New technology or high technology represents the products and processes that will become the basis of tomorrow's economy. Regions with a strong capacity to generate new or high technology industries--represented by the emergence of new or high technology firms--will be well positioned to compete in the future. New and high technology firms may (1) enhance the competitive posture of existing industries, (2) attract and support a highly skilled labor force, and (3) provide significant direct economic benefits through substantial out-of-state exports. Scholars and practitioners alike have turned their attention to ways in which high technology firms can maximize their performance and growth.

One such way are through strategic alliances which have generated considerable interest among firm managers as a means to secure vital resources. In particular, strategic alliances have been viewed as cooperative arrangements between firms where the exchange of critical resources has enhanced outcomes of two or more firms (Dollinger and Golden, 1992, Parkhe, 1993). However, it is not clearly understood how and if strategic alliances increase performance of a firm. Indeed, while the creation of strategic alliances in the past decade has accelerated rapidly, there is some evidence that such alliances are fraught with problems of instability, poor performance, and failure (Geringer and Hebert, 1991). While many large firms are capable of risking resources to engage in strategic alliances, it is not clear if younger and much smaller firms are capable of obtaining equal or significant benefits from such a relationship.

In this paper, an investigation of strategic alliances among new, young, and old high technology firms is conducted. Specifically, the research seeks to understand the role of strategic alliances and how they might influence performance outcomes. While much theoretical and empirical work has been conducted on interfirm cooperation (Ring and Van de Ven, 1992; Heide and Miner, 1992; Hagedoorn, 1993), the application of models and tests have been sparse in their focus on entrepreneurial high technology firms. In this study, not only are entrepreneurial (new) high technology firms examined, but are compared with older and larger high technology firms that compete in comparable industries.



Motives for entering a cooperative relationship such as a strategic alliance can be multiple and varied (Stearns, Hoffman, and Heide, 1987). Perhaps common among high technology firms is to access R&D capabilities or to generate more rapid innovation through creative synergies. This sharing and advancement of research can be attractive to firms who are undercapitalized or lack resources to obtain sophisticated equipment and personnel. In addition, firms may seek a strategic alliance around R&D as a method to reduce risk associated with efforts to solve problems or further advance innovation.

While it is not surprising to find issues related to innovation and creativity as important to high technology firms, strategic alliances among this class of firms is not limited to a focus on R&D. It can extend to issues such as technology licensing (Telesio, 1979), access to domestic and international marketing and distribution channels (Heide and John, 1988); manufacturing arrangements (Mowery, 1988); and equity investments (Harrigan, 1985). In many instances, these alliances may be done in combinations with a single partner or may be spread individually among different firms.

It is also evident that strategic alliances as formed are not simply a function of the content of the relationship. Some firms choose partners that operate in the same location in order to better coordinate their joint activities. However, firms may also elect to partner with firms located at a distance or based internationally. For instance, a firm may seek an alliance with a foreign company solely to gain access to their existing distribution channels. In exchange, the firm may offer a patented product. While it is known that the location of a partner in a strategic alliance can vary considerably, it is not know if the location has an impact on the performance of the firm.

This study is a test of the role and contribution that strategic alliances have on the performance of high technology firms. It examines this role by studying strategic alliances among three groupings of high technology firms: (1) new high technology firms, (2) young high technology firms, and (3) old high technology firms. It is hypothesized that strategic alliances will make greater performance contributions to new high technology firms than to young and old high technology firms. However, the paper represents an effort to explore if and how strategic alliances promote performance and growth of the firm. To investigate this general proposition, a sample of 225 high technology firms in 40 industries in the state of Wisconsin were studied. Eighty-two of the firms are new, or under the age of six years. Sixty of the high technology firms in the sample are young, or between the ages of 7 and 12. Eighty-three high technology firms in the sample are classified as old, or over the age of 12.

Information was obtained by questionnaire in the summer and fall of 1994 with a 45% response rate (total sample size = 505). Owners or CEOs of high technology firms responded to a set of questions that: (1) identify the type, number, and location of strategic alliances currently in place, and (2) identify sales of the firm annually from 1990 to 1994. Comparisons are made between (1) high technology new firms that have many versus few or no strategic alliances, (2) high technology new firms with diverse types of strategic alliances versus those with a specific set of strategic alliances, and (3) new high technology firms versus old high technology firms in reference to the types and patterns of strategic alliances they develop.



Locating and contacting owners and/or senior managers of high technology firms involved a three-stage procedure. The first stage involved identifying the SIC codes that would serve as the parameters for selecting firms. The forty SIC codes were selected based on their relatively high presence in Southeastern Wisconsin and in the state in general.

The second stage was a compilation of all establishments in the forty SIC codes that entered the Wisconsin state unemployment insurance file (ES202 file known as the DILHR file) for 1994. 719 establishments were pulled from the DILHR file that satisfied this criteria. Efforts were made to identify duplicate listings, removal of franchise operations, removal of listings where the DILHR filing was a result of an out of state company hiring a salesperson to represent them in the state, and out of state listings. Additional attrition of the listing was achieved through direct contact either by phone or mail indicating that no such firm was at the address or that the respondent did not fit the criteria to be included in the study. In 117 identifiable cases, the firm had discontinued operations, had moved out of state, or the firm did not satisfy a "high technology" requirement. This reduced the sample to 505 firms in total. 225 questionnaires were completed for a response rate of 45%.

After this screening was completed, a mail procedure was used. This involved a multi-stage process: (1) an initial individualized letter and questionnaire, and (2) a follow-up post card. This process was done two more times. The first mailing took place in July, 1994; the second in August, 1994; the third in September, 1994.

Previous Page | Main Menu | Next Page

1997 Babson College All Rights Reserved
Last Updated 4/27/97 by Germaine Wong

To sign-up for the Center for Entrepreneurial Studies' publication lists,
please register with the
Entrepreneurship WebTeam.