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Measures of Strategic Alliance Performance: An Analysis of Construct ValidityAuthor(s): Africa ArioSource: Journal of International Business Studies, Vol. 34, No. 1 (Jan., 2003), pp. 66-79Published by: Palgrave Macmillan JournalsStable URL: http://www.jstor.org/stable/3557140

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Measures o f strategic a l l i a n c e performance: nanalysis o f construct v a l i d i t y

Africa ArinoIESE, usiness choolUniversityf Navarra,Barcelona,painCorrespondence:DrAfricaAriio, IESE,Business SchoolUniversityof Navarra,Ave. Pearson,21,08034 Barcelona,Spain.Tel: + 3493 253 4200;Fax: + 3493 253 4343;E-mail:afarino@iese.edu

Received: 11 September 2000Revised: 22 August 200123 January20026 May20026 August 2002Accepted: 16 August 2002Online publicationdate: 5 December 2002

AbstractThis study evaluates the construct validity of measures of the performance ofstrategic alliances in 34 equity strategic alliances (SAs) and 45 contractual SAs.We discuss the content validity of existing measures in the light of currentconcepts of SA performance. Empirical results show that the fulfilment ofstrategic goals, and other organizational effectiveness measures of SAperformance - such as overall performance satisfaction and net spillover effects- capture different underlying factors. The latter two measures displayconvergent validity. The results also support the discriminant validity of thesetwo measures with respect to contractual changes and survival, but not withrespect to longevity. Building on our findings, we propose an expandeddefinition of SA performance that considers both outcome and processperformance.journal of International Business Studies (2003) 34, 66-79. doi:10.1057/palgrave.jibs.8400005

IntroductionThe measurement of the performance of strategic alliances (SAs)has been an important researchtopic in the field of internationalmanagement (Geringer and Hebert, 1991; Yan and Zeng, 1999).However, the validity of the underlying measures is stillquestionable, and no attempt has been made to estimate theirempirical validity (Parkhe, 1993a).The validity of the concepts that underlie measures of SAperformance needs to be assessed, for at least three reasons:(1) To evaluate the soundness of inferences drawn from therelationships between SA performance and other theoretical

constructs.(2) To help future researchers in selecting measures of SAperformance.(3) To make valid recommendations to managers on a soundbasis of researchresults.The main aspects of construct validity are: content validity;reliability; and convergent, discriminant and criterion-relatedvalidity. There is still no clear description of the dimensions thatdefine SA performance. Geringer and Hebert (1991) relied oncorrelations alone to establish the reliability and comparability ofalternative measures of performance.This paperproposes an initial

definition of SA performance that allows us to assess the content

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validity of these measures. Their empirical validityis assessed using a method based on confirmatoryfactor analysis applied to two subsamples of equityand contractual SAs. This method is both broaderand more powerful than that used in previouswork: broader,because it covers both content andempirical validity; more powerful, because the useof confirmatory factor analysis allows us to isolatemeasurement error.Different types of measure correspond to differ-ent levels of performance (Venkatraman andRamanujam, 1986). Financial measures includevarious measures of profitability, growth and costposition (for a review see Geringer and Hebert,1991). Frequentlyused operationalmeasures ncludestability measures such as longevity of the SAownership or contract stability, and survival (seereviews in Geringer and Hebert, 1991; Yan andZeng, 1999). The most commonly used organiza-tional effectivenessmeasure s an overall assessmentof the firm's satisfaction with SA performance(Beamish, 1988; Geringerand Hebert, 1991; Parkhe,1993b; Lin and Germain, 1998). Other organiza-tional effectiveness measures used include howwell the SA has fulfilled its strategic goals(Parkhe, 1993a, b), and the net spillover effects ofthe SA on the firm's other activities (Parkhe,1993b).This paper begins by defining SA and SAperformance. After presenting the concept ofconstruct validity and its different aspects, thecontent validity of the various measures of SAperformance is assessed. I suggest that the organiza-tional effectiveness measures capture the conceptbetter than the operational ones. Next, I assess theempirical aspects of construct validity using twosubsamplesof 34 equity SAs,and 45 contractual SAsinvolving at least one company operating in Spain.Based on the discussion of my findings, I suggest anexpanded definition of SA performance thatconsiders both out-come and process performanceaspects. Implications for researchare offered in theconclusion section.

Strategic alliances and their performanceIn order to assess the validity of SA performancemeasures, I first need to define what I mean by SAand by SAperformance. I define an SA as a formalagreement between two or more business organiza-tions to pursue a set of private and commoninterests through the sharing of resources incontexts involving uncertainty over outcomes

(Arifioet al., 2001). An alliance is strategic when itis the means by which a firm seeks to implement, inpart or in whole, elements of management'sstrategic intent (Hamel and Prahalad,1989).SAsmay be classified in various ways. They mayseek exploration or exploitation purposes (KozaandLewin, 1998). They may be cross-border or domes-tic, be governed as equity ventures or as contractualagreements, involve dyads of partners or multiplepartners.They may link firms in different stages ofthe value chain or seek the benefit of scale byconnecting companies in the same stage of thechain (Dussauge et al., 2000). The resources sharedmay be complementary or they may constitute apool of similar resources (Nohria and Garcia-Pont,1991). Depending on its purpose, an SA maytemporary or enduring.These, and other, differences arelikely to result indiverse dynamics, and to have differing impacts onSAperformance. Forinstance, equity-based SAscantake a longer time to negotiate and organize thancontractual SAs.They provide strongercontrol andincentive mechanisms, but are less flexible; theymake knowledge transfer easier, but can involvehigher exit costs. The management efforts involvedin the various types of SA also vary (Gulati, 1995),and the SAs are likely to evolve in different ways(Doz, 1996), with consequent differences inperformance.There is no agreed definition of SA performancein the literature (Yan and Zeng, 1999), but goalaccomplishment underlies most interpretations(Beamish, 1988; Anderson, 1990; Beamish andDelios, 1997; Lin and Germain, 1998). However,drawing from the strategy literature, we mayrecognize three levels of performance that dependon the goals under consideration: financialperformance, operational performance, and orga-nizational effectiveness (Venkatraman andRamanujam, 1986).(1) Financial performanceis relevant when thepartnersin an SAhave explicit financial goalsfor it.(2) Operationalperformancefocuses on those keyoperational success factors that might lead tofinancial performance' (Venkatraman andRamanujam,1986, 804, emphasis in original).It can be measured by indicators of suchkey success factors. I depart here fromVenkatraman and Ramanujam'sassertion: asfinancial performance is not always relevantto SAs (Anderson, 1990), it is sufficient to

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say that the operational success factorsmight lead to success understood aseffectiveness.(3) Organizational ffectiveness efers to the fulfil-ment of the organization's goals, taking intoaccount the interests of multiple constituen-cies. How should it be measured? This is

widely debated in the literature (Gawandeand Wheeler, 1999).Organizational effectiveness is the most compre-hensive of these three. If profitability is a specificgoal, then organizational effectiveness will expli-citly include financial performance. Also, if keyoperational success factors lead to achievement oforganizational goals, then organizational effective-ness will implicitly encompass operational perfor-mance.Because there are several parties to an SA, amultiple-constituencies approach is needed inevaluating organizational effectiveness, includingeach of the partners to the SA as an independentorganization, the SA management team, and thecommunity - particularly the host government inthe case of a cross-borderSA.Throughout this paperI shall assume that the goals of SAmanagement andof the community constrain the scope of thepartners'goals. I therefore assume that the relevantgoals in evaluating SAperformance are those of thepartners, and that they reflect the goals of otherconstituencies insofar as they are constrained bythem.There are two issues to consider in relation to the

partners' goals. First,each partnerwill usually havegoals for the SA that are not shared by the otherpartner.The shared interests are the commongoalsof the SA;the goals that each firm has for the SAand which it does not sharewith its partnerare theprivate goals (Arifio, 1995). Second, both thecommon and the private goals may change overtime (Doz, 1996), yielding emergent oals that differfrom the initial ones - whether common or private.Thus I define SA performance as the degree ofaccomplishmentof partners'goals, be these commonorprivate,initial or emergent.Initial goals - both common and private - set thestage for potential conflict. The level of conflict,high or low, will influence the way the partnersinteract: that is, the SAprocess. And the way the SAprocess develops will influence both the partners'ability to achieve their goals for the SA, and theemergence of new goals. SA outcomes and processare thus intertwined.

Construct validityConstruct validity represents 'the correspondencebetween a construct (conceptual definition of avariable) and the operational procedure to mea-sure... that construct'(Schwab,1980, 5-6). It includescontent validity, reliability,and convergent,discrimi-nant and criterion-relatedalidityof the measures ofthe construct.(1) Contentvalidity s 'a qualitative type of validitywhere the domain of a concept is made clearand the analyst judges whether the measuresfully represent that domain' (Bollen, 1989,185). The domain of a concept is bounded byits theoretical definition, which should reflectthe meanings associated with the concept inprior research and make its dimensions clear

(Bollen, 1989).(2) Reliability is traditionally defined as theconsistency of measurement. An alternativedefinition, appropriate from a structuralperspective, is that the reliability of a measureis the magnitude of the direct relations that allvariables (except the errorterms) have on thatmeasure (Bollen, 1989).(3) Convergent alidity s 'the degree to which twoor more attempts to measure the sameconcept... are in agreement' (Bagozzi andPhillips, 1982, 468). Measures of the sameconstruct should display a large commonvariance. Convergence is especially importantin areas in which there is a proliferation ofmeasures presumably assessing the sameconstruct (Schwab, 1980).(4) Discriminantvalidity is 'the degree to whichmeasures of distinct concepts differ' (Bagozziand Phillips, 1982, 469). Measuresof differentconstructs should share little variance. Theanalysis of discriminant validity may help tocorroborate issues of content validity when itis suspected that some measures actuallycorrespond to another concept.(5) Criterion-relatedvalidity is 'the degree ofcorrespondence between a measure and acriterion variable' (Bollen, 1989, 186). Toevaluate it, a variable is needed that is astandard against which to compare themeasure in question.

Content validity of measures of strategicalliance performanceI turn now to evaluate the content validityof existing operational and organizational

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effectiveness measures of SA performance in theliterature,by judging how farthese measures reflectthe degree of accomplishment of the partners'common and private, initial and emergent goalsfor an SA. The analysis does not incorporatefinancial measures, as financial performance is notalways relevant to SAs, and because I lackedfinancial data to run the empirical analysis.Operational measuresOperational measures of SA performance areindicators of key success factors that lead to SAeffectiveness. In practice, they are measures of SAstability. Although it is widely recognized thatstability and performance are different concepts(Yan and Zeng, 1999), it is questionable whethermeasures of stability are valid measures of perfor-mance. At the conceptual level, Yan and Zeng's(1999) discussion offers a solid ground for assertingthat an SA may be successful or unsuccessfulindependently of how long it lasts. Longevity maybe a precursor o or a result of performance:and it isdifficult to decide which it is without knowing thegoals pursued with an SA. If an SA is meant toendure, but actually has an existence shorter thannecessary to fulfil its intended goals, then it can besaid to have failed, but in general longevity doesnot display content validity as a measure of SAperformance.Similarly, ownership or contractual changes mayrespond to a number of causes: an initial govern-ance misfit (Gomes-Casseres, 1987), an expectedstep to move the SA forward (Kogut, 1991), or asuccessful adaptation to new environmental con-ditions (Yan, 1998). Thus ownership or contractualchanges are not conclusive about SA success. Theytherefore do not display content validity asmeasures of SAperformance.Turning to survival, we need to consider how anSAterminates. If it is by dissolution, the discussionon longevity applies: survival displays contentvalidity only when the SA was meant to endurebut actually lasted shorter than necessary to fulfilthe partners'goals. If the SA is acquired by one ofthe partners, the discussion on ownershipchangesapplies:survivaldoes not display content validity asa measure of SAperformance.In sum, the operational measures can be relatedto performance only in particularinstances. Theseinstances require some knowledge about thetemporal nature of SAgoals. It would be misleadingto use them as measures of performance withoutthis prior knowledge.

Organizational effectiveness measuresOrganizational effectiveness measures of SAperfor-mance assess the degree of fulfilment of severalgoals from the perspective of one of the partners.Apartner's satisfactionwith the overallperformance

fthe SA is one of the most frequently used measuresof SA performance (Beamish, 1988; Geringer andHebert, 1991; Parkhe, 1993b; Lin and Germain,1998). As it is an overall assessment, this measureevaluates the fulfilment of a partner's currentcommon and private goals - which may be theinitial ones or others that emerged during thecourse of the SA.Parkhe (1993b) measured SA performance as thedegreeof fulfilmentof strategicgoals. This measureallows respondents to rate the importance of theparticular items suggested by the researcher fortheir SA.The formation of an SAresponds to somestrategic goal that constitutes its initial purpose.Thus this measure capturesthe degree of fulfilmentof the initial goals, be these common or private.Finally, another measure is the net spillovereffectsof the SA on other activities of the company. It isdefined as the difference between positive spillovereffects - such as the application of know-howgained from SA activities to non-SA operations -and negative spillover effects - such as competitionbetween the SAand other operations of the parentfirm (Parkhe,1993b). Bydefinition, spillover effectspertain to private goals, either initial or emergent.Thus this measure capturesthe degree of fulfilmentof a partner'ssubset of private goals for the SA.To summarize, the various organizational effec-tiveness measures of SA performance displaydifferent degrees of content validity. A partner'ssatisfaction with the SA's overall performanceevaluates the degree of fulfilment of this partner'sgoals (common and private, initial and emergent),and displays the highest content validity of theorganizational effectiveness measures. The assess-ment of the accomplishment of strategic goalsevaluates the degree of fulfilment of initial goals -common and private. Finally, the estimation ofspillover effects evaluates the degree of fulfilmentof a subset of private goals - initial and emergent.Empirical validity of strategic allianceperformance measuresWhereas assessment of content validity relies onconceptual arguments, evaluation of the otheraspects of construct validity has an empiricalcomponent. For this purpose, I follow a structuralapproach. This procedure requires that I specify a

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'IL70 Strategic alliance performance Africa rino

E1

E2

E3

Figure 1 Initialmeasurement model.measurement model, which should include onlythose measures shown to have content validity.From the conceptual discussion of content validityit follows that the measurement model to be testedhas to incorporate organizational effectivenessmeasures as indicators of SA performance, whileoperational measures are allowed to correlatefreelywith SA performance: that is, the values of thesecorrelations are parameters to be estimated. Thediagram in Figure 1 represents the expectedrelationships. The first condition for measures tobe valid is that they be reliable. Reliability will beassessed using Cronbach's alpha, and by means ofthe reliability coefficient derived from the measure-ment model. As a result of the reliability tests, themeasurement model may need to be modified. Theconvergent validity and discriminant validity ofreliable organizational effectiveness measures willbe assessed on the grounds of the revised measure-ment model. Assessment of criterion-related valid-ity is not relevant in this case, as there is no readilyavailable model of SA performance from which todraw ex ante predictions with which to comparemeasures of SA performance. 'For many measuresno criterion is available' (Bollen, 1989, 188).

MethodsSampleThe information needed to carryout a study of thisnature is not readily available from secondarysources. I therefore collected information fromprimary sources through a mail questionnairesurvey. The sample was drawn from Spanish firmsthat appeared in Funk and Scott's Countries ndex-Europe (1986-1992) as having announced theirengagement in venturing activities. The selectedtime period begins with Spain's admission to theEuropean Community (1986), and concludes withthe establishment of the Single European Market(1992), a period that can be expected a priori todisplay considerable venturing activity. I selected astarget industries those with a higher number of SAs(see Table 1), and focused on dyadic SAs so as tocontrol for the number of partners. I detected atotal of 436 SAs.The target informant was the person in each firmmost directly related to the SA.Sacrificingquantityfor quality, I sent out questionnaires only to thosefirms in which I was able to identify this person.This gave a total of 189 questionnaires mailed to

Table I Industries nd responsesIndustrydescription Questionnairesmailed No. of responses Percentageof responsesEnergy (petroleum and electricity)ChemicalsMachineryexcept electricalElectronicequipmentTransportation quipmentTransportationCommunicationsFinancial ervicesOther servicesTotal

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1915775829531

61454460

37159189

6.615.45.54.44.46.60.0

40.616.5100

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firms involved in 160 different SAs. Of the mailedquestionnaires, 91 (48%)were returned. I attributethis rather high response rate to the care taken inidentifying the targetrespondent and in the follow-up process. For this, I followed the procedure thatDillman (1978) suggests, supplemented with phonecalls. To encourage response further, respondentswere assured of confidentiality and access to thestudy's findings. More than 63% of the informantshad participated in the negotiation of their firm'sSA;on average,they had been involved with the SAfor 4.9 years, with 91% having been involved atleast since the formation of the alliance, and 4.5%during its first year of operation. These detailsindicate the competence of key informants.For the purpose of this study, eight of thereturned questionnaires were incomplete. In fourcases. I received the answers from each side of theSA dyad. To ensure independent data points Idropped one of the parties to each SA, selecting itrandomly by the flip of a coin. This left a finalsample of 79 questionnaires for this study. Thesample was split in two subsamples. The firstincluded 34 equity SAs, and the second 45contractual SAs (28 marketing agreements, eightmanufacturing-relatedagreements, three joint pro-duct development agreements, two technologyexchanges, and one licence agreement; this in-formation was missing in three cases). The reasonfor the split was to investigate differences in thevalidity of performance measures in different typesof SA. Although a larger sample size would bedesirable, the necessary recourse to primarysourcesposes an important constraint to enlarging itsignificantly.Survey-basedresearch leaves open the possibilityof consistency artefactsand common method bias.To address this possibility I took the caution ofarranging the questionnaire items (see Appendix)so that the subjective items appeared prior to themore objective ones (Salancik and Pfeffer, 1977). Ialso examined whether a significant amount ofcommon method variance exists in the data usingHarman's (1967) single-factor test. If such a biasexists, then a factor analysis of the items willgenerate a single factor or a general factor thataccounts for most of the variance in the data (e.g.Podsakoff and Organ, 1986). Unrotated factoranalysis using the eigenvalue-greater-than-onecriterion revealed that the first factor explainedonly 8.74% of the variance in the data. Thus Iconcluded that the analysis was not subject tocommon method bias.

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MeasuresOrganizational effectivenessmeasures of SA perfor-mance Overallperformancesatisfaction is a five-point scale measuring the informants' assessmentof how far their firm is satisfied with the overallperformance of the SA.Strategic oals fulfilment s a composite measure ofthe importancemultiplied by the degree of fulfilmentof a partner'sspecific strategicgoals that an SAmaybe meeting (Parkhe, 1993b). Importance s a five-point scale measuring the informants' assessmentof how far each of the possible goals embraced bythe firm for an SA was important to their firm.Fulfilment is a five-point scale measuring theinformants' assessment of how far each of theidentified strategic goals for the SA was fulfilled.The list of strategic goals was adapted from theliterature (Contractor and Lorange, 1988; Parkhe,1993a, b). I added an open-ended item so that theinformants might consider additional goals notlisted. I also provided the category 'not applicable'as an option.Net spillovereffects s a five-point scale measuringthe informants' assessment of the differencebetween positive and negative effects of the SA onother activities of their firm (Parkhe,1993a).

Operationalmeasures Longevitymeasures the num-ber of years elapsed between the moment the SAwas formed and the moment it was terminated, orthe time of data collection if the SA was stilloperating then. Contractualchanges measures thenumber of changes in the ownership structureor inthe SA contract. Survivalmeasures whether the SAwas still operating at the time of data collection.Estimation and resultsTable2 shows the descriptive statistics and correla-tions of the variables in the study for each of thetwo subsamples. Seventy per cent of the SAswerecross-border.Possible nonresponse bias was exam-ined by comparing differences between early andlate respondents in all of the variables used in thestudy. There were significantly (P

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Table 2 Descriptive tatisticsand correlationsby subsampleVariable EquitySAsaMean s.d. Non-equity

SAsb1 2 3 4 5 6 Mean s.d. 1 2 3 4 5 6

(1) Overallperformancesatisfaction(2) Strategic goals fulfilment(3) Net spillovereffects(4) Longevity(5) Contractualchanges(6) Survival

3.56 1.16 1.0010.30 3.993.65 0.814.38 3.200.65 0.850.79 0.41

0.520.760.20-0.350.50

1.000.450.41-0.140.56

1.000.32 1.00-0.49 0.060.41 0.29

3.27 0.99 1.0010.11 3.59 0.50 1.003.64 0.77 0.67 0.453.82 5.46 0.13 0.041.00 0.20 0.40 0.28 0.200.39 1.00 0.76 0.43 0.44 0.11

1.000.10 1.000.16 0.37 1.000.34 0.13 0.28 1.00aN= 34. Correlationsbover= 0.34 significantt P

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E

2

Goal .41fulfillment (.04)Equity SAs sub-sample:N = 34; contractual SAs sub-sample:N = 45.Non-parenthetical figures correspondto the model estimated with the equity SAs sub-sample;those in parenthesis, to the modelestimated with the contractual SAs sub-sample.Figures in bold are estimated parameters;others, fixed parameters rom the correlation matrices.Significance levels obtained from non-standardizedsolutions:*** significant at p< .001** significant at p< .01* significant at p< .05El, E2: errorterms.

Figure 2 Revised measurement model with standardized coefficients for equity and contractual SA subsamples.Table 3 Tests of structural equation models with goodness-of-fit indicesModels X2 d.f. p X2dif d.f.a P CFI NNFI Evidence ofvalidityEquity SAs subsample (N= 34)Baseline modelb 6.54 9 0.69 1.00 1.06(1) Convergent validity testcOverall performance satisfaction = net

spillover effects(2) Discriminant validity testscSA performance = strategic goals fulfillmentSA performance = longevitySA performance = contractual changesSA performance = survival

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interaction with the partner (Arifioand Doz, 2000).For instance, given a poor outcome performance,the decision to keep the SA alive will be influencedby process performance: if partners are satisfiedwith their pattern of interaction, they may decideto maintain the relationship, waiting for bettertimes when external circumstances allow goalfulfilment; by contrast, if partners are unsatisfiedwith their pattern of interaction the chances arethat they will terminate the SA. These views areconsistent with research on SA evolutionaryprocesses (Ring and Van de Ven, 1994; Doz, 1996;Arifio and de la Torre,1998; Kumar and Nti, 1998;Lin and Germain, 1998; Yan, 1998; Arifio et al.,2001). Having both partners' views would haveallowed us to validate these points.This discussion suggests that we need to broadenour concept of SAperformance to encompass bothoutcome and process performance. I propose thefollowing definition:SAperformancerefers to the degree of accomplishment ofthe partners' goals, be these common or private, initial oremergent (outcome performance),and the extent to whichtheir pattern of interactions is acceptable to the partners(process performance).

ConclusionsThe results of this study shed light on the constructvalidity of existing measures of the performance ofequity SAs and contractual SAs. Identifying twoimportant aspects of SA performance - outcomeand process performance - broadens this concept,and poses a challenge for researchers to developnew measures that help distil these aspects. In fact,one limitation of this study is that I was not able tocount on such a measure,which would have servedto test the validity of the distinction betweenoutcome and process performance.This study takes the perspective of only onepartner- a limitation common to most SA research.Also, it treatsgoals of the SAmanagement team as aconstraint on those of the partners.However,as thegoals of these groups differ, they are also likely to

ReferencesAnderson, E. (1990) 'Two firms, one frontier: on assessingjointventure performance',SloanManagementReview 2: 19-30.Arino,A. (1995) 'Inter-firm ollaborativeventures:performanceand cooperative behavior',Ph.D.thesis,The AndersonSchool,Universityof California,LosAngeles.Arino,A. and Doz, Y. (2000) 'Rescuingtroubled alliances...be-fore it's too late', EuropeanManagementJournal18(2): 173-182.

dissent in their assessments of SAperformance:thisis an issue in SAs that result in a separateorganizational entity (Anderson, 1990). Geringerand Hebert (1991) found significantly positivecorrelations between the assessment of partnersand that of the SA management team. Thesecorrelations were stronger in the more generalmeasures, and less strong in the more specificdimensions. The further removed from SA opera-tions evaluators are, the more likely they are tofocus on broad performance indicators.Replication with a different sample, ideally alarger one, is necessary if the results are to begeneralized, as they may be bound to the specificsample used: equity and contractual SAswith onlytwo partners, and one of them operating in Spain.Future research should look at differences in thevalidity of SA performance measures using othercriteria to classify SAs, such as the purpose of theSA,or the number of partnersinvolved. It may alsobe worth the effort of developing multiple-itemscales for concepts that are currently measured bysingle items. We are also in need of measures of SAprocess performance.Despite its limitations, this study provides usefulguidelines for researchersengaged in understand-ing SAperformance by offering suggestions regard-ing the constructvalidity of existing measuresof theperformanceof equity and contractualSAs.Itsresultshelp us to interpretpast researchon the subject,andwill assist future researchersin their selection ofmeasuresof SAperformance.The distinction tracedbetween outcome and process performance hasimportant implications for practice, as SAmanagersmay have to be evaluated on the basis not only ofoutcome but also of process performance.AcknowledgmentsIthank PeterBentler,Josede laTorre,DickGoodman,ElaineMosakowski,PaulOlk and Bill Ouchi for theirhelpful comments on earlier drafts of this paper.Funding for this research was provided by IESEBusiness chool,Universityf NavarraBarcelona, pain).

Arino, A. and de la Torre, J. (1998) 'Learningfrom failure:towards an evolutionary model of collaborative ventures',OrganizationScience9(3): 306-325.Arifo, A., de laTorre,J.and Ring,P.S. (2001) 'Relationalquality:managing trust in corporatealliances', CaliforniaManagementReview44(1): 109-131.Bagozzi,R.P.and Phillips,L.W. 1982) 'Representingand testingorganizational theories: a holistic construal', AdministrativeScienceQuarterly 7: 459-489.

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Appendix: Questionnaire items(1) Collaborative ventures can be aimed at different strategic goals. How would you describe theimportance for YOUR FIRMof each of the following strategic goals when the venture agree-ment WAS SIGNED?

(a) Reducing costs/obtainingscale economiesMinimal1 2 Medium3 Vital NA4 5 6

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(b) Gaining access to a marketin the same industry(c) Gaining access to a market inanother industry(d) Developing new technologies(e) Blocking the competition(f) Meeting governmentrequirements(g) Developing new skills(h) Reducing risks(i) Other (specify)

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4 5 64 5 64 5 64444

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(2) Overall, to what extent do you think YOURFIRM s satisfied with the global results of this venture?VeryunsatisfiedUnsatisfiedSomewhat satisfiedSatisfiedVery satisfied

(3) How do you think each of YOURFIRM'S trategic goals in relation to this venture has been met?Very poorly Normal

(a) Reducing costs/obtainingscale economies(b) Gaining access to a marketin the same industry(c) Gaining access to a marketin another industry(d) Developing newtechnologies(e) Blocking the competition(f) Meeting governmentrequirements(g) Developing new skills(h) Reducing risks(i) Other (specify)

1 21 21111

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4 5 64 5 64 5 64 5 644444

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(4) Many collaborative ventures result in SIDE EFFECTS or their parent firms. For example, there arePOSITIVEside effects when the skills that are being developed through the venture can be appliedprofitably to other operations within the company. There are NEGATIVE side effects if thecollaboration has damaging repercussions on other activities in the company. In this venture,the NETside effects for YOURFIRMhave been:Strongly negative 1Negative 2Zero 3Positive 4Very positive 5

(5) When was the venture agreement signed? Year:19(6) Is the venture still operating?

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Verywell NA

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No 0Yes 1 (go to question 8)(7) When did the venture end? Year:19(8) When the agreement WASSIGNED,did it include equity participation?

No 0 (go to question 10)Yes 1(9) Have there been any changes in the ownership structure?

No 0Yes 1 How many?(10) Was the initial contract renegotiated during the course of the venture?

No 0Yes 1 Explain it briefly:Acceptedby TomBrewer,outgoingEditor,received11 September 000. Thispaperhas been with the authorfor4 revisions.

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