Does a Connection Exist Among National Culture, Alliance Strategy, and Leading Ict Firms’ Performance?

Abstract

Abstract. In this paper we explore links among firms' performance, firms' alliance strategies, and national culture in the context of the global information and communication technologies (ICT) industry. Currently, partnering is the one of the most effective ways to access a broad set of resources. In the ICT industry, we can observe a significant number of alliances, networks, and mergers and acquisitions. The contribution of this paper is to investigate how a contextual factor -namely, national culture -influences the alliance portfolio formation and a firm's performance. We also aim to contribute to the issue of alliance portfolio formation. First, the concepts of alliance portfolio and culture as an explanatory factor are elaborated upon and their relevance to the study discussed. Second, using a sample of 30 ICT leaders and 10,247 of their alliances, we explore the effect of alliance strategy on firms' performance as well as the connections among culture, firms' performance, and alliance strategy. The study confirms that, in a global ICT industry (i.e., the most dynamically changing and riskiest environment), weak alliances may increase a firm's performance more than strong, traditional strategic alliances. Culture may be used as one of the explanatory factors affecting firms' performance as well as firms' alliance strategies.

Alliance portfolio formation and configuration by small and medium ICT firms

“…First, firms' performance prompts them to choose different cooperation strategies (Lant et al, 1992;Nohria and Gulati, 1996;Audia et al, 2000;Mezias et al, 2002;Fleming and Bromiley, 2003;Baum et al, 2005), such as a firm's propensity to engage in partnerships (Baum et al, 2005) and partner-selection strategies. Second, numerous characteristics of the context have been shown to play a role in shaping a firm's cooperation strategy; these characteristics include experienced uncertainty (Xie et al, 2012), national culture (Hofstede, 1984;Peng, 2005;Griffith et al, 2006;Siakas et al, 2010;Furres et al, 2012;Golonka and Rzadca, 2013) and generalized trust (Hofstede, 1984;Doney et al, 1998;Monczka et al, 1998;Young-Ybarra and Wiersema, 1999;Ibrahim and Ribbers, 2009).…”

“…Studies have indicated that an extended, differentiated, complex, beneficial portfolio consisting of different alliances with various partners is a useful resource for carrying out a firm's strategy (Stuart, 2000;Lavie, 2007). A well-configured alliance portfolio has a positive impact on a firm's performance and innovativeness (Rothaermel, 2001;Rothaermel and Deeds, 2006;Shipilov, 2006;Lavie, 2007;Gulati, 2007;Duysters and Lokshin, 2011;Golonka, 2013;Golonka and Rzadca, 2013).…”

“…Previous studies have shown that, in an environment characterized by a high level of uncertainty (e.g. ICT), firms create significantly more exploration (Dussauge and Garrett, 1999), and weak alliances (Duysters and deMan, 2003;Golonka and Rzadca, 2013) and alliances are often created without previous preparation or strictly defined purposes (Deeds and Rothaermel, 2003). Firms in this environment choose to create weak, short-term alliances based on trial and error.…”

“…Thus, we adopt Lavie's (2007) perspective of seeing alliance portfolio as an egocentric network of interfirm ties examined from the perspective of the focal firm. Existing studies indicate that two main factors influence firms' cooperation strategies: firms' performance (Lant et al, 1992;Nohria and Gulati, 1996;Audia et al, 2000;Mezias et al, 2002;Fleming and Bromiley, 2003;Baum et al, 2005) and the institutional environment in which firms are embedded (Ring and Van de Ven, 1994;Lado et al, 2008;Peng, 2005;Golonka and Rzadca, 2013). Yet most existing research originated in studies of large organizations.…”

Alliance management knowledge and alliance performance: unveiling the moderating role of the dedicated alliance function

“…Large evidence exists on the influence of national culture on people's value and perceptions, decision-making, strategy formulation, and inter-firm cooperation (Child and Faulkner, 1998). Consistently with previous research, we controlled for the two most significant dimensions of national culture as developed by Hofstede (1991) in predicting firm behavior and organization, that is, uncertainty avoidance and power distance (Golonka and Rzadca, 2013). To account for context-related factors potentially affecting alliance propensity and perceived performance (Rowley et al, 2000), we controlled for regulatory quality and rule of law countryindexes (Kaufmann et al, 2011).…”