Business and Politics: A novel approach to studying international business alliances
We presented a novel approach to studying international business alliances by initiating a new conversation in an interdisciplinary context: political science, international relations and management. We offered new variables and theoretical applications to enrich our knowledge in inter-firm alliances and inter-nation alliances. We bridged the gap between these seemingly distant realms by identifying the common thread that connects them. At first sight, alliances between nations and business firms seem to have little in common: each have different set of players and are subject to different game rules. Nation-state alliances are negotiated by politicians and implemented by government officials to achieve goals such as national security; while, inter-firm alliances are established, managed, and monitored by company executives and employees to achieve objectives such as market entry and learning. In the “Business as International Politics: Drawing Insights from Nation-State to Inter-Firm Alliances” paper, we argued that management discipline learned from political science and international relations but also shared its knowledge with these two areas because differences notwithstanding, the two alliance types have more in common than may meet the eye. Political science scholars have pointed out that states often behave like business firms, while multinational enterprises are said to behave like nation states. Like firms, nation-states use alliances to achieve economic and quasi-economic goals such as pooling complementary capabilities and regulating trade, while firms are concerned with security and survival. While business alliances are typically underwritten by contract, political allies sign a document that is neither legally binding nor legally enforceable. Despite the possibility of enforcement, the signatories to a business alliance often forfeit legal action given the cost and uncertainty of litigation and enforcement action.
The main contribution of this paper rests in its treatment of identifying contingent and moderating variables by introducing an inflow of ideas and knowledge thereby allowing potential cross-fertilization across different disciplines. The integrative approach involving multi-level treatment of theories and operationalization of constructs initiates a fresh conversation and help us avoid a premature closure. We change the static and unitary approach to dynamic and relational methodology. Instead of focusing on a single theory or juxtaposing theories, we use “theory-sharing platforms” to show how management versus political science side of alliances share commonalities and also differ from each other. The proposed relationships were worded such that a new debate would emerge by focusing on a nation-state context where a new variable would impact business alliance formation, durability or termination. This unique approach not only borrows valuable insight from political science and international relations literatures and introduces them to management domains such as strategic management and international business; but also allows management theories to offer new insight vice versa. We elaborate on the extent by which alliance research contributes to both sides by developing propositions on selecting alliance partners, what it means to have strong versus weak partners, how few versus many partners impact alliance formation and longevity in stable versus unstable environments, and how the political and economic dynamics impact the alliance processes.
For further discussion on this topic
Read the article ‘Business as International Politics: Drawing Insights from Nation-State to Inter-Firm Alliances’ from journal Business and Politics, which can be read online at this link. Enjoy free access until the end of January 2018.