The alliance evolutionary model: reconciling the hierarchical and developmental approaches to explaining alliance behaviour for small firms

This paper conceptually investigates innovative relationship between different types of alliances and their relative competitiveness. Three alternative approaches are developed in the paper: a static approach, a developmental approach and finally a synthesis: the Alliance Evolutionary Model (AEM). This approach suggests that alliances could be thought as either strengthening firms' competitiveness through upgrading of differentiation or upgrading of low-cost capabilities and that they are based on either a local network of firms or a knowledge network of firms. The second approach provides a developmental model for a move from the most basic form of collaboration, the conventional supply system, characterised by transaction cost exchanges motivated by self-interest, to the establishment and maintenance of long-term social networks characterised by trust, commitment and mutual benefit. In the third section, the two approaches are synthesised to produce a hybrid model of alliance development. It is argued by the authors that the hybrid model the 'AEM', best approximates practice and provides guideposts for firms in their pursuit of the more sophisticated form of alliances as a means to long-term competitiveness.