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For many firms, establishing and maintaining successful ‘cooperative relationships suppliers, customers and third party organizations is critical to achieving strategic and operational flexibility in today’s business environment. Alliance Formation Motives: A Comparison of International Perspectives Robert Frankel East Carolina University Judith Schmitz Whipple Western Michigan University Establishing and maintaining successful alliances is an increasingly attractive, yet difficult strategic option for most firms in today’s business environment. One ‘component of the alliance process that has recently received considerable attention concems the motivations of a firm and its potential partner to establish an alliance. This paper examines and compares alliance motives at three channel levels (manufacturer, distributor and logistical service supplier) and across three ‘geographic trading regions (North America, Europe and the Pacific Basin). The managerial implications of the results are discussed with particular regard to developing and sustaining successful cooperative supply chain relationships. In response to an increasingly competitive global business environment, many firms are considering alliances or partnerships as a method for achieving world-class performance while minimizing investment and risk. For many firms, establishing and maintaining successful cooperative relationships with suppliers, customers and third party organizations is critical to achieving strategic and operational flexibility in today’s business environment. However, developing and sustaining these relationships is a challenging and difficult proposition. Many important factors Contribute to the difficulty of such a task. For example, strategic and operational planning issues regarding the exchange of information must be formulated and addressed; investments in human, capital and technological resources must be committed and carried out; and understanding and aligning partners’ organizational culture, alliance philosophy and goals are also critical, Thus, alliance involvement can be problematic, regardless of how experienced the firm is in cooperative supply ch relationships. One component of alliances that has received considerable attention in recent literature concerns what motivates a firm (and its prospective partner) to establish an alliance. Research concerning the motives to engage in strategic alliances has examined the development process from a variety of different theoretical perspectives (1]. Motives are important because they represent the participating firms’ goals for the alliance. Brouthers, Brouthers and Wilkinson concluded that failure is more likely to occur if the alliance “does not advance both firms’ strategic goals" 12]. As such, motives may form the basis for evaluating potential and actual goal atiainment. From the practitioner's perspective, understanding what motivates firms to establish strategic alliances becomes relevant only when that knowledge contributes to improved business practice. The prescriptive notion that alliances should be based on a “win-win” philosophy is of little practical relevance to managers in the process of searching for and selecting an alliance partner. What is relevant to the search and selection process is understanding what a prospective alliance partner's motives are since this knowledge can be used to determine whether a “win-win” position can be achieved Volume 7, Number 2. 1996 Page 19 Different motives imply different goals. Understanding the potential impact of those differences is only one of many factors that ate important to the successful creation, implementation and maintenance of an alliance (31. Research suggesis that a critical issue regarding alliances concerns the recognition of complementary motives (which leads to complementary goals), particularly with regard to firms at different channel levels [4]. Such recognition requires careful design, development and use of interorganizational structures and procedures in order to achieve the alliance goals and objectives inherent in each firm’s motives. Understanding a prospective partner's alliance motives is complicated by the increasingly global nature of contemporary business practice. Many firms seek alliances as a way to gain global market access (51 Other firms are geographically expanding their sourcing, production, marketing and logistical support networks both through internal methods and external outsourcing [6]. The economic, political/iegal, technological, cultural and_ physical environments of business have a significant impact on these extended support networks. In particular, internationat alliances are more complex than domestic alliances due to these various factors. Thus, a better understanding of how alliance motives may differ with regard to geographic trading regions is also important in order to enable global alliance practice. Research which increases the understanding of what motivates firms to establish alliances is of interest and value from both a theoretical and practical perspective, especially if it includes an international sample. An enhanced understanding of such motivations may provide important insight into the design and performance of successful alliances. The purpose of this paper is to examine alliance formation motives, compare those motives actos global trading regions and at unique channel levels, and describe what impact any differences may have on alliance practice. Motives are analyzed in three geographic trading regions (North America, Europe and the Pacific Basin) and at three channel levels (manufacturers, distributors and logistical service suppliers). Specifically, the paper will: examine the importance of alliance formation motives; compare and contrast the motives across global trading regions and at different channel levels; and, describe the implications of these comparisons and consider how they might affect the goals and objectives of alliance formation. The first section of the paper reviews the literature regarding alliance formation motives. The second section describes the research design and methodology. The next section presents the results of the research and the implications to practitioners, Finally, research limitations and related future issues are addressed Literature Review In recent years, the increased experimentation and success with strategic alliances has forced marketers to utilize theoretical developments from other disciplines to help explain the shift toward more cooperative business structures [7] Theoretical frameworks developed in interorganizational exchange behavior (81, institutional economics [9] and contract law [10] have been applied. For example, Spekman and Sawhney —_used interorganizational theory to suggest that the formation of a strategic alliance is an innovative attempt by an organization to manage and control uncertainty [11]. While such theoretical frameworks broadly characterize the underlying rationale for a firm's entry into a strategic alliance, they ‘generally do not explicitly detail those motives. Table 1 presents a representative, although not exhaustive, sampling of the theoretical foundation of alliance entry motives. While each motivation framework in Table T is somewhat unique in its approach, there are areas of significant overlap or consistency. Moreover, the motives are not mutually exclusive. In their synthesis of the conceptual foundations of alliance motives, Varadarajan and Cunningham suggest that “given the (motivations’] overlapping nature, it may be more appropriate to view them as complementing explanations rather than as competing explanations of the strategic alliance phenomenon” [12]. In spite of this observation, the notion of complementary motives does not diminish the need for a firm to clearly identify a prospective partner's motivels) in order to create, implement and fain a successful alliance. Different motives imply different goals. Understanding the potential impact of those differences is only one of many factors that are important to the successful creation, implementation and ‘maintenance of an alliance. Page 20 The International Journal of Logistics Management Analliance reflects a willingness of participants to modify their basic business practices to reduce duplication and waste while facilitating improved performance. Participants may include ‘material suppliers, ‘manufacturers, retailers/wholesalers and/or service suppliers. Table 1 Alliance Motivation Frameworks ‘AUTHOR 5 Yan de Ven (1976) + Need for Eternal + Need for External Kogan rsa + Teansiation Costs Postion + 0% + Realize Market Opportunities nizsioinal Knowledge Transfer MOTIVATIONS Rerources + Awareness of Others Needs Firms «+ Personal Acquaintances + Fahaneed Compatiive | farwer 1990) * Mandated Necess + Reciprocity + Environmental Sta ‘ staskerEnty Ti + skill Enhancemens Faker Eniy/Position| + Product’Market Relates + Resource Extension > Product Related «Market Structure ‘Modification + Resource Use Eficiency 3 + Risk Reuction ng “complete tes ave contained fa Reference [1] Synthesis of the various theoretical developments (see Table 1) suggests that four general categories exist to explain a firm’s motives to establish an alliance. Those categories are: (1) access to. market opportunities; (2) knowledge transfer and organizational learning; (3) increased efficiency; and (4) decreased market uncertainty. The four categories provide a working foundation to understand alliance motives from a research perspective. Reserarch Design and Methodology In 1993, a research team at Michigan State University undertook — a comprehensive international examination of business practices. A survey was. designed to gauge current interest and activity in a variety of business practices and included a section on alliance development. A particular area of interest concerned the motives for establishing a strategic alliance, The survey used the following definition of an alliance: An alliance reflects a willingness of participants to modify their basic business practices to reduce duplication and waste while facilitating improved performance. Participants may include material suppliers, manufacturers, retailers/wholesalers and/or service suppliers. The survey was sent to members of eleven logistics associations across North America, Europe and the Pacitic Basin (see Table 2 for the representative countries, associations and response rates). The surveys were prepared and completed in English except in Germany, Japan and Korea, where translated surveys were used. Manufacturing firms comprised the majority of respondents in each trading Volume 7, Number 2. 1996 Page 21 region, followed by service suppliers and then retailers/wholesalers. The majority of industry level representation varied by trading region, but did display considerable similarity: North America (health and personal care or pharmaceutical/drugs, industrial chemicals and plastics), Europe (food and beverage, health and personal care or pharmaceutical/drugs) and the Pacific Basin (food and beverage, automotive and transport, industrial chemicals and plastics, and health and personal care or pharmaceutical/drugs). Individual respondents represented a variety of different organizational levels; nearly 50% were managers and close to 70% were either managers or directors." Aithough the motivation for any one alliance may depend on the individual firms involved and may be situation specific, a comprehensive list of motives was compiled in the design phase of the survey in order to establish relevancy from a practitioner's perspective. The motives, which were based on an exhaustive literature review (summarized in Table 1), ranged from broad (increasing competitive advantage) to very For more detailed weatment ofthe sample base and ther related research design and methodology sus, plese soe The Global Logistics Research Team = Michigan State University, World Class Logistics: The Challenge of ‘Managing Continuous Change, Oak Brook, ti: Counc of Legitcs Management, 1995, specific (reduction in the price of purchased materials) goals. The list was evaluated by an advisory board of senior level managers from various industries and channel positions, consultants and academic researchers. The advisory board was asked to review the list of motives and then delete, combine or provide additional motives where appropriate and suggest wording changes to make the motives explicit and applicable to all channel positions (a Delphi procedure was performed). Once the suggestions were incorporated, a second review of the list occurred. The list was again revised and ten motives were included in the survey. The advisory board strongly endorsed a list of motives applicable to manufacturers, distributors (wholesalers and retailers) and logistical service suppliers (transportation, warehousing and third-party providers). As such, motives that appeared specific to any one particular channel level were eliminated from the list. Also, the board felt that general motives, such as cost reduction, were too simplistic. In other words, the board wanted to know specifically where cost reductions would be achieved (inventory, quality). Based on this information, the list was refined to the following 10 motives: COUNTRY (ASSOCIATION) Table 2 Research Respondent Characteristics TOTAL RECEIVED RESPONSE RATE (%) North America [Canada CACM TOF ne United Sates (CLM T255, 156 Europe France (AFT ITA u Ta [Germany (OGiL) 107, Netherlands (VEN) 32 107 [Norway (LOGMA) 26 156 Sweden SILF'SMAP) 15.6 United Kingdom a) 20.8 Pacific Basin [Australia IN) 306 Japan (ius) 27.0 Korea (NTELOG) 82 HrorAL wa Page 22 Although the motivation for any one alliance may depend on the individual firms involved and may be situation specific, a comprehensive list of ‘motives was compiled in the design phase of the survey in order to establish relevancy from a practitioner's perspective. The International Journal of Logistics Management -uthere was considerable agreement with regard to the ranking of the most important motives, regardless of trading region or channel member. Volume 7, Number 2 1995 + Achieve Competitive Advantage + Exploiting Core Competency * Increased Customer lavolvement + Improved Quality + Inventory Reduction + Lead Time Performance Improvement * Leveraging Capital + Market Access/Globalization * Supply/Demand stability * Technological Access Survey respondents were provided the list of 10 motives and were asked to rate each motive on a scale of 1 to 5 (where 1 = Very Important, 3 = Neutral and 5 = Not Important At All) The final list of ten motives is closely associated with the four theoretical categories discussed previously. For example, Market Access/Globalization is associated with market opportunities. Increased Quality and Technological Access are associated with knowledge transfer/organizational learning Fficiency is often increased through Inventory Reduction, Leveraged Capital and the ability to Exploit a Core Competency. Supply/Demand Stability and Lead Time Performance Improvement afford decreased uncertainty. The list of ten motives detailed in the survey is thus consistent with the theoretical literature base. Research Results The mean responses and standard deviations for the list of motives by global trading region are displayed in Tables 3, 4 and 5. For ease of reading, the tables are organized based on manufacturers’ mean importance scores (most important to least important) to facilitate comparison across channel levels and global trading regions. An examination of the mean responses for all ten motives reveals interesting similarities and differences in importance: (1) among motives; (2) across trading regions; and (3) across channel members. The means for all 10 motives were rated as important by respondents at each channel level in all three trading regions. The highest mean score (indicating a not very important motive) in North America was 2.51 (distributor perceptions of Market Access/Globalization); in Europe was 2.73 (distributor perceptions of Market Access/Globalization); and in the Pacific Basin was 2.75 (service supplier perceptions of Leveraging Capital). Further, there was considerable agreement with regard to the ranking (by mean score) of the most important motives, regardless of trading region or channel member. Generally, in all three trade regions, Achieving Competitive Advantage, Improved Quality, Lead Time Performance Improvement and Inventory Reduction were the four most important motives (with sfight variations in sequential order). Table 6 displays the top five motives for each trading region, from each channel member's perspective. In North America, manufacturer and distributor opinions for the top five motives North American Alllance Formation Motives [Mean Response/Standard Deviation (Sample Size)} MOTIVE MANUFACTURER bistaipuToR | SERVICE SUPPLIER [Competitve Advantage 1.65765 713) 165/72 (101) | 1.79/68 226) Improved Quality 1.85/71 (714) 1.73/68 (183) | 1.81/70 225) Lead Time Performance improvement 1.86/70 (715) v7e.72(169 | 2.10/73 226) Inventory Reduction 1.94/71 (706) 173.68 (18s) [2.24/81 227) Increased Customer involvement 2.00/71 1715) L9e75uen | 208.74.027) | supply/Demand Stabili 2.16/77 715) 221.7908) | 2.30075 025), Exploiting Core Competency 2.20179 (707) 2.2 760180) | 2.09/81 026) [Tachnotogical Access 2.25/83 715) 2.20/a2iey | 2.02/.79.02) Market Access/Globalization 2.40.83 (713) 2.51/8216) | 2.20/86 225) Leveraging Capital 2.86/82 (711) 2.30/83 082) [2.27187 027) Seale: 1=Very Imporans; 3«Newtal: Important at A Page 23 Table + European Alliance Formation Motives [Mean Response/Standard Deviation (Sample Sizo)] MOTIVE: MANUFACTURER | DISTRIBUTOR | SERVICE SUPPLIER. [Competive Advanta T 74768 (S18) —| T7770 (BIO) | 170765 G92 Improved Quality 79/74 (521)__| 1.75/66 208) | —1.92769.(392) Lead Time Periormance Taproverot | T.91/7HG21) | T8e/70 10) | 1-80-69, G90), Inventory Reduction 7.93/78 520" | 1.80/70.211)_| 1.59776 (331) increased Customer invahemeat Biv 7SIo) | 22/75 210) | 210.79 389) Supphy/Demand Siability 379/81 S19] 231785 209) | 7347. 7F39O) Expoiting Core Comperency 234/75 (518) | 2.35/7o1211)_| 2.19773.890) Frechnological Access 2.61/85 (519) | 2.57/81 09) | 2.37703. 091) Market Access(Clobalaaion 02/4 817) | 2.79/73 1207) | 2.55/86, 380) Teveraging Capital 27orma B16) | 2.55/88 208) | 7 56/85 (8B Scale: T=Very Imporiant; SeNeutal; SaNOt Important at All Tables Pacific Basin Alliance Formation Motives [Mean Respense/Standard Deviation (Sample Size}) [more [MANUFACTURER | DISTRIBUTOR” | SERVICE SUPPLIER [Competive Advantane TOy7I GIS) | 179/65 1) | 1.90175 22) Imoroved Qual 202065 (012) | +9078? @o) | 1.92777 GaN) Lead Tire Performance Inprovernent_|203.85G01) | 1.9.91 79)_| 2.04/86 221) nwentory Reguction 2061791511) | S177 @N | _2.147.76 10 increased Customer involvement ‘Zaria Gs)——| 1.80770 80) | 2.17/87 210), Suppiy/Demand Siabiliy 227]87 08) | 2.31/87 (80) | 2.29/75 210) Exploiting Core Competency 2a7far Gos) | 2-44 d wo) | —2a8 BT OT [Tecmnotogical Access Zag.82 (310) | 235/97 1) | 229/83 210) Market Access/Globalation Zaai7agin | 23078479) | 232.7600, Leveraging Capital 3.51/79 (908) | _2.39/75(76) | 278172 210) Scale: T=Very Imparane J=Newal, S=NOt Important at ATT Table 6 ‘Top Five Alliance Motives (By Trading Region) MANUFACTURERS. DISTRIBUTORS SERVICE SUPPLIERS. NORTH AMERICA Compaitive Advantage Compative Advantage Competitive Mvantage Improved Quality Improved Quality Improved Quality Lead Time Performance improvement laventory Reduction Technological Access Inventory Reduction Lead Time Performance improvement tncreased Customer Involverent Increased Customer Involvement Increased Customer Involvement Exploiting Core Competency EUROPE Competitive Advantage Lead Time Performance improvement Competitive Advanlage Lead Time Performance improvement Competive Advantage Improved Quality Improved Quality Inventory Reduction Lead Time Performance Improveme Inventory Reduction Improved Quality Inventory Reduction Increased Customer Involvement Increased Customer Involvement Increased Customer Involvement IASI Lead Time Performance Improvement Lead Time Performance Improvement Lead Time Performance Improvement Improved Quality Inventory Reduction Improved Quali Competitive Advantage Improved Quali Competitive Advantage Supply/Demand Stability ‘Competitive Advantage SupplyyDemand Stability Inventory Reduction Supply/Demand Stability Inventor Reduction Page 24 The Intemational Journal of Logisties Management In spite of the general agreement on the top five motives, differences in importance were evident with respect to chanel members within each trading region. Volume 7, Number 2. 1996 were very consistent; only the motives of Lead Time Performance Improvement and Inventory Reduction were reversed in ranking. However, service suppliers only agreed with regard to the motives of ‘Achieving Competitive Advantage, Improved Quality and Increased Customer Involvement; they ranked Technological Access (third) and Exploiting Core Competency (fourth) as more important motives than either Lead Time Performance Improvement or Inventory Reduction. In Europe, manufacturers, distributors and service suppliers clearly agreed that Achieving Competitive Advantage, improved Quality, Lead Time Performance Improvement, Inventory Reduction and Increased Customer Involvement were the five most important motives. In the Pacific Basin, the same five key motives were again highly evident, although their order was slightly different due to distributor and service supplier ratings of Supply/Demand Stability. tn spite of the general agreement on the top five motives, differences in importance were evident with respect to channel members within each trading region. It was expected that differences would exist but whether they would be statistically relevant required testing. As such, it was hypothesized that: Hy: No significant differences exist between the channel members’ motives for forming alliances within each trading region. ANOVA was used to test the hypothesis, examining each of the 10 motives individually in order to provide cross-channel comparisons within each trading region. In other words, within the Pacific Basin, manufacturer, distributor and service supplier perspectives were tested for ‘each motive to determine where differences existed. The univariate test procedures of ANOVA assume “the dependent variable (each of the 10 motives) is normally distributed and variances are equal for all treatment groups"!13]. However, violations of normalcy have little impact on ANOVA results because the F tests used in the procedure are robust, such that any violation of unequal variances is minimized when the sample size across groups is relatively equal [14], Such equality is intact when the ratio of the largest group divided by the smallest group is less than 1.5: if sample sizes differ by more than a ratio of 1.5, tests should be completed to analyze and correct such inequalities (151 For all three trade regions, the sample sizes were varied and, thus, unequal variances could pose a potential problem because at least one channel member group was much larger than another channel member group within the same region, and thus exceeded the 1.5 ratio rule. Therefore, the larger respondent groups were randomly divided into 10 subsamples such that each subsample fell within the acceptable, specified limits. For example, in North America the group of manufacturers was much larger than either the group of distributors or service suppliers. Thus, 10 subsamples of manufacturers were created ranging from 205 observations to 266 observations (266 manufacturers divided by 184 distributors results in a ratio of 1.45). In Europe, the ‘group of manufacturers and service suppliers were much larger than the group of distributors. Thus, 10 subsamples of manufacturers were created ranging from 212 observations to 308 observations (308 manufacturers divided by 211 distributors results in a ratio of 1.46). Ten subsamples of service suppliers were created ranging from 204 observations to 251 observations (251 manufacturers divided by 211 distributors results in a ratio of 1.19). In the Pacific Basin, the group of manufacturers and service suppliers were also much larger than the group of distributors. Thus, 10 subsamples of manufacturers were created ranging from 95 ‘observations to 115 observations (115 manufacturers divided by 81 distributors results in a ratio of 1.42). Ten subsamples of service suppliers were created ranging from 96 observations to 119 observations (119 manufacturers divided by 61 distributors results in a ratio of 1.47). Each of the 10 subsamples within each region was merged with the full sample of distributors (and service suppliers in North America). ANOVA test procedures were replicated in order to determine whether differences in motives existed across the three groups within each trading region. The Page 25 subsamples were drawn based on Bone, Sharma, and Shimp's 116] interpretation of Hope's 17] procedure which states that the number of required replications for testing is equal to 1/a, where « is the desired significance or confidence level. Ten replications thus provides a 90% confidence level (where a = .10). Across all 10 replications in each trading region, there were motives which did not display significant differences across the three groups (where a = .05) as well as between the means of paired group scores (using Duncan’s multiple-range test). Specifically, the non-significant paired motives are as follows: * North America - Increased Customer Involvement; + Europe - Competitive Advantage; Increased Customer Involvement; Supply/Demand Stability; and * Pacific Basin - Competitive Advantage, Exploiting Core Competency, Increased Customer Involvement, Improved Quality, Lead Time Performance Improvement, Market Access/Globalization. Duncan's multiple-range test was used to identify where significant differences existed between the paired groups in the remaining motives. However, the ANOVA results were not totally consistent for all 10 replications. tn some replications, paired comparisons for ‘one motive were insignificant based upon the Duncan multiple-range tests, while in other replications, comparisons for the same motive showed significant differences, Tables 7, 8 and 9 indicate the consistency of responses across the 10 replications for each paired comparison by trading region based upon the ANOVA resus. Inconsistencies in replications are Tapio Paired Comparison of North American Alliance Motives, [Significance (Results out of 10 replications)] "MANUFACTURER- MANUFACTURER: _ DISTRIBUTOR- DISTRIBUTOR SERVICE SUPPLIER SERVICE SUPPLIER RSTO) NEGA, NSoAo) ‘NS (10/10) NS (@/i0), 51070) ‘NS (9/10) S000) NS (lao) SiO) Scar) SATO) NS who} S070) S100), 5 (6/10) S@A0) NS (10710) RS cio) SEN) “Scart; ~~] NSTIOAOT RS (ior NS ovo} NS TOO} S710 MOTIVE (Competive Aivariane Exploiting Core Competency improved Quali inventory Reduction [fine rbot [Levering Cepia [Market AccersiGlobaliation {SuopivDemand stability [Technorogicar Access Paired Comparison of European Alliance Motives [Significance (Results out of 10 replicationsi] MANUFACTURER: MANUFACTURER: DISTRIBUTOR- DISTRIBUTOR SERVICE SUPPLIER SERVICE SUPPLIER NS 0710) sna | __Saaioy S00) NSO) NS iOAO) NSO) Rwy SG/IOF NSa/ioy RSA, Sao) NS (10) N5U10/10) 510/10) NS ONO, NSO), S160) Frechnological Access NSO) $1910) SaWI0) [S:_ Significant at = 05 NSz_Not Significant at @ = 05 monve Exploiting Core Competency Improved Quay Inventory Reduction Leadime Perlormance Improvement Leveraging Capital arker Access/Globalization Page 26 The Intemational Journal of Logistics Management Table 0 Palrod Comparioon of Pacific Basin Alliance Motives [Significance (Results out of 10 replications)] Volume 7, Number 2 Motive MANUFACTURER MANUFACTURER DISTRIBUTOR DISTRIBUTOR SERVICE SUPPLIER SERVICE SUPPLIER inventory Reduction RS @ioy NSCO7IO) S070) [Leveraning Cantal RSiTONGF NS (GIO) Sa10710) Suppiy/Demand Stabiliy NS (HOO) NS (HOO) SO Frechnolagical Access SOMO) NS (GO) RS (10) 5 _ Significant at = 05 NSE Not Significant at @ =05 evident in each trading region. in other words, the results do not adequately confirm or reject that differences exist between these ‘groups’ responses. As such, the decision to statistically reject the null hypothesis for the differences may be erroneous at a = .05. Specifically, in North America (see Table 7) the significant difference between manufacturer-distributor motives concerning Leveraging Capital and the significant differences between manuiacturer-service supplier motives concerning Market ‘Access/Globalization and Supply/Demand Stability are too inconsistent to be considered reliable. In Europe (see Table 8), the significant difference between. manufacturer-distributor motives concerning Inventory Reduction and the significant difference between distributor-service supplier motivations concerning Market ‘Access/Globalization are also. too inconsistent to be considered reliable. In the Pacific Basin (see Table 9), the significant difference between manufacturer-distributor perspectives concerning Inventory Reduction, the significant difference between manufacturer-service supplier motivations concerning Leveraging Capital and distributor-service supplier motivations concerning Supply/Demand Stability are again too inconsistent to be considered reliable. The remaining significant differences can be examined with a much higher level of confidence and are reviewed the following Discussion section. Trading Regions chain than do either European or North American channel members. More specifically, the mean responses of Pacific Basin manufacturers, distributors and service suppliers generated only two statistically significant differences with regard to alliance formation motives. Conversely, there were ten significant differences in the North American respondent base and seven significant differences in the European respondent base. ‘One potential explanation for the more synergistic Pacific Basin perspective is the cultural tradition of cooperation in many countries within the region. Second, government encouragement of interlocking corporate channel structures may explain this synergy. Third, the majority of Pacific Basin retail and wholesale businesses (including storage space) are small and require frequent deliveries of smaller quantities. As a result, highly coordinated time-based supply strategies have been developed in countries like Japan. These strategies require the cooperation of all channel members to support such coordinated supply chain activity. The higher incidence of significant differences in Europe and North America may reflect more competitive rather than cooperative business traditions, particularly in the United States. The majority of European and North American retail and wholesale businesses are physically large and include more backroom storage. Also, significant industry consolidation is driving businesses to achieve operational benefits from economies of scale. These factors tend Differences in Differences in consistency of alliance [fOr economies of scale. These factors tend consistency of alliance motives existed within each trading region. ‘© f sous aea ACO motives existed within Pacific Basin channel members exhibit 200 Cooperation of imeial, rather Wan each trading region. considerably more consistent motivations for °Xternal, business efforts. Finally, the 1996 alliance formation up and down the supply political-legal environment regarding Page 27 antiteust issues provides far less latitude toward overt cooperation in Europe and North America. The slightly more consistent motivations in Europe compared to North ‘America may be explained by recent integration efforts within the European ‘Community and a recognition that mutual market opportunities can be achieved by more supply chain integration. ‘Channel Members Within Regions Differences in alliance motives at the channel member level were also clearly evident. The overwhelming majority of significant differences at the channel member level involve service suppliers with either manufacturers (six significant differences) or distributors (eleven significant differences), rather than between manufacturers and distributors (one significant difference) For example, in North America, Inventory Reduction and Lead time Performance Improvement were much more important to manufacturers and distributors than to service suppliers. In Europe, these motives were much more important to distributors than to service suppliers. This response appears logical because neither Inventory Reduction or Lead Time Performance Improvement directly benefit service suppliers since they do not own inventory and have the accompanying risk. Conversely, Technological Access, Exploiting Core Competency and, in North America, Market Access/Globalization were significantly more important to service suppliers. Service suppliers often achieve valuable economies of scale by increasing, domestic and/or global sales volume to develop critical mass. Scale economies decrease asset-specific technological investments and provide service suppliers with the opportunity to develop expertise with leading edge technological applications and systems. Manufacturers and distributors are less concerned with such benefits. Interestingly, these differences between channel member perspectives were much less apparent in the Pacific Basin where Inventory Reduction and Leveraging Capital were significantly more important to distributors than to service suppliers Implications of the Results “The motivation to engage in an alliance represents a firm's strategic and operational expectation of benefits. This research suggests that the goals and expectations of firms will vary with regard to alliance motives based upon global trading region and channel member position. These distinctions raise several important issues. First, the consistency of alliance motives varies throughout the supply chain according to the global trading region. The synergy of Pacific Basin motives implies that a channel-wide focus is more prevalent than a limited, self-serving internal focus in this region. Moreover, foreign firms considering an alliance in this region are likely to confront the expectation that complete supply chain cooperation exists. The existence of this consistency is open to interpretation, due to sociocultural, governmental or structural reasons, but the fact that it exists requires acknowledgment by lead time managers forming alliances in the Pacific Basin. it should be noted that the consistency of Pacific Basin motives does not imply a lack of competitive rigor. If anything, it represents a strong contributing element to those firms’ understanding of competition at the channel level, as opposed to individual firm level. In Europe, alliance motives are less consistent than the Pacific Basin but slightly more consistent than in North America. The rapid, significant political and economic changes in Europe encourage, if nat demand, that firms be willing to modify how business is conducted. Recent efforts in the European Community 0 achieve monetary standardization and improve the ease of cross-border commercial activity reflect such efforts to cooperate. In spite of a general agreement regarding the primary objectives of the European Community, how to accomplish those objectives in a way that is beneficial to everyone remains open to debate. In general, these cooperative efforts are occurring very slowly, and the current state of channel alignment regarding alliance motives is consistent with this lack of consensus. Beyond the strong historical tradition of competition and strong antitrust protection, the lack of consistency in North American alliance motives is perhaps best illustrated by the difficulty of achieving a consensus with The motivation to engage in an alliance represents a firm’s strategic and operational expectation of benefits. The synergy of Pacific Basin motives implies that a channel-wide focus is more prevalent than a limited, self- serving internal focus in this region. Page 28 The international journal of Logistics Management these results indicate that there are differences in alliance formation motives at the channel level between suppliers of services (service suppliers) and buyers of services (manufacturers and distributors). regard to the Efficient Consumer Response (ECR) initiative in the United States grocery industry, The ECR initiative requires significant coordination, cooperation and alignment of supply chain participants and is driving considerable alliance activity in the industry. Yet despite the fact that the supply chain benefits are well-documented, the allocation of such benefits between manufacturers, distributors and service suppliers remains a troublesome issue and firms continue to struggle to form channel- wide alliance relationships. The research results broadly imply that consistency of alliance motives is more liekly to occur in the Pacific Basin, and that the inconsistency of alliance motives may occur in Europe and North America. In other words, the ability to achieve a “win-win” solution depends not only on the prospective partner, but also may be influenced by the partner's geographic perspective. Second, manufacturer and distributor alliance motives are much more closely aligned compared to either channel member in conjunction with service suppliers in North America and Europe. This result supports recent research which noted strong similarity between manufacturers and distributors across most practices and perceptions of business today and their expectations for the future (18) ‘A particularly important implication for service suppliers arises from this observation. From a managerial perspective, these results indicate that there are differences in alliance formation motives at the channel level between suppliers of services (service suppliers) and buyers of services (manufacturers and distributors). This observation is consistent with previous research which considered only U.S. firms’ alliance motives [19]. Where differences in channel member motives do occur, potential market opportunities for service suppliers exist when they are able to understand customer motivations which are different, but potentially complementary, to their goals and objectives. It is critical for service suppliers to customize solutions that meet potential customer goals and objectives while achieving the necessary levels of economies of scale and scope in service suppliers’ operating structures. In recent years, the recognition of such opportunities has frequently been given considerable attention, discussion and marketing effort however, translating that recognition into Viable service options has been problematic. Recent research that documents manufacturer and distributor dissatisfaction with service supplier performance supports the necessity of recognizing the potential of such market opportunities [20] Jn summary, the research results imply that alliance motives are likely to be more Closely aligned between manufacturers and distributors, and that alliances that include service suppliers may require careful design and development to creatively meet the goals and objectives of all parties. In other words, customization of alliance activity should also include consideration of a partner's specific business role in addition to its geographic alignment. Limitations Several limitations exist with regard to this study. First, differences in the interpretation of the 10 survey motives may have occurred due to cultural and/or language considerations. While the survey was translated according to prescribed international research procedures, distinctions in terminology and usage may still have occurred. Due to these differences, statistical tests of mean differences were only performed within regions to limit any differences due to misinterpretation. Second, while the 10 survey motives appear to accurately reflect the relevant literature base as well as practitioners’ perspectives, additional objectives or goals ‘may exist which motivate atliance formation For example, alliances that focus on new product development may incorporate other more specific motives. Moreover, some of the motives may overlap (Achieving Competitive Advantage and Exploiting Core Competency), be construed as too broad (Improved Quality) or as overly abstract (Exploiting Core Competency). Third, respondents were not asked to rate the 10 survey motives with regard to specific channel level or position that is, how each motive differed between manufacturer- distributor, manufacturer-service supplier and distributor-service supplier alliances. This information would have provided a more conclusive explanation for any variations in alliance formation motives across channel levels Volume 7, Number 2 1996 Page 29 ———— Future research that explores the nature of alliance motives and considers potential differences with regard to a broader spectrum of motives is necessary to better Understand the role that motives play in the alliance formation process. Further, research should be expanded to include a greater number of countries and trading regions including South America, Conclusions The research presented in this paper provides important insight into a key Component of alliance practice: why firms are motivated to form alliances. The results demonstrate that motivation differs based on the geographic position of the alliance partner. As an example, in the Pacific Basin, where firms are limited by storage space constraints, Supply/Demand Stability ranked ‘a5 a more important motive than in North ‘America and Europe. Thus, if a United States manufacturer would like to form an alliance with a Japanese retailer, the manufacturer may need to explicitly consider how supply stability will be achieved in the proposed alliance. The results also demonstrate that motivations often differ by channel member position. This point was more noticeable in North America and Europe than in the Pacific Basin. Often, buyers of services are motivated by different goals than sellers of services. This implies that in order to achieve a “win-win” relationship, the prospective partners need to determine how their motives, if different, can be creatively positioned to compliment, not distract from, one another. In other words, a “win” is not the same thing to all channel members in all trading regions. As such, each partner must provide a clear recognition and ‘communication of what a “win” constitutes in order to achieve alliance goals over time. Referenes [1] Lalonde, Berard J. and Martha C. Cooper, Partnerships in Providing Customer Service: A Third Party Perspective, Oak Brook, IL: Council of Logistics Management, 1989; Van de Ven, Andrew H., “On the Nature, Formation and Maintenance of Relations Among Organizations,” Academy of Management Review, Vol. 1, No. 4 (1976), pp. 24-36; Kogut, Bruce, “Joint Ventures; Theoretical and Empirical Perspectives,” Strategic Management Journal, Vol. 9, No. 4 (July-August 1988), pp. 319-332; Ellram, Lisa M. and Martha C. 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[20] Lieb, Robert C., “Third-Party Logistics Report,” Traffic Management, Vol. 34, No. 2 (February 1995), pp. 28-51 Volume 7, Number 2 1996 Page 31 Robert Frankel ‘s an Assistant Professor of marketing in the School of Business at East Carolina University. He holds a Ph.D. in marketing from Michigan State University. He is co-author of the research monograph ECR Alliances: A Best Practices Model, and he has published in the Journal of Marketing Theory and Practice, Logistics Technology | International, Transportation Journal, International Journal of Physical Distribution and | Logistics Management and various proceedings. He can be reached at the East Carolina University, School of Business, Department of Marketing, Greenville, NC 27858-4353. Phone: (919) 328-6607. Fax: (919) 328-4095. Judith Schmitz Whipple is an Assistant Professor of marketing and logistics in the Haworth College of Business at Western Michigan University. She holds a Ph.O. in marketing from Michigan State University. She is co-author of the research monograph ECR Alliances: A Best Practices Model, and she has pubished in the Journal of| Business Research, Industria! Marketing Management, Joumal of Marketing Theory and Practice, The Logistics Handbook, International Journal of Physical Distribution and | Logistics Management and various proceedings. She can be reached at the Wester Michigan University, Haworth College of Business, Department of Marketing, Kalamazoo, Mi 49008. Phone: (616) 387-6140. Fax: (616) 987-5710. Page 32 The Inverationsl Journal of Logistics Management

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