This paper investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We show that alliance outcomes vary systematically across link and scale alliances. Link alliances are interfirm partnerships to which partners contribute different capabilities, while scale alliances are partnerships to which partners contribute similar capabilities. We find that partners are more likely to reorganize or take over link alliances than scale alliances. By contrast, scale alliances are more likely to continue without material changes. The two types of alliances are equally likely to shut down, at similar ages. These results support the view that link alliances lead to greater levels of learning and capability acquisition between the partners than do scale alliances. Copyright © 2000 John Wiley & Sons, Ltd. This study investigates the outcomes and durations of strategic alliances among competing firms, using alliance outcomes as indicators of learning by partner firms. We define strategic alliances as arrangements between two or more

Economists have become increasingly frustrated with the textbook model of the firm. The "firm " of intermediate microeconomics is a production function, a mysterious "black box" whose insides are off-limits to respectable economic theory (relegated instead to the lesser disciplines of management, organization theory, industrial psychology, and the like). Though useful in certain contexts, the textbook model has proven unable to account for a variety of realworld business practices: vertical and lateral integration, geographic and product-line diversification, franchising, long-term commercial contracting, transfer pricing, research joint ventures, and many others. As an alternative to viewing the firm as a production function, economists are turning to a new body ofliterature that views the firm as anorganization, itself worthy of economic analysis. This emerging literature is the bestdeveloped part of what has come to be called the "new institutional economics."' The new perspective has deeply enhanced and enriched our understanding of firms and other organizations, such that we can no longer agree with Ronald Coase's 1988 statement that "[wlhy firms exist, what determines the number of firms, what determines what firms do... are not questions of interest to most economists " (Coase 1988a, p. 5).The new theory is not without its critics; Richard Nelson (1991), for example, objects that the new institutional economics tends to downplay discretionary differences among firms. Still, the new institutional economics-in particular, agency theory and transaction cost economics-has been *Peter G. Klein is assistant professor of economics at the University of Georgia. He

Businesses often benefit by forming alliances with other firms but risk becoming dependent on their partners. We discuss two situations in which dependence may create serious problems: first. if a partner shuts down and. second. if a partner forms a relationship with a new partner. We examine collaborative relationships fo rmed by businesses operating in the U.S. hospital software systems industry during the 1961-91 period. We find that businesses faced increased risk of dissolution if they did not form new partnerships after partners shut down or formed collaborative relationships with new pa rtners. The results have implications for del-eloping an evolutionary theory of business strategy and performance. Our approach implies that the performance of a focal business often depends 011 how the strategies of its business partners evolve over time. An evolutionary theory of strategy must incorporate key characteristics of actions and relationships throughout a web of business partnerships. The dual nature of interfirm relationships. which both help a business survive at one time and inhibit its ability to adapt at another. helps explain why so many successful businesses fail when their environments change. Formal interfirm collaboration has become an important means by wh ich busine sses in many industries gain access to capabilities needed to compete in changing markets. Empirical research suggests that collaborating firms sometimes realize corporate financial benefits (Berg, Duncan,

The structure of problem-solving knowledge and the structure of organisations

The recent decade has witnessed a strong expansion of work on the firm, both from a capabilities perspective and from a contractual perspective. These two bodies of theories are often thought to be fundamentally different, because their domains of applications are different (knowledge-accumulation vs contracts and incentives). However, we need to integrate propositions from capabilities perspectives with ideas about economic organization (markets, hybrids, firms). This is because only a more unified theory will allow us to understand such issues as the dynamics of the modern corporation, and, more topically, the costs and benefits of outsourcing. I discuss the relations between these two bodies of theories. It is possible to argue in favor of a relation of complementarity between the two and pursue a research strategy on this basis. However, it is also possible two claim that they are rivals. Along this line, it is argued that the capabilities perspective contains propositions about economic organization that are not to be found within the modern Coasian approach to economic organization, and thus may be seen as a distinct emerging perspective on economic organization.

This paper proposes that transaction costs and capabilities are fundamentally intertwined in the determination of vertical scope, and identifies the key mechanisms of their co-evolution. Specifically, we argue that capability differences are a necessary condition for vertical specialization; and that transaction cost reductions only lead to specialization when capabilities along the value chain are heterogeneous. Furthermore, we argue that there are four evolutionary mechanisms that shape vertical scope over time. First, the selection process, itself driven by capability differences, dynamically shapes vertical scope; second, transaction costs are endogenously changed by firms that try to reshape the transactional environment to increase their profit and market share; third, changes in vertical scope affect the nature of the capability development process, i.e., the way in which firms improve their operations over time; and finally, the changes in the capability development process reshape the capability pool in the industry, changing the roster of qualified participants. These dynamics of capability and transaction cost co-evolution are illustrated through two contrasting examples: the mortgage banking industry in the United States, which shows the shift from integrated to disintegrated production; and the Swiss watch-manufacturing industry, which went from disintegration to integration. Copyright © 2005 John Wiley & Sons,

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This study links theories concerning methods that firms use to acquire technology with theories concerning types of technological change. We place particular emphasis on interorganizational relationships. We predict that firms will often acquire know-how needed for encompassing technological change through equity-based arrangements with other organizations, complementary technological changes through nonequity interorganizational arrangements, and incremental changes through internal R&D. Our theory draws on perspectives that emphasize the need to develop new competencies within a business organization and to protect the value of existing competencies. Our empirical analysis examines methods of technology acquisition that firms have used in the commercialization of medical lithotripters, which are devices that fragment stones in the kidney and gall bladder. The analysis contributes to a better understanding of how technology acquisition methods vary with the manner in which technological change relates to a firm’s existing capabilities. The study also helps develop our understanding of the evolutionary processes by which capabilities diffuse through an industry. © 1998 John Wiley & Sons, Ltd. Firms often must acquire new know-how as technology changes in an industry. Past research identifies different ways that firms acquire new knowhow when technological change affects their businesses, including internal development and acquisition from other firms (e.g., Teece, 1986; Mitchell

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Abstract: Innovation networks have become a persistent organisational phenomenon in industrial innovation processes. However, in economics they were considered in the first place only as a temporary phenomenon between markets and a hierarchical organisation within a single firm. The main focus of traditional neo-classical analysis simply was on cost reduction of R&D within a network. Only with the coming up of evolutionary economics with its prevailing knowledge orientation also learning and synergistic partnering move in the centre of interest. Without a consideration of the roles true uncertainty, heterogeneity as well as the historical character of time play in innovation, networks cannot be explained as a selforganisational persistent phenomenon. The present paper wants to bring together different strands of the new theory of innovation and develop an evolutionary theory of innovation networks. 2 1.