Seizing the Shadow: How Firms Benefit from Nonshared resources

Our research explores how a focal firm benefits from nonshared resources of its alliance partner. By “nonshared resources”, we mean resources that are not directly dedicated to a partnership by a firm, and are unexpected to be acquired by its partner. A dominant approach to analyze alliance and partnership is the resource-based view (RBV), which indicates that the more VRIN resources a firm have, the more likely the firm will be involved in strategic alliances. Existing literature emphasizes complementary resource sharing, and highlights the importance and legality of profiting from shard relational-specific resources. This leaves the nonshared resources as a shadow area. Nonshared resources are important because it can be a source of inbound spillover rent. However, appropriation of spillover rent and benefiting from nonshared resources are always treated as the result of salient opportunistic behaviors, and will then harm the partner. Existing researches thus emphasize the protection of nonshared resources (Kale et al., 2000; Lavie, 2006).
We found the above arguments unconvincing. We believe that partnerships can provide alliance firms with opportunities that beyond their current collaboration scope, in which non-shared resource plays an important role. A few researches have touched upon this topic, though still very insufficient. Stuart (2000) treats alliances as endogenous, and investigates whether firms that have strategic alliances outperform those outsiders. The study finds out that the competitive advantage of a focal firm depends upon the resource profiles of its alliance partners. For example, the focal firm’s innovation rate is positively related to its partners’ technological capabilities; while its sales growth is positively related to partners’ revenues. Saxton (1997) investigates the impact of partner specific characteristics on alliance outcomes, and proves that firms can benefit from alliance participation and partner’s reputation. In the above cases, partners’ technological capabilities, revenues and reputations are nonshared resources, yet will benefit the focal firm. We argue that a focal firm can leverage benefits from its partner’s nonshared resources without harming the partner. Yet, no systematic and process theories on how a focal firm can benefit from nonshared resources of its partner have yet been developed.
Thus, we employs a multiple case study method by combining network and resource perspectives in a model of nonshared resource leveraging that explains how a focal firm benefits from nonshared resources of its alliance partner. The model is grounded in observations, interviews, informal conversations, and archived data gathered in two cases -Sunyard and Grundfos. These two firms both exploit their network position within an interdependent relationship to leverage partner’s nonshared resource, such as partner’s reputation, to sustain their own competitive advantages. Sunyard and Grundfos, in the process, exploit their access to their partners for acquiring the valuable cooperation experience and later on retrieving partner’s reputation to enter relevant business areas. This paper tries to discuss the process and mechanisms that how organizations profit from nonshared resources in a legitimacy way.