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A Theory of global strategic alliances: the case of the global auto industry

Author: Kim, W. Chan ; Burgers, Willem P. ; Hill, CharlesINSEAD Area: StrategyIn: Strategic Management Journal, vol. 14, no. 6, September 1993 Language: EnglishDescription: p. 419-432.Type of document: INSEAD ArticleNote: Please ask the Library for this articleAbstract: This paper suggests that the desire to reduce demand and competitive uncertainty are two separate, important motives for alliance formation. We predict the configuration of horizontal alliances that might be expected to form within an industry when firms experience these uncertainties to different degrees. An empirical test of this theory using data from the global auto industry yield results consistent with the view that alliances are a device for reducing the uncertainties that arise from unpredictable demand conditions and from competitive interdependence, and that variation of demand uncertainty and competitive uncertainty across firms explains differentials in both the intensity and structure of their horizontal alliance activity
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This paper suggests that the desire to reduce demand and competitive uncertainty are two separate, important motives for alliance formation. We predict the configuration of horizontal alliances that might be expected to form within an industry when firms experience these uncertainties to different degrees. An empirical test of this theory using data from the global auto industry yield results consistent with the view that alliances are a device for reducing the uncertainties that arise from unpredictable demand conditions and from competitive interdependence, and that variation of demand uncertainty and competitive uncertainty across firms explains differentials in both the intensity and structure of their horizontal alliance activity

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