chapter  7
16 Pages

Alliance Evaluation

To maintain effective alliances, alliance partners must evaluate alliance performance continuously; monitoring provides the fi rms with the necessary information to take appropriate actions, whether doing nothing, adapting the alliance design and management or terminating the relationship. Alliance evaluation is complex, however, owing primarily to the multifaceted nature of alliance performance. Most alliance managers focus on intentional outcomes, but they often neglect assessments of emergent objectives, relational processes and intangible outcomes. Furthermore, they tend to use generic metrics, whereas to be effective, performance metrics should align with unique alliance characteristics. An ill-designed performance metric system increases the risk of erroneous decision making, such that alliances might be continued when they should be terminated, and vice versa. To develop and use performance metric systems, alliance managers must thus understand the nature of alliance performance and the issues associated with metrics (shown in the introductory section). Obtaining insights into various performance metric approaches supports the development of a balanced performance metric system (shown in the following section). The following provide a systematic framework with a set of decision-making steps for alliance evaluation and provide a summary before concluding with some case illustrations.