Advantage Competition of Inter-Partner Learning in International Strategic Alliance

By Liu, Weng Kun | Journal of Global Business Issues, Summer 2009 | Go to article overview

Advantage Competition of Inter-Partner Learning in International Strategic Alliance


Liu, Weng Kun, Journal of Global Business Issues


ABSTRACT

Along with the trend of globalization, alliance activities are an inter-organizational form of cooperation among multinational corporations to expand global business. To enhance their competence, alliance partners are more likely to engage in the inter-partner learning activities in order to learn the critical technology and knowledge from other partners within the alliance. However, all partners within an alliance may competitively engage in the activity of "race to learn" to maintain their competitive advantages and, through that, cause organizational instability. This study evaluates the advantages and disadvantages of strategic alliance, and discusses the relationship of inter-partner learning and alliance organizational instability. By developing the following preventive strategies, alliance members could improve the learning activity within an alliance and enhance the situation of alliance stability: (1) developing a "wall off" strategy, (2) enacting a contract with the terms of safeguards, (3) making licensing agreement prior to the formation of alliance, (4) making a credible commitment from their partners, and (5) creating the difficulty of learning within an alliance group.

Introduction

Globalization has been in high gear recently. The trend of globalization has accelerated the global activities in the world environment. One of the most popular business activities is the formation of "alliance", which represents an inter-organizational form of cooperation in the global business environment. Alliances may have a more unstable type of integration than mergers and acquisitions. Some researchers proposed the reason which may cause the instability to be the "race to learn" in alliances. In order to strengthen their competitive advantages, alliance partners are more likely to acquire the critical capability and technology from the other partners in the alliance. Through acquiring the essential knowledge or technology from the other partners, alliance partners with more competitive advantage would not need the form of alliance. Thus, it will bring to the result of instability. In this situation, all members in an alliance may be forced to engage in the activity of "race to learn." The final result is that some alliance members would be winners in the market. On the other side, the rest of the alliance members would be expelled from the global competition. This is the notion of "race to learn."

This study will discuss the relationship between the inter-partner learning and the alliance stability. Then this research will explore whether the "race to learn" would bring alliance instability. Although the activity of "race to learn" would lead to the result of alliance instability in an alliance, in some situations, the learning behavior would have little effect on the alliance stability if alliance members develop some preventive strategies to reduce the learning activity within an alliance.

Purpose Statement

More and more companies tend to expand the global market in the way of strategic alliance, which is the structure of collaboration to accomplish the strategic goals of members between different organizations. With the restriction of global environment and cultural difference, alliance is the common way companies used to reach their functions of production efficiency, technology development, cost reduction, or market expansion. The extent of collaboration depends on the demand of their alliance members.

This study is organized to introduce the notions of alliance and inter-partner learning, and the relationship between "race to learn" and alliance instability. Learning provides the alliance partners with the proper way to exploit their abilities and enhance their competitive advantages within the form of alliance. The interpartner learning refers to the activities of a partner to obtain the information or technology from other partners within an organization or group (Hau & Evangelista, 2007). …

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