Product differentiation and the choice of alliance partners

James Sawler

Global Business and Economics Review, 2009, vol. 11, issue 3/4, 281-287

Abstract: Given the recent proliferation of the use of alliances as a key business strategy, the nature and extent of alliance formation must now be considered a significant element of any analysis of firm behaviour. This article contributes to this analysis by examining the relationship between a firm's choice of partners for a horizontal strategic alliance and the extent of differentiation among the firm's product and those of its competitors. A non-cooperative, two-stage game is developed and analysed; the results suggest that it is more profitable for a firm to ally with a competitor whose product is more greatly differentiated from its own.

Keywords: strategic alliances; joint ventures; product differentiation; strategy; game theory; alliance partners; partner selection; alliance formation. (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:11:y:2009:i:3/4:p:281-287

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