Daily Management Review

Asymmetric alliances between small innovative businesses and large companies


05/28/2020


A strategic alliance can be described as asymmetrical when it involves cooperation between two companies with marked differences in terms of size, portfolio of resources and market position. Although such asymmetric relationships are becoming more frequent, they have not been widely studied and their management remains particularly complex.



For the sake of clarity concerning the term strategic alliance, we have chosen to adopt the definition proposed by Jolly (2011) : “A link deliberately created between several sovereign companies, who outside the ambit of this link continue to be independent. It is characterised by the pooling by at least two companies of part of their resources in the pursuit of shared goals within a given area and the achievement of mutual benefits”. This form of cooperation is an agreement between two or more parties (formalisation) to pursue a set of agreed upon objectives needed (shared goals and common interests) while remaining independent organizations (legal independence).

The question of relations between small innovative businesses and large firms within the framework of strategic alliances continues to be a sparsely investigated area in management studies (Chen and Chen, 2002). This is somewhat paradoxical since such alliances represent a tool for additional growth for both partners as well as presenting specific problems in terms of Knowledge transfer and equilibrium of power. Mouline (2005) defines asymmetrical alliances as follows: “asymmetric alliances involve companies of different sizes, different resource levels and different capacities”. Similarly in their overview, Cherbib & Assens (2008), state that “ a partner of greater size in terms of staff, financial results and territorial presence has a greater patrimony and thus potentially more influence in the alliance than smaller partners.” Alvarez and Barney (2001) suggest that an asymmetric alliance with a large firm confers upon small innovative businesses a certain form of legitimacy (reputation, notoriety, social image) that they could not acquire without assistance. The authors explain that larger companies possess commercial, marketing and other resources needed by the SME to market its technology and assure the reputation of the latter. These alliances provide SMEs with an opportunity to convert their technological know-how into strategic assets.

Nevertheless, Meier and al. (2010) states that SMEs also provide a number of attractive benefits in such alliances. They are able to introduce radical innovations much more rapidly and at lower cost compared with larger companies (renewal of key skills). They can also help bring more organizational flexibility by responding more effectively to certain environmental concerns.

If research tends to highlight the potential risks for small innovative companies to form alliances with a stronger partner (risks of cultural and economic domination), this form of cooperation is bound to develop in the coming years It is up to the actors concerned to be aware of this and not to spoil this strategic complementarity, essential for the survival or the regeneration of organizations in a global and very competitive market.

Olivier Meier
Full Professor
University of Paris Est (LIPHA)