An investigation of the role of Innovation in Strategic Alliances in the Computer Hardware Business

Content

Abstract

1. Introduction

2. Literature review
2.1. Definition
2.2. Types of alliances
2.3. Alliances in the High-tech industries
2.4. Types of Innovation
2.5. Review of recent IBM alliances

3. Research Questions

4. Theoretical Model
Hypothesis 1.
Hypothesis 2.
Hypothesis 3.
Hypothesis 4.

5. Methods and Data
5.1. Quantitative Research (or Surveys)
5.2. Qualitative Research

6. Conclusions

7. References
Websites
Other (non-written) References

8. Appendices
Figure 1. EFQM Excellence Model

Abstract

The goal of this study is to show that a strategic alliance in the computer hardware business can be successful if it is driven by innovation. This work investigates the strategic alliances of IBM with other companies in the computer hardware and software business, as well as networking. The investigation includes an extensive literature review on the subject. The EFQM Excellence Model is the conceptual framework used to estimate the success of the strategic alliance. Since the research questions are complex, both quantitative and qualitative research methods are necessary for gathering the data necessary for this research project.

1. Introduction

In the contemporary business world nobody survives alone. An organization that wants to succeed must follow the rapidly changing environment. Major requirements for successful activity on the market are openness to innovations and the ability to enter into an alliance with other organizations and even competitors.

“Strategic” or “corporate” alliances formed at high levels often fail to deliver real benefits to the partners. Analysts and managers will argue eternally over what caused each link-up to fail. Some blame egos and clashing cultures; others cite business conflicts and ruthless competition. Yet these cases of unfulfilled promises typically share one syndrome: the creation of the big alliance came to be seen as an end in itself rather than a means to a broader strategic goal (Gomes-Casseres, 1998). Therefore, an alliance without a comprehensive strategy behind it has a large probability of failure. Moreover, not all strategies lead to success.

This research involves exploring strategic alliances in the computer hardware sector, the most innovative sector of the economy. Using the example of IBM, I aim to show that a strategic alliance can be successful if it is driven by innovation. In other words, two companies that form an alliance for the purpose of development and advancement of a new product or technology are likely to be successful. Admittedly, the presence of the innovation factor may not necessarily be the main reason for the success of the strategic alliance. Nevertheless, alliances based on joint innovation development are more lasting and productive than those that are not. I also hope to show how innovations help companies determine a strategy for their alliance.

The following section presents a literature review on the strategic alliance, its purpose, and its expectations. The subsequent two sections present the research questions and model the problem, using the EFQM Excellence Model to estimate the success of the strategic alliance in achieving its purpose. The last two sections discuss the methods and data necessary for this study, and then present the conclusion.

2. Literature Review

2.1. Definition

Wikipedia defines a strategic alliance as a mutually beneficial long-term formal relationship formed between two or more parties to pursue a set of agreed-upon goals or to meet a critical business need while remaining independent organizations. It is a synergistic arrangement whereby two or more organizations agree to cooperate in carrying out a business activity, with each bringing different strengths and capabilities to the arrangement.

Strategic alliances afford enterprises the following benefits:

- Increase in capital for research and product development, yet lower risk (innovation)
- Decrease in product lead times and life cycles (time pressures)
- Ability to bring together complementary skills and assets that neither company could easily develop on its own
- Access to knowledge and expertise beyond company borders (technology transfer)
- Rapid achievement of scale, critical mass, and momentum (bigger is better)
- Expansion of channel and international market presence (enter a foreign market)
- Increased credibility in the industry and brand awareness
- Provision of added value to customers
- Establishment of technological standards that will benefit the firm.

Strategic alliances come in all forms, and the level of cooperation can range from arm’s length contracts to joint ventures (Wikipedia). Such an alliance links specific facets of two or more firms. At its core, this link is a trading partnership that enhances the effectiveness of the participating firms’ competitive strategies by providing for the mutually beneficial trade of technologies, skills, or products. .

The term “strategic alliance” has been interpreted in a variety of ways. In this study, it is defined as possessing the following three necessary and sufficient characteristics simultaneously:

- Two or more firms unite to pursue a set of agreed-upon goals but remain independent subsequent to the formation of the alliance.
- The partner firms share the benefits of the alliance and control over the performance of assigned tasks–perhaps the most distinctive characteristic of alliances and the one that makes them so difficult to manage.
- The partner firms contribute on a continuing basis in one or more key strategic areas (e.g., technology and products) (Yoshino & Rangan, 1995).

2.2. Types of Alliances

It is important to understand and to determine the categorization of alliances in order to connect the concept of an alliance with its successful creation and implementation. Kuglin and Hook (2002) defined five basic categories of alliances: sales, solution-specific, geographic-specific, investment, and joint venture.

“In many cases, alliances between companies involve two or more categories or types of alliances. A sales alliance occurs when two companies agree to go into a market together to sell complementary products and services. A solution-specific alliance occurs when two companies agree to jointly develop and sell a specific marketplace solution. A geographic-specific alliance is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region. An investment alliance occurs when two companies agree to joint their funds for mutual investment. Finally a joint venture alliance occurs when two or more companies agree to undertake economic activity together.” (Kuglin and Hook, 2002)

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