Performance Relationships in UK International Alliances

Since the mid-1970s, the incidence of alliance formation between partners from advanced industrial economies has accelerated (Anderson, 1990; Hergert and Morris, 1988; Glaister and Buckley, 1994). A major driving force for alliance formation is the recognition by many managements that in, an intensely competitive international business environment, self-sufficiency alone will not bring success, but the ability to compete will be considerably improved with the help of partners (Inkpen, 1995: 1). Two contractual forms of alliance can be identified - equity joint ventures and non-equity joint ventures. Equity joint ventures (EJVs) involve the incorporation of a new company in which two or more partners each hold an equity stake. Each partner will expect to participate in the decision-making activities of the jointly owned entity, will anticipate a proportional share of dividend, and expect representation on the board of directors (Harrigan, 1985; Geringer, 1991). Examples include the 50-50 EJV established in 1988 between ICI of the UK and Du Pont of the USA in industrial paint products for the purposes of product development, production and marketing. From ICI’s perspective, the venture was particularly important in facilitating international expansion and to cope more effectively with a common competitor. From Du Pont’s perspective, the alliance was particularly important in terms of exchange of complementary technology, and enabling both product diversification and faster entry to the market. In 1989, the UK publishing group EMAP established a 50-50 EJV with Bayard Press of France, for the purposes of product development and marketing. The venture facilitated international expansion for Bayard Press, and was particularly important in enabling fast entry to the UK market.