Business alliances: why managerial thinking and biases determine success

Purpose – Alliances are unstable and while a number of explanations have been offered for understanding instability a motivational oriented approach remains underdeveloped. This paper seeks to provide a motivational oriented explanation for understanding alliance instability. Firms may enter into an alliance either with a promotion or a prevention mind set and this can be consequential for alliance development. Design/methodology/approach – The authors draw upon regulatory focus theory and its applications in an alliancing context to derive implications for alliance management. Regulatory focus theory is now increasingly being used to explain various types of organizational phenomenon (e.g. contracting, leadership, alliances). The paper distinguishes between a promotion oriented and a prevention oriented mind set and explores the impact of the different mind sets at the alliance formation, operation, and the outcome stage. Findings – A key finding is that different mind sets (promotion vs prevention) affect alliance formation, operation, and outcome. At the formation stage the mind sets may determine the success or failure of negotiations; at the operational stage they may determine if conflicts escalate or deescalate; while at the outcome stage they may determine whether the partners continue with or seek to exit from the alliance. Practical implications – The different motivational orientations have implications for alliance negotiations, the management of the alliance during the operational phase, and/or the decisions that are made by alliancing firms at the outcome phase of the alliance. The paper develops implications for how alliances should be managed for attaining success. Originality/value – The paper should be of interest to alliance managers as it will give them a new lens for understanding the drivers of alliance success and failure. The impact of motivation on alliance success and failure has not been studied to date and this paper provides a novel approach to assessing its impact.