GSM Lecture 8

Management > Global Strategic Management > Globalisation > Alliances > R&D alliances > external/internal sources > Core competences > Reasons

Reasons

There are a variety of reasons for the growth of international alliances, including:

• Seeking of agglomeration economies

• Location of near customers

• Source of spillovers

• Firms tend to seek partners who can provide opportunities for learning, regardless of location

However, outsourcing is often impossible, and alliances require managerial, scientific and financial resources.

Industry and game-theoretic considerations

A precursor to M&A, alliances are a learning process, starting with a follow-the-leader strategy. Firms learn to trust, not because they trust, but in order to trust. For example, partnering with unknown partners can be risky, but they have a higher learning potential. In addition, the high failure rate of alliances means that firms learn-to-learn and the art of managing alliances.

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