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

In such an environment firms with strong resource endowments may be better al-
lies than those with strong aspiration levels. This is first because the market structure al-
lows the strong firms to remain strong until the next disruptive change occurs (Klepper,
1996). Intensified competition among defined players makes resource strengths increas-
ingly important. Notably, however, the strong firms in this stage are not necessarily the
same as the strong firms in the exploratory stage. Second, the incentive to innovate is
manifested differently for process and product innovation. Product innovations attract
new buyers, and hence the incentive for product innovation is conditioned by the demand
of new buyers. In contrast, process innovation, which is more important in this phase,
typically lowers a firm’s average cost of production and the value of such a reduction is
proportional to the total output of the firm, the incentive to engage in process innovation
is greatest for the largest firms (Klepper, 1996). Thus, it makes most sense for strong firm
to engage in process innovation and thus thrive in this stage. In sum, the aspiration levels
of firms in the maturity stage become a less important criterion for partner selection. In-
stead it is important to ally with firms that have the strength in terms of resources and ca-
pabilities to stay on the market.

P2: In the maturity stage the strength of aspiration levels is a less important criterion for
partner selection than the strength of resource endowments

4.3 Partner Selection Criteria in the Development Stage

In between the exploratory and the maturity stages lies the development stage. In this
phase the technical subfield has evolved and dominant designs and standardized tech-
nologies are emerging (Anderson & Tushman, 1990). Hence, given that a product suc-
ceeds and makes it to the development stage, uncertainty will be reduced compared to the
growth phase but higher than in the maturity stage. This implies that the potential for
seizing significant new market shares is reduced - yet not disappeared. At first, few firms
will supply the products, but entry then expands as demand rises resulting in output in-
creases and price falls. In the development stage the competitive imperative is neither
market exploration nor market exploitation but staying in and developing the market.
This does not eliminate the importance of product innovations, as the market still needs

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