Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances

Organizational theorists have correctly argued that the emergence and maintenance of robust cooperation between global strategic alliance partners is related to the diversity in the partners' characteristics. Yet previous research has failed to systematically delineate the important dimensions of interfirm diversity and integrate the dimensions into a unified framework of analysis. This paper develops a multilevel typology of interfirm diversity and focuses on organizational learning and adaptation as critical processes that dynamically moderate diversity's impact on alliance longevity and effectiveness. On March 6, 1990, West Germany's Daimler Benz ($48 billion in sales) and Japan's Mitsubishi Group ($200 billion in sales) revealed that they had held 'a secret meeting in Singapore to work out a plan for intensive cooperation among their auto, aerospace, electronics, and other lines of business. However, combining operations of the two companies seems remote: Daimler's orderly German corporate structure doesn't mesh well with Mitsubishi's leaderless group management approach' [Business Week 1990b]. This example illustrates an important paradox in international business today. On one hand, global strategic alliances (GSAs) are being used with increasing frequency in order to, inter alia, keep abreast of rapidly changing technologies, gain access to specific foreign markets and distribution channels, create new products, and ease problems of worldwide excess productive capacity. Indeed, GSAs are becoming an essential feature of companies' overall organizational structure, and competitive advantage increasingly depends not only on a company's internal capabilities, but also on the types of its alliances and *Arvind Parkhe (Ph.D., Temple University) is an Assistant Professor of International Business in the Department of Management, Graduate School of Business, Indiana University (Bloomington). Following an undergraduate d gree in chemical engineering, he held corporate management positions with a German company in the United States and Germany. His research focuses on the formation, structuring, and management of interfirm cooperative arrangements, and the impact of national security export control regimes on the global competitiveness of high-technology firms. This research has been supported by a grant from the School of Business at Indiana University, Bloomington. The author gratefully acknowledges the helpful comments of Charles Schwenk, Janet Near, and the anonymous JIBS reviewers. Received: September 1990; Revised: January & March 1991; Accepted: April 1991.