Industry consortia and network externalities : a cross-sector comparison

Although the prevalence of multi-firm alliances or consortia in many industry sectors has been noted by many researchers, there is limited research on such alliance forms. This study sought to address the following questions: How prevalent are consortia and in which industry sectors are they most prevalent? What are the characteristics of the industries and what are the relationships between firms in such strategic blocks? Our results show that all sectors show a sharp drop in frequency after the threshold of 4 partners in an alliance is reached, suggesting a significant difference between dyadic or triadic alliances and larger-sized alliance forms. However, there is considerable variation across industry sectors in the frequency of alliances with more than two partners, with a range from zero to over 20%. Case studies of selected consortia suggest that network externalities are a significant factor in formation of many of the large consortia. Unexpectedly corporate social responsibility was also identified as a possible factor in other cases.