A knowledge-based view of strategic alliances

Journal of the Academy of Business and Economics, Jan, 2004 by Yongliang Han

4. CONCLUDING REMARKS

In this paper, we present a knowledge-based view of strategic alliances, we focus on the knowledgedriven alliances because they display different patterns of motives and stability than other types of strategic alliances. For the firms participating in knowledge-driven strategic alliances, life is a balance between exploitation and self-protection. While firms try to extract maximum value from the knowledge acquired from their partners, they also need to protect themselves from being exploited by their partners in knowledge transfer and creation. It is systematically demonstrated that the knowledge-driven strategic alliances are jointly motivated by the strategic value of external knowledge to the focal firm and partner's appropriability of the focal firm's knowledge.

It is further demonstrated that the stability of the knowledge-driven strategic alliances is a joint function of two variables--the endogenous characteristics of knowledge and the strength of exogenous contractual protective mechanisms. If transfer of existing knowledge between partners is the primary concern, then the stability of strategic alliances is determined by the leakage potential of knowledge and the strength of contractual protective mechanisms. If the property rights of knowledge generated during the alliances are the central issue, then the stability of alliances is a joint function of relative redeployability of the new knowledge between the firms and the regime of property rights regarding the new knowledge.

Because appropriability constitutes the most serious threat to the motives and stability of the knowledge-driven strategic alliances, firms have to make various efforts to estimate potential appropriability problems, negotiate protective terms in the contracts, monitor their partners' behavior, and set up enforcement mechanisms. All of these entail transaction costs. In this paper we discuss relative transaction costs in each situation when analyzing the motives and stability of different types of knowledge-driven alliances.

The work on knowledge-driven strategic alliances is far from complete. Although we have taken every effort to clarify the key concepts, some are still vague, such as leakage potential and redeployability. Moreover, the article has been largely operating at an abstract and theoretical level; therefore empirical support is badly needed. A large sample statistical analysis or at least some stylized cases will help to understand the motives and stability of different types of strategic alliances and the transaction costs involved in each type. There is still a long way to go to better understand the knowledge-driven strategic alliances.

ACKNOWLEDGEMENTS

I would like to thank the College of Business Administration, California State University, Sacramento, for providing financial support for this study.

REFERENCES

Alchian, A., & Demsetz, H. (1973). The property right paradigm. Journal of Economic History, 33: 16-27.

Bianchi, M. (1995). Markets and firms: Transaction costs versus strategic innovation. Journal of Economic Behavior and Organization, 28: 183-202.