Frontiers of Entrepreneurship Research 1994

Frontiers of Entrepreneurship Research


Abstracts from the 1994 Edition


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    TRIGGERING STRATEGIC ALLIANCES IN ENTREPRENEURIAL FIRMS: THE CASE OF TECHNOLOGY-SHARING ALLIANCES

    Kathleen M. Eisenhardt

    Department of Industrial Engineering and Engineering Management
    Stanford University
    Stanford, California 94305

    Telephone
    415-723-1887

    Fax
    415-725-8799

    Claudia Bird Schoonhoven
    Amos Tuck School
    Dartmouth College
    Hanover, New Hampshire 03755

    Telephone
    603-646-3953

    Fax
    603-646-1308

    Principal Topics
    Strategic alliances are a central strategy for many, contemporary ventures.Such arrangements have many advantages such as conserving resources, risk-sharing, and learning new skills. But there are disadvantages as well such assharing profits, draining of key skills, and implementation difficulties. Thissuggests that young firms will form alliances at varying rates. This studyexplores the determinants of those rates. The paper focuses on two generalexplanations, strategic position and social networks. We argue that alliancesare formed when firms have a need to bolster strategic position or when theyhave the opportunity to do so by attracting partners through social contactsand status. Specifically, we examine market factors (e.g. , competition andmarket stage), technical strategy, and asset position which affect strategicposition and top management team factors (e.g. , size, industry connections,past jobs) which affect social position through a set of 6 hypotheses.

    Method
    The research sample is the population of semiconductor firms that werelaunched between 1978 and 1985. There are 102 firms in this population and oursample includes 98 of the them, The data run from founding to firm death or1988 whichever comes first. Market data (i.e., competition, market stage)were gathered from major market research firms (e.g., Dataquest, ICE) and areannual. Firm data (i.e., technical strategy, top management, assets,alliances) were gathered during on-site interviews and are monthly except forstrategy which is measured at founding. Founding date, and number of alliancesare the controls, The analytic technique is event history where the dependentvariable is the rate of alliance formation. Specifically, we use a Cox model.

    Major Findings
    The findings indicate that firms are more likely to form alliances when they are in growth stage markets and have moderately innovative technical strategies, limited assets, all of which are related to improving strategic position. Second, such alliances are also formed at higher rates when large, well-connected top management teams manage the focal firm.

    Implications
    The implications are that these alliances form when firms have pressures for rapid pace from growth stage markets and pressures to conserve resources. Moreover, there is a delicate balance between need and opportunity such that firms appear to shy away from such alliances when they have very sophisticated technologies. Yet, ironically, when they have mundane technologies, they appear unable to develop such alliances. Finally, well-connected, large top management teams appear to be more successful in gaining alliances whereas less well-endowed teams seem to be less able to attract partners despite perhaps needing them more. Thus, our results suggest that perhaps advantaged firms are able to gain even more advantages through improved opportunities for alliance formation.


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