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STRATEGIC TECHNOLOGY ALLIANCES AND NETWORKS
Center for International Science and Technology Policy & Department of Economics
The George Washington University
and Lorenzo Zirulia
University of Bologna, CRIOS and RCEA
Abstract: This paper briefly reviews the literature on strategic technology alliances (STAs) and networks, allocating the contributions to “micro” (firm) and “meso” perspectives (the network). The focus is on a logical reconstruction of important themes in the literature pertaining to the role of STAs in boosting innovation and in promoting the survival and growth of partners and their environments. Overall the literature points to a quite important role of alliances and networks especially in knowledge intensive industrial activities combining the production and utilization of technological knowledge for competitiveness and growth. Not unexpectedly, important differences are pointed out in terms of incentives and benefits from alliances across different types of firms and industries. Network structure evolves in accordance to the nature of the industry and to the type of technological advancement sought by participating organizations. [Forthcoming Economics of Innovation and New Technology 2015] Note: This paper draws extensively on work undertaken by the two authors in the context of the research project “Advancing Knowledge-Intensive Entrepreneurship and Innovation for Economic Growth and Social Wellbeing in Europe” (AEGIS), 7th Framework Programme for Research and Technological Development, European Commission, DG Research and Innovation.
1 INTRODUCTION In 2013 Accenture and General Electric initiated a strategic alliance to develop “technology
and analytics applications that help companies across a range of industries take advantage of
the massive amounts of industrial strength big data generated through their business
operations”.1 The two companies were expanding their existing collaboration in Taleris
(Accenture and GE Aviation) which provides airlines and cargo carriers intelligent operations
services to predict, prevent and recover from operational disruptions. This agreement aligns
the complementary capabilities of a service company and conglomerate with arms in both
services and manufacturing to exploit a potentially lucrative application of big data.
Nowadays alliances are hardly the realm of enterprises in developed countries alone. Indus
Towers was established in November 2007 as a joint venture between India’s Bharti Airtel,
Vodafone Essar, and Idea Cellular, with the goal of reducing infrastructure costs for each
company. Bhati Airtel and Vodafone Esser, the two largest private telecom-services providers
in the country, realized they could cooperate on tower development while remaining
competitive in their core businesses of providing telecom services. Together, they decided to
jointly establish an independent firm to construct and manage towers throughout the two
firms’ common operating regions. Idea Cellular, the third largest telecom operator, was also
offered a smaller share in the new firm. With a portfolio of over 110,000 towers, Indus
Towers quickly became the largest telecom tower company in the world.2 Over the past two-
three decades, Brazil’s Petrobrás has evolved successfully into a global leader in deep sea
drilling techniques by using strategic alliances to help it absorb external knowledge to
generate unique solutions as well as develop its own formidable internal research
The aforementioned examples are just three of a large number of strategic technology
alliances being formed every day. Strategic technology alliances play indeed a prominent role
1 Accenture Newsroom: Accenture and GE Form Global Strategic Alliance to Develop Advanced Applications that Leverage Industrial Strength Big Data to Drive Efficiency and Productivity. (2013, June 18). Website: http://newsroom.accenture.com/news/accenture-and-ge-form-global-strategic-alliance-to-develop-advanced- applications-that-leverage-industrial-strength-big-data-to-drive-efficiency-and-productivity.htm Accessed April 25, 2014.
2 Gulati, et al. (2010) 3 Furtado and Gomes de Freitas (2000)
in contemporary business environments. Innovation is increasingly complex, building on
several technological fields. This includes technology producers, namely high tech
manufacturing sectors such as pharmaceuticals, especially following the introduction of
molecular biology in the mid-1970s, and microelectronics, where innovation hinges on
competencies in fields as different as solid physics, construction of semiconductor
manufacturing and testing equipment, and programming logic. It also includes technology
users, namely knowledge intensive services such as finance and management consulting; and
it includes more traditional technology user sectors such as construction and agriculture.
Firms cannot master all the relevant information and knowledge required to innovate and,
therefore, they look for partners with complementary capabilities to assist in an increased rate
of introduction of new products and processes, to monitor new opportunities and enter new
markets, and to sustain long-lasting competitive advantage.
At the same time, in the scholarly realm, a vast literature on networks has emerged on several
related fields such as economics, management, sociology and organization theory. In
particular, an important area of research has focused on networks arising from strategic
technological alliances (Ozman, 2009; Malerba and Vonortas, 2009). Nowadays, the idea that
innovation must be understood looking also at the webs of the various relationships occurring
among firms is widely, if not unanimously, accepted (Powell and Grodal, 2004).
This paper reviews (selectively) the existing empirical literature on this theme, trying to locate
important contributions within a single conceptual model. The model links in a co-
evolutionary perspective the “micro” dimension of organizations (in particular firms) and the
“meso” dimension of networks as a step towards the impact of strategic technology alliances
on growth and development (i.e. the “macro” dimension).
The rest of the paper is structured as follows. In Section 2, a definition of strategic technology
alliances is put forward together with some basic evidence. In Section 3, we advance our
conceptual framework which relies on a bidirectional causal link between strategic alliances
and networks. In Section 4, we take the point of view of organizations and ask two questions:
i) what are the characteristics of networking activity of different types of organizations? ii)
how networking activity impacts on their innovative and economic performance? In Section
5, we take the point of view of networks and ask what is the role of different organizations in
affecting the growth and dynamics of networks and how it influences the rate and direction of
technological progress in industries. Based on this review Section 6 suggests possible
directions for future empirical research. Finally, Section 7 concludes.
2. DEFINITION, SOURCES OF DATA, STYLIZED FACTS
The term strategic alliance was introduced in the 1980s to describe the multitude of forms of
agreements between firms, universities and other research organisations that analysts had
already begun to observe. Strategic alliances essentially refer to agreements whereby two or
more partners share the commitment to reach a common goal by pooling their resources
together and co-ordinating their activities (Teece, 1992; Hagedoorn, 2002).
Alliances denote some degree of strategic and operational co-ordination and may involve
equity investments. Alliances can occur vertically across the value chain, from the provision
of raw materials and other factors of production, through research, design, production and
assembly of parts, components and systems, to product/service distribution and servicing.
They can also occur horizontally between partners at the same level of the value chain. An
alliance can have both horizontal and vertical elements. Alliances can involve cooperation
among firms and other organizations, notably universities (Mowery and Sampat, 2005).
Partners may be based in one country. They may also be dispersed in several countries, thus
establishing an international alliance.
A subset of alliances can be characterised as innovation-based, focusing primarily on the
generation, exchange, adaptation and exploitation of technical advances. These are called
herein strategic technology alliances (STAs). This paper focuses on formal STAs. We do not
consider forms of informal cooperation, occurring, for instance, through information
exchange among engineers or scientists (Von Hippel, 1987).
Our definition is broad, encompassing several ways in which collaboration can occur: various
legal arrangements, different degrees of resources commitment, different levels and directions
of technological flows, different coor