Knowledge Based Inter-Firm Collaborations: A Theoretical Review

Abstract

This paper seeks to study the theoretical and empirical theories of knowledge based strategic inter-firm collaboration between firms.  Strategic alliances are innovative and interesting forms of relationships between organizations and organizations create alliances in their quest to compete against fast and nimble competitors. This paper provided some evidence to suggest that companies relying on strategic alliances are more profitable than their vertically integrated counterparts. In effect, strategic alliances provide an effective means to improve both the economies of scale and scope offered by traditional modes of organization. Consequently, there has been a dramatic increase in the number of strategic alliances. In the last two decades, alliances have become a central part of most companies’ competitive and growth strategies. Alliances help firms strengthen their competitive position by enhancing market power, increasing efficiencies, accessing new or critical resources or capabilities and entering new markets. By the turn of this century many of the world’s largest companies had over 20% of their assets, and over 30% of their annual research expenditures, tied up in such relationships. The review of related literature brought out some theories and concepts which were related to my study.