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This paper examined three different theories regarding motivations of strategic alliances and the type of governance structure firms should choose. The results found no support for resource dependency motives and choice of governance structure or transaction cost motives and choice of governance structure. Some support was found for the strategic choice theory which suggested that firms should choose non-equity alliances in functional areas unrelated to its strategy.

In the case of new ventures emphasizing marketing differentiation, non-equity marketing alliances led to slower sales growth. But, when the new ventures were pursuing a low-cost strategy, marketing alliances led to faster sales growth.

New ventures choosing a production alliance while pursuing a low-cost strategy experienced slower sales growth than those not choosing an alliance. But production alliances
led to faster sales growth when the new venture was pursuing a marketing differentiation strategy.

This research provides several suggestions for both managers and potential managers of new high technology ventures and those interested in investing in these type of firms. The use of strategic alliances can have a positive impact on sales growth. Strategic alliances appear to be a viable alternative for accessing needed resources for new ventures interested in sales growth.

The findings that practitioners should find most useful are the results of the tests of the hypotheses examining the relationships between financial performance, alliance structure and strategic core competencies. Specifically, it appears that new ventures pursuing a marketing strategy may experience sales growth with a non-equity alliance in manufacturing but not in marketing or R&D. There are several possible explanations for the non-significance associated with the technology alliances. These new ventures by definition are all in high technology industries and, as such, may include core competencies in R&D even if their stated strategy is not technology differentiation.

Firms with a manufacturing strategy may find a marketing alliance beneficial. to sales growth but not a production alliance exactly as predicted by strategic choice theory. Production alliances for firm with a marketing differentiation strategy appear to be a way for new ventures to grow.


These finding suggest that new ventures will benefit from pursuing a marketing differentiation strategy or low-cost strategy can find strategic benefits by choosing non-equity alliances outside their chosen area of functional expertise. They should also avoid non-equity strategic alliances within their areas of core competence.

In the future, a larger sample could be gathered that may allow the researcher to also look at the interaction of equity alliances and the various motives for forming an alliance. Additional research involving primary data could provide much greater detail regarding these strategic alliances. In particular, managers could provide great insight into the primary functional area of interest behind these alliances. Also, information could be gathered on the partner of the alliance, previous alliance experience with this partner or other partners, and length of time the alliance was intended to exist given their is ownership involved. Information gathered from the managers involved in negotiating the alliance would also prove invaluable.

Most importantly, this study suggests that the strategic choice theory provides a useful framework for analyzing strategic alliance motives and the ultimate choice of governance structure for the alliance. Understanding when and under what conditions strategic alliances are of benefit to new ventures will continue to be an important issue for practitioners and academics alike.



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