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



The argument links to the resource-based view, which contends that within an in-
dustry firms with different pre-entry resources have aspiration to enter at different points
in time (e.g. Mitchell, 1989; Schoenecker & Cooper, 1998). The valuation of net benefits
from entry is thus not independent from, but also not solely determined by, the existence
and utilization of a firm’s resources. Incumbents and new entrants typically have differ-
ent resource endowments as incumbents have adjusted their resources to the industry set-
ting and build knowledge of the particular market, which the new entrants have not. Be-
cause industry-specific resources and routines of new entrants are less well developed,
the resource endowments of incumbents in general tend to be strongest. This naturally
depends on whether the emerging market is based on competence-enhancing or compe-
tence-destroying technologies (Tushman & Anderson, 1986). However, for our argument
this distinction is less essential as we merely advocate for a more profound role for aspi-
ration levels. The implication for partner selection is that despite the fact that a firm has
attractive resources in a market, it may not be an attractive partner as its aspirations to
deploy the resources in accordance with the strategic desires of the central firm may be
insignificant. In addition, firms with strongly aligned entrance aspirations may be more
inclined to make alliance-specific investments, which are associated with higher per-
formance (Dyer, 1996).

3.1 Relative Importance of Resources and Aspirations

In general, it is attractive for firms to ally with partners that have strong resource endow-
ments and great aspiration to enter the market and unattractive to ally with weak firms
with low aspirations. However, a dilemma surfaces when the attractive combination is
not available in the partner market and firms must decide whether to ally with firms with
strong resource endowments and then make the aspiration strength a secondary criterion
or whether to ally with firms that have great aspirations to enter and make the resource
strength a secondary criterion? None of these options implies that “anything goes” for the
second criterion. Naturally, firms should not ally with partners that have either fully op-
posite aspirations or totally insufficient resources in terms of the aim of the alliance.
Rather secondary criteria imply
sufficient aspiration alignment or sufficient resource en-
dowments to support market entry. The four different situations arising from categorizing



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