According to (Mohr 1996; Mason 1993) strategic orientation of the partnering company is one of the determinants for strategic alliance formation. Partner match alliances are alliances in which the chosen partners are similar in management style and company culture. Domain similarity and goal compatibility have been found to enhance the effectiveness of inter-organizational collaborations (Ruekert 1987). A study undertaken by Bucklin and Sengupta (1993) indicate that compatibility of the partners is critical to alliance success. The level of partner match is positively associated with alliance success. Partner match and alliance success association is mediated by alliance relationship attributes. The authors also concluded that, the degree of strategic orientation of a company shows, an association with alliance relationship attributes. In the literature on alliance relationship, the focus is on commitment, collaboration, communication, trust, and conflict resolution as the important attributes of alliance relationships (Cobianchi 1994;Spekman 1998; Cravens 1993). These attributes imply that both partners acknowledge their mutual dependence and their willingness to work for the survival and prosperity of the relationship.
Trust seems to be a critical factor in determining alliance performance between alliance partners (Bleeke 1993; Smith 1997). The importance of trust in developing of long-term organizational relationships has been emphasized in the alliance literature (Jennings et. al. 2000; Parkhe 1998; Smith 1995). The existence of trust in a relationship reduces the perception of risk associated with opportunistic behavior (Moore 1998). Partners that trust each other generate greater profits, serve customers better, and are more adaptable (Kumar, 1996). When exchanges are governed by trust, transaction costs can be reduced (Barney and Hansel, 1994). Indeed, it has been argued that trust is so important to alliances that it is considered “the cornerstone of the strategic partnership success” (Spekman, 1996). At least we can conclude that trust between partners is positively related to alliance performance.
Communication between partners is critical for building a successful relationship. In order to achieve the benefits of collaboration, effective communication between partners is essential (Cummings 1984). Communication allows the partners to understand the alliance goals, roles and responsibilities of all involved. It also helps with the sharing and dissemination of individual experiences (Inkpen 1996). Cummings continues; that; successful alliance relationships show better communication quality, more information sharing, and more participation in planning and goal setting than less successful alliances. A high level of partnership commitment provides the context in which both parties can achieve individual and joint goals without raising the specter of opportunistic behavior (Cummings 1984).
Indications of commitment include investment by the participating organizations, exclusive agreements between the organizations and the absence of major conflicts between the organizations (Anderson 1990). He continues; committed partners are likely to be more cooperative, communicative and flexible in accommodating conflict issues. Commitment development between partners within an alliance would act as a counter-balance against failure of the strategic alliance and suggests a future orientation in which partners attempt to build a relationship that can weather unanticipated problems.
Collaboration in Alliances
Collaboration is the key dimension of the strategic alliance relationship. The alliance partners must collaborate to achieve their strategic objectives. The collaborative associations are interactive and adaptive in nature (Anderson, 1991). Understanding the nature and scope of collaboration is essential in analyzing the operation and success of an alliance. A highly collaborative relationship provides the flexibility and adaptability necessary to overcome uncertainties, resolve conflicts and achieve mutually beneficial outcomes.
Conflicts in Alliances
Conflicts are often present in inter-organizational relationships due to the inherent interdependencies between partners (Borys, 1989). Companies in strategic alliances are motivated to engage in joint problem solving because they are, by definition, linked together to manage an environment that was more uncertain and turbulent than each one could control (Cummings, 1984).
There are functional or dysfunctional conflicts (Anderson, 1990). Functional conflicts would enhance an alliance’s performance (Morgan, 1994) while dysfunctional conflicts within the alliance would affect the effectiveness of alliance performance (Bucklin, 1993). Dysfunctional conflicts are counter productive and are likely to strain the fabric of the partnership (Mohr, 1994). Naturally, excessive dysfunctional conflicts between alliance partners will have a negative effect on the success of an alliance.
Within a strategic alliance relationship, trust, communication, collaboration and conflict resolution are important attributes. These attributes are “the cornerstones of the strategic partnership success” implying that both partners acknowledge their mutual dependence and their willingness to work for the survival and prosperity of the relationship.