Not so long ago, e-commerce alliances were being struck at an amazing pace: in 1999 alone, companies announced approximately 13,000 of them, from "bricks-and-clicks" partnerships between on- and off-line companies to deals between Internet portals and content or commerce companies (Exhibit 1). "Speed is everything" was the mantra of venture capitalists, entrepreneurs, and executives. And the stock market generally approved: fully 60 percent of the significant alliances announced in January and February 2000 raised the partners’ share prices more than expected. Old-fashioned business analysis became, well, old-fashioned.

But when, shortly thereafter, Internet stocks crashed, investors grew skeptical. Only 40 percent of the e-alliances announced from March to May 2000 got a positive reception. As one senior executive said, "The days of the ’Barney deal’—press releases announcing, ’I love you, you love me, we’re a happy family’—are over."

Are e-alliances a fad of the past? The answer is no; in fact, they are now more essential than ever. Speed and scale remain important in the Internet economy, and alliances are often a faster and less capital-intensive way to gain access to products, customers, and business capabilities than building them from scratch. Moreover, our assessment of the financial and strategic outcomes...