Auteurs
Valérie MOATTI
Pierre DUSSAUGE
Abstract
The size-performance relationship has long been a major research topic both in industrial organization and in strategy. In the late sixties, it has given rise to such famous strategy concepts as the so-called “experience curve”, but has since generated only limited interest. More recently, much research has been devoted to examining mergers and acquisitions on the one hand, and inter-firm alliances on the other hand. Both these moves affect a firm’s size in one way or another and are thus likely to have an impact on performance. However, the work on M&As or on alliances very rarely compares these different modes of growth to one another, or to organic growth. Our research aims specifically at analyzing the impact of each alternative mode of growth on the size effects resulting from the achieved growth. In this paper we develop conceptual arguments on the relative impact of these modes of growth on performance. We then test the resulting hypotheses on a sample of 54 firms in the global retail sector over the 1984-2001 period. Our initial results suggest that both M&As and alliances negatively affect performance. However, we show that the choice to form alliances or engage in M&As is determined by firm characteristics that also affect performance; when accounting for this endogeneity, we find that neither alliances nor M&As have a significant impact on performance.
Auteurs
Louis MULOTTE
Pierre DUSSAUGE
Résumé
Both researchers and practitioners have long argued that firms can use alliances as a means to more easily enter new businesses or new markets. Indeed, alliances can provide access to necessary but difficult-to-trade resources and thus help the entering firm gather all the resources required to operate in the targeted business. Other authors, however have emphasized the downsides of alliances: they provide only incomplete access to the targeted resources, they create a dependence on partners, they are difficult and costly to manage and, finally, entail a sharing of profits. This leads many firms to choose to enter new business areas directly, without previously forming any sort of partnership with incumbents. In this broad context, we will address two sets of questions: (i) what factors drive newcomers to choose between entering alone vs. forming alliances in order to enter a new business area? (ii) how do these entry strategies influence subsequent success and survival in the new area of business. Drawing upon the resource-based view, we develop arguments suggesting that entry strategy is influenced by firm capabilities. We predict that entry through alliances, while allowing weaker firms to overcome entry barriers, does not result in superior long-term performance. We test our predictions on a sample of firms that have eventually established a stand-alone presence in the aerospace industry through sequential vs. direct entry and, with two-stage treatment models, we assess their post-entry performance accounting for the endogeneity of their entry strategy choice.
