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In many markets and industries, alliances are no longer a strategic option but a necessity. An alliance can be broadly defined as a situation where two or more organizations come together because of their mutual interest in interorganizational learning and collaboration to leverage existing knowledge levels. The number of U.S. corporate alliances has grown by more than 25 percent annually for the past five years (Harbison & Pekar, 1989). Drucker (1995) suggested that the greatest change in the way business is being conducted is the accelerating growth of relationships based not on ownership but on partnership. An important explanatory factor in the growth of alliances is that theses forms of cooperation provide a platform for organizational learning and access to new knowledge gained during the alliance (Grant, 1996; Hamel, 1991; Khanna, 1998; Kogut, 1998).
The motivations for an organization to enter an alliance include attempts to achieve competitive advantages by gaining market access, improve scale economies, and develop competence through collaboration (Astley, 1989; Hamel, 1989; Lorange & Roos, 1992). While the number of alliances has grown over the last few years, the actual performance of strategic alliances seems to be disappointing (Harrigan, 1988; Porter, 1987). Doz (1996) suggests that a key to better understand the pitfalls of strategic alliances can be found in the benefits and difficulties of organizational learning among the cooperating firms. Other researchers have identified particular learning problems, such as the risk of uncontrolled information disclosure and asymmetric diffusion of core competencies to partner firms as constraints for a successful alliance (Bresser, 1988; Hamel, 1991; Inkpen & Beamish, 1997).
The literature is replete with theoretical research (Kumar & Nti, 1998; Makhija & Ganesh, 1997; Mody 1993) as well as empirical studies (Dodgson, 1993; Lane & Lubatkin, 1998; Simonin, 1999) addressing the issues of alliance learning. While this stream of research addresses some important questions concerning the conditions under which organizations exploit alliance learning opportunities, little is known about the dynamic nature of interorganizational learning that occurs among cooperative firms. The primary objective of this paper is to integrate various perspectives on learning in alliances and to extend existing frameworks of interorganizational learning by making explicit causal feedback mechanisms that, we contend, will help decision makers gain insights into the dynamic behavior of alliance learning.
The model described in this paper is an explicit dynamic theory expressed in a micro-world simulation, grounded in the relevant literature, with which we can test different conditions for strategic alliances. Although the representation of the system along with the outcomes of joint learning is highly aggregated, reflecting on simulation experiments with the model nevertheless provides insights into the dynamic behavior of interorganizational learning.