Date:
Author: Magali Ayache, Maître de Conférences en Sciences de Gestion, CY Cergy Paris Université
Original article: https://theconversation.com/how-the-renault-nissan-alliance-overcame-crisis-and-redefined-collaboration-over-two-decades-244591
Nissan and Honda announced fusion recently. By the end of 2023, the Renault-Nissan Alliance, which had existed since 1999, is usually described as having come to an end. Common structures, such as the jointly created purchasing company, are dissolved. However, the relationship between the two companies continues (along with the third partner, Mitsubishi) in the form of collaborative projects. How can we understand the end of the Alliance combined with a relationship that persists through projects? To explain this phenomenon, it is necessary to analyse the overall dynamics of the relationship, from its origins to the crisis it has undergone.
The Renault-Nissan strategic alliance, forged in 1999, has been a subject of extensive study, particularly as it faced a major crisis in 2018. The arrest of CEO Carlos Ghosn and development director Greg Kelly in Japan, on charges of misuse of corporate assets and tax fraud, shook the partnership to its core. Yet, the alliance endured, with Mitsubishi joining as a third partner. Understanding its trajectory – its operations pre-crisis, the turmoil of the crisis, and its survival – required a fresh lens. We sought to provide such insights by interviewing key stakeholders in France and Japan, culminating in our research published in the journal M@n@gement.
The foundations of the Renault-Nissan alliance
Initially dubbed “The Alliance” by its founders, the Renault-Nissan partnership can be assessed through strategic alliance theory, which emphasises three core principles:
-
Complementarity: Alliances thrive when partners possess complementary capabilities.
-
Relational capital: Trust and collaboration deepen over time, fostering a seamless working relationship.
-
Learning dynamics: As firms learn from each other, their mutual dependence diminishes, often limiting the alliance’s lifespan.
However, the Renault-Nissan alliance defied these norms. At its inception, there were elements of geographical complementarity – Renault’s strength in Europe contrasted with Nissan’s presence in the United States and Asia. Operationally, Nissan excelled in quality production but struggled with cost and project management, while Renault demonstrated superior project oversight but lagged in quality control. Yet, these synergies were overshadowed by the reality that Nissan was on the brink of bankruptcy, burdened with $20 billion in debt. It was Renault, not Nissan’s preferred partner Daimler-Benz, that took the risk. The two companies had little mutual understanding at the outset, making complementarity an overstated premise.
As the alliance reached its 20-year mark, the firms had ample time to learn from each other. Yet, the 2018 crisis revealed a startling fragility. Decades of collaboration unravelled almost instantaneously, raising questions about the substance of their relational capital. One senior executive reflected: “It remains a question for me: why are these organisations so fragile?”
The Renault-Nissan dynamic
To fully understand the Renault-Nissan dynamic, we turned to alternative theoretical frameworks. We explored concepts from interpersonal relationship theory and project management.
While corporate alliances differ from personal relationships, both are, fundamentally, forms of relations. Interpersonal theories highlight two key insights:
-
Relationships are ongoing, inherently “unfinished business” (Duck, 1990).
-
The future takes precedence over the past, as even long-standing relationships can dissolve when forward momentum ceases.
Modern corporations operate within a framework of “projectification”, where projects are defined by clear objectives and finite timelines. Unlike relationships, projects are “finished business.” This dichotomy between open-ended relationships and finite projects proved instrumental in analysing the Renault-Nissan partnership.
The Alliance as a “project of projects.”
Carlos Ghosn’s framing of “the Alliance” as a new management model offers critical insight. He envisioned it as a strategic alliance without a defined endpoint – neither a merger nor a temporary collaboration. This vision materialised through joint projects. As a Renault manager said: “Ghosn had this genius. He focused everything on projects. As soon as we got out of there, things went wrong.” The Alliance began with a joint initiative in Mexico shortly after the signature. It was within the framework of the project itself that complementarities were built. “At the beginning, we focused on determining how to collaborate effectively. Roles were matched, with a leader and a co-leader assigned to each area,” said the Renault manager. “We were aware that Nissan had a strong focus on quality and strict adherence to schedules. Their approach was known to be uncompromising. When we began working together, we assigned a Renault co-leader in recognition of this. In terms of cost management, Renault was more structured and drove its projects with profitability objectives. Consequently, cost control was managed by Renault.”
The Renault-Nissan partnership operates as an overarching, indefinite project sustained by finite, goal-oriented collaborations. Its structure reflects the broader trend of projectification but with a unique twist: an “unfinished project” supported by discrete, finished projects.
The 2018 crisis, however, tested this model. Tensions arose from divergent priorities. The French government, a Renault shareholder, pushed for a merger – an ultimate conclusion to the alliance – which Nissan resisted. Compounding the strain, Renault and Nissan pursued electric vehicle development separately, undermining joint progress. As a Nissan manager said: “Today, exchanges only occur on projects. We no longer have the purpose; the trigger for exchanges has completely changed.”
To recover, the alliance returned to its foundational model, emphasising collaboration on electric vehicle projects. The focus on shared initiatives restored momentum to the larger, open-ended relationship.
The Renault-Nissan case enriches our understanding of strategic alliances and project management:
-
Complementarities can emerge over time: Rather than existing from the outset, they may develop through joint projects.
-
Relational capital is future-focused: The strength of an alliance lies more in its shared vision than its historical ties.
-
Projectification’s dual nature: The interplay between infinite and finite projects can sustain complex relationships.
Interestingly, this framework may extend beyond corporate alliances to interpersonal dynamics. Couples, for example, could be seen as “projects of projects,” with their longevity dependent on shared goals and mutual perceptions of fairness.
Going back to Renault-Nissan, the Alliance has ended in its institutional form, but the relationship between Renault and Nissan continues through time-limited (finished) projects. It will be interesting to keep observing the dynamics of this relationship. Will it gradually unravel, with the two partners increasingly engaging in projects with other automotive companies and a progressive decline in joint initiatives? Or will the two partners be able to maintain some form of collaboration through concrete joint projects without a form of unfinished perspective?