Alliance patterns during industry life cycle emergence: the case of Ericsson and Nokia

Abstract

Industry Life Cycles (ILCs) have been proposed as a means of analyzing the processes of company entry and exit in competitive industries. This paper utilizes ILC approaches to better understand the changing rationales for alliance formation for two large multination electronics firms, Nokia and Ericsson. Through the use of alliance announcements by the firms, we find that the rationale for alliance formation changes over the industry life cycle in response to changing organizational needs and industry imperatives. We also find that the rapid emergence of standards-based alliances has been a strategic response by firms and industries to the growing complexity of information and communication technology systems and the costs involved in ignoring the scale economies that standards-based alliances deliver.