Partnering for Speed: When Do Alliances Make Firms Faster?
Alliances speed up slow firms most, because they gain partner capabilities, and can slow already fast firms through coordination costs.
Summary
The study uses on-shore oil and gas drilling projects to ask when alliances make a firm faster, and finds that it depends on the firm's own speed capabilities. Slow firms, meaning those lacking intrinsic speed capabilities, gain the most, because partnering gives them access to a partner's capabilities and, later, lets them acquire them. That improvement can carry into future projects, but only for firms that have built up absorptive capacity from earlier partnerships. Firms that are already fast may lose speed to coordination costs, so alliances are not a universal remedy. The estimation uses random-coefficient models and treatment-effect analyses to address selection.
Editor's opinion
Alliances are a speed lever mainly for firms that are slow: they buy capabilities the firm lacks, and those gains persist only if the firm has learned how to absorb a partner's know-how. Firms that are already fast should expect coordination costs to eat the benefit, so partnering for speed should start from an honest view of the firm's own tempo.
Key concepts
alliances · speed · firm heterogeneity · capabilities · coordination costs