Alliances articles - Wang&Zajac: Allianc or acquisition? A dyadic perspective on interfirm resource combinations

13 important questions on Alliances articles - Wang&Zajac: Allianc or acquisition? A dyadic perspective on interfirm resource combinations

What is the core of the research of W&Z?

A dyadic (tweevoudige) perspective how and why configurations of two firms' resources and capabilities affect the costs and benefits associated with either the alliance or acquisition. 

Which 3 types of paired-firm characteristics are influencing the choise to choose for an alliance or an acquisition? (W&Z)

1 Resource similarity and complementarity between two firms
2 The combined relational capabilities of two firms
3 The partner-specific knowledge of two firms

Define business similarity and business complementarity (W&Z)?

Similarity: the similarities in products, markets and technologies between 2 firms.
Complementarity: 2 firms' resource are different, yet interdependent and mutually supportive.
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What is the effect of business similarity and complementarity to a firms' acquisition/alliance? (W&Z)

High level of business similarity is beneficial to firms in acquisition/alliances. 
Business complementarity can generate economic benefits for two firms, when they combine their resources through alliance or acquisition.

What do W&Z mean with potential synergie (a value-creating and value-claiming issue that declares the differences in desirability of an alliance or acquisition)

Potential synergies is when 2 firms are similar: organizational processes are more efficient within the boundary of a firm than in an alliance, suggesting greater realization of synergies. 

What do W&Z mean with compatibility of economic interests (a value-creating and value-claiming issue that declares the differences in desirability of an alliance or acquisition)?

The risk of cooperation include creating new competitors, making the existing competitors stronger through knowledge transfer and market access, This set of concerns suggest that two similar firms are more likely to engage in an acquisition than to form an alliance.

What do W&Z mean with informational/knowledge risks (a value-creating and value-claiming issue that declares the differences in desirability of an alliance or acquisition)?

This is another value-claim relevant to interfirm resource combination. IT stems from the problem of information asymmetry which occurs when 2 firms are not well informed about each others' business environment and operations. This is problematic for alliances and acquisition (risk is higher in acquisitions). 

What are the advantages of alliances? (W&Z)

An alliance allows continuous reassessment by the firms to learn from each other and gather new information about each other.

What does the real option theory suggests (W&Z)?

Firms in an lliance usually have the option to continue on to a complete integrating by acquiring the other firm. They can also choose to terminate the alliance if they are not satisfied. In contrast, an acquisition involves a final irreversible transaction of transferring ownership. Therefore an alliance may be more preferable than an acquisition when the information asymmetry problem is great.

Where do relational capabilities of a firm refer to? (W&Z)

To its ability to interact with and manage other firms in interfirm relationship. 

Which 2 types of relation capabilities of a firm are there? (W&Z)

1 Alliance capability (the ability of a firm to deal with its partners in an alliance)
2 Acquisition capability (the ability of a firm to deal with its transaction partners in an acquisition)
> If 2 firms have more combined relational capabilities, then its more likely that they will transform these capabilities into economic benefits in similar transactions in the future.
 

What is the danger of not knowing the transacting partner, thus asymmetrical information? (W&Z)

The firm faces a greater risk of opportunistic behavior by its partner. Whereas repeated interaction allow two firms to better know each other, what reduces information asymmetry. This also developed trust and repeated transaction will also develop relational-specific absorptive capacity. They are able to identify critical knowledge to be learned from each other and even develop interfirm knowledge-transfer routines to facilitate the learning process.

Summarize the 6 results of the research of W&Z:

1a Higher level resource similarity > acquisition
b Higher level resource complementarity > alliance
2 Combined alliance capabilities > increases and alliance and acquisition between 2 firms
3 Combined acquisition capabilities > acquisition (it discourage to form alliance)
4 Alliance more versatile (veelzijdig) than acquisitions. Alliance provide sufficient general knowledge in aditions to the specfic knowledge to encourage firms to engage in other interfirm combinations.
5 Partner-specific knowledge increases both alliance and acquisition change. 
6 General knowledge developed between 2 firms prior acquisition appears insufficient to encourage two firms to conduct an alliance.

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