A Study of Value Creation and Value Appropriation In Inter-Firm Alliances of Simultaneous Cooperation and Competition

Abstract

Relatively little is known about how value is created and appropriated in inter-firm alliances of simultaneous cooperation and competition. In this dissertation, I address this gap from both theoretical and methodological perspectives. First, I propose a theoretical framework that delineates and explains the distinction between value creation and value appropriation in such inter-firm alliances. Second, I adopt a mixed-method approach and develop a new and psychometrically valid scale for measurement of value creation in such inter-firm alliances; in particular, in addition to the two dimensions currently used, namely ‘co-created value’ (commonly known as ‘common benefits’) and ‘private value cooperation’ (commonly known as ‘private benefits’), I propose the inclusion of a third-dimension, namely ‘private value competition,’ which is created as a result of competition with the alliance partner. Third, I advance the notion of ‘alliance competence’ and ‘alliance management capability’ by developing a conceptual framework for ‘alliance development and management,’ which posits that it is a three stage sequential process comprising ‘alliance mobilization,’ ‘alliance stabilization’ and ‘alliance sublimation.’ Finally, I propose an integrative model for value creation showing syncretic relationships among variables drawn from multiple theoretical perspectives. I then empirically test it by employing component-based partial least square (CB-PLS) path modeling technique on 447 cases representing 288 dyadic alliances collected from 155 firms in five high-technology knowledge intensive sectors of Indian industry.