Do strategic alliances add value? : an empirical examination at industry and firm levels in European banking
Strategic alliances are a prevalent form of business organization. The critical characteristics of strategic alliances are detailed using Coase (1937) and the resulting definition tested through primary research and the alternative form, the infrastructure alliance posited. The thesis examines whether strategic alliances add value in the European banking sector through four types of analysis at two levels of engagement - a 23 historical review (at industry level); a review of over 400 papers in the academic literature; a questionnaire survey (at firm level) and in-depth interviews (at firm level). Bankers high pre-existing propensity to enter into strategic alliances is determined and three lifecycles, and the underpinning, conditions identified - Clubs and Consortium Banks, Bankassurance and the Virtual bank - the latter involving a fundamental change in Coase (1937) enabled by the underpinning technology. Bankers were found to be followers of potential business steams and the strategic alliance was one form of market entry. The questionnaire research, however, identified European bankers prefer to enter into alliances (as opposed to own branch or M&A) only in countries which had the appropriate supporting conditions such as definable, enforceable and terminable contracts, the provision of accounting information, stable governments and economic freedom. Direct discussions with senior bankers resulted in a number of valuable insights into the conceiving, forming, organizing evolving and dissolving of alliances. Further research into the infrastructure alliance, including 'oscillation' between infrastructure and strategic forms is proposed. The Co-Evolution Model of Strategic Alliances is proposed and taxonomy consisting of parallel co-evolution, convergent coevolution, divergent co-evolution and the subsidiary taxonomy of differential parallel coevolution, differential convergent co-evolution and differential divergent co-evolution detailed and further research suggested. Strategic alliances are found to add value in European banking but this value is contingent on the strength of the business stream, the global, national and industry conditions and the nature of managerial decisions and drive.