Title: Product differentiation and the choice of alliance partners

Authors: James Sawler

Addresses: Mount Saint Vincent University, 166 Bedford Highway, Halifax, Nova Scotia, B3M 2J6, Canada

Abstract: Given the recent proliferation of the use of alliances as a key business strategy, the nature and extent of alliance formation must now be considered a significant element of any analysis of firm behaviour. This article contributes to this analysis by examining the relationship between a firm|s choice of partners for a horizontal strategic alliance and the extent of differentiation among the firm|s product and those of its competitors. A non-cooperative, two-stage game is developed and analysed; the results suggest that it is more profitable for a firm to ally with a competitor whose product is more greatly differentiated from its own.

Keywords: strategic alliances; joint ventures; product differentiation; strategy; game theory; alliance partners; partner selection; alliance formation.

DOI: 10.1504/GBER.2009.031175

Global Business and Economics Review, 2009 Vol.11 No.3/4, pp.281 - 287

Published online: 24 Jan 2010 *

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