Power Division in Strategic Alliances : How to be Successful despite Power Asymmetry

Abstract: Background: In resent years, the number of alliances has increased rapidly. Through collaborating with other firms, companies hope to gain certain benefits that they cannot reach on their own. However, the division of power in strategic alliances can be asymmetric, endangering the achievement of goals and objectives in the alliance for the less influential party. Purpose: The purpose of this thesis is to identify success factors for companies with less influence and power than their collaboration partner/s in a strategic alliance. Delimitation: This study concerns strategic alliances characterised by one party making an equity investment in the other party. The study is, furthermore, conducted from the perspective of the less influential party with relatively less power in the alliance. Realisation: A case study was conducted based on six interviews and a questionnaire among employees at the mobile operator Swisscom Mobile. The company is involved in a strategic alliance with Vodafone and is part of the world leading Vodafone Group. Results: The main findings of this thesis show that power asymmetry in an alliance originates from factors both on a dyadic level and on a network level and that these levels affect each other. Companies with a weaker power position must strive for counteracting the existing power asymmetry in order to secure their goals and objectives in the alliance. This study shows that this can be achieved through, for instance, partly having different goals than the partner/s, increasing the dependence of the partner/s on the own resources, absorbing information and know-how and learning from the partner/s, building trust in the relationship through personal contacts and safeguarding goals and objectives through a written contract and “economic hostage”.