Instabilities of Strategic Alliances: An Internal Tensions Perspective

Abstract

The instabilities of strategic alliances have been examined in the literature through a number of theoretical approaches. Alliance instabilities refer to major changes or dissolutions of alliances that are unplanned from the perspective of one or more partners. Although the literature identifies certain characteristics of strategic alliances that may lead to their unplanned dissolution, the extent of our understanding of this subject appears to be fragmented and incomplete. In this article we propose a comprehensive framework for adequately understanding alliance instabilities based on the notion of internal tensions. We suggest that strategic alliances are sites in which conflicting forces develop and which can be viewed as being constituted by three key pairs of competing forces—namely, cooperation versus competition, rigidity versus flexibility, and short-term versus long-term orientation. This tensions framework helps us in explaining the intrinsic vulnerability of alliances in terms of a wide range of internal contradictions and enables us to examine, in an integrated manner, the incidence, dynamics, and eventual dissipation of the inherent instabilities. We discuss the interrelationships among the different internal tensions and their impacts on different types of strategic alliances. We also examine the termination of alliances through mergers/acquisitions and dissolution. Finally, we suggest ways to empirically test the various ideas and propositions developed here and indicate directions for further research.