Abstract
Five learning objectives To describe the meaning of ‘strategic alliances’ and their main benefits. To explain the concept of ‘dependency spiral’ and the ways to avoid it when outsourcing. To develop an understanding of the risks of dependence, exploitation and abuse in strategic alliances. To support a reflection on the meaning of the ‘learning race’ and ‘learning asymmetry’ concepts in the alliance context. To illustrate how MNEs select wholly owned affiliates versus alliances in the emerging economy context. This chapter examines Hamel et al .’s idea that, when pursuing strategic alliances with partners who are also rivals, firms should try to learn as much as possible from their partners while giving away as few of their FSAs as possible. In theory, strategic alliances have three main benefits: they allow firms to share risks and costs (particularly R&D costs), they allow firms to benefit from their partner’s complementary resources, and they allow the quicker development of capabilities to deliver products and services valued by the output market. Hamel et al . provide other advice on carrying out strategic alliances, including the advice to keep developing FSAs independently and to avoid a vicious cycle of dependency on the partner. These ideas will be examined and then criticized using the framework presented in Chapter 1. Significance In 1989, Gary Hamel , Yves Doz and C. K. Prahalad wrote an influential HBR article on the dynamics of international strategic alliances. They focused on the phenomenon whereby large MNEs form strategic alliances with equally large foreign firms that are also rivals in the international marketplace.
Published Version
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