Performing better through alliances?; the case of the high-tech industry

This thesis deals with the question whether firms in an alliance perform better with regards to innovation, market performance and financial performance. This thesis begins with the discussion of several theories on this theme. Entering alliances with other firms have become a rule, rather than an exception. It is relatively difficult to acquire new knowledge or to develop, manufacture and market products individually. Using complementary assets from each other is considered a necessity to survive competition. Innovation is also regarded to be necessary in order to survive. By doing so, firms enable themselves to work more efficiently and qualitatively better than thier rivals. An often chosen way to innovate is to file patents. Theory indicates a positive effect of alliances on market-, financial- and innovative performance, which is formulated in five hypotheses. Furthermore, the relation between alliances and financialmarket- and innovative performance have in this thesis also been applied to three major high-tech industries: the biotechnology, pharmaceutics and IT industry. For the empirical research, SDC Platinum was consulted (to acquire information on worldwide alliances), Thomson One Banker (to extract financial data from) and Esp@cenet( for counting patents applied for by companies). After running an independend t-test, linear regression and bivariate correlation test for all financial rates and patents, it has turned out that the t-test and correlation test showed somewhat different results than the OLS regression does. Return on Invested Capital and Return on Sales have appeared to be higher for non-allying firms and if a firm decides to enter an alliance, those same rates are most likely to decrease. The regression results suggest that all hypotheses can be accepted, and as control variables are included, this gives stronger evidence to accept the hypotheses. Overall, the assumption that allying firms procuce a higher rate of Return on Sales, Return on Invested Capital, Sales, Research and Development to Sales and Patents, is true. On average IT firms show higher values of variables more often than firms of the pharmaceutics and biotechnology industry. All three industries demonstrate a positive linear relation between alliance and two variables: Return on Sales and Sales. Biotechnology and pharmaceutics business both show a positive linear relation between alliance and patents. The same holds for alliances and Research and Development to Sales for biotechnology and IT firms.