Alliance Management as Source of a Successful Strategy

Abstract

In todays global environment, strategic alliances represent an important source of growth and competitive advantage; they allow firms to access new and critical resources and capabilities, to improve competitive position and rapidly to enter a new market In spite of the strategic importance of the alliances, they still exhibit a high failure rate; previous researches show that the half of the alliance formed end up as failure. The low success rate testifies firms difficulties in managing their alliance relationships and in ensuring enough success from them. In global markets, firms exhibit heterogeneity in terms of the overall alliance success; some firms achieve success from their alliance and others fail. Although most companies have realized the importance of strategic alliances, only few of them have developed the needed capabilities to manage them with success. In recent years, empirical studies found that firms with greater alliance success are those ones with superior management capabilities, termed in literature as alliance capabilities. This study is based on the assumption that the heterogeneity in alliance success rate is due to heterogeneity in firms level of management capabilities. Eli Lilly & Companys success in strategic alliances represents a clear example of company that understood the importance of developing an institutionalized approach of alliance management that improves the likelihood of alliance success.