Strategic Business Alliances - Are you ready to Partner?

Partnering with other businesses can be a great way to grow and develop your business. Reaching new markets, reaping economies of scale, developing new skills, and sharing risks are just a few examples of how businesses can benefit from alliances.

Of course, alliances are only worth pursuing if there is a strong business case. The right market conditions must exist, the businesses involved need to have the right setup and resources, and the partners need to bring balanced but complementary strengths to the alliance.

But a strong business case is often not enough to ensure success. In fact, business partnerships, even those which seem to have all the right ingredients for success, continue to fail at an alarming rate. One reason for this is that business partnerships are not just about business, they are also about people.

Research on alliances in business is extensive and has focused on various areas including the characteristics of the exte
al environment and the firm as antecedents to alliance formation, the nature and various forms of partnership, and outcomes and criteria for success. But few studies and resources give due importance to the individuals...the people involved in forming and sustaining business alliances, and their personal characteristics.

One of the few resources that does look at strategic business alliances from a people perspective is PROPAT (propensity to partner assessment tool) which highlights the importance of the characteristics of the entrepreneur. PROPAT was initially developed as part of research project to examine whether and to what extent the propensity to partner in business is influenced by characteristics of the entrepreneur.

The research underlying PROPAT identifies seventeen separate characteristics potentially affecting this propensity and proposes the hypothesis that entrepreneurs possessing these characteristics have a greater propensity to partner with other businesses. It also includes an analysis of known characteristics of family businesses and examines their relation to alliance-formation behaviour, building on the hypothesis emanating from prior research that as a result of their unique characteristics family firms tend to be less inclined to form business alliances.

The validity of these hypotheses was tested with empirical research using PROPAT, a self-assessment tool designed to measure an individual’s propensity to partner using a scoring methodology linked to the various characteristics identified in the research.

In the survey, entrepreneurs with prior alliance experience scored much higher on PROPAT than entrepreneurs who had never been involved in alliances, indicating that the propensity to partner is indeed influenced by certain attributes, attitudes and behaviours of the entrepreneur. Marked differences in scores were noted in characteristics such as acceptance of interdependence, the readiness to invest time and money in the face of uncertainty, active networking within the business community, an orientation toward absolute rather than relative gain, and patience and flexibility.

Interestingly, the survey revealed that entrepreneurs of family businesses may not necessarily be more wary of business alliances, as the theory suggests. Non-family-firm entrepreneurs scored only marginally higher on PROPAT than entrepreneurs of family businesses in the survey.

PROPAT is now available at www.propatalliance.com where people involved in any form of business alliance can learn more about the relevance of personal characteristics and take the test online to measure their propensity to partner and discover their personal ‘alliance profile’.