Cross-function and same-function alliances: How does alliance structure affect the behavior of partnering firms?
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2010-02-01
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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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Amaldoss, W, and R Staelin (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.
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Wilfred Amaldoss
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 Science 2015; “Bidding Costs and `Broad Match' in Sponsored Search Advertising” (joint with KInshuk Jerath and Amin Sayedi) in Marketing Science, 2015; “First-Page Bid Estimates and Keyword Advertising,” (joint with Preyas Desai and Woochoel Shin) in Management Science 2015, "Multi-tier Store Brands," (with Woochoel Shin) in Journal of Marketing Research 2015; “Do Firms Endowed with Higher Strategic Ability Earn Higher Profits?” (joint with Carl Mela and Bobby Zhou) in Journal of Marketing Research 2015.
He is an Associate Editor of Management Science (Behavioral Economics department), and an Associate Editor of Journal of Marketing Research. He received Distinguished Service Award from Management Science in 2009, 2010 and 2011 for his service as Associate Editor. He also serves on the editorial boards of Marketing Science and Marketing Letters.
In 2001, his research received the Frank M. Bass Award. The INFORMS College of Marketing gave this award in recognition of the best marketing paper derived from a Ph. D. thesis published in an INFORMS-sponsored journal (Marketing Science/Management Science). In addition, he received the John C. Little Award, for the best marketing paper published in Marketing Science or Management Science. He was also named the Jay Ross Young Faculty Scholar in 2000. In 2011, his work was a finalist for Long-Term Impact Award for a paper published in Marketing Science/Management Science. He has also received several teaching awards at Duke for teaching MBA students: 2008 and 2009 Weekend MBA Excellence in Teaching Awards, 2006 DaimlerChrysler Corporation Award for Excellence in Teaching, 2005 Cross-Continent MBA Excellence in Teaching award. The MBA students of Krannert School of Management voted him the best instructor in the school and he received the Salgo Noren Outstanding Teacher Award in 2000 and 2001.
Richard Staelin
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 2000-2002, Co-Director of the Teradata Center for Customer Relationship Management at Duke University 2000-2005, and Deputy Dean 2002-2004. As of July 1, 2004 he stepped down from his administrative duties to devote all his attention to research and teaching.
Prior to joining Duke's faculty, he taught at the Carnegie Mellon University, the University of Chicago and the Australian Graduate School of Management. He holds two bachelor degrees in Engineering, and MBA and a Ph.D. from the University of Michigan.
As Executive Director of Marketing Science Institute, Staelin facilitated the interface between the needs of the 60 plus member companies for relevant academic research and faculty researchers all around the world. This work included formulating industry's priorities, designing research competitions, evaluating and guiding faculty research and helping disseminate newly found knowledge. Dr. Staelin has published over 70 articles in academic journals on a diverse set of subjects which include information search, managerial decision making, influence of verbal and pictorial messages in print ads, consumer protection regulation and its impact on consumer behavior, channel management strategic alliances and marketing strategy. He has also co-authored a book entitled Consumer Protection Legislation and the U.S. Food Industry. He also has served on over 40 Ph.D. committees. His students now teach at universities all over the globe.
He has held a number of positions within the American Marketing Association (AMA), The Institute of Management Science (TIMS) and the American Statistical Association (ASA). He was Area Editor of Marketing Science, a position he held for seven years, and also served on the editorial boards of the Journal of Marketing Research, the Journal of Marketing, the Journal of Consumer Psychology and the Journal of Consumer Research. He was the Editor of Marketing Science from 1994 to 1997 and in 2004 and 2005 he was consulting editor for the Journal of Marketing special issue on CRM. In 1996, he was given the AMA Distinguished Educator award in recognition of his impact on the marketing profession and in 2000 he was awarded the Converse Award by the AMA.
Much of Staelin's consulting activity has been for the Federal Government (the FDA and the FTC), or as an expert witness in antitrust cases concerned with disputes between manufacturers and its dealers. Professor Staelin also has worked with Adtel - (a division of Burke Marketing) developing new ways to measure the effects of advertising and couponing on purchase behavior; MCI - forecasting the demand for the cellular telephone; and BNR - forecasting the demand for many new telephone services. He has taught in a number of executive programs around the world. These include programs in Norway, Israel and Australia, as well as at the University of Chicago, Carnegie Mellon and Duke University. His main interest in executive education is showing how strategic or tactical marketing problems can be better solved by using good analysis.
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