Choosing to introduce a new product alone or in collaboration

What drives firms to choose to develop, produce and commercialize a new product alone rather than in collaboration with another industry incumbent? We (Garrette, Castañer and Dussauge, 2009) argue that, surprisingly, past research has for the most part ignored the overall project requirements and the firm’s overall resource endowment.  Instead past research has focused on rent appropriation concerns, whether it is anticipated contractual hazards with the potential partner/s or from the possible risk of partner imitation of the firm’s strategic resources.

Taking a Penrosian perspective, we argue that managers tend to first think about the possibility of autonomously undertaking new product development, production and commercialization. We believe they assess whether they internally have enough resources (or can buy them) to match the overall resource requirements they expect the new product to represent. If they don’t believe they have enough, they might consider the alliance alternative, with its potential contractual and strategic risks.

We find support for our matching argument in a study of new aircraft development, production and market introduction in the worldwide aicraft industry between 1945 and 2000.

Garrette, B., Castañer, X. and Dussauge, P. (2009). “Horizontal Alliances as an Alternative to Autonomous Production: Product Expansion Mode Choice in the Worldwide Aircraft Industry, 1945-2000”. Strategic Management Journal, vol.30, number 8, 885-894.