Assessing Vertical Strategic Agribusiness zyxwvutsrqponmlkjihgfedcbaZYXWVU Thomas L. Sporleder Alliances by zyxwvutsrqpon Department zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFE of Agricultural Economics, The Ohio State University Strategic alliances are agreements between or among firms to cooperate in an effort to ac- complish some strategic purpose. This analy- sis investigates the character and substance of strategic alliances for the purpose of achieving enhanced coordination between vertically- linked agribusiness firms. The core of this analysis is on the economic motivations of corporate managers for choosing among vari- ous vertical coordination exchange arrange- ments. It is argued that strategic alliances, in general, are inherently different from other forms of vertical corporate arrangements. Dis- cerning characteristics of strategic vertical al- liances include fuzzy prerogatives and obligations relative to other arrangements, relatively weak and maileable vertical control, and partners which are stakeholders in the object of the alliance but may not be share- holders. Special emphasis is placed on under- standing the nature of vertical strategic alliances in agricultural marketing channels. The investigation includes examples of strate- gic alliances by agribusinesses. resource supplies or core competencies. A recently emerging form of corporate partner- ing is referred to as strategic alliances. Clearly, it is important to understand the nature and characteristics of strategic alliances and the managerial motivations that lead to this form of corporate partnering. This manu- script focuses on vertical, rather than horizon- tal, strategic alliances. To build from a broad and tractable base, the analysis first revisits the definitional aspects of strategic alliance. The next portion of the manuscript addresses the evolution of selected strategic alliance Iit- erature with a special focus on interpretation for vertical relationships. Subsequent to this, the fundamental characteristics of strategic alliances are reexamined and compared to al- ternative forms of intraindustry inter-firm co- operative arrangements, again in a vertical coordination context. Finally, the analysis fo- cuses on two selected strategic alliance exam- ples between vertically-allied agribusiness partners and how such alliances may interact with other alternatives for vertically-allied partnering. INTRODUCTION Competition among rival firms within the STRATEGIC ALLIANCE DEFINITIONS same industry may provide an incentive for Confusion arises partly because a widely-ac- managers to consider entering into coopera- cepted definition of strategic alliance has not tive relationships with vertically-allied firms. materialized. Definitions of strategic alliances In this broad sense, intraindustry interfirm have ranged over extremes. At one extreme is competition may beget inter-industry interfirm the definition of a strategic alliance as any cooperation. In vertical relationships, such as form of interfinn cooperation. Authors such a firm with its suppliers, coordination and as Borys and Jemison have asserted that the cooperation may be paramount. The drive for domain of strategic alliances includes merger coordinative and cooperative relationships and acquisition activities. Other authors, such among vertically-allied firms may be moti- as Amanor-Boadu and Martin divide alli- vated partly by searching for exploitable first- ances into formal and informal but include mover advantages over rivals with regard to manifold inter-firm contractual arrangements Can. J. Agric. Eton. 42: 533-540 533 Table of Contents