DOES SPEED REALLY MATTER WHEN IT COMES TO ALLIANCE PERFORMANCE? - Polish Journal of Management Studies

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DOES SPEED REALLY MATTER WHEN IT COMES TO ALLIANCE PERFORMANCE?

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DOES SPEED REALLY MATTER WHEN IT COMES TO ALLIANCE PERFORMANCE?

Hoeck M., Ringle Ch.M. *


Abstract

This paper explores the long-term partnership benefits of local strategic alliances in the software industry. A structural model of the value continuum is formulated and tested on data  from small and midsize enterprises in Germany. Partial Least Squares Analysis is used to investigate the effect-casual-relations between foundation values, i.e. efficiency and effectiveness, and the innovation value. The results of our empirical study  show that the innovation value of localized inter-firm networks originates from costs savings and quality improvements. On the contrary, alliance-induced ´speed´, measured by an acceleration of the R&D process, improved flexibility and/or shortened  delivery time, has no significant impact on the market-based performance. Time-related benefits of alliances stated in literature may be important to maintain competitive parity, but they do support competitive advantage, market development and market  penetration. Instead, value is created, among others, via exchange of tacit knowledge and reduction of transaction costs, particularly by a reduction of customer service costs.


Key words: Local Strategic Networks, Small and Midsize Enterprises, Value Continuum, Software Industry, Partial Least Squares-Analysis.

Introduction

"Though we have many answers to the question: 'Why do [local] alliances and networks exist' we have fewer answers to the question: 'Do [local] alliances and networks really matter when  it comes to firm performance?'" [32]. The notion of value is central to understanding organizations in general and to understanding contemporary phenomena, like strategic alliances. However, the currencies and drivers of the network value are difficult  to assess using short-term return on investment criteria or stock prices. To capture the long-term partnership benefits of alliances, the innovation value, i.e. the combination of additional competitive advantages, market development and penetration,  needs to be evaluated.


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Summary


This study was conceptualized to investigate whether small and midsized enterprises in the software industry benefit from local alliances regarding costs, quality and time and whether these improvements support competitive advantage, market development  and penetration. Our empirical results show that the innovation value of localized inter-firm networks primarily originates from costs savings and quality improvements. The time-related benefits of local software alliances have no significant impact on  the market-based performance. Although R&D and marketing speed [83] as well as flexibility aspects [84] are frequent motives to form alliances, they are not associated with value creation, at least in local alliances in the software industry. Overall,  about 2/3 of the variance in the innovation value of local alliances can be explained by traditional success factors. This is quite high considering that specific issues of the alliance implementation process, such as human resource practices [60,73]  and other important aspects, like trust [67], were not included in this study that is based on the value continuum framework.
In literature, several studies attempt to explain the determinants of alliance success. Most of them focus on a specific cause-effect relationship analyzed from a particular theoretical perspective. The universal framework of the value continuum provides  support for both transaction costs economics and the resource-based view as equally important foundations of value creation in local alliances. Quality improvements, and especially cost savings, are both rooted in these theories. Surprisingly, the impact  of the 'gain in know how' on the success factor quality is high, although most of the investigated alliances are low-level tactical alliances that do not support extensive knowledge transfer. Even in such an environment, the knowledge-based theory holds  considerable promise for exploring the role of alliances in gaining competitive advantages.  
Overall, the analysis of value creation in local software alliances was performed at an aggregated level, allowing a comparison of different paradigms. Based on the findings, future studies may conduct more detailed investigations of specific effect-cause  relationships. The universal framework of the value continuum also permits a comparison of different industries and types of networks. The above insight has implications not only for alliance theory but also for managers of small and midsized enterprises  in terms of their choices of alliance partners and structures.


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CZY SZYBKOSC MA ZNACZENIE W PRZYPADKU EFEKTYWNOSCI ALIANSÓW?


Streszczenie

W ponizszym artykule zbadano czy dlugoterminowe partnerstwo przynosi korzysci lokalnym aliansom strategicznym w branzy oprogramowania. Sformulowano strukturalny model ciaglosci wartosci  i sprawdzono go na danych z malych i srednich przedsiebiorstw w Niemczech. Wykorzystano analize czastkowa najmniejszych kwadratow w celu sprawdzenia przypadkowych relacji miedzy przyjetymi danymi, np. wydajnosc i skutecznosc oraz wartosc innowacji. Wyniki  naszych badan empirycznych pokazuja, ze wartosc innowacji zlokalizowanych sieci wewnatrz firm wywodza sie z checi uzyskania oszczednosci i podniesienia jakosci. Z drugiej strony, narzucona przez alians szybkosc,  mierzona jako przyspieszenie badan, zwiekszyla  elastycznosc i/lub skrocila czas dostawy, ale nie ma istotnego wplywu na efektywnosc zwiazana z rynkiem. Korzysci zwiazane z czasem dotyczace aliansow prezentowane w literaturze moga byc istotne dla utrzymania parytetu konkurencyjnosci, ale nie wspieraja  one przewagi konkurencyjnosci, rozwoju rynku i penetracji rynku.  Zamiast tego tworzona jest wartosc poprzez wymiane cichej wiedzy i redukcje kosztow transakcji, zwlaszcza przez redukcje kosztow obslugi klienta.




 
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