Resource Transformation Through Alliances: The Resource-Based and Relational Rents Dilemma and Implications for the Evolution of Firm Boundaries

Abstract

There is an ongoing debate on how firms can simultaneously generate resource-based and relational rents, i.e., how they can benefit from increasingly specialized knowledge and resources on the one hand, while also fulfilling relation-specific demands for adaptation that allow them to benefit more fully from their partnerships. We contend that firms with the capability to more effectively and efficiently (a) adapt their own resources to relational requirements, and (b) adapt their relationship’s resources to their own advantage face less of a tradeoff between resource-based and relational rents. Since different firms in a collaboration may preside over different levels of these adjustment and re-adjustment capabilities, they will have asymmetric incentives to invest in the collaboration, which impacts collaboration outcomes. Our argument explores underlying dynamics between the resource based and relational view in this regard as an important potential driver of boundary evolution. We apply our argument to two well-known joint ventures between Apple and IBM to illustrate and elucidate the key points.

Keywords: Resource based view, relational view, interfirm collaboration, joint ventures, alliance evolution, firm boundaries

JEL Classification: D20, D21, D29