A THEORY OF GLOBAL STRATEGIC ALLIANCES - THE CASE OF THE GLOBAL AUTO INDUSTRY

The theory articulated in this paper suggests that the desire to reduc e demand and competitive uncertainty are two separate, important motiv es for alliance formation. Taking this as a starting point, we predict the configuration of horizontal alliances that we might expect to obs erve within an industry when firms experience these uncertainties to d ifferent degrees. An empirical test of this, theory using data from th e global auto industry yields results consistent with the view (1) tha t alliances are a device for reducing both the uncertainties that aris e from unpredictable demand conditions and those that arise from compe titive interdependence, and (2) that variation of demand uncertainty a nd competitive uncertainty across firms explains differentials in both the intensity and structure of their horizontal alliance activity.