Competition between Alliance Blocks: The Case of the RISC Microprocessor Technology

Abstract

Competition between alliance blocks is a new form of rivalry: groups of firms link together for a common purpose by means of strategic alliances, and competition between alliance blocks is superimposed on competition between individual firms. This paper focuses on alliance blocks in the RISC microprocessor field. In this field, alliance block competition is shaped by battles over technical standards. Based on an analysis of the competitive forces in standards battles, and taking into consideration the need for internal coordination within alliance blocks, we expect to find the formation of alliance blocks around the various proprietary RISC designs, with scarce linkages across blocks. The blocks will consist of complementary firms, including all the capabilities necessary to compete against other alliance blocks. The requisites of internal coordination, finally, lead us to expect alliance blocks with star-like internal structures when the central firm has either a very weak, or a very strong position. In intermediate cases, we expect to find alliance blocks with internal structures more approaching the characteristics of fully-connected cliques. The findings from a quantitative analysis of the network structure as it evolved in the RISC field in the period 1980-1989 support these conjectures.