The alliance revolution: the new shape of business rivalry

Abstract

More than we ever anticipated, alliances among firms are changing the way business is conducted, particularly in the global, high-technology sector. The reasons are clear: companies must increasingly pool their capabilities to succeed in ever more complex and rapidly changing businesses. But the consequences for managers and for the economy have so far been underestimated. In this book, Benjamin Gomes-Casseres presents an in-depth account of the new world of business alliances and shows how has become part of the very fabric of modern competition. Alliances, he argues, create new units of competition that do battle with one another and with traditional single firms. The flexible capabilities of these multifirm constellations give them advantages over single firms in certain contexts, offsetting the advantage of a single firm's unified control. When managed effectively, alliances can strengthen a firm's competitive advantage and narrow the gap between leading firms and second-tier players. This often results in intensified rivalry, and the competition within an industry is transformed. Alliances often spread swiftly through an industry as firms jockey for advantage. Yet the very spread of alliances increases their costs and poses new limits on their use. Gomes-Casseres concludes that firms need to manage their constellations to enchance within their groups, while raising what he calls barriers to collaboration for rivals. These ideas are developed and illustrated through case studies of alliances among US, Japanese and European firms in electronics and computers, including Xerox, IBM and Fujitsu as well as other small and large companies. The book should be of interest to business academics, managers and general readers concerned with contemporary capitalism.