Asymmetric Alliances and Information Systems

Issues and Prospects

Karim Said, Fadia Bahri Korbi

• Publisher: Wiley-ISTE
• Year: 2017
• Print ISBN: 9781786300973
• eBook ISBN: 9781119335672
• Edition: 1
• Topic: Computer Science
• Subtopic: Information Technology
• Index: Computer Science

This book explores the impact of information systems on the management of North–South asymmetric strategic alliances through a series of in-depth case studies which analyze different types of partnerships. Positioned at the heart of the value creation process, the choice of information system seems to be becoming a strategic issue which should be centered not only on the organizational decisions related to the type of alliance but also the management systems of each of the partners. The authors provide an understanding of the nature of this relationship between the organizational structure and the method of information system integration in asymmetric alliances. The in-depth analysis of strategic alliance case-studies illustrates the different methods of information system integration, which are themselves linked to the organisational and structural choices of the alliance. These methods are characterized by information-sharing and coordination mechanisms as well as the balance of control over shared activities developed by the distinct partners.

 

PART 1
Specificities of IS within Asymmetric Alliances

Introduction to Part 1

After the diffusion of integrative technologies within businesses, the question of information system integration moved to the field of relations across organizations, where it generates more and more interest among researchers in Information Systems (IS) management. The study of interorganizational relations has recently become far more interesting due to the appearance of strategic alliances and partnerships, as opposed to the traditional dichotomization of straight market and hierarchy in conjunction with the increasing use of IS. These technologies are capable of managing the relations between partners and supporting their formal and informal governance methods because of a combination of material and non-physical resources.

However, coordinating the activities of a strategic alliance is all the more complex when it links partners that are asymmetric with regard to the differences or even incompatibilities between their strategic decisions and managerial systems, often set in specific social and cultural structures. These differences can be amplified by the geographic distance between partners, highlighting the need to coordinate joint activities.

In this context, an integrated information system can unify the information shared between partners and help develop a common framework that will work toward problems arising from information asymmetry and incompatibility within the alliance. Through their ability to alleviate restrictions linked to spatial location, information systems can help reduce the costs of acquisition and transportation of information, thus enhancing efficiency and productivity as well as decision-making time. Furthermore, these technologies allow the development of interpersonal relations between the members of two partnering companies and the establishment of a dynamic of knowledge transfer.

1
Strategic Alliances versus Asymmetric Alliances

1.1. Strategic alliances

A cooperation agreement between organizations relies on a range of partnership relations between corporations that seek to realize a joint production of information, products or commercial services. These agreements include different forms of contractual cooperation such as licensing contracts, R&D agreements and functional collaborations that aim to reinforce the value chain of both parties which can range from common participations to total integration (see Figure 1.1). This can be a number of autonomous entities participating in a network, applying one of many possible configurations: corporate collaboration – cooperation between two or more partners from different countries where each corporation remains autonomous within the areas that are not included within the collaboration perimeters including the common realization of activities and specific tasks.

Garrette and Dussauge [GAR 95] present an analysis grid of different forms of collaborations for strategic alliances, thus distinguishing agreements between competing corporations from agreements between non-competing corporations. A distinction can thus be made between market relations, mergers and acquisitions, and collaborations (see Table 1.1). The following analysis grid presents the differences in definitions of collaboration and the collaboration models between corporations. We will note that one of the most ubiquitous collaboration models remains is that of strategic alliance.

Figure 1.1. Configurations of alliances (Alliance Science, 2004)

Table 1.1. Analysis grid of the forms of relations and interorganization cooperation

(source [GAR 95, p. 97])

Stakeholders Relation	Non-competing corporations			Competing corporations
Market relations	Exports and imports	Transactions		Competition
Mergers and acquisitions	Local acquisitions	Vertical integration	Diversification	Sector concentration
Collaboration	Multinationalization joint venture	Vertical partnerships	Intersectoral agreement	Strategic alliances between competitors

1.1.1. Definition

The notion of strategic alliance refers to a link between two or more individual corporations, deciding on the governance and structure of a common project while both maintaining their independence. They are therefore engaged in a partnership whereby they will share the benefits and the costs of the collaboration. Khanna et al. [KHA 98, p. 195] highlight other dimensions associated with the definition of alliance, citing the mutual transfer of information between strategic partners and the development of organizational knowledge. Resorting to strategic alliances is here justified by the act of: “mutually transferring information from one partner to another, allowing them to combine and grow their competences and key-knowledge to exploit them within common operations”. However, Gulati [GUL 98] highlights goals other than the transfer of knowledge and learning, such as the desire to exchange, share or develop common products, technologies or services.

Jolly [JOL 01, p. 3], on the other hand, defines alliances as:

“A link established by at least two sovereign companies that do not belong to the same group, agreeing to pursue a common goal within a defined space by pooling or exchanging resources in order to obtain mutually beneficial results, while remaining independent outside of the alliance”.

This notion of independence implies, for the partners, that they maintain their strategic autonomy outside of the areas covered by the mutual agreements. For their part, Contractor and Lorange [CON 88] put forward the importance of sharing financial and technological resources as well as the management and control model of the joint activity. Pooling complementary capital and manpower as well as production capabilities and information must therefore allow the creation of value [BUC 88].

Using these definitions as a basis, we can establish a theoretical framework that encompasses the different dimensions that characterize a strategic alliance, i.e.:

• – a strategic alliance encourages networking between non-competing companies, competing companies or potentially competing companies;
• – the decision to enter a strategic alliance must involve a formal, well-defined and appropriately structured contract;
• – when active, this contract will not remove the autonomy of either of the companies or their independence;
• – a strategic alliance involves pooling resources and capabilities as well as sharing the results by the contracting parties.

1.1.2. Organizational forms

Partnerships, functional collaborations, joint ventures and cooperation agreements are generic terms that refer to various organizational forms that companies can take on in order to mobilize the resources necessary to their competitiveness. These organizational forms can fall into one of two categories depending on whether the nature of the commitment is equity based or simply contractual.

1.1.2.1. Equity alliances

Joint ventures and equity investments (joint/unilateral) are representative of this type of alliance. Joint ventures, in particular, refer to the investment of capital into a new entity and the pooling of resources among a number of partners. This will take the form of a new administrative structure that operates on the basis of a new hierarchy. The objectives for a joint venture are most often expressed in a long-term context in the areas of R&D, production and product commercialization. Kogut [KOG 88], Pisano [PIS 89, PIS 91] and even Oxley [OXL 97] mention that joint ventures allow control over the behaviors of the partners in order to align their objectives, particularly in the context of an uncertain environment favorable to opportunistic moves and behaviors.

Members of a joint venture agree beforehand to commit their resources in order to determine ownership over the common subsidiary. This avoids any of the partners going back on their commitment. Furthermore, the partners wield their operational power via a formal administrative unit (the executive board of the joint venture), which allows them to efficiently exercise control over the joint activity and reduce transaction costs among partners.

Das and Teng [DAS 98] underline the fact that joint ventures allow control over decisions, resources, assets and partners through specific organizational routines and an elevated hierarchical control. This type of alliance ensures that the partners’ interests are aligned and reduces the inherent costs that occur from incomplete contracts and opportunistic behaviors.

The works of Contractor and Lorange [CON 88, p. 6] emphasize the high level of co-dependency between partners during a joint venture who mobilize part of their personnel in a collaborative framework and rely on...

Table of contents

• Cover
• Table of Contents
• Title
• Copyright
• Introduction
• PART 1: Specificities of IS within Asymmetric Alliances
• PART 2: The Role of IS in the Management of an Asymmetric Alliance: Four Case Studies
• Conclusion: The Role of IS in Managing Asymmetric Alliances
• Bibliography
• Index
• End User License Agreement