THE EXTERNAL ALLIANCES OF JAPANESE KEIRETSU MEMBER FIRMS

We investigate the alliance formation of firms affiliated with Japanese business groups (Keiretsu affiliates) and their strategies of choosing suitable partners. Although Keiretsu affiliates mainly exchange resources with same-group peers, they would form alliances with external partners to complement their network. Accordingly, we set out to explore how Keiretsu affiliates form external alliances by evaluating three factors that could affect their decisions: environmental uncertainty, collaborative uncertainty, and inter-Keiretsu competition. Our analysis has shown that Keiretsu affiliates would form alliances with external partners to complete their capabilities when environmental uncertainty is high. This preference will be reinforced as they gain more experience in external alliances. In the meantime, Keiretsu affiliates consider collaborative uncertainty, in that they prefer external Keiretsu affiliates to stand-alone to cope with a highly uncertain environment because the former has high creditability and support from their business groups and could potentially contribute more to the alliances. Our theoretical and empirical analysis reveals how Keiretsu affiliates weighing between uncertainty and competition in their partnering decision.