Propensity to form
business alliances

Before entering into any form of business alliance, be it a strategic alliance, joint venture, or simply teaming up with a trusted associate to start your own business, you need to find out whether you are ready to partner.

PROPAT helps increase your awareness about the personal characteristics needed for successful business alliances and the degree to which you currently possess these characteristics.

The average PROPAT score of all people who have taken the test so far is 66%, which is at the bottom end of the 'high' range. This means that, on the whole, most people who have taken the test exhibit a reasonable tendency to form alliances with other businesses.

The actual responses, however, show some significant variations, ranging from a minimum score in the 'low' propensity range of 47% to a maximum in the 'very high' range of 81%.

Take the test now to find out how you compare.

The research underlying PROPAT identifies 17 different characteristics which may affect an individual's readiness to enter into a business partnership. Learn more

The chart on the left shows how respondents so far have scored on average on each of these characteristics. It reflects the profile of the 'average' respondent. It indicates, for example, that most people have expressed a high capacity to learn, without which much of the value of business alliances would be lost. Another essential attribute on which most respondents ranked high is the seeking of absolute ('the sum of the parts') over relative advantage.

At the other end of the spectrum, responses reveal lower ratings on other important characteristics, such as flexibility, readiness invest money in the partnership, and acceptance of interdependence. This may shed light on some of the reasons why many alliances fail.

Knowing your own personal profile helps you prepare better for success in business alliances. Take the test to receive your profile and see how you rate on each of these important characteristics.

The chart shows a marked difference in total PROPAT scores between entrepreneurs who have participated in alliances before ('allies') and those who have not ('lone rangers').

While allies achieved an average score well into the high propensity range, lone rangers' mean score emerged in the neutral range. This supports PROPAT's hypothesis that entrepreneurs sharing certain characteristics do indeed have a higher propensity to enter into business alliances.

It must be noted, of course, that prior alliance experience may in itself affect one's attitudes and outlook toward business alliances and the behaviours needed to support successful business partnering.

Whether you are seasoned business ally with prior alliance experience or a lone-ranger contemplating a business partnership, it pays you to develop your awareness about the personal attributes needed to form business alliances and make them work. PROPAT is designed to help you increase this awareness.

While the knowledge that business alliances may be influenced by personal characteristics is in itself of useful, the principal contribution of PROPAT is the identification of the individual characteristics which seem to have the most profound effect on the propensity to partner.

This chart compares the responses of allies and lone rangers on each individual characteristic.

Indeed, entrepreneurs who have been involved in alliances scored higher on all characteristics except one. This confirms the validity of the alliance-related characteristics identified in the PROPAT's research.

The greatest differences in scores between allies and lone rangers, further explained below, can be seen in awareness about alliances, and attitudes toward independence and thrift.

The only characteristic on which lone-rangers scored higher is ‘objective assessment of one’s own contributions’.

This chart shows the difference in mean scores achieved by allies and lone-rangers. Awareness about alliances emerged as the main distinguishing characteristic. Although PROPAT asks about theoretical, rather than practical, knowledge, it is reasonable to assume that the higher awareness demonstrated by allies could have been a direct result of prior alliance experience, rather than an inducing factor.

The top three characteristics which seem to exert most influence on the propensity to partner are the entrepreneur’s comfort with interdependence, a negative attitude toward thrift (a greater readiness to spend) and active membership in social networks. Seeking absolute rather than relative advantage, patience, the ability to co-ordinate, and flexibility also emerge as important characteristics which induce entrepreneurs to partner.

It is surprising to note that less of a difference is noted in trust and the willingness to change and take risks, both of which are in theory established as very important factors which influence firms’ willingness to cooperate.

It has been argued that family business owners tend to be more wary of forming business alliances.

For example, family businesses executives are known to be more change and risk averse and less willing to divulge details of their business' financial performance. Family businesses are also reputed to value their autonomy and be somewhat reluctant to take any actions, such as increasing their debt finance, which may impair their independence.

One would expect that these and other special characteristics of family firms render them less likely to form business alliances than other forms.

PROPAT has not established any marked difference between family and non-family firms in this regard. While responses do reveal a higher overall propensity to partner by non-family-firm entrepreneurs as opposed to entrepreneurs of family businesses, the difference is not quite significant with both groups scoring well above the neutral propensity range on average.

As one would expect, given the close scores achieved in overall propensity by family-firm and non-family-firm entrepreneurs, differences in scores on individual characteristics between these two groups are much less pronounced than those noted between allies and lone rangers.

The family-firm-specific characteristics, and therefore the ones which should have produced the most notable differences in scores between family and non-family firms are:

• People before structure
• Loyalty
• Thrift
• Secrecy
• Change and risk aversion
• Fixation on independence

PROPAT responses do not support the view that family firms are materially different on these characteristics than non-family firms.

While, as can be seen in this chart, non-family firms seem to be less inhibited by family-firm specific characteristics such as loyalty to existing members and putting people before structure, none of these special attributes emerge at the top of the list of differentiating characteristics.

Interestingly, on thrift and risk aversion, both of which are traditionally closely connected with family firms, very slight differences are noted. Furthermore, family firms’ reputation of having a ‘fixation on independence’ is not evident from PROPAT responses to date.