On Some Procedures of Forming a Multi-partner Alliance

Annelies de Ridder (1) , Agnieszka Rusinowska (2)

1 Radboud University [Nijmegen]
2 GATE - Groupe d'analyse et de théorie économique

We study two different ways of forming multi-partner alliances between firms with the central idea that procedure is an important factor in multi-partner alliance formation. In the first procedure, an alliance is formed simultaneously, while in the second, step-by-step procedure, members are added one by one. In the model we present, each firm is assumed to have a multidimensional maneuvering space, which consists of all alliance positions acceptable to the firm, and an ideal position in this space. Alliances will form between the firms whose maneuvering spaces overlap. The results of the analysis confirm that procedure is an important factor in multi-partner alliance formation. Nevertheless, if ideal positions of firms are acceptable to all alliance partners, then the result of alliance formation does not depend on procedure. In addition, it is shown that it can be disadvantageous to be a first mover. Finally, we are able to provide sufficient conditions under which one procedure is preferred in a three-partner case. More specifically, a firm with its ideal position acceptable to the two other firms may prefer the simultaneous procedure to being a late mover if (1) there is a certain balance in the firms' degree of flexibility and their power and (2) if the agreed alliance position of the two other firms is acceptable to the firm in question.

Keywords: Procedures of Forming an Alliance

Domains: Economics and Finance

Annelies de Ridder, Agnieszka Rusinowska. On Some Procedures of Forming a Multi-partner Alliance. Journal of Economics and Management Strategy, 2008, 17 (2), pp. 443-487. ⟨halshs-00406461⟩