Conflict resolution and the successful alliance partner

The ability to manage and resolve conflict is key to successful business alliances

More successful partnerships, compared with less successful partnerships, exhibit higher use of constructive conflict resolution techniques, including joint problem solving and persuasion, as opposed to destructive resolution techniques, such as domination and confrontation (Spekman and Mohr 1994). The ability to manage and resolve conflict is thus an important prerequisite for successful alliances and alliance partners need to possess the necessary personal attributes to deal positively with conflict.

Conflict, or rather fear of conflict, may be considered by some firms as in itself being an inducement to form alliances (Bleeke and Ernst 1995). It is perhaps tempting to reason that it is better to partner with, rather than compete against, a competitor operating in the same core business. The authors caution however that alliances between competitors with similar core businesses, markets and skills are more prone to failure. Ironically, such alliances tend to fail because of conflict as they often reach stalemate on important issues such as which markets to target, which products to promote, capital investment and financing etc.

Alliances should not therefore be formed to avoid conflict. Indeed, according to (Hamel et. al. 1989) harmony is not essential for successful collaboration and conflict may be the best evidence of mutually beneficial collaboration. The authors maintain that the objective of an alliance is not harmony, but rather for the partners to emerge from the alliance more competitive than when they entered it. Successful companies understand how their partners' objectives compare with their own and never forget that their business partners may be out to disarm them. Conflict is therefore inevitable in business alliances and partners need to be aware of this at the outset and be capable of managing it.

The good news for SMEs is that interpersonal relationships are often key to managing and resolving conflicts before they escalate (Kanter 1994). Since SMEs are known to depend more on interpersonal relationships than on formal rules and procedures this flexibility should put them in a stronger position to deal with conflict arising in strategic alliances.