Disentangling the role of knowledge similarity on the choice of alliance structure (original) (raw)

Alliance formation issues for knowledge-based enterprises

International Journal of Management Reviews, 2001

Interfirm collaboration among knowledge intensive firms is increasing as a result of accelerating competition, falling regulatory barriers, and rising customer expectations. Resource dependency theory is used to position knowledge as the key resource for the knowledge-based enterprise (KBE) and to examine the suitability of alliances as a mode of knowledge acquisition and exchange, contrasted particularly with merger and acquisition. The alliance and knowledge literatures are reviewed and particular attention is paid to the critical alliance formation stage. This stage is reviewed against a research model that posits firm performance in knowledge creation arises from a number of factors, including the motivation for an alliance, partner firm characteristics (the ability to develop and sustain valuable resources; absorptive capacity; combinative capability; experience with alliances; and appropriate design for knowledge exchange), the development of operating structures and norms, and the choice of alliance structure. The paper concludes with suggestions for future research. This paper will focus on an important aspect of alliance operation-formation-with a view to developing a parsimonious conceptual model linking the motivation to collaborate (based on resource-dependency theory) with structure, partner characteristics, operating norms and performance for KBEs. Formation is an important period in the life of an alliance, as Walker, Kogut, and Shan (1997) have argued that the early choices made by firms have a significant impact on the course of future cooperation. This paper is in four sections. First, we will briefly define knowledge and alliances. Second, we will provide an overview of some of the key aspects of alliances that will demonstrate their suitability as a mode of knowledge acquisition and exchange, especially in contrast to merger and acquisition (M&A). Third, we will introduce our research model and integrate representative studies from the alliances and knowledge literatures to describe the key issues in the formation stage of the alliance life cycle. Finally, areas for future research will be proposed. Definitions Knowledge: Every evolving field of inquiry seems replete with a host of definitions and distinctions that attempt to shade every nuance of the phenomenon under study. Knowledge in firms is no exception. Rather than survey this field in search of an ideal definition, we have chosen instead to adopt the distinction Zack (1999) made about data, information and knowledge. Briefly, Zack (1999) suggested that data comprised observable facts without context. With the addition of suitable context, data became more valuable, to a firm as it was thus transformed into information. Finally, knowledge is information further endowed by the user's belief in its worth through the assignment to it of value, based on meaningful, organized accumulation obtained via experience, communication or inference (Zack, 1999). Polanyi (1966) usefully distinguished between explicit knowledge (which can be presented in written form) and tacit knowledge (which is difficult to codify, reflecting human limitations on describing everything they know). These distinctions will also be observed in this paper. Alliances: Alliances make possible the conduct of cooperative activity between firms and create opportunities for participating companies to appropriate benefits from their involvement in an alliance. This form of collaboration has been defined as a partnership amongst firms that work together to achieve some strategic objective (Berg, Duncan and Friedman, 1982; Harrigan, 1988; Killing, 1983). The literature emphasizes several key characteristics of alliances. Alliances are generally thought to include two or more firms united to pursue a set of agreed-upon goals (Yoshino and Rangan, 1995); contributing complementary, firm-specific capabilities (Florin, 1997); involved in a range of interdependent activities (Contractor and Lorange, 1988) in which limited control is exercised by parties (Gomes-Casseres, 1996) who remain independent subsequent to the formation of the alliance and share in its risks and benefits (Yoshino and Rangan, 1995).

The Role of Knowledge in Alliances: A Meta-Analysis

Strategic alliances promise an effective means for companies to fill critical gaps and gain position of competitive advantage. A majority of executives believe alliances represent a prime vehicle for future growth, and alliances are expected to account for an increasing percentage of company value. Yet despite the prevalence of alliances, estimates are that up to 75 percent of them fail. The authors investigate, using a meta-analytic technique, underlying factors that lead to alliance success. They find that the role of knowledge is a significant predictor of alliance success. They also find that cohesion and environmental uncertainty are important moderators.

A knowledge accessing theory of strategic alliances

Journal of Management Studies, 2004

 The emerging knowledge-based view of the firm offers new insight into the causes and management of interfirm alliances. However, the development of an effective knowledge-based theory of alliance formation has been inhibited by a simplistic view of alliances as vehicles for organizational learning in which strategic alliances have presumed to be motivated by firms' desire to acquire knowledge from one another. We argue that the primary advantage of alliances over both firms and markets is in accessing rather than acquiring knowledge. Building upon the distinction between the knowledge generation ('exploration') and knowledge application ('exploitation'), we show that alliances contribute to the efficiency in the application of knowledge; first, by improving the efficiency with which knowledge is integrated into the production of complex goods and services, and second, by increasing the efficiency with which knowledge is utilized. These static efficiency advantages of alliances are enhanced where there is uncertainty over future knowledge requirements and where new products offer early-mover advantages. Compared with alternative learning-based approaches to alliance formation, our proposed knowledge-accessing theory of alliances offers the advantages of greater theoretical rigour and consistency with general trends in alliance activity and corporate strategy.

Strategic Alliances in Knowledge-Intensive Industries: An Integrated View

JABM JOURNAL of ACCOUNTING - BUSINESS & MANAGEMENT

In this study, we examine strategic alliances between large pharmaceutical companies (LPCs) and new biotechnology firms (NBFs) in the knowledge-intensive biopharmaceutical industry in the light of two explanations for the motives behind R&D alliances, namely, the transaction cost explanation and the learning with flexibility explanation. We develop a series of propositions based on an integrated view of the motives behind strategic alliances in knowledge-based industries.

Strategic alliances and the learning life-cycle of biotechnology firms

Organization Studies, 2001

Strategic alliances in the biotechnology industry are used as an inter-organizational learning device, in addition to their ability to provide financial resources, vertical and horizontal integration facilities, and legitimacy to dedicated biotechnology firms (DBFs). However, despite the advantages associated with strategic alliances, the literature accounts for hazards and disadvantages as well. This paper analyzes the relationship between organizational life-cycle and the formation of strategic alliances based on a population of 554 new biotechnology firms (DBFs) in a 15-year period. Using event history analysis, this study tests two propositions: that the inability of DBFs to form strategic alliances will be associated with organizational death and that firm growth will make it possible to reduce network learning through alliances (exploration stage of learning), allowing the firm to enter a period of internalized learning (exploitation). These propositions are supported by the data. The findings showed that lack of alliances is associated with organizational death, that learning through alliances is not a cumulative process, and that firm life-cycle alliance formation is not linear. Although alliance-based learning is vital to biotechnology firms at the early stages of their formation, when learning is associated with exploration, at later phases of the life-cycle, learning is internally exploited through intrafirm networks. The results also provide some evidence that another phase of external, network based, learning follows. Jarillo 1998); and the organizational texture of inter-firm relations (Grandori 1998). To these edited volumes, a number of recent review papers have tried to analyze and map the existing literature of alliances and networks, Gulati (1998), Oliver and and , to name a few. These papers have shown that despite the extensive existing literature, the field is still complex and ambiguous, and that there is a strong need for additional research in specific areas, especially of the longitudinal aspects of inter-organizational networks. Coupled with the quest for longitudinal analysis, the theoretical foundation of studies on strategic alliances has somewhat shifted from a transactioncost economics perspective to a systems view encompassing learning networks and the resource-based view . While these approaches have somewhat different foci, they both examine the relations between firm characteristics and the structure of their interorganizational networks, addressing various questions regarding the formation, nature and outcomes of strategic alliances. This study aims to highlight some longitudinal issues related to the arguments presented in the learning networks and the resource-based approaches and offers further support to resource-based theory.

Do alliances promote knowledge flows?

Journal of Financial Economics, 2006

We explore the role of inter-firm alliances as a mechanism for sharing technological knowledge. We argue that knowledge flows between alliance partners will be greater than flows between pairs of non-allied firms, and less than flows between units within single firms. Using patent citations as a proxy for knowledge flows, we find results that are consistent with these expectations. We then explore how firm characteristics affect knowledge flows within alliances and find positive effects due to technological, geographic, and business similarity between partners. We use alliance data from MERIT, patent data from the USPTO, and firm data from Compustat.

Strategic alliances - A marriage of convenience or a matter of trust?

2008

This paper examines how members of a strategic alliance (referred to as the Alliance) develop knowledge through networking relationships that may or may not contribute to competitive advantage. A 1994 survey of Alliance general managers revealed that the reasons they gave for joining were related to maintaining and improving competitiveness through sharing management know-how, training costs and programs, engaging in joint tendering and increasing market share (Fulop and Kelly, 1995). Ten years later, in 2004 and again in 2008, the authors revisited the Alliance in order to discover whether some of these objectives had been achieved, the forms of learning that may have occurred among partners, and the role that trust has played in the knowledge sharing processes.

Learning from Alliances: Knowledge Management or “Ignorance” Management?

The international journal of knowledge, culture and change management, 2006

The past two decades have seen the emergence of a variety of strategic alliances in an attempt by organizations to cope with the demands of rapidly changing and complex environments. Initially, reasons for strategic alliances have been primarily economic or strategic-risk sharing, market penetration, technology transfer or pooling resources. As the knowledge-based theory of the firm gained prominence, organizations have started realizing that knowledge is a critical resource for competitive advantage. Organizations have recently started paying more attention to processes that can enable inter-organizational learning and knowledge transfer. Research conducted so far regarding knowledge transfer between partners in strategic alliances clearly indicates that the transfer does not happen automatically and has to be managed. It also shows that managers may not be fully aware of how to facilitate knowledge transfer. The barriers to knowledge transfer are a complex mixture of issues covering organizational, social and technological factors as well as the nature of knowledge being shared. A review of the literature indicates that organizations do not seem to utilise tools created in the knowledge management field that can facilitate knowledge sharing. There is also a feeling among scholars that while organizations can develop strategies to exploit what they know, it is never possible to know everything that an organization needs and organizations should also learn how to manage their "ignorance" as well. This paper identifies some questions for knowledge management scholars and practitioners to carry out research in knowledge transfer and inter-organizational learning among strategic alliances.