Alliance Formation Issues for Knowledge-Based Enterprises

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. Introduction The challenges of accelerating competition, falling regulatory barriers, and rising customer expectations have led many companies to improve their competitiveness by combining resources explained the trend toward the use of interfirm collaboration in terms that every manager can understand: " [gaining] competitive advantage increasingly depends not only on a company's internal capabilities, but also on the types of its alliances and the scope of its relationships with other companies. " The incidence of alliance formation rose at some 25% per annum for the first half of the 1990s (Bleeke and Ernst, 1995) and there is little evidence to suggest that rate has diminished.