Mission
 Resource Complementarity in Business Combinations: Extending the Logic to Organizational Alliances.
Original publication by Jeffrey S. Harrison, Michael A. Hitt, Robert E. Hoskisson and R. Duane Ireland
This compelling article vaunting the value added by the synergy of integrating complementary resources builds on an earlier publication by the same authors (Harrison et al, 1991). In that article they stressed that business mergers or acquisitions that took advantage of differences between the two companies were more productive than business mergers or acquisitions that only combined similar businesses to form a larger entity. The argument was that complementary business mergers allow the expertise of one to fill the gaps of the other and, under conditions of thoughtful integration and management of the merger, a greater synergy could result in better performance in the long term. In this article, Harrison, et al, extend this logic to strategic business alliances. In an era of increased globalization it has become more difficult for a single firm to cover all knowledge bases even while continuing to grow. It is true that short-term gains may occur when firms with similar resources merge if they are able to accomplish economies of scale. Yet the more challenging integration of firms that complement each other’s strengths and weakness, when well managed, can create new value and a competitive advantage. New technology requires new competencies and businesses often combine or cooperate to enhance their capabilities. For example, one firm with excellent research and development resources may ally itself with a firm that has efficient marketing and distribution competencies. For this reason, vertical rather than horizontal alliances create a more unique resource bundle. Alliances may allow more strategic flexibility than actual acquisitions. To form an alliance with another company may reduce the risk that an acquisition could entail. The partners learn from each other-- not only new competencies but methods of problem-solving or performance evaluation, etc., that can then be used internally, in ways beyond the focus of this alliance. “…differences in skills are a catalyst for learning by the partners”. Unlike an acquisition, the timeframe of value for an alliance may be more clear cut, with the alliance aimed at a particular goal. Once that goal is accomplished the parties may decide to move on and partner with a different organization to achieve another desired condition. There are several recent examples of strategic organizational alliances around specific projects that benefit from the resource complementarity of the separate organizations. Kodak and Fuji have a joint research and development project with three Japanese camera makers to establish a new standard for photographic film. They have already come out with a new “smart film” which allows correction of photographic errors. IBM, Toshiba, and Siemens have a joint venture to develop an advanced line of memory chips. GM, Ford, and DaimlerChrysler recently joined forces to form a single automotive parts exchange to run on the Internet. The leader who can envision and accomplish a complementary alliance can provide a unique opportunity for growth and add value to the existing business or organization. |
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