This chapter examines Hamel et al.'s idea that, when pursuing strategic alliances with partners who are also rivals, firms should try to learn as much as possible from their partners while giving away as few of their FSAs as possible. In theory, strategic alliances have three main benefits: they allow firms to share risks and costs (particularly R&D costs), they allow firms to benefit from their partner's complementary resources, and they allow the quicker development of capabilities to deliver products and services valued by the output market. Hamel et al. provide other advice on carrying out strategic alliances, including the advice to keep developing FSAs independently and to avoid a vicious cycle of dependency on the partner. These ideas will be examined and then criticized using the framework presented in Chapter 1.

Significance

In 1989, Gary Hamel, Yves Doz and C. K. Prahalad wrote an influential HBR article on the dynamics of international strategic alliances. They focused on the phenomenon whereby large MNEs form strategic alliances with equally large foreign firms that are also rivals in the international marketplace.

Such ‘competitive collaboration’ occurs because MNEs find it increasingly difficult to bear alone the enormous R&D costs – and singlehandedly gain easy access to the scarce resources required – to launch new products. These problems are amplified in the context of the compressed time frames necessary to stay ahead of rivals.