Abstract

For some time now, conditions in Europe have been favorable to technological alliances. Most European countries are committed to stimulate technological development. The EEC supports it. There is official commitment through such organizations as EUREKA, and they often actually require cooperation of their participants. There are unique reasons for Europe's interest in joint R&D. Reaching a critical mass in Europe has been a problem for a long time. It is also more critical that managements avoid duplication of similar R&D efforts in other countries. Therefore there is less emphasis today on national priorities, and there is great concern that European firms enhance their ability to compete with the United States and with Japan. Recent research on a sample of 2,245 alliances between European firms or between them and firms from other countries showed that 20% involved technology development. Operations and logistics drove 42%, and marketing drove another 22%. It is estimated there were approximately 1,000 European companies involved in technology alliances at the start of 1988. The authors selected 15 of these firms to study in depth, each of which relied significantly on their alliances. There were five driving forces behind the alliances of these 15 firms. First, they sought to reduce the costs of access to a key technological capability. Second, they needed help in reaching critical mass required by a particular research activity. Third, they sought the discipline and commitment that an alliance requires. Fourth, two of the firms joined others simply to survive. And fifth, several firms wanted the publicity that surrounds technology alliances. As experience has accumulated, there has been growing concern about several problems. First, the firms cannot control all personal conversations; they wonder about how much loss of knowledge is taking place. Second, because smaller firms must put a larger percentage of their total R&D budgets into any alliance they form, larger firms tend to dominate the strategy of smaller firms. Third, there have been cases where participants suspect that hidden agenda agreements of a competitive nature were made at the time alliances were formed. Fourth, they worry about what will happen to these alliances after research and development phases are concluded. Regarding the alliances themselves, the authors report that they are of mixed types, depending on (1) whether the alliance is horizontal or vertical and (2) whether it is pre‐competitive or competitive. Horizontal alliances are those that seek access to markets; a good example is the establishment of standards to guide all participants (e.g., VHS versus Beta). Vertical alliances are those that enable firms to reach upstream or downstream to access technology they could not otherwise reach. Pre‐competitive alliances are those made prior to the time the partners begin competing; competitive alliances are among firms that are already competing. If those two dimensions are put into a 2 × 2 matrix, the four cells describe the types found in this study. The article shows how they differ, mostly along such lines as objectives, levels at which decisions are made, the time horizon, the number of partners, frameworks stability and risk. The situation is dynamic, and the alliances are becoming more complex, with a higher order of management.