Partnering for Speed: When Do Alliances Make Firms Faster?

Abstract

Alliances are typically viewed as an acceleration strategy for firms able to access or acquire the resources and capabilities of partner firms, yet theoretical and empirical work also suggests that alliances can actually impair speed performance due to the costs stemming from partner cooperation and coordination. This paper advances the premise that firm heterogeneity may determine whether alliances enhance, or impair, the speed performance of firms. The focus then turns to one particular kind of firm heterogeneity, the intrinsic speed capabilities of the firm, which is the ability to execute investment projects or operations faster at the same cost. Slow firms, being those firms lacking intrinsic speed capabilities, stand to gain most from partnering due to accessing and ultimately acquiring capabilities from partner firms. Moreover, the benefits of capability access enjoyed by slow firms from partnering can persist into future projects, suggesting capability acquisition from the initial partnership. These benefits, however, hinge on the firm possessing absorptive capacity in the form of previous partnering experiences. Evidence from onshore oil and gas drilling projects provides support for these arguments.