Game Developer (2a/3): How Can Strategic Autonomy Foster Learning and Innovation?

Despite potential benefits like resource sharing, strategic alliances may not always justify the loss of control and risks involved. This article explores how strategic autonomy empowers game developers to cultivate internal learning and innovation.

.credits: T.L.J.Broekhuizen

‘’We find that, while the alliance required ‘’DVGD’’ to share with the publisher a substantial fraction of the value appropriated by the game, the alliance strategy resulted in greater absolute financial performance and relative market performance compared to the self-publishing strategy.‘’

‘’Since an identical game was involved in both instances, we argue that the differences in performance can be traced to specialised complementary assets required for successful commercialization.’’

(T.L.J.Broekhuizen et al., 2013)

Even though the performance results are not in favour of the individualistic approach, there are several scenarios where partnering up may not be the right choice. There are multiple benefits and risks that need to be considered for a thorough evaluation of both approaches.

Many organisations prefer to go solo in their business endeavours to ensure complete control over operations and safeguard proprietary knowledge and technology. By developing internal capabilities independently, firms not only protect their intellectual assets but also position themselves to establish a robust competitive advantage.

While strategic alliances can offer benefits like shared resources and expertise, the decision to avoid them can align with organisational strategies focused on autonomy, control, and long-term competitiveness.

Furthermore, the difference in performance was only marginal, and the financial profits may not have even been sufficient to justify the loss of control and additional disadvantages associated with the partnership.

So, what were the key factors for choosing the individualistic approach? What would you be the most afraid of?

Losing control
Brand image // Reputation
Sharing knowledge // IP risks
Sharing profits

However, something quite notable happened during the partnership, approximately 50 days after the release. The promotion strategy based on sales & marketing expertise has resulted in a significant number of additional downloads, the game was trending and provided additional brand awareness and user engagement.

Therefore, if the company possesses a well-developed absorptive capacity, it could reap invaluable benefits and potentially decrease dependence on strategic partners in the future. Small-sized, technology-based firms can capitalise on the specialised complementary assets offered by prospective partners, provided the organisation can effectively internalise the lessons learned from the collaboration.

Hence, organisations should not consider only a limited number of factors, such as profits and loss of control, but should also view strategic partnerships as opportunities for learning and additional avenues for creating and capturing value. The suitability of a strategic partnership should be evaluated based on the specific situation of the firm—such as industry, life-cycle stage, and existing resources—and its capacity to derive knowledge from the partnership.

What lessons can be drawn from this case study, and how can organisations apply them??

How can your organisation learn from strategic partnerships??

How can they be managed for your benefit??

What strategies can your organisation adopt to safeguard intellectual property and proprietary knowledge while engaging in strategic alliances??

What are the specialised complementary assets

in creative industries??

Part III.

References

Broekhuizen, T. L. J., Lampel, J., & Rietveld, J. (2013). New horizons or a strategic mirage? Artist-led-distribution versus alliance strategy in the video game industry. Research Policy, 42(4), 954-964.
Dyer, J.H.; Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review 23(4): 660-679.
Lampel, J., Lant, T., Shamsie, J., 2000. Balancing act: learning from organizing practices in cultural industries. Organization Science 11 (3), 263–269.
Teece, D.J. (1986), “Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy,” Research Policy, 15(6): 285–305.
Teece, D.J. (2010), “Business Models, Business Strategy and Innovation,” Long Range Planning, 43(2/3): 172–194.