Multi-party alliances: the more the merrier?

Much research has been conducted into alliances to understand why firms find partners with whom they can complete their innovation projects, and into the effect of alliances on firms’ performance. However, to date, very little research has been conducted to understand why firms would form an alliance with two partners, rather than 3 or more (a multi-party alliance). The dissertation finds that multi-party alliances are highly contextual. Industries where products are characterised by a lot of small, individually ownable parts (such as aircraft manufacturing or computers) make it easier for firms to work together in larger groups. Also, firms tend to be more comfortable forming a multi-party alliance when they have previous experiences with at least one of the partners. Once a firm has entered into a multi-party alliance, it tends to continue this participation in the future. Furthermore, the research shows that firms still prefer the flexibility of contracts when working with multiple partners, rather than seeking control through a joint venture. All in all, multi-parties seem to be entered into not because they are superior to alliances with two partners, but because the situation requires and facilitates a larger partnership with multiple partners