An Empirical Test of the Internal Tensions Perspective of Strategic Alliances

Abstract

The internal tensions perspective of alliances is rooted in the dialectic process theory that views relations as collisions of contradictory ideas that compete for domination: the interaction of these competing ideas being aimed at unity or wholeness. However, alliances are at the outset a union, rather than opposition, focusing on a cooperation project, which outcome is expected to benefit alliance partners. Thus, a dialectic can be viewed, on one hand, as contradicting ideas of diverse groups over goals (external tensions), and on the other hand, contradicting ideas within a loosely-coupled group (alliance) over how to reach a mutually agreed goal (internal tensions). A Cox regression model was specified on 1335 minor and major alliances (airline industry) to test the internal tensions perspective of alliances. The model results show that: 1) alliances having a dominant partner (cooperation versus competition tension) have higher risk of termination; 2) alliances having minority equity (rigidity versus flexibility tension) have lower risk of terminations; and 3) as alliance cooperation features increase (short-term versus long-term tension) risk of termination decreases. Thus, according to our study all three internal tensions of alliances, suggested in the internal tensions perspective enhance our understanding of alliance terminations.

Keywords: Internal tensions perspective, strategic alliances, dialectic process theory, Cox regression, airlines

JEL Classification: L00, L93, C41