Building Firm Capabilities through Learning: the Role of the Alliance Learning Process in Alliance Capability and Firm-level Alliance Success

ion of experience associated with a specific activity or task. We conceptualize codification in the alliance learning process in a similar manner. Codification involves creating and using knowledge objects or resources such as alliance guidelines, checklists, or manuals to assist action or decision making in future alliance situations. We also see it as being distinct from the aspect of articulation described earlier. Articulation primarily emphasizes externalizing the content residing within individuals. Codification, on the other hand, focuses on providing the content (know-what), the methodology (knowhow ), and even the rationale (know-why) for executing and managing various alliance-related tasks. Its ‘people-to-documents’ approach emphasizes ‘reuse economics,’ by which a firm reuses the alliance management knowledge that exists within the firm itself, or that resides with firms or people outside the firm (Hansen et al., 1999), to manage future alliances. Although the principal benefits of codification arise from the use of the codified alliance management manuals or tools, it also potentially provides more subtle benefits to managers in a firm. By involving themselves in the effort to codify alliance management knowledge, managers emerge with a crisper understanding of what works, or what does not work and why, in the context of managing certain tasks in alliances. Hence codification not only helps firms replicate and transfer alliance best practices, but also identify or select what those best practices are. In our fieldwork, we observed firms adopt several practices of codifying alliance management know-how. One company has created ‘35 rules of thumb’ for managing alliances. Another company has developed an in-house ‘power of partnerships’ program that provides its managers with detailed guidelines and frameworks for managing alliances. HewlettPackard has developed ‘40 decision-making templates’ to help managers understand and manage key activities at every stage of the life cycle of any alliances (Harbison and Pekar, 1998; Dyer et al., 2001). Eli Lilly, which is considered a ‘premier partner’ in the pharmaceutical industry, also has developed several such codified tools and templates to improve its managers’ partnering skills (Draulans et al., 2003). Overall, such codification is expected to enhance a firm’s decision making and actions in its alliances, and consequently lead to greater alliance success over time. Sharing of alliance know-how According to the knowledge-based view of the firm, the development of organizational skills to manage any particular task also rests upon a firm’s ability to share knowledge associated with managing or executing that task with all relevant parts within the organization (Grant, 1996). This is not only true for knowledge that is articulated and codified, but also for ‘tacit’ knowledge that is less amenable to easy articulation or codification (Winter, 1987). Knowledge sharing plays an important role in this regard. In the context of the alliance learning process, knowledge sharing involves exchanging and disseminating individually and organizationally held alliance management knowledge, which is both tacit and/or codified, through interpersonal interaction within the organization. ‘Communities of personal interaction’ are a central element of such knowledge sharing within firms (Seely Brown and Duguid, 1991; March, Sproull, and Tamuz, 1991). They provide a means for regularly and systematically sharing alliance management knowledge that has already been articulated or codified by the firm. More important, however, they provide a forum to share individually held tacit knowledge through direct person-to-person interaction between managers since tacit knowledge is more easily shared through dialogue between individuals than through knowledge objects (Hansen et al., 1999). Third, they also play a role in helping managers better conceptualize the alliance knowledge that is being shared or disseminated throughout the firm. Dialogue in the form of face-toface communication between managers provides them an opportunity to test their hypotheses and assumptions regarding best practices to carry out Copyright  2007 John Wiley & Sons, Ltd. Strat. Mgmt. J., 28: 981–1000 (2007)