Partner Selection Criteria in Strategic Alliances When to Ally with Weak Partners

early phase rapid adaptation to change is an essential competitive parameter. Firms with
strong resource endowments may be unable to quickly adapt to change (Henderson &
Clark, 1990) as they typically are large, which in general makes them less adaptable but
also because they may have developed certain routines that are not easily adjustable
(Nelson et al., 1982). Several authors argue that there is a negative correlation between
weak resource bases and post-entry survival rates (Geroski, 1995; Helfat et al., 2002).
However, this is not necessarily important as partners can function as “stepping-stones”
by facilitating early entry and then being replaced over the course of the industry life cy-
cle if desired. In sum, we argue that firms wishing to enter an emergent market should not
choose its ally primarily on the basis of its stock of resources but rather on the degree and
strength of aligned aspiration levels.

P1: In the exploratory stage the strength of aspiration levels is a more important crite-
rion for partner selection than the strength of resource endowments
4.2 Partner Selection Criteria in the Maturity Stage

Firms contemplating on market entry in the maturity stage face a different competitive
environment than the early movers. In the maturity stage technology and market uncer-
tainty have been resolved and few changes take place in the market.⁴ Established cus-
tomer connections stabilize the rate of change of market shares of the largest firms in the
industry (Agerwal et al., 2001; Klepper, 1996), while reduced uncertainty intensifies
competition between the firms in the market (Afuah et al., 1997). In this stage firms that
remain on the market will be determined to stay, and as growth rated decline and some
firms do better than others, some exits the market, not voluntarily but because they are
forced to. Whereas product innovations and improvements of functionalities are impor-
tant in the exploratory stage, in the maturity stage process innovations and cost reductions
for the end-customers are central (Adner & Levinthal, 2001; Klepper, 1996). The matur-
ity stage persists or is replaced by a decline phase where the demand decreases and may
fall to zero.

⁴ Naturally the maturity stage ends with uncertainty as a new exploratory growth stage in an emergent mar-
ket will replace it.

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