Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances

Abstract

Abstract. Organizational theorists have correctly argued that the emergence and maintenance of robust cooperation between global strategic alliance partners is related to the diversity in the partners' characteristics. Yet previous research has failed to systematically delineate the important dimensions of interfirm diversity and integrate the dimensions into a unified framework of analysis. This paper develops a multilevel typology of interfirm diversity and focuses on organizational learning and adaptation as critical processes that dynamically moderate diversity's impact on alliance longevity and effectiveness. This example illustratesan importantparadoxin international business today. On one hand,global strategicalliances (GSAs) arebeing used with increasing frequencyin orderto, interalia, keep abreastof rapidlychangingtechnologies, gain access to specific foreign marketsand distributionchannels, create new products,and ease problemsof worldwideexcess productivecapacity.Indeed, GSAs are becoming an essential featureof companies' overall organizational structure, and competitive advantage increasingly depends not only on a company's internal capabilities, but also on the types of its alliances and *ArvindParkhe(Ph.D.,TempleUniversity) is anAssistant Professorof International Businessin theDepartment of Management, GraduateSchoolof Business,Indiana University(Bloomington). Followingan undergraduate degreein chemicalengineering,he heldcorporate management positionswitha Germancompanyin theUnited StatesandGermany. His researchfocuseson the formation, structuring, andmanagementof interfirmcooperative arrangements, andthe impactof national security exportcontrol regimeson the globalcompetitivenessof high-technologyfirms.

The impact of partner diversity within multiparty international joint ventures

“…While RBV-based research has highlighted the benefits of synergistic differences between partners, other work has stressed the potentially negative effects of differences, in particular cultural differences between partners, on joint venture longevity (Barkema, Bell, & Pennings, 1996;Park & Ungson, 1997;Parkhe, 1991). Much of this stream of research uses TCE logic and argues that differences between partners increase the costs of coordinating, monitoring, and acculturating partners and thus reduce an IJV's net value.…”

Working Abroad, Working With Others: How Firms Learn to Operate International Joint Ventures.

“…Cultural distance adversely affects international joint ventures hy eroding the applicability of the parent's competencies (Johanson & Vahlne, 1977;cf. Brown, Rugman, & Verbeke, 1989;Chowdhury, 1992;Gomes-Casseres, 1989;Harrigan, 1985Harrigan, ,1988Hergert & Morris, 1988: Lorange & Roos, 1991Parkhe, 1991). Woodcock and Geringer (1991) argued that cultural differences produce inefficient principal-agent contracts, and Li and Guisinger (1991) found that U.S. affiliates whose partners came from culturally dissimilar countries were more likely to fail.…”

The paradox in international cooperation: Institutionally embedded universities in a global environment

“…Here, after the strong increase in inter-firm constellations like strategic alliances and joint ventures in the 1980s, a wide range of studies on international cooperation between firms has emerged. In examining determinants of consortium performance, the study focuses on a unique aspect associated with the characteristics of partners involved in an alliance, namely interorganisational diversity (Parkhe 1991). An interesting paradox, which forms the core of the argument, is that alliances or consortia are based on both compatibility as well as complementarity.…”