Alliance Management Capability PDF

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Alliance Management Capability...

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Alliance Management Capability  Alliance management capability is a firm's ability to effectively manage three alliance-related tasks concurrently, often a portfolio of many different alliances: 1. Partner selection and alliance formation.  Partner compatibility captures aspects of cultural fit between different firms.  Partner commitment concerns the willingness to make available necessary resources and to accept short-term sacrifices to ensure long-term rewards. 2. Alliance Design and Governance.  Choosing an appropriate governance mechanism: non-equity contractual agreement, equity alliances, or joint venture.  The joining of specialized complementary assets increases the likelihood that the alliance is governed hierarchically (effect is stronger in case of uncertainty).  Interorganisational trust is a critical dimension of alliance success as all contracts are incomplete to some extent.

3. Post-formation alliance management.  The partnership needs to create resource combinations that obey the VRIO criteria.  Can be accomplished if the alliance partners make relation-specific investments, establish

knowledge-sharing routines, and build interfirm trust.  Trust helps meeting the goals of an alliance and is important for fast decision making.  Building alliance management capability by repeated experiences over time and are best managed at the corporate level.  Firms should create a dedicated alliance function, led by a vice president or director of alliance management and endowed with its own resources and support staff.  Should be responsible for creating processes and structures to leverage experience and related knowledge throughout the rest of the organization across all levels.  The alliance champion (corporate level executive makes sure that alliances fit in the existing portfolio, leader (technical expert, dayto-day management of the alliance), and the manager (business integrator between two parties) are part of the function....