hi to all respected CITE HR
i need help in following assignments
1-Critically evaluate the importance of ‘cultural intelligence’ for the modern international manager.
2-write an essay exploring the process of strategic change
thanks
From United Kingdom, Northampton
i need help in following assignments
1-Critically evaluate the importance of ‘cultural intelligence’ for the modern international manager.
2-write an essay exploring the process of strategic change
- merger/acquisitions
- transformation change
- strategic alliances
- cross culture aspect of change
thanks
From United Kingdom, Northampton
Hi Skywatcher ? [IMG]https://www.citehr.com/images/icons/icon12.gif[/IMG]
From where did you got this fodder?[IMG]https://www.citehr.com/images/icons/icon10.gif[/IMG]
How will you diagnose this cultural intelligence?[IMG]https://www.citehr.com/images/icons/icon5.gif[/IMG]
what is the utility? I mean cost and benefits of such nuisance in HR?
Are you aiming to become behavioral scientist? if yes, what job you will perform by this reaserch and development?
You are really extraterrestrial alien because this is beyond our common sence what business this subject has in HR?
If our HR Managers waste their official time in such extra carricular activities he will be forced by his management to take Voluntary Retirement and opt for Consultancy or for Professor or Lecturer jobs because this subject exist in such domain.
This is not practical question because you will only receive some half knowledge replies. We don't religiously follow such thing in our field.
regards
Sawant
From Saudi Arabia
13From where did you got this fodder?[IMG]https://www.citehr.com/images/icons/icon10.gif[/IMG]
How will you diagnose this cultural intelligence?[IMG]https://www.citehr.com/images/icons/icon5.gif[/IMG]
what is the utility? I mean cost and benefits of such nuisance in HR?
Are you aiming to become behavioral scientist? if yes, what job you will perform by this reaserch and development?
You are really extraterrestrial alien because this is beyond our common sence what business this subject has in HR?
If our HR Managers waste their official time in such extra carricular activities he will be forced by his management to take Voluntary Retirement and opt for Consultancy or for Professor or Lecturer jobs because this subject exist in such domain.
This is not practical question because you will only receive some half knowledge replies. We don't religiously follow such thing in our field.
regards
Sawant
From Saudi Arabia
Due diligence for mergers and acquisitions
A risk management perspective
Prior to any merger or acquisition, the management of an organization must perform the necessary due diligence. The purpose of this due diligence exercise is to determine that the information about the company to be acquired is correct, accurate, and properly disclosed. During this process, the parties need to determine that all critical issues have been identified and that key assumptions used in the investment proposal are accurate.
The process of due diligence is carried out by a team whose members have expertise in various functional areas. These team members are usually employees of the acquiring company unless a particular expertise is needed that cannot be found within the company. The team will request documents from various departments within the company which will assist in obtaining the desired information and reaching the desired goals.
The team may include members from the following disciplines:
1. Financial/Accounting
2. Tax
3. Risk Management
4. Management Information Systems/Information Technology
5. Human Resources
6. Environmental
7. Legal
8. Actuarial
9. Operations
10. Sales
The broad scope of the due diligence process makes it useful for a variety of situations:
1. An agent or broker can apply these methods when writing a new account.
2. A new risk manager can use this approach to determine that all exposures to loss have been identified and addressed. It will also assist the new risk manager in gaining instant credibility.
3. A risk management consultant can use the tools of due diligence to assist in program design and implementation.
These three groups might employ a checklist similar to the one at the end of this article.
The due diligence process is accomplished in four steps. The first is the Identification Phase, which involves information gathering and risk identification. During this phase, the risk management team will spend time reviewing current risk management department operations and assembling all loss data. The second phase involves the analysis of all loss runs, identification of pending and prior litigation, and reviewing insurance policies and environmental issues. The third phase involves summarizing the data collected and analyzing the exposures compared to existing insurance coverages and submitting recommendations to the due diligence team. The fourth phase is performed after acquisition and involves visits to new locations, consolidating the insurance program, and addressing administrative issues.
The acquisition of an insurance agency offers similar challenges and presents other areas of concern:
* When buying an agency, markets are an important issue. Request at least five years of company loss experience. These numbers will indicate how well the carrier has done with this agency and foreshadow any impending problems.
* It is necessary that carriers be aware of the possible sale and preauthorize the transaction so that the carriers will stay.
* Ask the seller to list his/her largest 25 accounts. Buyer and seller should jointly call on the clients to discuss the pending sale of the existing agency and to introduce the new owners.
* Require the seller to provide five years of financial statements including IRS filings.
Examine the employment contracts of all producers. Make sure there are noncompetitive covenants in place prior to change of ownership.
* Determine ownership of business. Does the agency own the business or do producers own the business they write?
* Arrange for an escrow account so that audit changes can be accounted for.
* Obtain an indemnification agreement from the seller for prior acts and make sure that the seller's errors and omissions policy provides for "tail" coverage.
* Obtain employment contracts) from owners) or written agreement(s) that they will be available for a period of time.
The pitfalls of a bad acquisition can be mitigated by use of the attached checklist, common sense, and products provided by the insurance industry. Recognizing the risks associated with mergers and acquisitions, risk management professionals look to the insurance market for newly developed products that will help treat these exposures.
These coverage’s include but are not limited to:
* Representation and Warranty Insurance
* Aborted Bid Insurance
* Tax Opinion Insurance
* A variety of Pollution Liability Insurance policies:
-Clean Up Cost Gap. Top loss for the financial side of remediation covering overruns of expected cleanup costs.
-Pollution Legal Liability. Site specific coverage for unknown, preexisting (and new) pollution conditions at insured sites.
-Environmental Protection Programs. Risk transfer and self funding (with claims and loss control support) to assist with costs applicable to compliance with environmental laws governing hazardous waste treatment, storage and disposal operations.
DUE DILIGENCE CHECKLIST
Prior to our scheduled meeting to complete our exposure questionnaire, please gather the following information and data:
General:
1. Names of all operating entities with a list of owners and officers and ownership percentages
2. Most current audited financial statements)
3. Most current annual report
4. Copies of current insurance policies
5. Loss Control/Safety/Hiring/ Testing/Maintenance manuals, procedures, etc.
6. Insurance company issued loss runs for current year and four (4) prior years
7. Description of, and details about, any individual loss in excess of $5,000 paid or reserved
8. Details of any planned significant change in operations over the next year
9. Insurance carriers, policy numbers, limits and premiums for four (4) years. (The insurance company final audits are excellent source documents.)
10. All brochures, advertising copy, pamphlets, etc., used to describe your business
11. Additional/Named Insureds, Loss Payees and Certificate of Insurance holders
12. Copies of any Hold Harmless Agreements in effect
13. Details on fire/theft protection systems, safeguards, procedures, etc.
14. Details on any foreign operations)
15. Copies of current Experience Modifiers for Workers Compensation and Automobile
16. Copies of all leases and contracts
Workers Compensation:
1. Payroll and number of employees by classification for next year
2. Description of any operations involving exposure under the various Act
3. Form for last two (2) completed quarters
4. Employer's ID# and code under various labour and industrial laws
General Liability:
1. Gross revenues expected this year and next
2. Gross revenues for past five (5) years
3. Details on any discontinued product or service
Automobile:
1. List of drivers by full name, date of birth, driver's license number, state of issue, and date of hire
Property:
1. List of all locations including occupancy, type of fire protection, square
footage, and construction
2. Details on any changes in insured values compared to current coverage’s
3. Details on any bailment or property in your care, custody or control
From Saudi Arabia
A risk management perspective
Prior to any merger or acquisition, the management of an organization must perform the necessary due diligence. The purpose of this due diligence exercise is to determine that the information about the company to be acquired is correct, accurate, and properly disclosed. During this process, the parties need to determine that all critical issues have been identified and that key assumptions used in the investment proposal are accurate.
The process of due diligence is carried out by a team whose members have expertise in various functional areas. These team members are usually employees of the acquiring company unless a particular expertise is needed that cannot be found within the company. The team will request documents from various departments within the company which will assist in obtaining the desired information and reaching the desired goals.
The team may include members from the following disciplines:
1. Financial/Accounting
2. Tax
3. Risk Management
4. Management Information Systems/Information Technology
5. Human Resources
6. Environmental
7. Legal
8. Actuarial
9. Operations
10. Sales
The broad scope of the due diligence process makes it useful for a variety of situations:
1. An agent or broker can apply these methods when writing a new account.
2. A new risk manager can use this approach to determine that all exposures to loss have been identified and addressed. It will also assist the new risk manager in gaining instant credibility.
3. A risk management consultant can use the tools of due diligence to assist in program design and implementation.
These three groups might employ a checklist similar to the one at the end of this article.
The due diligence process is accomplished in four steps. The first is the Identification Phase, which involves information gathering and risk identification. During this phase, the risk management team will spend time reviewing current risk management department operations and assembling all loss data. The second phase involves the analysis of all loss runs, identification of pending and prior litigation, and reviewing insurance policies and environmental issues. The third phase involves summarizing the data collected and analyzing the exposures compared to existing insurance coverages and submitting recommendations to the due diligence team. The fourth phase is performed after acquisition and involves visits to new locations, consolidating the insurance program, and addressing administrative issues.
The acquisition of an insurance agency offers similar challenges and presents other areas of concern:
* When buying an agency, markets are an important issue. Request at least five years of company loss experience. These numbers will indicate how well the carrier has done with this agency and foreshadow any impending problems.
* It is necessary that carriers be aware of the possible sale and preauthorize the transaction so that the carriers will stay.
* Ask the seller to list his/her largest 25 accounts. Buyer and seller should jointly call on the clients to discuss the pending sale of the existing agency and to introduce the new owners.
* Require the seller to provide five years of financial statements including IRS filings.
Examine the employment contracts of all producers. Make sure there are noncompetitive covenants in place prior to change of ownership.
* Determine ownership of business. Does the agency own the business or do producers own the business they write?
* Arrange for an escrow account so that audit changes can be accounted for.
* Obtain an indemnification agreement from the seller for prior acts and make sure that the seller's errors and omissions policy provides for "tail" coverage.
* Obtain employment contracts) from owners) or written agreement(s) that they will be available for a period of time.
The pitfalls of a bad acquisition can be mitigated by use of the attached checklist, common sense, and products provided by the insurance industry. Recognizing the risks associated with mergers and acquisitions, risk management professionals look to the insurance market for newly developed products that will help treat these exposures.
These coverage’s include but are not limited to:
* Representation and Warranty Insurance
* Aborted Bid Insurance
* Tax Opinion Insurance
* A variety of Pollution Liability Insurance policies:
-Clean Up Cost Gap. Top loss for the financial side of remediation covering overruns of expected cleanup costs.
-Pollution Legal Liability. Site specific coverage for unknown, preexisting (and new) pollution conditions at insured sites.
-Environmental Protection Programs. Risk transfer and self funding (with claims and loss control support) to assist with costs applicable to compliance with environmental laws governing hazardous waste treatment, storage and disposal operations.
DUE DILIGENCE CHECKLIST
Prior to our scheduled meeting to complete our exposure questionnaire, please gather the following information and data:
General:
1. Names of all operating entities with a list of owners and officers and ownership percentages
2. Most current audited financial statements)
3. Most current annual report
4. Copies of current insurance policies
5. Loss Control/Safety/Hiring/ Testing/Maintenance manuals, procedures, etc.
6. Insurance company issued loss runs for current year and four (4) prior years
7. Description of, and details about, any individual loss in excess of $5,000 paid or reserved
8. Details of any planned significant change in operations over the next year
9. Insurance carriers, policy numbers, limits and premiums for four (4) years. (The insurance company final audits are excellent source documents.)
10. All brochures, advertising copy, pamphlets, etc., used to describe your business
11. Additional/Named Insureds, Loss Payees and Certificate of Insurance holders
12. Copies of any Hold Harmless Agreements in effect
13. Details on fire/theft protection systems, safeguards, procedures, etc.
14. Details on any foreign operations)
15. Copies of current Experience Modifiers for Workers Compensation and Automobile
16. Copies of all leases and contracts
Workers Compensation:
1. Payroll and number of employees by classification for next year
2. Description of any operations involving exposure under the various Act
3. Form for last two (2) completed quarters
4. Employer's ID# and code under various labour and industrial laws
General Liability:
1. Gross revenues expected this year and next
2. Gross revenues for past five (5) years
3. Details on any discontinued product or service
Automobile:
1. List of drivers by full name, date of birth, driver's license number, state of issue, and date of hire
Property:
1. List of all locations including occupancy, type of fire protection, square
footage, and construction
2. Details on any changes in insured values compared to current coverage’s
3. Details on any bailment or property in your care, custody or control
From Saudi Arabia
MEASURING STRATEGIC ALLIANCE SUCCESS: A CONCEPTUAL
FRAMEWORK
Abstract
What makes a strategic alliance successful?
This paper identifies the key drivers of success in strategic alliances and proposes an integrated conceptual framework for empirical investigation. A number of propositions are developed based on extant literature.
1. Introduction
Much attention has recently been devoted to issues surrounding strategic alliances as organizations are increasingly turning to alliances to help them successfully compete in the marketplace. In a provocative article on “ Strategic alliances: A synthesis of conceptual foundations,” noted that whereas at one extreme, some firms seem to have been quite successful in establishing and maintaining a web of lasting alliances, a few firms at the other end of the continuum seem to have to their credit a long list of failed alliances. These realities highlight the need for research that can provide insights into factors underlying the success and failure of alliances. although the characteristics of strategic alliance formation have been well explored in the literature, little has been written about the characteristics associated with strategic alliance success. Moreover, many of the research studies on strategic alliances were not specifically concerned with the relationship and interplay of specific factors - such as environmental and organisational characteristics, strategic alliance formation features, strategic alliance relationship attributes, and their association to alliance success. In order to determine which of these factors directly contribute to competitive positional advantage and superior performance in strategic alliances, additional research is required. The development of an integrative model to address the multiplicity of issues raised by alliances is long overdue.
From a strategic standpoint, some of the key facets of the behaviour of firms relating to alliance formation and alliance performance can be understood by looking at the sequence of few interrelated factors in alliances. This sequencing of factors includes the organisational and firm characteristics that influence the propensity of firms to enter into strategic alliances, the choice of appropriate partner, alliance relationship characteristics, and the success of the
alliance overtime. Some of the research questions that emerge from the sequencing of factors are: (1) Which organisational and environmental factors are the drivers for the firms to enter into strategic alliances? (2) What factors do firms consider when assessing prospective partners to form alliances? (3) What attributes of the relationship in an alliance are responsible for overall alliance success? (4) What leads the partners’ to achieve competitive positional advantage in the marketplace and what is the effect of alliance on overall organisational performance? Against this backdrop, testable propositions are offered in this paper and at the end an integrated conceptual model is presented.
2. Drivers of Strategic Alliances
Literature suggests that the most common types of drivers that influence the propensity of firms to enter into strategic alliances are turbulence in markets, resource constraints, market uncertainty, globalisation of the industry, fast technological change, economies of scale, prior involvement in strategic alliances, risk sharing, and consolidation of market position. Competitive forces also play a critical role in strategy formulation in organizations. All these factors can be grouped into two broad categories – firm characteristics and environmental characteristics – that mostly influence the propensity of firms to enter into strategic alliances.
Environmental Characteristics
In a conventional sense, an organization’s environment consists of actors and forces outside the firm, which affect the company’s attitudes, actions and outcomes. Today, organizations operate in a global environment that is characterised as diverse, knowledge-rich and unstable. In Ohmae’s view, the relentless challenges of globalization mandates alliances, making it absolutely essential to strategy.
Organizations are increasingly recognising that an individual firm is insufficient to deal with rapid changes in the environment. Uncertainty concerning product markets, changing barriers to foreign trade and investment, technological volatility, market turbulence, and rapidly changing economies of scale have all been proposed as contributors to environmental uncertainty and linked to increased cooperative behaviour between firms suggest that environmental uncertainties have a direct effect upon alliance use. This discussion leads to the following two propositions:
P1: Alliance formation will be positively associated with the following sources of
environmental uncertainty: (a) high uncertainty, (b) high technological volatility and demand,
(c) low predictability of customer demands and competitor actions, and (d) demands for
internationalisation.
P2: The greater the market turbulence and uncertainty, the greater is the propensity of the
firm to form alliances.
Firm Characteristics
Competition plays an important role in determining strategic position undertaken by firms. Alliances improve the strategic position of firms in competitive markets by providing resources from other firms that enable them to share costs and risks in product design, production, marketing, or distribution. Forging an alliance enables a firm to focus resources on its core skills and competencies while acquiring other components or capabilities it lacks from the marketplace. Such resources give firms to weather business downturns and other setbacks, and ensure more even and predictable resource flow. Alliances can often improve the market power of a firm because either the alliance partner is a customer for the product or because the distribution channels and buying power of the partners can be combined. Also, the close inter-firm relationships within alliances can provide customer information. Further, organisational culture affects strategic options that are perceived and chosen, and establishes consistent management style and marketing practices. It has been observed that in an information-rich environment an organisational culture that fosters learning has become an important contributory factor for forming strategic alliances. This is the basis of these two propositions:
P3: The larger the number of competitors and the higher the need for additional resources,
the greater is the need for alliance formation.
P4: Firms cultivating learning as an organisational culture are more likely to have a higher
propensity to form alliances.
3. Strategic Alliance Formation
The two key determinants identified in the literature on strategic alliance formation are partner match and strategic orientation of the partnering firm.
Partner Match
Partner match calls for the creation of alliances in which the chosen partners are similar in management style and company culture. Considerations such as domain similarity and goal compatibility have been found to enhance the effectiveness of interorganizational dyads indicate that compatibility of the partners is critical to alliance success. Hence, the propositions:
P5: Higher level of partner match is positively associated with alliance success.
P6: Partner match and alliance success association is mediated by alliance relationship
attributes.
Strategic Orientation
The strategic orientation of a firm reflects the willingness of the firm to enter into strategic alliances and to adopt innovative strategies. Firms select strategies to improve their competitive postures and to gain an advantage over one or more competitors Strategic alliances are formed based on strategies of how to manage environmental uncertainties, how to overcome lack of resources and, in particular, how to manage the firm’s range of interorganizational relations.
P7 : Degree of strategic orientation of a firm will exhibit: (a) higher levels of alliance
success; and (b) an association with alliance relationship attributes.
4. Strategic Alliance Relationship Attributes
Extant literature has focused on commitment, collaboration, communication, trust, and conflict resolution as the important attributes of alliance relationships. The existence of these attributes implies that both partners acknowledge their mutual dependence and their willingness to work for the survival and prosperity of the relationship.
Trust
The centrality of trust in developing long-term organisational relationships has been
emphasized in the alliance literature. The existence of trust in a relationship reduces the perception of risk associated with opportunistic behavior. Partners that trust each other generate greater profits, serve customers better, and are more adaptable. argue that when exchanges are governed by trust, the transactor can reduce transaction costs (e.g. bargaining and monitoring costs). Studies suggest that one critical factor determining alliance performance is the degree of trust between alliance partners. Indeed, it has been argued that trust is so important to alliances that it is considered the “cornerstone of the strategic partnership success”. This discussion leads to the following proposition:
P8: Higher trust between partners is positively related to the success of an alliance.
Communication
Communication between partners is critical for building a successful relationship. In order to achieve the benefits of collaboration, effective communication between partners is essential. Communication allows the partners to understand the alliance goals, roles and responsibilities of all the actors. It also helps with the sharing and dissemination of individual experiences. In sum, more successful alliance relationships are expected to exhibit higher levels of communication quality, more information sharing between partners, and more participation in planning and goal setting than less successful alliances. Stated more formally, we propose that:
P9: More successful alliance, compared with less successful alliance, will exhibit higher
levels of: (a) quality communication; (b) information sharing; and (c) participation in
planning.
Commitment
Commitment suggests a future orientation in which partners attempt to build a relationship that can weather unanticipated problems. A high level of commitment provides the context in which both parties can achieve individual and joint goals without raising the spectre of opportunistic behaviour. Indications of commitment include investment by the participating organizations, exclusive agreements between the organizations and the absence of major conflicts between the organizations. Committed partners are likely to be more cooperative, communicative and flexible in accommodating conflict issues. Commitment development between partners within an alliance would act as a counterbalance against failure of the strategic alliance. The following proposition is derived from this discussion:
P10: Higher level of commitment to alliance relationship is positively related to the alliance
success.
Collaboration
Collaboration is the key dimension of the strategic alliance relationship. The alliance partners must collaborate to achieve their strategic objectives. The collaborative associations are interactive and adaptive in nature. Understanding the nature and scope of collaboration is essential in analysing the operation and success of an alliance. A highly collaborative relationship provides the flexibility and adaptability necessary to overcome uncertainties, resolve conflicts and achieve mutually beneficial outcomes.
P11 : The greater the extent that a collaborative relationship exists between the alliance
partners, the higher the probability of success.
In sum, the literature cited above suggests that more successful alliance relationships are expected to be characterized by higher levels of commitment, collaboration, communication, and trust than are less successful alliances. Thus, the proposition:
P14 : Firms scoring high in levels of strategic alliance attributes (for example, trust,
commitment, collaboration, and communication) are likely to exhibit more success than are
firms that do not score high in these attributes.
Conflict Resolution
Conflict often exists in interorganizational relationships due to the inherent interdependencies between partners. Cummings posited that firms in strategic alliances are motivated to engage in joint problem solving because they are, by definition, linked together to manage an environment that was more uncertain and turbulent than each one could control. Conflict may be distinguished as functional or dysfunctional. Functional conflict would enhance an alliance’s performance. While dysfunctional conflict within the alliance would affect the effectiveness of alliance performance. Dysfunctional conflicts are counterproductive and are likely to strain the fabric of the partnership. This results in the development of the proposition:
P15 : Excessive dysfunctional conflict between alliance partners is negatively related to the
success of an alliance.
6. Proposed Conceptual Model
In view of the preceding discussion and evidence from the existing literature, the followingconceptual model is proposed (Fig. 1). It has been argued throughout the paper that an assessment of alliance success warrants examination of the relationship along a number of interrelated factors. The factors identified have been incorporated in the proposed model. We hope that the perspective presented in this paper has provided a first step towards generating a deeper understanding of the increasingly pervasive strategic alliance phenomenon.
7. Implications and Conclusions
The number of strategic alliances has been growing in most industries in recent years. However, not every strategic alliance succeeds. There is a need for comprehensive research
Environmental
Characteristics
Firm Characteristics
Strategic Alliance
Formation
Alliance Relationship
Attributes
Alliance Success
· Competitive positional advantage
· Organizational performance
that investigates the factors underlying the successes and failures of alliances, as well as issuesrelated to systems, structures and controls conducive to effective management of alliances. Current conceptual frameworks are not adequate to examine these issues. We have purposively developed an integrative model to identify key alliance success factors that would contribute to an understanding of why alliances make sense, what the partners need to bring to the table and what management practices and attributes might help the long-term growth and
development and success of the strategic alliances.
From Saudi Arabia
FRAMEWORK
Abstract
What makes a strategic alliance successful?
This paper identifies the key drivers of success in strategic alliances and proposes an integrated conceptual framework for empirical investigation. A number of propositions are developed based on extant literature.
1. Introduction
Much attention has recently been devoted to issues surrounding strategic alliances as organizations are increasingly turning to alliances to help them successfully compete in the marketplace. In a provocative article on “ Strategic alliances: A synthesis of conceptual foundations,” noted that whereas at one extreme, some firms seem to have been quite successful in establishing and maintaining a web of lasting alliances, a few firms at the other end of the continuum seem to have to their credit a long list of failed alliances. These realities highlight the need for research that can provide insights into factors underlying the success and failure of alliances. although the characteristics of strategic alliance formation have been well explored in the literature, little has been written about the characteristics associated with strategic alliance success. Moreover, many of the research studies on strategic alliances were not specifically concerned with the relationship and interplay of specific factors - such as environmental and organisational characteristics, strategic alliance formation features, strategic alliance relationship attributes, and their association to alliance success. In order to determine which of these factors directly contribute to competitive positional advantage and superior performance in strategic alliances, additional research is required. The development of an integrative model to address the multiplicity of issues raised by alliances is long overdue.
From a strategic standpoint, some of the key facets of the behaviour of firms relating to alliance formation and alliance performance can be understood by looking at the sequence of few interrelated factors in alliances. This sequencing of factors includes the organisational and firm characteristics that influence the propensity of firms to enter into strategic alliances, the choice of appropriate partner, alliance relationship characteristics, and the success of the
alliance overtime. Some of the research questions that emerge from the sequencing of factors are: (1) Which organisational and environmental factors are the drivers for the firms to enter into strategic alliances? (2) What factors do firms consider when assessing prospective partners to form alliances? (3) What attributes of the relationship in an alliance are responsible for overall alliance success? (4) What leads the partners’ to achieve competitive positional advantage in the marketplace and what is the effect of alliance on overall organisational performance? Against this backdrop, testable propositions are offered in this paper and at the end an integrated conceptual model is presented.
2. Drivers of Strategic Alliances
Literature suggests that the most common types of drivers that influence the propensity of firms to enter into strategic alliances are turbulence in markets, resource constraints, market uncertainty, globalisation of the industry, fast technological change, economies of scale, prior involvement in strategic alliances, risk sharing, and consolidation of market position. Competitive forces also play a critical role in strategy formulation in organizations. All these factors can be grouped into two broad categories – firm characteristics and environmental characteristics – that mostly influence the propensity of firms to enter into strategic alliances.
Environmental Characteristics
In a conventional sense, an organization’s environment consists of actors and forces outside the firm, which affect the company’s attitudes, actions and outcomes. Today, organizations operate in a global environment that is characterised as diverse, knowledge-rich and unstable. In Ohmae’s view, the relentless challenges of globalization mandates alliances, making it absolutely essential to strategy.
Organizations are increasingly recognising that an individual firm is insufficient to deal with rapid changes in the environment. Uncertainty concerning product markets, changing barriers to foreign trade and investment, technological volatility, market turbulence, and rapidly changing economies of scale have all been proposed as contributors to environmental uncertainty and linked to increased cooperative behaviour between firms suggest that environmental uncertainties have a direct effect upon alliance use. This discussion leads to the following two propositions:
P1: Alliance formation will be positively associated with the following sources of
environmental uncertainty: (a) high uncertainty, (b) high technological volatility and demand,
(c) low predictability of customer demands and competitor actions, and (d) demands for
internationalisation.
P2: The greater the market turbulence and uncertainty, the greater is the propensity of the
firm to form alliances.
Firm Characteristics
Competition plays an important role in determining strategic position undertaken by firms. Alliances improve the strategic position of firms in competitive markets by providing resources from other firms that enable them to share costs and risks in product design, production, marketing, or distribution. Forging an alliance enables a firm to focus resources on its core skills and competencies while acquiring other components or capabilities it lacks from the marketplace. Such resources give firms to weather business downturns and other setbacks, and ensure more even and predictable resource flow. Alliances can often improve the market power of a firm because either the alliance partner is a customer for the product or because the distribution channels and buying power of the partners can be combined. Also, the close inter-firm relationships within alliances can provide customer information. Further, organisational culture affects strategic options that are perceived and chosen, and establishes consistent management style and marketing practices. It has been observed that in an information-rich environment an organisational culture that fosters learning has become an important contributory factor for forming strategic alliances. This is the basis of these two propositions:
P3: The larger the number of competitors and the higher the need for additional resources,
the greater is the need for alliance formation.
P4: Firms cultivating learning as an organisational culture are more likely to have a higher
propensity to form alliances.
3. Strategic Alliance Formation
The two key determinants identified in the literature on strategic alliance formation are partner match and strategic orientation of the partnering firm.
Partner Match
Partner match calls for the creation of alliances in which the chosen partners are similar in management style and company culture. Considerations such as domain similarity and goal compatibility have been found to enhance the effectiveness of interorganizational dyads indicate that compatibility of the partners is critical to alliance success. Hence, the propositions:
P5: Higher level of partner match is positively associated with alliance success.
P6: Partner match and alliance success association is mediated by alliance relationship
attributes.
Strategic Orientation
The strategic orientation of a firm reflects the willingness of the firm to enter into strategic alliances and to adopt innovative strategies. Firms select strategies to improve their competitive postures and to gain an advantage over one or more competitors Strategic alliances are formed based on strategies of how to manage environmental uncertainties, how to overcome lack of resources and, in particular, how to manage the firm’s range of interorganizational relations.
P7 : Degree of strategic orientation of a firm will exhibit: (a) higher levels of alliance
success; and (b) an association with alliance relationship attributes.
4. Strategic Alliance Relationship Attributes
Extant literature has focused on commitment, collaboration, communication, trust, and conflict resolution as the important attributes of alliance relationships. The existence of these attributes implies that both partners acknowledge their mutual dependence and their willingness to work for the survival and prosperity of the relationship.
Trust
The centrality of trust in developing long-term organisational relationships has been
emphasized in the alliance literature. The existence of trust in a relationship reduces the perception of risk associated with opportunistic behavior. Partners that trust each other generate greater profits, serve customers better, and are more adaptable. argue that when exchanges are governed by trust, the transactor can reduce transaction costs (e.g. bargaining and monitoring costs). Studies suggest that one critical factor determining alliance performance is the degree of trust between alliance partners. Indeed, it has been argued that trust is so important to alliances that it is considered the “cornerstone of the strategic partnership success”. This discussion leads to the following proposition:
P8: Higher trust between partners is positively related to the success of an alliance.
Communication
Communication between partners is critical for building a successful relationship. In order to achieve the benefits of collaboration, effective communication between partners is essential. Communication allows the partners to understand the alliance goals, roles and responsibilities of all the actors. It also helps with the sharing and dissemination of individual experiences. In sum, more successful alliance relationships are expected to exhibit higher levels of communication quality, more information sharing between partners, and more participation in planning and goal setting than less successful alliances. Stated more formally, we propose that:
P9: More successful alliance, compared with less successful alliance, will exhibit higher
levels of: (a) quality communication; (b) information sharing; and (c) participation in
planning.
Commitment
Commitment suggests a future orientation in which partners attempt to build a relationship that can weather unanticipated problems. A high level of commitment provides the context in which both parties can achieve individual and joint goals without raising the spectre of opportunistic behaviour. Indications of commitment include investment by the participating organizations, exclusive agreements between the organizations and the absence of major conflicts between the organizations. Committed partners are likely to be more cooperative, communicative and flexible in accommodating conflict issues. Commitment development between partners within an alliance would act as a counterbalance against failure of the strategic alliance. The following proposition is derived from this discussion:
P10: Higher level of commitment to alliance relationship is positively related to the alliance
success.
Collaboration
Collaboration is the key dimension of the strategic alliance relationship. The alliance partners must collaborate to achieve their strategic objectives. The collaborative associations are interactive and adaptive in nature. Understanding the nature and scope of collaboration is essential in analysing the operation and success of an alliance. A highly collaborative relationship provides the flexibility and adaptability necessary to overcome uncertainties, resolve conflicts and achieve mutually beneficial outcomes.
P11 : The greater the extent that a collaborative relationship exists between the alliance
partners, the higher the probability of success.
In sum, the literature cited above suggests that more successful alliance relationships are expected to be characterized by higher levels of commitment, collaboration, communication, and trust than are less successful alliances. Thus, the proposition:
P14 : Firms scoring high in levels of strategic alliance attributes (for example, trust,
commitment, collaboration, and communication) are likely to exhibit more success than are
firms that do not score high in these attributes.
Conflict Resolution
Conflict often exists in interorganizational relationships due to the inherent interdependencies between partners. Cummings posited that firms in strategic alliances are motivated to engage in joint problem solving because they are, by definition, linked together to manage an environment that was more uncertain and turbulent than each one could control. Conflict may be distinguished as functional or dysfunctional. Functional conflict would enhance an alliance’s performance. While dysfunctional conflict within the alliance would affect the effectiveness of alliance performance. Dysfunctional conflicts are counterproductive and are likely to strain the fabric of the partnership. This results in the development of the proposition:
P15 : Excessive dysfunctional conflict between alliance partners is negatively related to the
success of an alliance.
6. Proposed Conceptual Model
In view of the preceding discussion and evidence from the existing literature, the followingconceptual model is proposed (Fig. 1). It has been argued throughout the paper that an assessment of alliance success warrants examination of the relationship along a number of interrelated factors. The factors identified have been incorporated in the proposed model. We hope that the perspective presented in this paper has provided a first step towards generating a deeper understanding of the increasingly pervasive strategic alliance phenomenon.
7. Implications and Conclusions
The number of strategic alliances has been growing in most industries in recent years. However, not every strategic alliance succeeds. There is a need for comprehensive research
Environmental
Characteristics
Firm Characteristics
Strategic Alliance
Formation
Alliance Relationship
Attributes
Alliance Success
· Competitive positional advantage
· Organizational performance
that investigates the factors underlying the successes and failures of alliances, as well as issuesrelated to systems, structures and controls conducive to effective management of alliances. Current conceptual frameworks are not adequate to examine these issues. We have purposively developed an integrative model to identify key alliance success factors that would contribute to an understanding of why alliances make sense, what the partners need to bring to the table and what management practices and attributes might help the long-term growth and
development and success of the strategic alliances.
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