Breaking up is never easy: Planning for exit in a strategic alliance

California Management Review

Volumn 50, Issue 4, 2008, Pages 147-163

  Gulati, Ranjay ^a   Sytch, Maxim ^b   Mehrotra, Parth ^c  

^a HARVARD BUSINESS SCHOOL   (United States)

^b NORTHWESTERN UNIVERSITY   (United States)

^c Goldman Sachs Group   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 51649093117     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41166460     Document Type: Review

References (44)

1. See, for example, J. Hagedoorn, "Inter-Firm R&D Partnerships: An Overview of Major Trends and Patterns since 1960," Research Policy, 31/4 (May 2002): 477-492;
2. R. Gulati, Managing Network Resources: Alliances, Affiliations, and Other Relational Assets (Oxford: Oxford University Press, 2007);
3. M. Sytch and P. Bubenzer, "Research on Strategic Alliances in Biotechnology: An Assessment and Review," in H. Patzelt and T. Brenner, eds., Handbook of Bioentrepreneurship (New York, NY: Springer, forthcoming).
4. D. Palmer and P. Mullaney, "Building Better Alliances," Outlook (July 2001), pp. 53-57.
5. Partner Alliances, "Strategic Alliances Practice," San Carlos, CA, 2007.
6. Y.L. Doz, P.M. Olk, and P.S. Ring, "Formation Processes of R&D Consortia: Which Path to Take? Where Does It Lead?" Strategic Management Journal, 21/3 (March 2000): 239-266;
7. P.S. Ring, Y.L. Doz, and P. Olk, "Managing Formation Processes in R&D Consortia," California Management Review, 47/4 (Summer 2005): 137-156;
8. R. Gulati, T. Khanna, and N. Nohria, "Unilateral Commitments and the Importance of Process in Alliances," Sloan Management Review, 35/3 (Spring 1994): 61-69;
9. R. Gulati, "Social Structure and Alliance Formation Patterns: A Longitudinal Analysis," Administrative Science Quarterly, 40/4 (December 1995): 619-652.
10. J.A.C. Baum, T. Calabrese, and B.S. Silverman, "Don't Go It Alone: Alliance Network Composition and Startups' Performance in Canadian Biotechnology," Strategic Management Journal, 21/3 (March 2000): 267-294.
11. J.J. Reuer, M. Zollo, and H. Singh, "Post-Formation Dynamics in Strategic Alliances," Strategic Management Journal, 23/2 (February 2002): 135-151;
12. T. Casciaro, "Determinants of Governance Structure in Alliances: The Role of Strategic, Task and Partner Uncertainties," Industrial and Corporate Change, 12/6 (December 2003): 1223-1251;
13. K.J. Mayer and N.S. Argyres, "Learning to Contract: Evidence from the Personal Computer Industry," Organization Science, 15/4 (July/August 2004): 394-410.
14. B.N. Anand and T. Khanna, "Do Firms Learn to Create Value? The Case of Alliances," Strategic Management Journal, 21/3 (March 2000): 295-315;
15. H. Hoang and F.T. Rothaermel, "The Effect of General and Partner-Specific Alliance Experience on Joint R&D Project Performance," Academy of Management Journal, 48/2 (April 2005): 332-345;
16. D. Lavie, C. Lechner, and H. Singh, "The Performance Implications of Timing of Entry and Involvement in Multi-Partner Alliances." Academy of Management Journal, 50/3 (June 2007): 578-604.
17. B. Kogut, "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, 38/2 (December 1989): 183-198;
18. P. Kale, J.H. Dyer, and H. Singh, "Alliance Capability, Stock Market Response, and Long-Term Alliance Success: The Role of the Alliance Function," Strategic Management Journal, 23/8 (August 2002): 747-767.
19. J.H. Dyer, Collaborative Advantage: Winning through Extended Enterprise Supplier Networks (New York, NY: Oxford University Press, 2000);
20. J.R. Lincoln and M.L. Gerlach, Japan's Network Economy (New York, NY: Cambridge University Press, 2004).
21. R. Gulati, M. Sytch, and P. Mehrotra, "Preparing for the Exit," Wall Street Journal, March 6, 2007, p. R1.
22. See, for example, G. Smith, "The Exit Structures of Strategic Alliances," University of Illinois Law Review, 1 (2005): 303-317.
23. See Gulati, Sytch, and Mehrotra, op. cit.
24. Cf. P.S. Ring and A.H. Van de Ven, "Developmental Processes of Cooperative Interorganizational Relationships," Academy of Management Review, 19/1 (January 1994): 90-118.
25. See e.g., J. Reuer and A. Ariño, "Contractual Renegotiations in Strategic Alliances," Journal of Management, 28/1 (2002): 47-68.
26. Generally, this rule would imply that once exit is initiated by one of the parities, then no future contingencies would override the active exit provisions. Exceptions, however, should be made for contract violations. For example, consider a situation where a firm's strategic direction changes and it initiates exit under an asymmetrically hard exit provision (Quadrant IV in Figure 1). If, however, a partner breaches the contract during this time, then the asymmetrically easy exit provision for the firm would be activated (Quadrant II in Figure 1).
27. S. Walsh, "Pay Dispute Dissolves D.C. Law Firm," Washington Post, October 1, 1996, p. C01.
28. J. Sviokla, M. Keil, and S. Simonson, "BellSouth Enterprises: The Cellular Billing Project," Harvard Business School Case 9-193-150, 1993.
29. P. Olk and C. Young, "Why Members Stay In or Leave an R&D Consortium: Performance and Conditions of Membership as Determinants of Continuity," Strategic Management Journal, 18/11 (December 1997): 855-877.
30. R. Gulati and M. Sytch, "Dependence Asymmetry and Joint Dependence in Interorganizational Relationships: Effects of Embeddedness on Exchange Performance," Administrative Science Quarterly, 52/1 (March 2007): 32-69.
31. O.E. Williamson, The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting (New York, NY: Free Press, 1985);
32. N. Kumar, "The Power of Trust in Manufacturer-Retailer Relationships," Harvard Business Review, 74/6 (November/December 1996): 92-106;
33. Y.L. Doz and G. Hamel, Alliance Advantage: The Art of Creating Value through Partnering (Boston, MA: Harvard Business School Press, 1998).
34. K.J. Mayer, "The Role of Prior Relationships in Contract Design: An Analysis of Early Termination Provisions," working paper, Marshall School of Business, University of Southern California, 2005.
35. See Olk and Young, op. cit.
36. See Smith, op. cit.
37. See, for example, J.A. Wall, J.B. Stark, and R.L. Standifer, "Mediation: A Current Review and Theory Development," Journal of Conflict Resolution, 45/3 (June 2001): 370-391.
38. Smith, op. cit., p. 315; for a discussion of alternative dispute resolution approaches, see also W. Ross and D.E. Conlon, "Hybrid Forms of Third-Party Dispute Resolution: Theoretical Implications of Combining Mediation and Arbitration," Academy of Management Review, 25/2 (April 2000): 416-427.
39. Y.L. Doz, "The Evolution of Cooperation in Strategic Alliances: Initial Conditions or Learning Processes?" Strategic Management Journal, 17 (Summer 1996), 55-83;
40. J.J. Reuer, M. Zollo, and H. Singh, "Post-formation Dynamics in Strategic Alliances, Strategic Management Journal, 23/2 (2002): 135-151.
41. T. Harper, G. Pasteris, D.J. Phukan, and W. Mitchell, "The Evolution of Astra Merck Inc. (A)," University of Michigan Business School Case, 1999.
42. D. Ernst and J. Bamford, "Your Alliances Are Too Stable," Harvard Business Review, 83/6 (June 2005): 133-141.
43. A.C. Inkpen and J. Ross, "Why Do Some Strategic Alliances Persist Beyond Their Useful Life?" California Management Review, 44/1 (Fall 2001): 132-148.
44. Ernst and Bamford, op. cit.