Knowledge Creation in Strategic Alliance: Case of 'Child Business' Learning from 'Parent Partner'

Abstract

IntroductionOne of the most important trends in industrial organization of the past quarter century has been the growth of collaboration between independent companies. These inter firm alliances involve cooperative relationships that are not fully defined either by formal contracts or by ownership. As a result, the term 'strategic alliance' has been used to refer to 'agreements of two or more firms to reach a common goal entailing the pooling of their resources and activities' (Teece, 1992). Furthermore, the intense competition in the recent market has called many firms to rely on international collaboration such as strategic alliance as a strategic necessity for sustaining competitive advantage and creating customer value. Aside from explicit strategic and operational motives, learning has become one of the primary motives in the recent partnership agreement.Successful strategic alliances are highly evolutionary and grow in interactive cycles of learning, reevaluation, and readjustment. They do so at different levels, e.g., individual, group, and organization. Such are the attributes of learning organizations (Serrat, 2009). Extant literature regarding how alliances could promote and facilitate learning stated that alliances are vehicles of opportunity for creating a laboratory for learning (Inkpen, 2002). In this view, the paper would discuss the findings from two case studies conducted in Malaysia, and would later suggest key success factors that would help promote the cross border learning. In summary, the objectives of this paper is: (1) To discuss how international strategic alliance can promote organizational learning, 2) To identify the processes and key elements that can ease and promote organizational learning in international strategic alliance ventures, and (3) To suggest key elements in promoting organizational learning in International strategic alliance.Literature ReviewOrganizational Learning (OL) in International Strategic Alliances (ISA)Learning has been recognized to promote organizational development and competitive advantage. In this view, knowledge is considered to be an important resource, which linked with competitiveness, either directly or indirectly. As Sharma (1998) noted that it is important for the alliance partner to accumulate knowledge, resources and capabilities, and use them as sources of competitive advantage and sustain their business in today highly competitive market. Serrat (2009) noted that organizational learning occurs when an organization acquires, assimilates, and applies new information, knowledge, and skills that improve its long-run performance and augment its competitive advantage.In a strategic alliance case, commitment, trust, communications and conflict-resolution techniques are as crucial as organizational structure (e.g., formalization, centralization, and complexity) and control to help promote knowledge. This is because; knowledge can only be acquired if it can be assessed. So, how can organization access the alliance knowledge? Based on the research, knowledge acquisition can take place at least when alliances are structured and placed with the right strategy and systems in a way conducive to the sharing and institutionalization of experience to achieve better learning results.Additionally, the previous researchers have strongly emphasised the need for quality leadership and management style that extends across the relationship (Morrison and Mezentseff, 1997; Tsang, 1999; Trim, 2003). In this case, managers should act as agents of learning and are able to improve their organization's learning systems. If a company does not actively manage a learning process, what is learned will become a by-product of normal business operations, and the company will fail to take full advantage of the process.A consistent management role across the alliance will enable parties in the relationship to be focused and to provide a shared vision within the alliance (Morrison and Mezentseff, 1997). …