Entrepreneurship Through Mergers and Alliances

This chapter synthesizes ideas from the fields of entrepreneurship and collaboration. It builds on Joseph Schumpeter’s definition of entrepreneurship as the “making of new combinations.” This view is extended with modern concepts from the resource-based view of the firm, from organizational economics, and from industrial organization. The chapter explores three broad questions: how joint value is created in business combinations, how collaboration is governed, and how value created jointly is shared. These questions define the “remix strategy,” defined as the use of mergers, alliances, and joint ventures to create value. Suggestions for future research are noted throughout.

Types of cooperation and networks

Chapter 5 reviews the traditional forms of strategic alliance and network. It shows that there are many different types, ranging from supplier contracts to equity joint ventures, and all have different levels of interaction and independence. Networks are another well-established form of cooperation; these can embrace several, sometimes many, firms and other partners. This chapter discusses dominated, equal partner, and coordinated networks. This chapter also describes a variety of taxonomies proposed for classifying alliances. It notes that Yoshino and Rangan (1995) and Dussauge and Garrette (1999) have perhaps the most attractive typologies of alliance forms among the many on offer. Yoshino and Rangan categorize alliances into non-traditional contracts, equity alliances, and joint ventures. Dussauge and Garrette identify international expansion joint ventures, vertical partnerships, diversification alliances, complementary alliances, shared supply alliances, and quasi-concentration alliances. The chapter concludes with some suggestions as to which forms may be most appropriate for which situations.