Research Paper SIM

Research Paper SIM

Collaboration for innovation

Comparing alliance knowledge management preparation between

organizations with and without alliance experience

Matthijs den Engelsman s2229595

Introduction

Strategic alliances have become more and more important for organizations' growth and competitive strategies because they help organizations access new or critical capabilities (Rothaermel & Boeker, 2008) and access and acquire external knowledge (Bleeke and Ernst 1991; Grant and Baden-Fuller 2004; Hennart 1988; Kogut 1988; Osland and Yaprak 1995; Powell 1987). In other words, to innovate. However, studies have shown that up to 70% of alliances fail (Draulans, de Man & Volberda, 2003; Kale & Singh, 2009). Failure in this context means that the alliances neither meet the goals of their parent companies nor deliver on the operational or strategic benefits they purport to provide (Bamford, Gomes-Casseres, & Robinson, 2004). How can alliances be such an important innovation strategy for many organizations, where they make up for more than 30% of the annual research expenditures (Ernst, 2004), and yet still generally be so unsuccessful? Especially inexperienced organizations in terms of alliance experience are having difficulties making an alliance successful, due to lack of alliance capability. Alliance capability refers to the skill of an organization in managing alliances (Draulans, de Man & Volberda, 2003). Therefore building alliance capability is extremely important for organizations if they wish to have successful alliances, in the present and in the future. In the past decades, much research is done in order to find in what ways organizations can improve alliance capability for higher alliance success rates. A way to improve alliance success is by using active knowledge management, i.e. learning and leveraging lessons from earlier alliances (Draulans, de Man & Volberda 2003). What has been left out in existing studies however, is empirical data about how inexperienced organizations prepare for an alliance when it comes to knowledge management, and how this compares to the preparations of organizations that do have a lot of experience with alliances. Therefore, this paper will answer the following question; 'In the absence/presence of alliance

experience, how do managers prepare for alliance knowledge management?'. From this point

To answer the research question, case studies will be done at two organizations. In case of the study of the inexperienced organization, the name and location of the organization are disguised to ensure confidentiality. This organization will be referred to as Mental Healthcare Organization, or MHO.

MHO is inexperienced with strategic alliances and operates in the mental healthcare branch in the region of Amsterdam. The other organization is CWN (Coalitie Wadden Natuurlijk), an experienced organization concerning strategic alliances. It operates in the nature and environment branch. It is an organization that only exists to manage and maintain a strategic alliance between eight different organizations. Those organizations combined have the 'control' over, and stick up for the Wadden Sea area. The coalition consists of the director of CWN and his assistant, the eight CEO's of the incumbent organizations and multiple inter-organizational teams (teams with members from different organizations) with a certain theme, e.g. fishery. At both organizations interviews are held with managers concerned with a formed alliance and additional data will be gathered through documents.

The key findings include that both researched organizations indicate they want to learn from alliances to gain alliance capability, but neither prepare for alliance knowledge management in order to gain as much alliance capability as possible. Also within an experienced organization a collective memory exists from which the alliance know-how and skills are drawn when needed. Furthermore, inexperienced organizations seem to rely for some part on improvisation, where experienced organizations do not rely on improvisation.

The purpose of this paper is to give an insight in the preparation activities of both experienced and inexperienced organizations for an alliance. But it is also an invitation to other researchers to conduct more research about knowledge management preparations at experienced and inexperienced organizations in order to lower the vast failure rates of alliances of up to 70%.

Theory

independent alliance function. However, nothing is said about organizations that (for what reason whatsoever) have no such function. Sluyts et al. (2011), who revealed that through investment in deliberate alliance learning tools, an organization can develop alliance capability which will enhance the alliance performance of the organization. This article thus discusses preparation tools for management to build alliance management in general and draws close to the research topic at hand, but is however still something different.

No empirical research has yet been done concerning the actual management preparations for alliances and alliance knowledge management for an individual alliance in both experienced and inexperienced organizations, and consequently no literature about this phenomenon exists. Therefore, this paper will start to fill this gap and encourage others to also research this subject and fill the gap further. This is important because alliance knowledge can greatly improve alliance capability (Meier, 2011), which will lead to greater alliance success for organizations. Since up to 70% of alliances fail, improving the success rate of alliances in any possible way is important. Management preparation for alliance knowledge management might be key to proper alliance knowledge management during the actual alliance, which on its turn is very important for alliance capability. Therefore, this is a very interesting phenomenon to research.

Methodology

To gather empirical data regarding the research question, two interviews at different organizations (experienced and inexperienced) were conducted with different managers who oversee a strategic alliance within their organization. The interviews mainly covered rather detailed questions about the preparations management makes concerning alliance knowledge management. Most questions and thus answers involved alliance experience, alliance management as an organizational objective, ways of learning from alliance experience, the three main phases of an alliance (i.e. choosing an alliance partner and negotiation objectives, the management of the alliance and determining the success of the alliance), the importance of improvisation, capturing and storing relevant learning data and the overall importance of alliance knowledge management to those organizations. Next to the interviews, additional documents concerning for example the intentions and specifications of the alliance were used. The literature, interviews and documents were used to compare both experienced and inexperienced organizations in order to address the research question.

Research findings

This research paper focuses on how managers prepare for alliances and alliance knowledge management, and very important is the distinction between organizations with experience and without experience. To compare both experienced and inexperienced organizations, the findings will be grouped in findings of the experienced organization, CWN, and findings of the inexperienced organization, MHO. After the findings of both organizations have been discussed, the findings will be compared to each other in order to judge whether experienced and inexperienced organizations differ in terms of management preparation for alliances and alliance knowledge management.

CWN

learn from and leverage experiences by documenting important information, but this happens almost always after an event, not much has been done to prepare for learning from experience. Or as the director of CWN said; "I'm trying my best to learn from experiences, but it is not

easy to write it all down". However, having learned from past experiences, clear agreements

regarding for example media attention have been made. Knowledge from these kinds of experiences are also brought to new alliances, but is not seen as intentional preparation for alliance knowledge management.

Although it is not an alliance knowledge management preparation tool, everything that is done by CWN as a whole or by one of its teams is evaluated. Questions such as how did we do, what could be improved, are we still going the right way and so on are constantly asked. This is a very important part of the management of the strategic alliance. The whole coalition is evaluated once a year. Things that could be done better are discussed and new strategic plans are made if necessary.

Overall, it could be said that most preparations for a new alliance are done from past experience, but are not documented as such. There is something of a collective memory from which the alliance know-how and skills are drawn when needed. Only the loss of a key player such as the director of CWN would lead to the loss of a lot of experience which would be much harder to replace. Actual preparations for alliance knowledge management are minimal. Learning does occur from things that happen and this is being documented, it is however not something that is being prepared for in advance. Therefore it could be concluded that although learning from alliances is considered rather important, this always occurs on the go or afterwards, and thus preparation for alliance knowledge management is not something that is actively pursued.

MHO

Also, people who were involved in previous collaborative settings, like partnerships on a smaller scale (non-strategic alliances), were redeployed in the new project to make use of the knowledge and skills they gained concerning working together with another organization. Managers that do not have this experience talk with people that do, in order to gain some more insight and knowledge about the subject.

Furthermore, the Board of Directors and Board of Trustees of MHO insisted on delivering the board director of the newly found joint venture, in order to minimize the distance between MHO and the joint venture, because in previous smaller partnerships this appeared to be a problem. In some cases the distance between the organization and its collaborative setting was so big, it lost some control over its operations, which leads to confusion about what is going on. Therefore they try to prevent this situation from happening in a larger collaboration such as a joint venture.

Also, in response of events in an earlier partnership, a risk-analysis was made and as a result of the analysis actions were taken in order to lower potential risk. All was documented in order to be able to use this information again in the future when necessary.

It seemed like MHO tried its best to prepare for the strategic alliance in terms of making it a success, but this cannot be said about the preparations for alliance knowledge management. Concerning this topic, they seem to rely more on improvisation, i.e. awaiting what will happen and at that moment decide how the organization can learn from it in order to gain alliance capability.

Overall, it can be concluded that management has indeed taken action to prepare for the alliance itself, but not much preparations were made to really try and learn from the alliance. For example in order to gain alliance capability concerning processes like choosing the alliance partner, negotiating alliance terms, managing the alliance, capturing valuable information and data and determining the final success or failure of the alliance. Preparing to learn from those processes will enable the organization to learn, and leverage those lessons in future small partnerships or strategic alliances. This is especially true for this particular organization, because the manager I interviewed said the following: "We want MHO to be a

network organization". This means that collaborating on many different levels is important to

Discussion

There are multiple dimensions on which the findings of case studies at both CWN and MHO will be compared with each other in order to determine if there are differences in management preparations between absent and present alliance experience. The dimensions are selected on their relevance for answering the research question. The following dimensions will be compared: How do both organizations compare in terms of;

 Management's effort to prepare for a strategic alliance?

 Management's effort to prepare for alliance knowledge management?  The usage of improvisation as a tool to learn from alliance experience?

Management preparations for an alliance

Because of the lack of experience concerning strategic alliances, MHO's management really tried to prepare as much as possible for the alliance, in order to make it as successful as possible. As can be read in the MHO paragraph, they undertook several activities in order to prepare. CWN, in contrast, does less to prepare for new alliances because the experience from eight years of strategic alliances enables them to perform well without much preparation efforts. It has leveraged the lessons it's learned in a sort of routine, in order to have successful collaboration.

Existing literature reveals the importance of alliance knowledge management (Draulans, de Man & Volberda 2003; Meier 2011) but fails to make a distinction between experienced and inexperienced organizations. Making this distinction is something other researchers might want to do as well.

Preparation for alliance knowledge management

Improvisation

MHO seems to rely on both preparation and improvisation. It prepares for a strategic alliance in multiple ways, from hiring an outside consultant and redeploying people with collaborative experience to installing their own director in the joint venture in order to have as much control as possible. When it comes to learning from the alliance itself though, more is relied upon improvisation than preparation, since they have little experience with strategic alliances. This means MHO has to discover what activities concerning the forming and managing of an alliance are important, how to document important information regarding alliance experience and how to make sure MHO is able to leverage those lessons in future alliances.

In comparison to MHO, the experienced organization CWN does not seem to rely on improvisation as much. It does sometimes grasp opportunities and evaluate those actions afterwards, but most activities concerning the forming and managing of alliances are standardized. Also there is more experience with regard to documenting important aspects of alliances and it is clear that lessons learned in previous alliances or earlier within the existing alliance are leveraged when new alliances are started.

Therefore the conclusion can be drawn that experienced organizations rely more on their experience than on improvisation, and subsequently make less use of improvisation than inexperienced organizations would.

Although alliance capability is often referred to as a main determinant for alliance success (Kale & Singh 2007, 2009; Sluyts et al. 2011) and it is said that explicit efforts are necessary to learn from alliances (Wassmer 2010), the use of improvisation as a tool to gain alliance capability is something that is not discussed. This paper tries to identify whether it is useful for organizations to make use of this and this might be something future researchers want to incorporate in their research as well.

Conclusion

know-how and skills from their own experience and an existing collective memory. Managers from organizations without experience cannot access any experience or a collective memory since it does not exist, therefore they put more effort in preparing for an alliance to make up for the lack of experience. However, they also don't seem to prepare for alliance knowledge management. This means that there are definitely differences between organizations with and without experience concerning manager preparations for an alliance, but when it comes to manager preparations for alliance knowledge management, both types of organizations behave the same. Another difference between absent/present alliance experience is the reliance on improvisation. Inexperienced organizations seem to rely for some part on improvisation, where experienced organizations do not rely on improvisation at all.

Conceptual model

Figure 1: The differences in management preparations for an alliance in the

presence/ absence of alliance experience

= Type of organization

= Most important preparation factors = New alliance

Implications and limitations

Existing literature reveals the importance of alliance knowledge management (Draulans, de Man & Volberda 2003; Meier 2011) but fails to make a distinction between experienced and inexperienced organizations. This paper shows that by making this distinction, it becomes clear that different factors are important in order to prepare for alliances depending on the absence/presence of experience. Future research should take this into account.

Managers from inexperienced organizations should try to prepare for a new alliance as much as possible and use improvisation when, due to lack of experience, the preparations were insufficient. Also, both experienced and inexperienced organizations acknowledge the importance of preparing for alliance knowledge management, but have difficulties

implementing this. Therefore more research should be done on the 'taking action' part of preparing for alliance knowledge management. For example, in what ways can managers successfully prepare for alliance knowledge management, or what kind of preparations fit an experienced or inexperienced organization? Another suggestion for future research is researching whether using improvisation compared to standardized procedures is advantageous or disadvantageous, because inexperienced organizations use improvisation and experienced organizations make use of standardized procedures.

This research had several limitations. Firstly, I could only manage one interview within each organization, thus creating a possible one-sided view of the alliance(s). A second interview with another person would have solved this problem. Secondly, the interviewed managers of both organizations might not yet have been familiar with activities describes by researchers to learn from alliances and therefore made no preparations for alliance knowledge management, thereby affecting the research results. Thirdly, certain findings of the research were not initially meant to be researched, because they are not strongly related to the research question, e.g. the use of improvisation. However, those findings are rather interesting and are therefore mentioned in the paper.

References

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Appendix I. Journal Articles Summaries

Study Research question Type of research Method Remarks

Collaboration and innovation: a review of the effects of mergers, acquisitions and alliances on innovation. A.P. de Man and G. Duysters (2005). Whether alliances or M&As are superior to the other in terms of strengthening the innovative capabilities of the partners involved

It is a conceptual research paper where the authors made a selection of papers and studied these selected papers. The research approach was theory-testing since the authors try to fill a gap by studying existing theory and test their hypothesis.

Selection of existing papers on a number of criteria; only large-scale empirical studies, clearly defined measure of success has to be present in the papers, papers must be published in refereed journals or need to be presented at a renowned, refereed academic

conference and in the papers innovation is defined narrowly in terms of R&D. Finally, 30 papers on Alliances and 15 papers on M&As were able to meet the criteria.

The success of alliances in enhancing innovation is greater than the success of M&As in enhancing innovation.

The initiation and evolution of interfirm knowledge transfer in R&D relationships. Faems et al.(2007).

What role does the evolution of interfirm relationships have on the transfer of R&D knowledge?

It is an empirical research paper. The research approach was theory-building.

Multiple interviews were held with managers from Belgian firms. Furthermore, the authors gained insight in many documents (e.g. minutes from important meetings). All this data was used to build the case.

The authors built a model that points to the importance of legal clauses as a formal design alternative to equity governance structures, expectations of a long-term relationship as a specific indicator of trust, and similarity of technological equipment as an important facilitator for acquisition and assimilation of

16 Managing Strategic Alliances: What Do We Know Now, and Where Do We Go From Here? P. Kale & H. Singh (2009).

What critical factors determine the success of a single alliance and alliance portfolio management?

It is mostly a conceptual research paper. However, they also collaborated with the previous vice president of corporate alliances for Philips to track the development of alliance capability within Philips. The research approach was theory-building, since the authors developed a new theory.

They made use of existing papers to identify critical success factors in single alliances. Besides that, they collaborated with the previous vice president of corporate alliances for Philips to research success factors in managing alliance portfolios.

There are several critical success factors for both single alliances and the management of alliance portfolios.

Managing joint ventures. P.W. Beamish and N.C. Lupton (2009). Identify prominent academic discussions established over the last 25 years and draw implications from past research and areas for future research on successfully managing JVs.

It is a conceptual research paper. The research approach was theory-building.

The authors used existing papers of the last 25 years, based on number of times cited using the Social Science Citation Index. No book titles were included.

Key implications include the necessity of honesty, trust, and commitment for the success of the JV, settling disputes by focusing on what is best for the JV rather than individual partner objectives, and division of managerial responsibilities according to the functional expertise of each partner.

Building alliance capability: management techniques for superior alliance performance. Draulans et al. (2003).

The main aim of this research was to get a first quantitative underpinning of the authors' ideas about alliance capability development.

It is an empirical research paper. The research approach was theory-building.

It is a quantitative study on alliances and alliance-management techniques of 46 large companies.

Experienced organizations learn the most from the comparison of alliances with each other, while inexperienced organizations learn more from the individual evaluation of alliances. Also, experienced organizations in particular benefit from the use of an alliance specialist, as long as the latter is able to exert

influence on the operational practicalities of the alliance. A specialist needs to be close to practice. Furthermore, alliance training courses are particularly

17 Knowledge management in strategic alliances: a review of empirical evidence. M. Meier (2011). To develop an integrative framework which organizes existing empirical evidence on knowledge management in strategic alliances. Furthermore, the paper aims to identify areas of convergence, areas of divergence and salient research gaps.

It is a conceptual research paper. The research approach was theory-building.

The author followed the principles for systematic review suggested by Tranfield et al. (2003). In order to provide a systematic, transparent

and replicable methodology, the review follows 6 stages, which can be found in the paper.

The author established a framework from the data he collected and also made a summary of the empirical evidence to provide a comprehensive overview of the research field, but both the framework and the summary are too large to show here. Organizational Improvisation and Learning: A Field Study. Miner et al. (2001). The effects of improvisation on both short and long term organizational learning.

It is an empirical research paper. The research approach was theory-building.

It is an empirical research on improvisation within two companies. Data gathering techniques involved documents, observation and interviews

Improvising is a special type of organizational learning. It represents a form of real-time, short-term learning that may or may not influence other learning processes. Furthermore, improvisation has the ability to enhance other learning processes and to detract from their value or operation. Finally, organizations appear to be able to develop competencies in generating and deploying improvisation in spite of its dangers, although these competencies may be localized. What really is alliance management capability and how does it impact alliance outcomes and success? Schreiner et al. (2009).

What are the main skills that comprise a firm’s capability to manage any individual alliance, and how does it influence the outcome or success in that alliance.

It is an empirical research paper. The research approach was theory-building.

The authors made use of surveys and secondary data from a large sample of interfirm relationships between software service providers and three major global software vendors.

The study contributes to theory by specifying what alliance management

knowledge and skills are actually valuable assets for realizing an alliance’s value creation potential. Furthermore it has several conclusions: 1. Alliance

18 Building capabilities to manage strategic alliances. Sluyts et al. (2011).

Verifying the impact of alliance

management capability on alliance

performance and analyzing the drivers of alliance

management capability.

It is an empirical research paper. The research approach was theory-building.

The sample consists of 1346 Belgian companies with more than 100 employees. The population was selected using a database that was composed by Spectron, an independent provider of database solutions. To gather data, the authors used surveys. In the end, the surveys of 235 companies were used.

Through the investment in deliberate alliance learning tools, a firm can develop alliance capability which

will enhance the alliance performance of the firm.

Building firm capabilities through learning: the role of the alliance learning process in alliance capability and firm-level alliance success. P. Kale and H. Singh (2007).

They have multiple hypotheses:

Hypothesis 1: A firm’s alliance learning process

is positively linked to its overall alliance success.

Hypothesis 2a: The alliance function is positively linked to a firm’s alliance learning process. Hypothesis 2b: The alliance learning process partially mediates the rela-tionship between the alliance function and a firm’s overall alliance success.

It is an empirical research paper. The research approach was theory-building.

First, the authors did a field study with several companies to understand the nature of the alliance learning process in firms. Based on the fieldwork and a thorough study of extant literature, they developed their theoretical arguments and model. This approach provided rich contextual detail, and enabled them to develop grounded

specification of the framework and constructs that used the language of the phenomenon. They then collected large sample survey data to validate the

theoretical constructs and test the proposed relationships.

19 Building theory from case study research. K.M. Eisenhardt (1989).

Describing the process of inducting theory using case studies.

It is an empirical research paper. The research approach was theory-building.

The whole process of building theory from the case study research is listed in Table 1 on page 533 of the paper.

The purpose of this article is to describe the process of theory building from case studies.

Trying to become a different type of company. E. Danneels (2010).

How Smith Corona tried to alter its resource base by leveraging existing resources, creating new resources, accessing external resources, and releasing resources. It is an empirical research paper. The research approach was theory-building.

The author used the extended case method, and his study advances dynamic

capability theory by confronting it with an empirical case (of Smith Corona)