Partner Selection Criteria in Strategic Alliances When to Ally with Weak Partners

Abstract

In many emergent markets, cross-industry alliances are necessary to develop and market new products and services. The resource-based view suggests that firms form alliances to access valuable, rare, non-imitable and non-substitutable resources, and that such access determines the level of profits. Hence, firms confronted with the choice between partners with strong versus partners with weak resource endowments should choose the former. We contest this view and argue that firms benefit from allying with weak partners at certain times. In essence, we suggest that partner selection involves assessing the relative importance of strong resource endowments and aligned strategic aspirations over time. By adopting an evolutionary approach, we show that appropriate partner selection criteria are dynamic and may involve allying with weak partners in the initial exploratory stage, with weak and/or strong partners in the development stage and with strong partners in the maturity stage. Our findings suggest that the resource-based view should be extended to include a more profound role for a partner firm’s strategic aspiration. 1