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

in partner selection. Both Gulati (1995), Li & Rowley (2002) and Gulati & Gargiulo
(1999) focus on intra-industry alliances.² However, entry alliances in emerging markets
often involve firms from different industries, which, because of industrial separated pasts,
may not have any previous direct ties and merely insignificant indirect ties.

2.2 Insufficiency of Current Theories

Resource-based theory aims to address which assets should be brought together, whereas
transaction cost theory informs about how these assets should be brought together. For
this reason, transaction cost economics does not inform the specifics around selection cri-
teria. The resource-based explanation offers some managerial guidance, but the proposed
prescriptions are problematic for several reasons. First, the general argument that strong
resources in the relevant market equals and attractive partner is too simplistic. A growing
literature developed by Joseph Schumpeter (1934) and pioneered by Clayton Christensen
(1997) documents the failure of leading firms, signaling that allying with the strongest
firm may not always be the best strategy. Second, the resource-based view is not very
context-sensitive (notable exceptions are Miller & Shamsie (1996) and Brush & Artz
(1999)), yet, context is very important for partner selection (Geringer, 1991; Mahnke,
2001). Third, it views the possession of critical resources as a primary reason (Hitt et al.,
2000) and even prerequisite for alliance formation (Das et al., 2000) and consequently
pays less attention to alternative parameters. In sum, the resource-based contribution to
the alliance literature has focused on the static properties of firm’s existing resource en-
dowments and hence implicitly adopted simplifying assumptions of constant or neutral
levels of alternative explanatory variables.

3. ASPIRATION LEVELS AND THE SHADOW OF THE FUTURE

Current research addresses partner selection, because it affects the mix of resources and
capabilities available to the alliance. Yet, it is not necessarily the critically of resources
(Barney, 1991) that determines the attractiveness of a partner. Spekman (1988) claims

² Gulati notes that “A useful extension of this research would examine both cross-industry and intraindustry
alliances within a single unifying framework” (1995: 646).

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