Differential Learning and Interaction in Alliance Dynamics: A Process and Outcome Discrepancy Model

Abstract

Our paper develops a dynamic theory of alliances by examining certain outcome and process discrepancies that may emerge as the partners interact, highlighting issues that are especially relevant in knowledge intensive alliances, such as joint R&D or product development. Firms enter into these types of alliances to create economic value and to acquire knowledge to enhance their competencies. The degree to which the partners can realize their objectives is dependent on their absorptive capacities and the collaborative strategies adopted by the partners. Outcome and process discrepancies may emerge as collaboration unfolds. Outcome discrepancies concern the ability of the partners to achieve their economic and learning objectives. Process discrepancies relate to the partners' satisfaction with the pattern of interaction, and affect their feelings of psychological attachment to the relationship. How the partners assess and react to discrepancies shapes the developmental path of an alliance. The alliance flourishes in certain states but may collapse in others as the collaboration is subjected to environmental changes or shifts in the grand strategies of the partners. Guidelines for assessing and managing outcome and process discrepancies are suggested.