The dynamics of learning alliances: competition, cooperation, and relative scope

TLDR

Private and common benefits create different incentives for learning investment. The study examines how cooperation–competition tension shapes learning alliance dynamics, introduces relative scope to quantify a firm’s external opportunity set, and explains why firms may deviate from optimal behavior. The authors define a firm’s relative scope within an alliance to capture how its external opportunity set influences alliance behavior. Competitive tensions are greatest when a firm’s private benefits dominate its common benefits. © 1998 John Wiley & Sons, Ltd.

Abstract

We show how the tension between cooperation and competition affects the dynamics of learning alliances. ‘Private benefits’ and ‘common benefits’ differ in the incentives that they create for investment in learning. The competitive aspects of alliances are most severe when a firm's ratio of private to common benefits is high. We introduce a measure, ‘relative scope’ of a firm in an alliance, to show that the opportunity set of each firm outside an alliance crucially impacts its behavior within the alliance. Finally, we suggest why firms might deviate from the theoretically optimal behavior patterns. © 1998 John Wiley & Sons, Ltd.