The Alliance Revolution

The New Shape of Business Rivalry

Paperback

ISBN 9780674016484

Publication date: 01/08/1998

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 new book, Benjamin Gomes-Casseres presents the first in-depth account of the new world of business alliances and shows how collaboration 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 multi-firm 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 enhance collaboration within their groups, while raising what he calls "barriers to collaboration" for rivals.

These ideas are developed and illustrated through original case studies of alliances among U.S., 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.

Praise

Gomes-Casseres explains in a highly readable style the different forms...collaborations take and elaborates on the varied motivations behind the formation of alliance groups.

—European Business Report
The rich high-tech cases and thoughtful analysis in The Alliance Revolution shed powerful light on global business competition. Gomes-Casseres is among the first to show how strategic alliances change industry structure--a lasting contribution to applied economics and business strategy that will also be of value to managers and consultants.

—Rosabeth Moss Kanter, Harvard Business School
This is a fascinating and original study of business organization in the modern industrial world. The ‘constellations’ discussed by Gomes-Casseres give rise to intense competition and a type of dynamic rivalry among contenders very different from the textbook descriptions we are used to.

—Edith Penrose, University of London and INSEAD, author of The Theory of the Growth of the Firm
Gomes-Casseres explains convincingly why business rivals have turned to strategic alliances on a large scale and why that form of cooperation among business firms is likely to stay. He introduces a business structure that academics, business managers, and public policymakers will have to understand and reckon with.

—Raymond Vernon, Harvard University
The book takes the reader on a journey from how alliances resolve problems of trust among two firms to their use in flexible constellations among many firms. This is a serious book, yet written for a general audience. Without jargon, it brings social science analysis to bear on a business trend that is changing competition in global markets.

—Bruce Kogut, Wharton School
The Alliance Revolution vividly describes how some of the grand designs of prominent strategic alliances were originally developed, why they were changed and modified, and why and where they have succeeded or failed. The book offers extremely insightful material for business executives to sharpen their own thinking on this increasingly important subject.

—Yotaro Kobayashi, Chairman & CEO, Fuji Xerox Co., Ltd.
Although strategic alliances have been studied and written about for a number of years, the number and variety of alliances has increased significantly in the past decade. Professor Gomes-Casseres has especially studied those alliances that bring competitors together in some form of cooperation, creating new competitive forms. He brings particular light to multiparty alliances where clusters of firms and other organizations work together to develop a new product, encourage and promulgate technical standards or develop new technical and manufacturing capabilities. These new style alliances are especially prominent in the rapidly developing fields involving digital information technology. This dynamic environment, sometimes referred to as digital convergence, demands the new forms of industrial cooperation that Gomes-Casseres has analyzed so insightfully.

—Thomas C. MacAvoy, Graduate School of Business Administration, University of Virginia