This discrepancy may be attributed to the fact that while objective measures to evaluate the value of a resource-based alliance can be developed, it is relatively more difficult to do so for a branding alliance. Most firms are in innovative entry mode and recognize that losses and huge investments in acquiring and retaining a customer base are imminent in the present period to reap profits in the future. In addition, uncertainty in market conditions, the rapid pace of change, and the absence of established standards leads to firms in this industry being more tolerant and persistent in maintaining alliance relationships. The development of alliances offers an option to distribute risks across multiple entities and gain strength in the quest to establish preferred standards. Branding is essential in online marketspace where privacy and trust concerns are main barriers to online retailing and there is a need to build consumer confidence in an emerging channel.
Brands act as signals of quality and reliability.
Hence branding alliances allow entrepreneurial firms to legitimize their products and services to consumers. Firms in branding alliances that are in inferior position are more tolerant of short-run dissatisfaction with partner performance than those in technology alliances. This obervation can be explained by the fact that technology partners can be more easily replaced. On the other hand, branding alliances, once developed and executed in the minds of consumers, are relatively more difficult to replace. This is a paradoxical situation, since firms in inferior position need alliances most but are likely to gain less in probabilistic terms even if alliance is successful.