Risky, but trendy Alliances are particularly common in the Internet economy, where agreements, such as the wireless communications partnership between Vodafone AirTouch and Vivendi, help firms attempt to gain quick access to new resources in rapidly changing markets. The Internet networking industry leader, Cisco, has been involved in over 15,000 partnerships with other companies. Similarly, the wireless communications industry leader, Nokia, has used hundreds of alliances to extend its business around the world. No company in any industry can survive for long without an effective alliance strategy. At the same time, though, alliances are highly risky.
Research shows that unsuccessful alliances often contribute to major business problems.
The recent break up of the Global One telecommunications alliance, for instance, has interfered with the pan-European expansion of its partners, Deutsche Telekom, France Telecom, and Sprint, leaving them at least temporarily vulnerable to competitive strategies from other telecoms companies. Moreover, the fastest growing type of alliance is the highly volatile link alliance in which partners each contribute different types of resources to a partnership. Link alliances create many learning opportunities for the partners, but are often short-lived and require quick alliance management action to achieve their benefits. It re- mains an open question why some alliances succeed and others fail. Despite growing recognition of the importance of alliances and the need for quick effective management, it remains an open question why some alliances succeed and others fail.