Relationship Rather than Contract

Strategic alliances are relationships between organizations that provide mutual benefit for each through compromise and alignment of objectives (Bowersox et al., 1992). Unfortunately, too many alliances break down and end up being unsuccessful, which creates the illusion that alliances are a greater waste of resources rather than a creative solution to marketplace challenges (Zoogah and Peng, 2010). Often, alliances are established without anyone tasked with the responsibility to ensure its success through constant monitoring and management, which contributes to the, often surprising, breakdown in the alliance. This is where a strategic alliance manager should be implemented and empowered to monitor, adjust, and work to ensure the success of the alliance, and the success of the allied organizations (Zoogah and Peng, 2010).

There are also other factors that contribute to the breakdown in alliances. Too often the focus on alliances are the contractual agreements between the partnering organizations (Bowersox et al., 1992). Though formal contracts are a necessary part of alliances, what contributes more often to the breakdown of alliances are the violations of the informal social contracts (Frankel et al., 1996). Alliances are relationships, and alliance managers are responsible for insuring the relationship operates in a mutually beneficial way (Zoogah and Peng, 2010). The success of an alliance is not in the formal contracts, but it is in the social management of the relationship.

For instance, successful alliances are reliant on the alliance partners being adaptable and open with one another, which leads to increased trust (Taylor, 2005). This includes a seamless, and honest, knowledge transfer between the alliance partners sharing both migratory knowledge and embedded knowledge (Segil, 2005). This not only insures trust development, but it also provides both parties with the opportunity to approach things from multiple angles not bound by their own organizational culture.


Bowersox, D. J., Daugherty, P., Dröge, C., Germain, R., & Rogers, D. (1992). Logistical Excellence: it’s not business as usual. Burlington, MA: Digital Press.

Frankel, R., Whipple, J. S., & Frayer, D. J. (1996). Formal versus informal contracts: achieving alliance success. International Journal of Physical Distribution & Logistics Management, 26(3), 47–63.

Segil, L. (2005). Metrics to successfully manage alliances. Strategy & Leadership, 33(5), 46–52.

Taylor, A. (2005). An operations perspective on strategic alliance success factors: An exploratory study of alliance managers in the software industry. International Journal of Operations & Production Management, 25(5), 469–490.

Zoogah, D. B., & Peng, M. W. (2010). What determines the performance of strategic alliance managers? Two lens model studies. Retrieved from


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