SUCCESSFUL ALLIANCE ESTABLISHMENT AND EVOLUTION IN A VOLATILE BUSINESS ENVIRONMENT: THE CASE OF "CELLARS OF CANTERBURY"

Abstract

Little attention has been given to the process of development that leads to alliance relationships flexible enough to withstand unforeseen environmental shifts and evolve while others fail. We believe that the problem stems from the contractual rigidity imposed by partners in the initial stages to the formation of an alliance. This paper analyzes a process to create self-enforcing agreements that lead to a flexible alliance architecture capable of reconfiguration to meet the demands of environmental change. Using an empirical case study of "Cellars of Canterbury" a New Zealand wine producing and marketing joint venture, we suggest that immediate value creation establishes private enforcement capital in a relationship which allows for critical relation-specific investment to take place without the need for written contractual safeguards. We also emphasize the advantage of external contract enforcement mechanisms and third party verification in reinforcing these relationships. We then argue that it is this lack of contractual rigidity that allows an alliance agreement to be reconfigured when environmental circumstances change.Agribusiness,