The Impact of Collaborative Agreement on Firms' Performances: The case of the IT industry in the 90's

In the I.T. industry, which was confronted to a major transition phase during the 90's, partnerships became a strategic component of the new "divided technical leadership" which emerged from the industry vertical disintegration. This paper attempts to evaluate the impact of 1676 partnerships on the financial performance (revenue and profit) and innovative efforts (R&D intensity) of 14 large firms and 725 of their partners. On average, there is a positive impact of collaborative agreements on large incumbents and their partners' financial performance (revenue and income). These results vary according to the type, form and content of the agreement and according to the partner's field of activity. Incumbents get the most benefit from broad scope informal alliances while smaller and more hierarchical forms of partnerships (consortia, joint-ventures) do profit to their partners. For large incumbents, collaborative agreement are more effective when performed with partners from the services industry than with partners from the I.T. industry. The role of partnerships in such an industry transformation phase with heavy cost pressure is confirmed by the negative impact of collaborative agreements on internal R&D spending.