Strategic alliances today play an integral role in setting the pace for strategic competitiveness in the global economy. Despite the fact that more and more business are seeking strategic alliances because of intensified global competition, such firms have failed to benefit fully from such alliances due to poor strategies for selecting partner firms (Elmuti & Kathawala 2001). The alliances have mostly experienced difficulties that originate from lack of trust, strategic incompatibility, opportunism, deceit, cultural differences and deficient organisational integration. The underlying argument in this paper is that although strategic alliances have become a vital means of doing business in many industries for purposes of achieving competitive advantage, balancing competition and collaboration within the alliance and controlling opportunism have affected the extent to which the alliance becomes successful.
The Economic Logic for Strategic Alliances.
In seeking strategic alliances, businesses tend to seek to achieve different economic objectives through collaboration rather than competition. March (1991) proposed the Theory of Co-Evolution when he identified the logics of exploitation and exploration as the key motives for adapting a business to any particular course. Exploitation depicts elaborating on existing business capabilities to incrementally improve efficiencies. On the other hand, exploration refers to establishing or experimenting new resources and capabilities. In this vein, the strategic intent of exploitation is to attain residual revenue as well as improve competencies through extension of capabilities (Ohmae 1989). The strategic objective of exploitation is to discover new opportunities that have the capacity to improve a business' performance. Basing on Co-evolution theory, the concepts of exploitative and explorative logic both depict what motivate businesses to enter into strategic alliances for different economic reasons (Akio 2004).