentiate "integrated" forms from "sequential" forms of alliance depending on the nature of the interdependency of the partners. Therefore, the "integrated" joint venture is characterized by a joint interdependency between partners since they dedicate part of their personnel and resources to an integrated and separate organization, granting them an operational role. On the other hand, "sequential" joint ventures are characterized by a "sequential" interdependency in the sense that operations are directly taken on by members of the alliance. Each partner performs the distinct actions that are tied to the resources they commit before transferring activity to a partner who continues the work using on their own resources. With common venture not having an operational role, it is confined to a role of judicial and administrative coordination. As for Hennart [HEN 88], he distinguishes between scale joint ventures and link joint ventures. This is based on the transaction cost theory [WIL 85]. While the former model of alliance aims to realize similar economies of scale by pooling similar resources, the latter is preferred by companies with complementary resources with the objective of developing activity synergies.
Recourse to equity alliances is favorable when partners are looking to exchange or acquire new skills. Khanna et al. [KHA 98] point out that successful knowledge transfer and learning requires a solid governance of the alliance allowing the partners to effectively perform R&D activities. In the same vein, Mowery et al. [MOW 96] emphasize that tacit knowledge requires a large amount of interactions, personal relations and proximity...