To understand interfirm business alliances better, you must examine their theoretical foundations and conceptual pillars. Business alliances reflect our concept of the firm; hence, it is first important to appreciate the theory of the firm and then demonstrate its tie to strategic alliances. In linking strategic alliances to firm behavior and market environment, we offer numerous theoretical explanations. We will introduce principal theories on the nature of firms as a foundation of interfirm strategic alliances and then offer our integrated view of strategic alliances in light of extant theories.
Bruce Kogut, one of the pioneering scholars studying strategic alliances, introduced general theoretical foundations of strategic alliances by reviewing three theoretical approaches that are specifically relevant in explaining the motivation and choice of joint ventures. 1 The following explanations are partly based on Kogut’s typology, but we will expand the theoretical treatment of alliances to new dimensions and cover all types of strategic alliances, not only joint ventures. Additionally, we will incorporate a value chain perspective in explaining the behaviors of business partners. Basically, the theoretical underpinnings of collaborative firm behavior can be found in the following theories: transaction cost theory, industrial organization model, game theory, resource-based view, organizational learning, and knowledge in the literature. 2 We will discuss each one of them by demonstrating its relevance to strategic alliances.