Cooperation has limits. Companies must defend against competitive compromise. Successful companies inform their employees at all levels about what skills, technology, and information can be shared with their partner and what is off-limits. These companies also monitor what their partner requests and receives.
Learning from partners is paramount. Successful companies view each alliance as a window on their partner’s capabilities. They use these alliances to build skills in areas outside their formal agreement then diffuse these skills throughout their organization.
Alliances run smoothest when one partner is intent on learning and the avoidance, or when one partner is willing to grow dependent on the other.
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Japanese firms emerge from cooperation stronger than their Western counterpart because the focus on learning. NEC enters partnerships to learn about areas in which they lack competence. NEC is the only company in the world that is a leader in telecommunications, computers, and semiconductor markets. Western companies, by contrast, typically enter alliances to avoid short- term investment related to entering a new market or business. Western firms are less concerned about learning a new business or technology. Western firms seek a “comfortable” relationship, forgetting that the merger may not last. Japanese firms always see mergers as a way to improve themselves in areas where they are weak.
Mergers fail when distrust and conflict spoils the relationship. Japanese firms tend to collaborate for very different reasons than their Western counterparts. Western firms typically have a technology to transfer, whereas Asian companies most often have a competence, like manufacturing expertise. There have been very few mergers between Korean and Japanese firms, since both countries seek to improve their weaknesses without revealing much to the partner. An alliance in which one side avoids investment and the other side seeks to learn work out the best.
Principles to adhere to for successful collaboration
Alliance should be a learning experience. Western firms tend not to expect to learn from Asian partners.
The purpose and scope of an alliance must be understood by all employees in order to limit a partner's access to competitive information. Asian companies protect proprietary information from being shared with a partner. Western firms seldom limit the scope of information to be passed to the partner due to lack of communications. Top management and lawyers put together cooperative agreements, but technology transfer takes place within the organization.
Skill complexity determines how easily each partner can internalize new skills. Asian companies often contribute manufacturing skill to an alliance, which tends to be a non- transferable competence. Production skills often result from a complex web of employee training, integration with suppliers, statistical process controls, employee involvement, value engineering and design for manufacture. Western firms tend to contribute a discrete, stand- alone technology that is more easily learned and mastered by Asian partner.
The partners' strategic goals converge while their competitive goals diverge. By this, Chrysler and GM should never collaborate to build a truck or van, because both are strong players in that identical market. However, if Microsoft can become a stronger software firm through an alliance with a hardware firm, a partnership is reasonable.