Cross-function and same-function alliances: How does alliance structure affect the behavior of partnering firms?
Abstract
Firms collaborate to develop and deliver new products. These collaborations vary in
terms of the similarity of the competencies that partnering firms bring to the alliance.
In same-function alliances, partnering firms have similar competencies, whereas in
cross-function alliances, partners have very different competencies. On examining
managerś view of these alliances, we find that, on average, same-function alliances
are expected to perform better than cross-function alliances, holding fixed the level
of inputs. A game-theoretic analysis shows that this apprehension about cross-function
alliances is consistent with a Pareto-inferior equilibrium. A Pareto-superior equilibrium,
however, suggests that partners in cross-function alliances may invest more in their
alliances than those in same-function alliances. It is also often believed that increasing
the number of partnering firms is not conducive for collaborative effort. Our analysis
shows that this belief is correct for same-function alliances, but not for cross-function
alliances. We test these equilibrium predictions in an experiment where we exogenously
vary the type of alliance and the number of partnering firms. The experimental results
lend support for the Pareto-superior equilibrium. Partners in cross-function alliances
invested more than their counterparts in same-function alliances, and this difference
in investment levels increased with the number of partnering firms. We extend our
model to consider alliances where firms have an opportunity to learn from their partners
and later leverage this knowledge outside the scope of their alliance. Though such
learning increases the resources committed by alliance partners in the learning phase,
it decreases investment in the subsequent competition and also dampens the overall
investment across the two stages. In addition, an increase in inter-alliance competition
decreases investments in the focal alliance but increases investment in the competition
outside the scope of the alliance. © 2010 INFORMS.
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https://hdl.handle.net/10161/4423Published Version (Please cite this version)
10.1287/mnsc.1090.1103Publication Info
Amaldoss, W; & Staelin, R (2010). Cross-function and same-function alliances: How does alliance structure affect the
behavior of partnering firms?. Management Science, 56(2). pp. 302-317. 10.1287/mnsc.1090.1103. Retrieved from https://hdl.handle.net/10161/4423.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Show full item recordScholars@Duke
Wilfred Amaldoss
Thomas A. Finch Jr. Distinguished Professor of Business Administration, in the Fuqua
School of Business
Professor Amaldoss received his Ph.D in Marketing in 1998 from the Wharton School
of the University of Pennsylvania. He holds an MBA from the Indian Institute of Management,
Ahmedabad. He has taught earlier at the Krannert Graduate School of Management of
Purdue University. He is interested in understanding strategic behavior in the context
of pricing and advertising. Recent publication credits include “Branding Conspicuous
Goods” (joint with Sanjay Jain) in Management Sc
Richard Staelin
Gregory Mario and Jeremy Mario Distinguished Professor Emeritus
Richard Staelin is the Gregory Mario and Jeremy Mario Distinguished Professor Emeritus
at The Fuqua School of Business, Duke University. He served as Associate Dean for
Faculty Affairs at The Fuqua School from 1984 until July 1991. For the next two years
he was Executive Director of Marketing Science Institute in Cambridge, Massachusetts.
After that he served as Managing Director of The Fuqua School's Global Executive MBA
program (GEMBA) 1995-1997, Associate Dean for Executive Education 2000-
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