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Successful Alliance Establishment And Evolution In A Volatile Business Environment: The Case Of "Cellars Of Canterbury"

  • Oliver, Lance D.
  • Gow, Hamish R.
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    Little attention has been given to the process of development that leads to alliance relationships flexible enough to withstand unforeseen environmental shifts and evolve while others fail. We believe that the problem stems from the contractual rigidity imposed by partners in the initial stages to the formation of an alliance. This paper analyzes a process to create self-enforcing agreements that lead to a flexible alliance architecture capable of reconfiguration to meet the demands of environmental change. Using an empirical case study of "Cellars of Canterbury" a New Zealand wine producing and marketing joint venture, we suggest that immediate value creation establishes private enforcement capital in a relationship which allows for critical relation-specific investment to take place without the need for written contractual safeguards. We also emphasize the advantage of external contract enforcement mechanisms and third party verification in reinforcing these relationships. We then argue that it is this lack of contractual rigidity that allows an alliance agreement to be reconfigured when environmental circumstances change.

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    Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19808.

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    Date of creation: 2002
    Date of revision:
    Handle: RePEc:ags:aaea02:19808
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    1. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
    2. Mick Carney, 1998. "The Competitiveness of Networked Production: The Role of Trust and Asset Specificity," Journal of Management Studies, Wiley Blackwell, vol. 35(4), pages 457-479, 07.
    3. Hamish R. Gow & Johan F. M. Swinnen, 2001. "Private Enforcement Capital and Contract Enforcement in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 686-690.
    4. Klein, Benjamin, 1996. "Why Hold-Ups Occur: The Self-Enforcing Range of Contractual Relationships," Economic Inquiry, Western Economic Association International, vol. 34(3), pages 444-63, July.
    5. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-98, December.
    6. Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
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