potential partners according to their resource endowments and their strategic aspirations
are portrayed in table 1.
Table 1: Partner Selection Criteria and Alliance Categories
|
Great aspiration |
Low aspiration | |
|
Strong resources |
(1) Attractive alliances |
(2) Resource-based alliances |
|
Weak resources |
(3) Aspiration-based alliances |
(4) Unattractive alliances |
4. EVOLUTIONARY PERSPECTIVE ON PARTNER SELECTION CRITERIA
A firm will ally with another only if it foresee a probability of future strategically or fi-
nancially benefits from the collaboration (Stuart, 1998). These benefits can stem from the
resource endowments of the other firm or its aspiration to achieve a certain objective. The
partner selection decision involves a comparative assessment of these two factors across
potential allies. However, the importance of each criterion is likely to change over time.
Linking motivations for forming alliances to each distinctive stage in a development
process has not been undertaken (Rothaermel & Deeds, 2004). Similarly, no effort has
been made to link motives to the product life-cycle. To account for these changes in crite-
ria we utilize life cycle reasoning and a three-stage entry game with an early exploratory
stage, an intermediate development stage, and a maturity stage (Williamson, 1975).
From the firm’s perspective, initially when a market is formed it must decide on
whether to enter, and if so, the timing of entry. When balancing the risks of premature
entry and the costs of missed opportunities, the firms that value the net potential as high
will have a stronger aspiration to enter than those who value it to be low (Lilien & Yoon,
1990). The underlying reason motivating entry, however, changes over the industry life
cycle (Agerwal & Audretsch, 2001). Thus, deciding not to enter early in the life cycle
does not imply that the firm will refrain from participating in market-entry-alliances be-
fore this stage for strategic reasons. For firms, contemplating on entering emerging mar-
kets, where allying is necessary for entry, it is important to avoid such alliance partners.
Hence, in order to make appropriate partner selection decisions they must not only assess
the resource endowments of potential allies but also understand how they will value the
potential of entering and how this valuation may change over time.