The governance and contractual issues arising when businesses form strategic alliances with each other are "multi-dimensional, and hopefully the work from this conference will begin to tackle the messy issue of alliance design." So said Jeff Reuer, associate professor of the University of North Carolina, U.S.A., when he opened the research conference "Strategic Alliance: Governance and Contracts," which was being held June 16-18 at IESE Business School, Barcelona.
Reuer shared highlights from new research he is undertaking with IESE Prof. Africa Ariño, who specializes in the area of strategic alliances, particularly in process issues and evolutionary aspects of the inter-partner relationship. Dr. Ariño is the academic director of the Anselmo Rubiralta Research Center on Globalization and Strategy at IESE, which sponsored the conference.
Business Schools Around the World
Some 40 researchers and experts, representing as many business schools around the world, gathered at IESE for three days to share as-yet-unpublished research papers and to exchange ideas exploring the design and management of collaborative agreements and contractual arrangements undertaken by firms, and the many decisions involved. An edited volume containing selected research from the conference will be published subsequently.
To ensure that the research remained rooted in reality, the organizers invited two practitioners to share their own personal experiences of contracting in alliance: John Bell, vice-president of corporate alliances at Philips Electronics, and Antoni Valverde, a transactional lawyer for the international law firm Freshfields Bruckhaus Deringer.
Building a Living Relationship
Both speakers stressed that, as important as contracts are in defining the parameters of any business alliance, ideally you should put the contract in a drawer while the alliance is working, and focus on building a living relationship with the other partner. "In my experience, I have seen companies becoming more sophisticated in their understanding of contractual alliances, and showing a greater interest in getting on," said Valverde. He advised against the "irritating" tendency of some firms to constantly refer back the contract, quoting chapter and verse, using the contract as a stick with which to beat the other party.
Perhaps because of this propensity for pettiness, Bell acknowledged that the majority of all alliances tend to fail. Therefore, he shared the model that Philips used to try to make them more successful. Involving legal as early as possible when first considering an alliance was crucial, he said, adding that it was also important to consider at the outset how you will end the alliance, "when you are still in love with other, rather than waiting till you have reached an impasse and are fighting and it is too late."
On this point, Bell urged the researchers gathered at the conference to look in more depth at the whole area of exit strategies. "My preferred topic for future research would include looking at different types of exit arrangements and determining which kinds work best in which situations."
Over the course of the conference, around two dozen papers were presented, involving top business schools such as HEC, Michigan, LBS, Wharton, Fuqua and Haas. Participants came from the U.S.A., Europe, Australia and Japan.
In welcoming participants to the conference, IESE Dean Jordi Canals pointed out that IESE has a long history of forming strategic alliances with other business schools around the world and of devising governance mechanisms that work for both parties. By way of example, he cited the IESE partnership with CEIBS in Shanghai, and the recent establishment of a new school in Kenya - the third such venture in Africa following other business school alliances in Nigeria and Egypt.
