Industry determinants of the "merger versus alliance" decision

Mergers and acquisitions (M&As) and alliances are potential alternative choices for managers. We propose that three dimensions of industry conditions are likely to be influential in such choices: (1) industry demands on firms to make significant commitment, (2) the environmental pressures for flexibility, and (3) the limitations on firm choices stemming from industry concentration and institutional conditions. We develop propositions about how differences across these three dimensions influence the choices that firms make between M&As and alliances.