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Global manager engagement plummeted 3 percentage points in 2024, with female managers dropping 7 points and young managers falling 5 points—the steepest decline since the COVID-19 pandemic.
Why it matters:
In the age of global strategy, multinational companies are betting big on alliances as an organizational structure solution to fuel innovation and growth. Alliances can serve as an efficient means to supplement organizational capability. But new evidence reveals that the pattern of alliances within the firm—their concentration across subsidiaries—can make or break performance. Should you cluster your bets in just a few units or spread them out company-wide? The answer isn’t one-size-fits-all.
What researchers found:
- Less is more—at first. Firms with a small alliance portfolio do best by focusing partnerships in a select few subsidiaries, where learning and coordination are easy.
- But too much good thing flips the equation. For firms with many alliances, concentrating them in fewer subsidiaries overloads local managers, causing bottlenecks, and ultimately drags down performance.
- The lesson: As alliance portfolios grow, it’s smarter to spread partnerships more evenly—avoiding overcrowding and knowledge silos.
How we know:
Using detailed data on 32 global pharmaceutical multinationals from 2000–2010, the study tracked the concentration of alliances at the subsidiary level and linked them to financial performance. Advanced statistical controls isolated the effects of alliance strategy from other corporate variables.
What this means:
- For Strategy Leaders: Routinely audit where new alliances are managed. Early on, favor tight concentration, but as portfolio complexity grows, rebalance to avoid risk of overload.
- For Organizations: Don’t “set and forget” your alliance policy. Regularly revisit internal structures to keep up with growth and strategic change.
- For Researchers: More nuanced studies of internal alliance dynamics are needed to guide leaders through the complexity of multinational strategy.
Now what:
- Determine strategic value of each new alliance.
- Use annual strategic reviews to assess alliance distribution across the enterprise—don’t let bottlenecks build.
- Design systems to share lessons learned across dispersed alliance managers before scaling up.
