The Evolutionary Phases of Knowledge Transfer and Inter-organizational Competitive Advantage in Finnish-Chinese Strategic Alliances in the Diagnostics Industry

Abstract

Globalization has changed and will continue to shape the ways firms carry out their economic and profit-seeking activities. However, going it alone into a new country or business sector is always full of unpredictable risks. A possible way to lower such risks is to form alliances and networks. Among various motivations to form alliances, technology transfer is one of the most important, especially in a cross-border context. But, alliance also has a high failure rate. Why? How can the creation and sustaining of inter-organizational relational rent and competitive advantage be realized during the different evolutionary phases of knowledge transfer in strategic alliances? The purpose of this case study is to seek answers to this research problem. As contributions, theoretically, this study is an attempt to study the relational view (Dyer and Singh, 1998) in an integrated and dynamic framework with concepts of knowledge transfer, learning, relational behavior change and alliance performance. Managerially, instead of giving propositions on the challenges of relationship management in alliances involving intensive knowledge transfer, the researcher argues that compared to the challenges in receiving knowledge, it is actually bigger challenge and more demanding for the knowledge supplier to really understand the task of transferring it. In the researcher‘s opinion, in a company‘s evolution, a strategic vision, including that for alliances, is anyhow important; no matter it is related to a particular alliance or not. Thus, the researcher proposes from her Chinese perspectives that, it is better off for western companies to have a vision to treat their alliances in China as a window to the whole market and a learning-and-unlearning opportunity with the local partners. The gaining and sustaining of inter-organizational competitive advantage actually comes from such a vision.