International Business Strategy by unknow

Author:unknow
Language: eng
Format: epub
ISBN: 978-1-317-90664-3
Publisher: Taylor & Francis Ltd

Hypothesis development

Mimetic effects in international alliance formation

International marketing alliances of companies in a specific industry, which vie for resources in the same competitive domain, can be regarded as a population that strives for survival in the global market. A population is defined by a collection of entities with a similar degree of environmental dependence, common reliance on certain resources and limits to the range of activities and structures assumed (Hannan & Freeman, 1977). Therefore, the environmental level of co-evolution can be employed to study the effects of changes in the density of the international alliance population on the likelihood of a new cross-border alliance being initiated.

Assessing the dynamics of competition for resources and how constraints in the environment affect relative sizes of different populations is one means of explaining and predicting outcomes (Hannan & Freeman, 1977). While there are a number of important considerations when entering international markets through alliance relationships, perhaps the most significant is the choice of partner firms: the pool of potential collaborators is a fundamental resource. New international marketing alliance formations are constrained by the availability of foreign partners as well as by regulatory, geographic and other socio-economic factors.

The size of the population from which appropriate partners can be found is limited to the size of the industry population, effectively establishing it as a niche parameter. This is not to say that the total number of potential partners is fixed over time; it is static only at any given point in time. The total density of the population is a function of the carrying capacity of the niche, which represents an upper bound of the aggregate activity that can be performed by an organizational form (Boone & Witteloostuijn, 1995). Density dependence describes the consequences of competition within a population: the size of a population at any time affects the rate of birth and death from the population (Hannan & Carroll, 1992). At low density levels, legitimation of the population occurs as new entities are formed.

Efforts to establish legitimacy are a function of a firm’s intentions to reflect characteristics congruent with prevailing institutional norms (Oliver, 1990). Since managers tend to be aware of organizations in their own industry, they are inclined to mimic the actions of other firms within their competitive group (Haveman, 1993). The tenets of mimetic isomorphism (DiMaggio & Powell, 1983) provide a means to elucidate the growth of the international alliance formations in this stage of population development. Conceptually, this is considered to be a contagion effect, where trendy ideas proliferate from one organization to another (Haveman, 1993; March, 1981; Rogers, 1962). What emerges is a mimetic process where organizations adopt innovations as a function of the degree to which other firms in their industry have already adopted them. Cycles occur when increases in the number of adopters raise mimetic pressures and these pressures cause the number of adopters to grow (Abrahamson & Rosenkopf, 1993). The mimetic effect – operationalized as the proportion of competing firms engaged in alliances in the previous year –

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