Describing the Phenomenon: Alliance Capabilities

The number of publications based on (a mix of) the six theories discussed in Chapter 2 has grown exponentially over the past years (Foss, 2000; Helfat, 2000). Two main streams of research have emerged from this (Hamel, 1991; Ranft and Lord, 2002): a body of research which has been referred to as external sources of capabilities and another body of research which centres on internal sources of capabilities (Grant, 1998), also referred to respectively as knowledge acquisition and knowledge internalization (Hamel, 1991), inter-firm and intra-firm learning (Grant and Baden-Fuller, 2002), internal and external learning (Bierly and Chakrabarti, 1996), learning outside and inside the firm (Leonard-Barton, 1995), or vicarious and experiential learning (Huber, 1991). This book builds on the concepts underlying the second stream of research. The second stream of literature focuses on processes within the individual firm that foster knowledge dissemination and integration (e.g. Henderson and Clark, 1990; King and Zeithaml, 2001). In fact, the second stream fills the void left open by the first stream, which essentially answers questions like: how can firms learn from their collaborative experience? How can firms transfer and internalize knowledge (Inkpen and Crossan, 1995; Tsang, 2002a)? And can firms cultivate the development of alliance capabilities (Reuer et al., 2002a)? In this stream of research, the building blocks of alliance capabilities are the main topic of research (Simonin, 1997; Gulati, 1998). Hence, studies of this kind suggest that firm-specific resources, capabilities, routines and competences explain competitive heterogeneity as well as firm dynamics (e.g. Hitt and Ireland, 1985). Notwithstanding the significant contribution of both streams, limited attention has so far been paid to explain how experience can be translated into a capability (Kale et al., 2002; Tsang, 2002a). As most studies have pursued a macro-focus, firms are left in the dark about the adequate actions that can be taken at the micro-level. As a consequence, a growing debate is surrounding academic strategy research with respect to its practical relevance (see e.g. Johnson et al., 2003). This critic also counts for alliance research, as contributions aimed at enlightening the process underlying the development of capabilities and the potential mechanisms to be used have been limited in number and have so far lacked micro-level evidence and detail (Grant, 1996b; Williamson, 1999; Eisenhardt and Martin, 2000; Thomke and Kuemmerle, 2002; Zollo and Winter, 2002). Hence, there is an evident need to understand how firms can internalize their acquired experience in order to develop alliance capabilities. Despite recent attention for the need for firms to develop alliance capabilities, research into mechanisms and routines that are purposefully designed to accumulate, store and integrate alliance-related knowledge is practically non-existent (Fiol and Lyles, 1985; Anand and Khanna, 2000; Lehtonen, 2003).