Chapter 9: Cognitive Dissimilarity among Rivals about the State of Competition and Technology Alliance Formation: A Contingency Perspective

How does cognitive similarity among rivals about the state of competition influence their alliance formation? How is this relationship moderated by firms’ strategic choices (such as joining a business association) or the extent of market development (such as the presence or absence of intermediaries)? These questions are the focus of our study.

Though a significant body of literature has examined why alliances are formed, it has mainly focused either on industry conditions (e.g., key industry characteristics such as economies of scale, Kogut (1988) or on firm-specific factors such as resource gaps (Dussauge, Garrette, & Mitchell, 2000), but overlooked the influence of social factors. Our study aims to address this gap in the literature by applying the embeddedness perspective first proposed by Granovetter (1985) which suggests that firms are embedded in, and their behavior is partially determined by, ongoing systems of interfirm relations.This perspective may be highly relevant to key strategic actions by firms such as forming strategic alliances because strategic alliances are vehicles to acquire critical resources and information and improve competitive position (Uzzi, 1997; Wu & Pangarkar, 2010). It also provides an excellent basis for a model of macro (group or social-level) and micro (firm-level) connection since it relates interfirm cognitive structure to firm-level strategic behaviors (Chen, Su, & Tsai, 2005; Zuckerman, 1999).