Strategic Alliances with Equity Investment
When companies decide that strategic alliances are an effective means of operating within a global marketplace, they must grapple with questions about the nature of ownership and control within the alliance. Should the partnership be limited to the contribution of resources or knowhow? Should a more substantial equity investment be made by each partner? These important issues involve more than simply determining how responsibilities and rewards are to be divided between partners. Difficult managerial and legal problems also arise, such as how decisions will be made and how conflicts will be resolved.
Chapter 5 discussed the nature of strategic alliances in general and, in particular, those alliances that do not involve the joint ownership of the venture itself. This chapter examines cooperative alliances in which the partnership is based on ownership rather than merely cooperation.
The distinguishing characteristic of collaborative alliances involving ownership is that each participating firm has an invested equity stake in the partnership. This is in contrast