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Strategic alliances and new product development: the cases of Rover and Seat

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  • Álvarez, María José
  • González de la Fe, Pedro

Abstract

The large influence of the automotive industry in the global economy is widely recognised. This sector has undergone enormous changes in order to be ready for the fierce competence of the next to come 21st century. Among theses transformations, the most relevant are those technologies developed for the rapid evolution of the activities linked to new designs, new products, and new manufacturing processes and systems, which aim to cope with the always innovative Japanese car makers. International technology alliances may be one option to gain access to the brand new competitive technologies. At the same time, the risks and costs associated with new product development are shared among the allies, as well as the manufacturing facilities and production capabilities. Sometimes, the agreement may even give place to the deployment of new capabilities. In spite of its many potentialities, the literature presents the success rate of alliances being below a 50 percent. Our study considers two examples of companies that developed international joint ventures (UVs), Rover with Honda, and Seat with Volkswagen, respectively. Since these two European peripheral companies, Rover and Seat, no longer remain as independent firms, we are interested on identifying the reasons leading to the success or failure of these UVs as regards the New Product Development (NPD) process. In spite of the fact that most of the literature characterises the strategic technology alliances as highly successful, new empirical evidences are questioning that consensus. In particular, some recent cases are bringing into the limelight the dangers associated to enter an UV when one of the partners is weaker than the other and it does not have a well defmed strategy. The weakest firm can become completely reliant on its associate, thus aggravating and accentuating its constraints. Our article addresses the question of possible dependencies along the NPD process in the Rover and Seat cases and looks for an answer to the question of how such type of addiction affects the survival of the firms.

Suggested Citation

  • Álvarez, María José & González de la Fe, Pedro, 1998. "Strategic alliances and new product development: the cases of Rover and Seat," DEE - Working Papers. Business Economics. WB 6537, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    • Handle: RePEc:cte:wbrepe:6537
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