PARTNER NATIONALITY AND THE STRUCTURE-PERFORMANCE RELATIONSHIP IN STRATEGIC ALLIANCES

The dramatic growth of global strategic alliances between firms is fun damentally reshaping the nature of international business. Indeed, int erfirm cooperation has become a crucial component of the pursuit of gl obal competitive advantage. Yet such alliances are enormously complex to manage successfully, in part because of the opportunity and incenti ve to cheat, and profit at the partner's expense, that is an inescapab le part of these relationships. Consequently, strategic alliances are frequently subject to high instability, poor performance, and prematur e dissolution. Thus, an important question arises: Is it possible to p romote more stable cooperation and higher alliance performance through a realignment of companies' incentives? This question is addressed em pirically in the present paper using recent work in game theory, which suggests that high performance is linked to specific elements of the alliance structure. Further, this study applies insights from internat ional business literature, suggesting that alliance partners from diff erent countries are often characterized by sharp cultural, national, a nd organizational differences, to test this linkage in an internationa l context. The study's data strongly support the hypothesis that allia nce performance is linked to alliance structure. This finding has broa d implications both for managers and management scholars, in suggestin g that ''up front'' attention to alliance structure may help arrest th e high failure rates, and improve alliance stability and performance l evels. However, the data also support the hypothesis that the linkage between structure and performance varies by partner nationality. This finding points to the need for: (a) systematic assessment of salient c haracteristics of potential international partners; (b) development of programs to effectively deal with important differences between partn er firms; and (c) attention to different key alliance structure dimens ions, depending upon partner nationality. Finally, this study shows ga me theory to provide an extremely useful perspective in understanding crucial aspects of strategic alliances, although in the analysis of cr oss-border strategic alliances, the perspective must be enriched by an appreciation of interfirm diversity.