, Papers: 51st Annual Meeting

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Dyadic Analysis in Inter-Corporate Alliance: Merits and Risks

takafumi MORIOKA

Abstract


The objects of this paper have three points. First, Inter-corporate alliance can be classified into four patterns by its alliance-form. About four patterns in Inter-corporate alliance, the focused corporate is supposed to consists of two business-layers; application and infrastructure. Application is direct product activity for goods and services or systems. Infrastructure is an activity or system to promote activities of applications.
The four patterns of inter-alliance are horizontal alliance, cross-industry alliance, vertical alliance, and infrastructure-application alliance. Horizontal alliance means the interactions of applications underlying the same infrastructures. Cross-industry alliance means the interactions of applications underlying the difference infrastructures. Vertical alliance means supply-chain activity. Infrastructure-application alliance means hierarchical activity between application-player and infrastructure-player.
Second, from the view points of Inter-corporate alliance, the concepts of economies are redefined. There are traditionally two concepts of economies: economies of scale and economies of scope. Economies of scale have defined factors that cause the average cost of producing a commodity to fall as output of the commodity rise. The new definition of economies of scale is internal and external effects ( merits and risks) that increases activity -scale by alliance. While economies of scope have defined factors that make it cheaper to produce a range of related products than to produce each of the individual products on their own. The new definition of economies of scope is internal and external effects ( merits and risks) that cause combinations or connections of the different products, business and activities by dyadic corporate-alliance. Here internal effects mean influence and effect between one player and the other player that constitute alliance. External effects mean influence and effect between a customer and a player.
Third, the paper analyzed those four inter-corporate alliances (four case studies), each of which we assume has its own merits and risks. The merits and the risks are divided into internal and external effects, and four concepts of economies are proposed corresponding to four alliance-forms. Horizontal alliance is influenced by economies of scale, and the other three types of alliances are influenced by economies of scope but in different ways. The internal merits of horizontal alliance cause the average cost of producing a commodity to fall per unit and critical-mass. Its external merits make easy access to purchase and use. Its internal risk makes flexibility the rate of operation low. Its external risk makes a choice range reduce. The internal merits of cross-industry alliance cause complementation and assimilation. Its external merit makes increase of one stop shopping. Its internal risk makes complexity of coordinations and judgments with activities. Its external risk makes brand image confuse. The internal merits of vertical alliance cause the constant supply and improvements across the supply chains and differentiation. Its external merit makes easy proposal across the supply chains. Its internal risk makes difficulty of changing membership. Its external risk makes brand image limited by the alliance partner.
The internal merits of infrastructure-application alliance cause whole business formation and the limit of business domain. Its external merit makes users’ convenience promote. Its internal risk makes developing constrains underlying partner’s standard. Its external risk makes minority opposition without uses of government and infrastructure.
The paper proposes each corporate must adopt the alliance strategy considering the merits and risks.

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