Skip to main content
SpringerLink
Log in

To teach or to compete? A strategic dilemma of knowledge owners in international alliances

  • Published:
Asia Pacific Journal of Management Aims and scope Submit manuscript

Abstract

The strategic importance of learning and knowledge development in alliances has been widely recognized and discussed in literature, though focusing mainly from the view of the demand side and leaving the equally important ingredient of knowledge owners’ incentives-to-teach intact. This paper blends the perspectives of the transaction-costs economics (TCE) and the knowledge-based view (KBV) in a hypothesized governance model that illustrates how knowledge and location factors of international partners jointly impact alliance strategies. We first identify the relevant knowledge and location factors affecting incentives-to-teach in alliances, and then incorporated them into a framework explaining the choice of contractual or equity-based mode governing an alliance. Eight hypotheses are developed and then tested on a sample of 640 international alliances, with at least a partner from a focal emerging economy, Taiwan. Our research findings show that the contractual mode is usually aligned with higher incentives-to-teach of the knowledge owners, especially in knowledge-asymmetric and location-symmetric alliances. In a contrast, the equity-based mode, offering additional safeguarding mechanisms for the knowledge owner, is often selected in the alliances associated with a severe concern of competition, especially in knowledge-symmetric and location-asymmetric alliances.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1

Similar content being viewed by others

Notes

  1. The following four steps were used for selecting the initial sample extracted from the SDC database: (1) Taiwan as the focal emerging economy: 1,565 alliances, participated by at least one Taiwanese partner; (2) alliance status: 942 signed and completed plus 1 extended alliances, after excluding 622 alliances with the other status of pending, LOI, renegotiated, rumor, and terminated; (3) international partners: 849 international alliances, after excluding 84 domestic alliances (without any foreign parent) and ten subsidiary alliances (without any Taiwanese parent); (4) data cleansing: 843 Taiwanese alliances, after excluding one knowledge-unknown alliance (without the SIC code of alliance) and five duplicated alliances (with identical applicable data except the source of news).

  2. The percentages of each location factor in the full-sample are reported in the parentheses: Taiwan (48%), non-Taiwan emerging economies (28%), North America (14%), Japan (5%), Europe (4%), supernational (11%), and multiple locations (30%), when the alliance is located in multiple economies.

References

  • Agarwal, S., & Ramaswami, S. N. 1992. Choice of foreign market entry mode: Impact of ownership, location and internalization factors. Journal of International Business Studies, 23(1): 1–27.

    Article  Google Scholar 

  • Anand, B. N., & Khanna, T. 2000. Do firms learn to create values? The case of alliances. Strategic Management Journal, 21: 295–317.

    Article  Google Scholar 

  • Anderson, E., & Gatignon, H. 1986. Modes of foreign entry: A transaction cost analysis and propositions. Journal of International Business Studies, 17(3): 1–26.

    Article  Google Scholar 

  • Argyris, C., & Schon, D. A. 1996. Organizational learning II: Theory, method and practice. Reading, MA: Addison-Wesley.

    Google Scholar 

  • Aulakh, P. S., & Kotabe, M. 1997. Antecedents and performance implications of channel integration in foreign markets. Journal of International Business Studies, 28(1): 145–175.

    Article  Google Scholar 

  • Balakrishnan, S., & Wernerfelt, B. 1986. Technical change, competition and vertical integration. Strategic Management Journal, 7: 347–359.

    Article  Google Scholar 

  • Barkema, H. G., & Vermeulen, F. 1998. International expansion through start-up or acquisition: A learning perspective. Academy of Management Journal, 41(1): 7–26.

    Article  Google Scholar 

  • Barney, J. B., & Hesterly, W. 1996. Organizational economics: Understanding the relationship between organizations and economic analysis. In S. R. Clegg & C. Hardy (Eds.). Handbook of organization studies. Thousand Oaks, CA: Sage.

    Google Scholar 

  • Bruton, G. D., Dess, G. G., & Janney, J. J. 2007. Knowledge management in technology-focused firms in emerging economies: Caveats on capabilities, networks, and real options. Asia Pacific Journal of Management, 24: 115–130.

    Article  Google Scholar 

  • Chang, S. J. 1995. International expansion strategy of Japanese firms: Capability building through sequential entry. Academy of Management Journal, 38(2): 383–407.

    Article  Google Scholar 

  • Chen, M.-J. 1996. Competitor analysis and interfirm rivalry: Toward a theoretical integration. Academy of Management Review, 21(1): 100–134.

    Article  Google Scholar 

  • Child, J., & Yan, Y. 1999. Investment and control in international joint ventures: The case of China. Journal of World Business, 34(1): 3–15.

    Article  Google Scholar 

  • Child, J., Faulkner, D., & Tallman, S. 2005. Cooperative strategy: Managing alliances, networks, and joint ventures. New York: Oxford University Press.

    Google Scholar 

  • David, R. H. S., & Han, S. K. 2004. A systematic assessment of the empirical support for transaction cost economics. Strategic Management Journal, 25: 39–58.

    Article  Google Scholar 

  • Doz, Y. L., & Hamel, G. 1998. Alliance advantage: The art of creating value through partnering. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Dyer, J. H. 1997. Effective interfirm collaboration: How firms minimize transaction costs and maximize transaction value. Academy of Management Review, 18(7): 535–556.

    Google Scholar 

  • Dyer, J. H., & Singh, H. 1998. The relational view: Cooperative strategy and source of interorganizational competitive advantage. Academy of Management Review, 23(4): 660–679.

    Article  Google Scholar 

  • Ellis, P. D. 2003. Social structure and intermediation: Market-making strategies in international exchange. Journal of Management Studies, 40(7): 1683–1708.

    Article  Google Scholar 

  • Grant, R. M. 1996. Toward a knowledge-based theory of the firm. Strategic Management Journal, 17: 109–122.

    Article  Google Scholar 

  • Grant, R. M., & Baden-Fuller, C. 2004. A knowledge accessing theory of strategic alliances. Journal of Management Studies, 41(1): 61–84.

    Article  Google Scholar 

  • Gulati, R. 1995a. Does familiarity breed trust? The implications of repeated ties for contractual choice in alliances. Academy of Management Journal, 38(1): 85–112.

    Article  Google Scholar 

  • Gulati, R. 1995b. Social structure and alliance formation patterns: A longitudinal analysis. Administrative Science Quarterly, 40(4): 619–652.

    Article  Google Scholar 

  • Hennart, J. F. 1988. A transaction costs theory of equity joint ventures. Strategic Management Journal, 9(4): 361–374.

    Article  Google Scholar 

  • Hennart, J. F. 1993. Explaining the swollen middle: Why most transactions are a mix of “market” and “hierarchy.” Organization Science, 4(4): 529–547.

    Article  Google Scholar 

  • Hill, G., Hwang, P., & Kim, W. G. 1990. An eclectic theory of the choice of international entry mode. Strategic Management Journal, 11: 117–128.

    Article  Google Scholar 

  • Hoskisson, R. E., & Hitt, M. A. 1990. Antecedents and performance outcomes of diversification: A review and critique of theoretical perspectives. Journal of Management, 16(2): 461–509.

    Article  Google Scholar 

  • Jayachandran, S., Gimeno, J., & Varadarajan, P. R. 1999. The theory of multimarket competition: A synthesis and implications for marketing strategy. Journal of Marketing, 63(3): 49–66.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. E. 1977. The internationization process of the firm—A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1): 23–32.

    Article  Google Scholar 

  • Kamien, M. I., & Schwartz, N. L. 1982. Market structure and innovation. Cambridge: Cambridge University Press.

    Google Scholar 

  • Kogut, B. 1988. Joint ventures: Theoretical and empirical perspectives. Strategic Management Journal, 9(4): 319–332.

    Article  Google Scholar 

  • Kogut, B., & Zander, U. 1992. Knowledge of the firm, combinative capabilities and the replication of technology. Organization Science, 3(3): 383–397.

    Article  Google Scholar 

  • Kogut, B., & Zander, U. 1993. Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 24(4): 625–645.

    Article  Google Scholar 

  • Krishnan, R., & Martin, X. 2006. When does trust matter to alliance performance? Academy of Management Journal, 49(5): 894–917.

    Google Scholar 

  • Lang, L. H. P., & Stulz, R. M. 1994. Tobin’s q, corporate diversification and firm performance. Journal of Political Economy, 102(6): 1248–1280.

    Article  Google Scholar 

  • Lavie, D., & Rosenkoph, L. 2006. Balancing exploration and exploitation in alliance formation. Academy of Management Journal, 49(4): 797–818.

    Google Scholar 

  • Maddala, G. S. 1983. Limited-dependent and qualitative variables in econometrics. Cambridge, UK: Cambridge University Press.

    Google Scholar 

  • March, J. G. 2006. Rationality, foolishness, and adaptive intelligence. Strategic Management Journal, 27: 201–214.

    Article  Google Scholar 

  • Meyer, K. E. 2006. Asian management research needs more self-confidence. Asia Pacific Journal of Management, 23: 119–137.

    Article  Google Scholar 

  • Montgomery, C. A. 1994. Corporate diversification. Journal of Economic Perspectives, 8(3): 163–178.

    Google Scholar 

  • Nelson, R. R., & Winter, S. G. 1982. An evolutionary theory of economic change. Cambridge, MA: The Belknap Press of Harvard University Press.

    Google Scholar 

  • Nonaka, I. 1994. A dynamic theory of organizational knowledge. Organization Science, 5(1): 14–37.

    Article  Google Scholar 

  • Phan, P. H., & Peridis, T. 2000. Knowledge creation in strategic alliances: Another look at organizational learning. Asia Pacific Journal of Management, 17: 201–222.

    Article  Google Scholar 

  • Reuer, J. J. (Ed.). 2004. Strategic alliances. New York: Oxford University Press.

  • Rindfleisch, A., & Heide, J. B. 1997. Transaction cost analysis: Past, present, and future applications. Journal of Marketing, 61(4): 30–54.

    Article  Google Scholar 

  • Rumelt, R. P. 1982. Diversification strategy and profitability. Strategic Management Journal, 3(4): 359–369.

    Article  Google Scholar 

  • Schumpeter, J. A. 1961. Theory of economic development. New York: Oxford University Press.

    Google Scholar 

  • Scott, J. T. 1982. Multimarket contact and economic performance. Review of Economics and Statistics, 64(3): 368–375.

    Article  Google Scholar 

  • Shenkar, O., & Reuer, J. J. (Eds.). 2006. Handbook of strategic alliances. Thousand Oaks, CA: Sage.

  • Simonin, B. L. 1997. The importance of collaborative know-how: An empirical test of the learning organization. Academy of Management Journal, 40(5): 1150–1174.

    Article  Google Scholar 

  • Simonin, B. L. 1999. Ambiguity and the process of knowledge transfer in strategic alliances. Strategic Management Journal, 20(7): 595–623.

    Article  Google Scholar 

  • Spender, J. C. 1996. Making knowledge the basis of a dynamic theory of the firm. Strategic Management Journal, 17: 45–62.

    Google Scholar 

  • Walker, G., & Weber, D. 1987. Supplier competition, uncertainty, and make-or-buy decisions. Academy of Management Journal, 30(3): 589–596.

    Article  Google Scholar 

  • Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5: 171–180.

    Article  Google Scholar 

  • West, G. P., & DeCastro, J. 2001. The Achilles heel of firm strategy: Resource weaknesses and distinctive inadequacies. Journal of Management Studies, 38(3): 417–442.

    Article  Google Scholar 

  • Williamson, O. E. 1975. Markets and hierarchies: Analysis and antitrust implications. New York: The Free Press.

    Google Scholar 

  • Williamson, O. E. 1981. The economics of organization: The transaction costs approach. American Journal of Sociology, 87: 548–577.

    Article  Google Scholar 

  • Williamson, O. E. 1985. The economic institutions of capitalism: Firms, markets, relational contracting. New York: The Free Press.

    Google Scholar 

  • Williamson, O. E. 1991a. Comparative economic organization: The analysis of discrete structural alternatives. Administrative Science Quarterly, 36(2): 269–296.

    Article  Google Scholar 

  • Williamson, O. E. 1991b. Strategizing, economizing, and economic Organization. Strategic Management Journal, 12: 75–94.

    Article  Google Scholar 

  • Williamson, O. E. 1993. Introduction In O. E. Williamson & S. G. Winter (Eds.). The nature of the firm: Origins, evolution, and development: 3–17. New York: Oxford University Press.

    Google Scholar 

  • Williamson, O. E. 1996. The mechanism of governance. New York: Oxford University Press.

    Google Scholar 

  • Williamson, O. E. 1999. Strategy research: Governance and competence perspectives. Strategic Management Journal, 20: 1087–1108.

    Article  Google Scholar 

  • Woodcock, C. P., Beamish, P. W., & Makino, S. 1994. Ownership-based entry mode strategies and international performance. Journal of International Business Studies, 25: 253–273.

    Article  Google Scholar 

  • Wright, M., Filatotchev, I., Hoskisson, R. E., & Peng, M. W. 2005. Strategy research in emerging economies: Challenging the conventional wisdom. Journal of Management Studies, 42: 1–33.

    Article  Google Scholar 

  • Zhao, H., Luo, Y., & Suh, T. 2004. Transaction cost determinants and ownership-based entry mode choice: A meta-analytical review. Journal of International Business Studies, 35: 524–544.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Business Administration, Tamkang University, 151 Yin-Chuang Road, Tamshui, Taipei County, Taiwan 251

    Sonya H. Wen

  2. Department of International Business, National Taiwan University, 50, Lane 144, Sec. 4, Kee-Lung Road, Taipei, Taiwan 106

    Cheng-Min Chuang

Authors
  1. Sonya H. Wen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Cheng-Min Chuang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Sonya H. Wen.

Additional information

We are grateful to David Ahlstrom (Senior Editor of APJM) and two reviewers for their constructive comments. The earlier manuscripts of this paper were presented at the 2007 Annual Meetings of Academy of International Business (AIB) in Indianapolis, Academy of Management (AOM) in Philadelphia, and Strategic Management Society (SMS) in San Diego. All the comments received from the reviewers and conferences are much appreciated.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Wen, S.H., Chuang, CM. To teach or to compete? A strategic dilemma of knowledge owners in international alliances. Asia Pac J Manag 27, 697–726 (2010). https://doi.org/10.1007/s10490-008-9127-y

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10490-008-9127-y

Keywords

Search

Navigation