ABSTRACT

Alliances tend to be asymmetrical in nature, such that a dominant partner has a bargaining power advantage due to its superior resource endowments.1 When such power asymmetries characterize the relationship, alliance partners are engaged in an asymmetrical alliance; the dominant fi rm can exert power, and the weaker fi rm risks being taken advantage of. In turn, dominant fi rms might appropriate the lion’s share of the alliance benefi ts. Without proper management, power asymmetries create an eminent risk of inequitable value appropriation and sub-optimal alliance performance. Thus partners – especially weaker ones – face a unique challenge: Finding the balance between exploiting resource asymmetries to create value while still preventing the escalation that can result from power asymmetries. This chapter focuses on this asymmetrical alliance challenge (fi rst section) and elaborates on the mechanisms that managers might use to deal with it (second section). Connecting asymmetrical alliances with the alliance development framework offers some guidelines for decision making (third section). We conclude the chapter with a summary and a case illustration.