Alliance Capabilities and Alliance Performance

Performance in alliances, and particularly in international joint ventures (IJVs) has been a topic of considerable interest to management scholars for the last twenty or more years. Most studies have focused on the difficulties of measuring performance in international joint ventures, an issue yet to be fully resolved. The causes of and expectations for such performance, however, while subject to theoretical debate as to precise mechanisms, generally have been resolved — but to a focus on the conditions at the time the alliance is founded. An alliance set up to properly fit national, international, and industry conditions, or partner resource endowments, or transactional characteristics between the partners at the time the deal closed is expected to perform better than average — and that performance is largely measured against managerial expectations at the time of formation of the IJV (or any alliance). This paper proposes that such an approach to performance is obsolete at a time when the focus of management theory is on dynamic, evolving systems. It takes a dynamic capability perspective on IJVs and alliances and their rent-yielding resources and capabilities to suggest a multi-faceted approach to alliance rents that can be used to separate initial static sources of advantage from dynamic sources of potential rents that evolve with the alliance over its lifecycle. This perspective provides new insights on alliance success and failure and provides suggestions for the management and study of alliances and joint ventures, whether international or not.