research@hec - Issue #10 - (Page VII)

a Thoughtful Choice Key Ideas alliances have a decisive impact on the success of a partnership. Partnering with Competitors: the resources they need to carry out a large-scale project on their own. • One reason why companies form alliances with competitors is because they lack • Project magnitude, company size, and company experience with horizontal AERONAUTICS, A PERFECT FIELD FOR STUDY Pierre Dussauge, Bernard Garette, and Xavier Castañer explain that a horizontal alliance is one where partner companies share production responsibilities and inherent risks as well as sales profits. The purpose of their research has been to determine whether relying on partnerships for growth is a valid strategy. In other words, is it more profitable for a company to build an aircraft alone (like Boeing) or as part of an alliance (like Airbus)? Dussauge and his colleagues focused on the aircraft industry because the field offers easily understandable data. The reasons for this are as follows: • Partnerships have been common in the airframe industry since World War II. Long-term data is therefore available. • Airframe production projects are clearly identifiable. The outcome of each is pre-determined, and commercial success is measurable. It is a matter of building airplanes, helicopters, and other specifically defined aircraft. PREREQUISITES TO HORIZONTAL ALLIANCES The study raises questions about a number of widespread assumptions about business alliances. For instance, research literature says that they are M formed by companies that are both strong and weak: weak because they do not possess adequate resources to carry their project out alone and must consequently find a partner, and strong because they must present convincing arguments to get other companies to work with them. Complementarity has thus been given as the primary reason for horizontal alliances. However, Dussauge’s research indicates that in reality, alliances are generally formed by companies in weak positions. Complementarity is not really an issue; alliances generally involve companies that are experiencing similar difficulties. Close examination of the profiles of the companies included in the sample confirms that the companies that form partnerships generally have fewer resources than those that work alone. So when they want to undertake a large scale project, an alliance is a solution. In addition, the study indicates that the more experience a company has with alliances and partnerships, the more likely it is to turn to this type of scheme. Effective alliances are built upon three conditions: •Insufficient resources to carry out a project alone; • The desire to undertake a large scale project; • Previous experience with partnerships. When these three factors are present, an alliance constitutes a better choice for a company than an autonomous initiative. Pierre Dussauge Bernard Garrette BIOGRAPHIES HEC Paris graduate Pierre Dussauge holds a PhD from the University of Paris-Dauphine and has taught business strategy and policy at HEC Paris since 1982. His research focuses on alliance strategies between competitors. Bernard Garette graduated from HEC in 1985 and received his doctorate from the school in 1991. He currently holds the Atos Origin chair at HEC Paris. His research also focuses on competitive and cooperative business strategies. September-October 2009 • research@hec VII http://www.hec.edu/Faculty/Professors-alphabetical-list/(professor)/Dussauge http://www.hec.edu/Faculty/Professors-alphabetical-list/(professor)/Garrette

Table of Contents for the Digital Edition of research@hec - Issue #10

Cover & Contents
What Makes Entrepreneurs Tick?
This I Like, That I Don’t Like
Entrepreneurial Optimism
Partnering with Competitors: a Thoughtful Choice

research@hec - Issue #10