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Product differentiation and the choice of alliance partners

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  • James Sawler

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.

Suggested Citation

  • James Sawler, 2009. "Product differentiation and the choice of alliance partners," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 11(3/4), pages 281-287.
    • Handle: RePEc:ids:gbusec:v:11:y:2009:i:3/4:p:281-287
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