Discussion Questions: Strategic Alliances

1. The risk of opportunism and hold up is more likely to happen in equity strategic alliances than in non-equity strategic alliances. Do you agree with the previous statement? Why?

I tend to disagree with this statement because the risk of opportunism and hold-up is more prominent in strategic partnerships that are short-term or temporary in nature. In addition, this risk is more likely to happen in strategic partnerships that have relatively weak ties between the involved firms. In such cases, due to lack of commitment to the partnership and lack of trust, a partner can be involved in other activities that might be opportunistic in nature because it may appear to such a partner that opportunistic behaviours are more attractive and gainful that what is expected from the alliance. Looking at the non-equity strategic alliances, it was learnt that they are mainly temporary in nature, sometimes produce weak ties between the alliance partners, and can result in lack of commitment and trust (Chapter 11, slide 8).

On the contrary, an equity strategic alliance ensures that the partners involved dedicate their resources, time, and knowledge to the venture, which means that the level of commitment is high. In addition, the equity strategic alliances tend to be long-term or permanent in nature, which produces strong ties between the involved partners where trust is prominent (Chapter 11, Slide 21). These features imply that a partner is not likely to be attracted by opportunistic behaviours.

2. Why are strategic alliances important for competing in the so-called network industries?

The idea is to use strategic alliances as a way of creating value by shaping the competitive environment in the industry (Chap 11, Slide 37).

Answer the following questions. 3. Briefly explain the three rea...