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ABAS: Annals ofBusiness Administrative
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Daniel A. HELLER
Takahiro FUJIMOTO

35

Classification of Information on Websites and Perceived Risk in Online Transactions

Inter-Firm Learning in Horizontal High-Commitment Alliances:Findings from Two Cases in the World Auto Industry

http://www.gbrc.jp© 2004 Global Business Research Center

ABAS: Annals of Business Administrative ScienceVol. 3, No. 3, July 2004

CHIEF EDITOR

Junjiro Shintaku

University of TokyoEDITORIAL BOARD

Makoto Abe
University of Tokyo
Takahiro Fujimoto University of Tokyo
Makoto Kasuya
University of Tokyo
Hotaka Katahira
University of Tokyo
Nobuo Takahashi University of Tokyo
Technical Editor: Maki Nishida, Global Business Research Center

ABAS: Annals of Business Administrative Science is published quarterly in January,
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Annals of Business Administrative Science Vol. 3, No. 3 (July 2004)

Inter-Firm Learning in
High-Commitment Horizontal Alliances:Findings from Two Cases in the World Auto Industry
Daniel A. HELLER
Faculty of Economics, Shinshu University
E-mail: daniel@econ.shinshu-u.ac.jp

Takahiro FUJIMOTO
Graduate School of Economics, University of Tokyo
E-mail: fujimoto@e.u-tokyo.ac.jp

Abstract: The present paper argues that the Ford-Mazda and Renault-Nissan
relationships may represent a forerunning pattern of the learning alliance, whereby
ongoing close interaction of horizontal alliance partners at multiple hierarchicallevels can be used to facilitate the mutual accumulation of superior organizational
capabilities within the alliance firms. Our observations suggest that for this pattern ofcooperation to function effectively at least the following three conditions must be met.
The alliance partners must: (1) co-exist as separate learning organizations, (2) beable to evaluate accurately a partner’s relative organizational capability strengths
and weaknesses, and (3) have the motivation and ability to facilitate a partner’sinter-firm learning.
Keyword: capability-building
capabilities

competition,

learning

alliance,

organizational

Introduction

Takeishi, 2001; Fujimoto, Takeishi, & Nobeoka,

Since the mid-1980s, there has been a dramatic1999). A similar trend can be found in numerous

increase in horizontal linkages between assemblers

other industries (Contractor & Lorange, 2002;

in the world auto industry (Ishii, 2003; Fujimoto &Hergert & Morris, 1988). This increase in alliances
35

Heller and Fujimotois generally attributed to intensified competition,

In this paper, we use an inter-firm learning

globalization, rapid technological change, andperspective within the context of the competitive

notably for automobiles, growing consumer anddynamics

governmental pressure on firms to respond todevelopment in the world auto industry to analyzepressing social needs, particularly on environmental

the observed alliances and consider if their featuresand safety issues.

constitute a new pattern of alliance cooperation. Theofmanufacturing

andproduct

Some alliances emphasize the inter-firm sharing

authors’ numerous research visits to each of theof productive and managerial resources throughcompanies presented in the case studies serve as thevarious types of cooperation as a means to engage inprimary source of the data upon which this paper isinter-firm learning (i.e., “learning alliances,” cf.,

based.

Hamel, 1991). To the extent that such alliances
produce superior organizational capabilities inIndustrial

alliance

Capabilities in the Auto Industry

partners

they

may

be

calledContext:

Organizational

capability-enhancing alliances. In this paper, weOrganizational capabilities have been the focus ofargue that the Ford-Mazda and Renault-Nissanmuch research in recent years and can be understood

relationships can be understood as a forerunningto be bundles of routines within a firm (Dosi, Nelson,

pattern of this type of learning alliance. We suggest& Winter, 2000; Nelson & Winter, 1982). As such,the pattern may be distinctive in that it features athey are likely to be socially complex (cf., Barney,

two-way, long-term orientation to inter-partner

1986a), involve tacit knowedge (Tsoukas, 2003,

learning that is characterized by ongoing close

Kogut & Zander, 1992), be causally ambiguousinteraction between partners at upper managerial and(Rumelt, 1984), and be path dependant (Dierickx &other hierarchical levels. Such a cooperative pattern

Cool, 1989; Teece, Pisano, & Shuen, 1997), making

would sharply contrast with what is typically foundthem difficult to imitate and transfer (Barney 1986b;

in horizontal (i.e., competitive) alliances, namely, theKogut & Zander, 1992). Hence, differences in the

independent pursuit of short-term benefits (including

capability endowments of firms tend to persist.

learning) that is generally characterized by only

The efficient development and manufacture of airregular close interaction between upper-level

highly complex product such as an automobile

managers in the alliance partners. We categorize thisrequires an organization to possess integrated

emerging alliance pattern as a high-commitment

productive

horizontal alliance, as it seeks to maximize over theengineering, procurement, logistics, assembly, andlong-term the mutual accumulation of superior

distribution. As each of these organizationalorganizational capabilities within alliance partners.

capabilities are difficult to build in the short run,36

capabilities

in

design,planning,

Inter-Firm Learning in High-Commitment Horizontal Alliancesheterogeneity of firms’ productive performance

degree to which each measure is influenced bytends to persist. Catch-up by lagging firms may takefactors external to the firm. Financial performance

decades, and it is largely for this reason that suchtends to be highly volatile even from quarter toclose attention is paid in the auto industry to evenquarter, surface-level performance generally varies

slight differences in the productive performance ofmore moderately as product lineups are renewed,

automakers.

thisand deep-level performance tends to be relatively

productive-performance level, they may be said to bestable for a given product architecture. The stability

engaging in capability-building competition (seeof deep-level performance comes from it being the

Figure 1), the analysis of which necessarily requires

least exposed of the three measures to externala longer-range perspective than competition between

factors, and from the stability of productive

firms in product and financial markets (Fujimoto,capabilities, as described earlier.

As

firms

competeat

Capability building in the auto industry takes

1999).
As indicated in Figure 1, at least three generalplace within the context of the long history of themeasures of a manufacturing firm’s performance can

automobile. Since the era of Ford Model T, thebe identified: deep-level (“productive”) performance,

product architecture of the automobile has been

surface-level (“product”) performance, and financial

integral, closed, and stable. Thus, the auto industry(“profit”) performance. Firm performance by eachsince the early 1900s can be seen as an industrial

measure tends to vary based on firm strategy and thesector in which cumulative evolution, rather thanFigure 1. Arena of Capability-building Compeition

environmental factors

organizational
capabilities

deeplevel
performancesurfacelevel performanceorganizationalroutines

productivity
production lead-time
defect rate
product-devel. lead time

price
time to delivery
product appeal
advertising appeal

profitperformance

Arena of capability-building competition(cf., Fujimoto, 2000)

37

Heller and Fujimoto
revolution (cf., Christensen, 1997), has been a

Alliance Learning - Received Theory

powerful engine for industrial change. Ongoing

Entering into an alliance relationship to engage inincremental change has produced great technologicalinter-firm learning has been identified as a motive

advancement and improvements in the productive

for alliance formation from the early stages of theand product performances of automakers worldwide.

alliance literature. Much research supports the

In this framework the long-term competitive foci ofcontention that an alliance can be a viable means toautomakers have been the organizational capabilities

learn from a partner and internalize a partner’s skills,

that determine a company’s performance on key

technologies, and capabilities (Doz & Hamel, 1998;

productive measures (e.g., product development lead

Hamel, 1991; Hamel, Doz, & Prahalad, 1989;

time, assembly productivity, assembly defects per

Harrigan 1986; Hennart, 1988, Inkpen, 1995;

car, etc.). Competition by firms to build increasingly

Westney, 1988). For inter-partner learning that

more effective productive capabilities has been a

involves high levels of tacit and socially complex

powerful driver of the industry’s changes over theknowledge, frequent interaction of alliance partners

years.

(Nonaka,

1991;

organizational

While capability-building competition in thecf.,

Szulanski,

replication

whereby

1996)

and

a

firm’sauto industry has centered on productive capabilities,

reproduces its organization in a new venture (Kogut,

building a strong automobile brand and consistently

1988; Kogut & Zander, 1992) may be needed.

achieving appropriate financial management also

In horizontal alliances, however, the fear of

require various organizational capabilities. These

creating or aiding a competitor strongly pushes firms

capabilities may be considered increasingly valuable

to be wary of excessive partner learning (Hamel,and difficult to build as industrial competition

1991; Lei & Slocum, 1992), and the literature warns

intensifies and firm size increases. As in otherof the dangers of allowing the inadvertent transfer ofindustries, automakers worldwide also engage in thea firm’s core competencies to a partner, as these maybuilding of these capabilities.

be used by the partner against the transferring firm

To the extent that capability building has been(e.g., Dussauge, Garrette, & Mitchell, 2000).

the primary driver of the automobile industry’s

Consequently, inter-firm linkages are often kept

evolutionary development, other industry dynamics,

tightly controlled and firm knowledge closely

including alliances, are only likely to be relevant toguarded (Inkpen, 1998). Hamel (1991) has describedindustrial competition in the long-run in how theylearning by alliance partners as a competitive race,

impact a firm’s qualitative capability building, that is,where firms compete against each other to see which

in how they supplement, not replace, the industry’s

side can be first to use the alliance to learn, with ties

long-term competitive dynamic.

severed or terms of cooperation aggressively
38

Inter-Firm Learning in High-Commitment Horizontal Alliances
relationship to be long-term and thus capable ofrenegotiated after one firm “wins” the learning race.
of

supporting investments in long-lived specific assets.

cooperation are often managed as prisoner dilemma

Our usage of “commitment” to describe thesituations (Gulati, Khanna, & Nohria, 1994). As such,durational orientation of relations between horizontal

the unwillingness of firms to support the alliancepartners is consistent with Cullen, Johnson andlearning goals of a partner may manifest as

Sakano (1995, 2000). However, the study of

uncooperative behavior, such as a failure to disclose

high-commitment horizontal alliances is a relatively

critical knowledge to a partner (Inkpen, 1998). Suchunder-explored area in management research, withbehavior can be expected to be an obstacle tomost research on commitment in alliances focusing

inter-firm learning, thereby hindering the realization

on vertical ties (e.g., Mohr & Spekman, 1994).

These

highlycompetitive

patterns

The following section describes learning in twoof the inter-firm learning potential of an alliance.
If a firm’s managers believe that any knowledge

alliance cases in the world auto industry, eachor organizational capabilities gained by a partner

involving a pair of auto assemblers that seem to havethrough inter-firm learning would not be used

forged relationships that feature high commitment

against them, they may be able to avoid thelevels between partners. We view learning as adefensive attitude described above and make betterchange in organizational routines (Levitt & March,use of alliances as a learning tool. Toward this end,

1988), as these are generally viewed as a

the literature suggests that managers may foster afundamental unit of organizational capabilities, ourmore cooperative relationship with their counterparts

present concern.

in an alliance partner by building appropriate levelsof mutual trust between partners (Lane, Salk, &Case-Studies

Lyles, 2001; Parkhe, 1998) or via other mechanisms,

Case#1: Ford-Mazda

such as the skillful use of alliance gatekeepers (Ishii,

The Ford-Mazda relationship dates back to 1969,2004), building a dedicated alliance function (Dyer,

when the firms, together with Nissan, formed aKale, & Singh, 2001), or making unilateralmanufacturing joint venture in Japan. Following

commitments (Gulati et al., 1994). We may callother cooperative initiatives between the companies,

alliance relationships exhibiting these characteristics,

Ford purchased a 25% equity-stake in Mazda in

and the long-term cooperative orientation they imply,

1979. At the time, other U.S. automakers were also“high-commitment” alliances.

forming alliance ties with Japanese automakers as

Helperandused

the Japanese auto industry and market grewdescribe(Yoshino & Rangan, 1995). Mazda, on the otherassembler-supplier relations where firms expect theirhand, had been experiencing financial difficulties in“high-commitment”

Levine(1992)

terminology

have
to

39

Heller and Fujimoto
the 1970s, which can be attributed to strategic

With

the

mistakes (e.g., an over-dependence on the rotary

relationship between the two companies, both wereengine) and the oil shocks. Cooperative relations

allowed access to each other’s information systems

between Ford and Mazda grew throughout the 1980s

and broad based sharing of data and knowledge in

to include product development collaboration, anumerous functional areas ensued.
Ford’sdistribution joint-venture in Japan, and mutual parts

increased

increasedstrategic

natureinfluence

of

over

the

Mazda’sand product souring. Due in part to learning frommanagement led to a shift in the focus of alliance

Mazda (Doz & Hamel, 1998; Harbison & Pekar,

learning from Ford in productive capabilities to1998; Heller, 2001), Ford’s productive capabilities

Mazda in strategic and administrative capabilities.

strengthened

various

Under the leadership of various Ford-dispatchedperformance measures improved markedly during

upper- and mid-level managers who brought withthe 1980s (Pascale, 1990; Shook, 1990; Womack,

them expertise in financial management andJones, & Roos, 1990).

marketing, many changes were enacted at Mazda,

and

the

company’s

In the 1990s the relations between Ford andincluding: the introduction of an extensive internal

Mazda grew closer at an increasing rate. Mazda

education system for strengthening the strategic

experienced

another

attributabletocrisis,again

business skills of Mazda managers, improved asset(e.g.,

rapid

management and financial planning capacities, aproliferation of products and dealer channels in

more rigorous integration of financial and market

Japan despite decreasing sales volume), even as

analysis into product development, and the strategic

productive performance at Mazda remained strong.

clarificationofMazda’s

In 1992, Ford acquired a 50% equity stake andpositioning

andoverallmanagement control of Mazda’s assembly plant in(Bungsche & Heyder, 2004; Heller, 2003; Nobeoka

the United States. Ford then began a comprehensive& Taniguchi, 2003; Taniguchi, 1998). Ford andreview of the overall potential of the Mazda

Mazda have also been closely cooperating in variousorganization. Positive results to this study were

joint product development projects (Heller, 2003)

followed in 1993 by Ford and Mazda formallyand third-country ventures (Heller & Orihashi,

announcing the strengthening of their alliance, and in2003).

financialstrategic

missteps

worldwide
marketingbrandprocesses

1996 Ford increased its equity stake in Mazda toThroughout the time when these changes were

33.4%. With this additional investment, Henry

occurring at Mazda, the firm has continued theWallace, who had been dispatched from Ford tointernal building of its productive capabilities, andserve as an executive vice-president at Mazda since

the company’s deep-level performance has remained

1994, was promoted to become Mazda’s president.

strong.
40

Since

2001,

Mazda’ssurface-level

Inter-Firm Learning in High-Commitment Horizontal Alliances
performance has improved, and the company’s

performance followed the completion of corporate

financial performance has greatly improved overrestructuring at Renault in the mid-1980s andwhat it was in the early-to-mid 1990s. At Ford,

mid-1990s (cf., Freyssenet, 1998). The poor

depressed financial performance in the early 2000s

performance that triggered these restructurings canand a recognition that Ford’s deep-level performance

be attributed to factors such as a high-cost/low-profit

still trails Mazda in various key dimensions appear

structure, too many platforms, and difficulties

to have spurred recently renewed broad-based efforts

developing an attractive product line-up. Renault’sat Ford to use its relationship with Mazda as arecovery was based on a series of extensive

learning instrument.

corporate-wide

efforts,

includingfinancial

restructuring, learning from best-practice operations,
Case#2: Renault-Nissancost-reduction

initiatives

mainlyinparts

The alliance between Renault and Nissan began inprocurement, and the development of a series ofthe late 1990s. At the time, Nissan’s productive

successful and innovative new products.
Thus, as of the late 1990s, Nissan and Renault

performance was strong in many aspects (e.g.,assembly plant productivity, product development

had

lead times, engine and key component technologies);

strengths: operational capabilities at Nissan andhowever, the company had difficulty using thesestrategic/administrative capabilities at Renault. In

productive capabilities and technologies to produce

addition, Renault had free cash, but its operations

attractive products. Nissan’s weaknesses at the times

tended to be limited to Europe and some parts of

can generally be said to have been in brandLatin America. Nissan was more internationallymanagement, product design, and overall productactive than Renault, though not a major player inplanning. These, together with strategic mistakes

either Europe or most Latin American markets, and(e.g.,

andthe company needed cash to reduce its heavy debt

distribution channels in Japan to match Toyota

burden. An opportunity existed for an alliance that

despite a stagnant or shrinking sales volume), led towould exploit these complementary positions. In

poor profitability and chronic deterioration of

1999, the two companies entered into a broad based

Nissan’s market share throughout the 1990s in

corporate alliance when Renault acquired a 37%

markets around the world.

equity-stake in Nissan. Two years later Renault

excessiveproliferationofmodelscomplementaryorganizational

capability

increased its stake to 44% and Nissan acquired a

Renault, on the other hand, was experiencing

15% (non-voting) stake in Renault.

strong financial and product performance as of thelate 1990s through a series of successful new

In the years since the alliance was formed, thevehicles with novel product concepts. This good

two firms have sought to learn from each other and41

Heller and Fujimoto
have engaged in numerous cross-company projects,

looked as if it were a compressed version ofincluding joint product development projects andRenault’s own revival experience (Fujimoto, 2001),

third-country collaboration. In addition, the firms

including lessons Renault learned from its failed

have actively sought to assist each other’s learning.

alliance with Volvo in the early 1990s. Numerous

They have also broadly shared information andchanges have been implemented at Nissan sinceknowledge in various functional areas. For example,

1999 to improve the company’s strategic capabilities,

the companies established in 2001 a joint purchasing

including an emphasis on cross-functionalism at theorganization, which handles the majority of parts,

corporate level, the more widespread inclusion ofcomponents, and supplies purchased by the two

front line (gemba) managers in corporate decisioncompanies.

making, an integration of brand and corporate image
building efforts, and an introduction of more rapid

Learning at Renault has included codifying andrefining the Renault Production System, an effort

andgloballythat includes detailed benchmarking of Nissan plants,(Bungsche & Heyder, 2004; Fujimoto, 2001; Heller,

notably Nissan’s two large-scale production facilities

2003; Yoshino & Egawa, 2003, 2002). Over thisin Europe. Deep interaction between Renault andtime, Nissan’s deep-level performance has continued

Nissan production engineers is a core element of thistoprocess. In part to aid this process, Nissan has

improved, and record financial performance has

strengthened its efforts to make its own production

been achieved since 2000.

beorientatedstrong,management

surface-levelsystems

performancehassystem, the Nissan Production Way (NPW), more
explicit, including establishing a section whose

Discussion

mission is to articulate and disseminate the NPW. In

Since both of the cases reviewed above are ongoing,

this way, Renault has been in the process of

we must refrain from attempting to make any

enhancing its productive organizational capabilities

definitive conclusions. Nevertheless, preliminary

to improve its deep-level performance. Since 1999,

analyses of the alliance relationships are warranted

surface-level and financial performance at Renault

given their achievements thus far.

have largely remained steady.

Despite the presence of strong productive

At Nissan, under the leadership of a team ofcapabilities of Mazda and Nissan, two factors

upper- and mid-level managerial dispatchees fromcombined to push these Japanese automakers to the

Renault headed by Carlos Ghosn, a corporate revival

difficult positions they experienced in the 1990s.

plan was successfully executed and the company has

First there was a narrowing of the gap in productive

subsequently embarked on an aggressive expansion

capabilities

plan. In many ways, Nissan’s recovery process

automakers (Womack et al., 1990; Ellison, Clark,
42

betweenWesternandJapanese

Inter-Firm Learning in High-Commitment Horizontal Alliances
Fujimoto, & Hyun, 1995) and the heightened global

1988). However, the observed mutuality of thecompetition this created. Second there was thepartners’ long-term support for each other’s alliancebursting of the so-called economic bubble in Japanlearning goals is not predicted by the literature.

and the depressed home-county environment that

The governance mechanism that resulted in the

resulted. These factors exposed strategic weaknesses

two cases also does not follow conventional alliance

at Mazda and Nissan, and unable to deal with them

theory. In both alliances, one of the allianceon their own, these companies were forced to look tocompanies

other industrial players for help. Their strong

executives to head its partner’s management. Such a

productive capabilities made them attractive targets,

result would be expected if majority-equity stakes

even given their depressed surface-level andhad been acquired (e.g., Rugman, 1981), but isfinancial performances.

highly unusual in minority-equity stake acquisitions

is

seen

dispatching

upper-level

Ford and Renault emerged as the firms that

(Lynch, 1993), such as that which occurred in theultimately entered into broad-based alliances withcases. A transaction-costs perspective (e.g., Hart,

Mazda and Nissan, respectively. While these1988) would tend to emphasize that one firm gaining

Westernproductive

the control rights of another is significant because itcapabilities that that tended to be weaker than theirwould make it easier for the dominant firm to utilize

Japanese partners, they generally possessed superior

the resources of the other firm for its own benefit,

strategic capabilities (e.g., product-concept creation,much as a multinational parent firm deploys andbrandfinancialbuilds the resources of an overseas subsidiarymanagement). Inter-firm learning of each partner’s(Nohria & Ghoshal, 1997; Rugman & Verbeke,

relatively stronger organizational capabilities was2001). In the cases described above, however, thisobserved to have occurred sequentially in thetype of direct control was not widely observed.

Ford-Mazda

theWhile some level of resource coordination andRenault-Nissan case. Thus, the cases may be viewed

strategic alignment between the partners did occur, it

as examples of capability-enhancing alliances. The

does not seem to be the primary benefit of theobserved pairings of companies with complementary

alliance

resources and the attempts to use the alliancecapability-building competition is the long-term

relationships to cover relative weaknesses are

driver of the auto industry, a more important aspectconsistent with alliance theory, which holds thatof the alliances is the effect that the observed

complementary resource endowments of firms andgovernance mechanism has on learning within andlearning are primary motivations for allianceamong alliance partners.

automakers

management,casepossessed

marketing,

and

and

concurrently

in

to

the

partners.

Rather,

given

that

Formal treatment of the effect of the observed

formation (Doz & Hamel, 1998; Harrigan, 1986,
43

Heller and Fujimoto

Figure 2. Close Interaction at Multiple Hierarchical Levels
upper-level management

mid-level management

alliance
partnerlower-level management

alliance
partner(arrowed lines indicate frequent and ongoing interaction)

governance mechanism on learning is beyond theto work for the sake of the partner, they also broughtscope of this exploratory paper. Here we limit ourwith them their backgrounds and various contacts intreatment of this issue to noting that the mechanism

the dispatching company and typically will return tocreates a means by which extensive inter-firm

the dispatching company after a few years. As such,contact becomes possible at all managerial levels of

their interaction with people in the dispatching

the alliance partners (Heller, 2003), as is illustrated

company tends to persist after they have beenin Figure 2. While close cross-firm interaction of

dispatched to a partner. In addition, these dispatchees

mid- and lower-level managers and engineers, iscan be expected to continue to identify, to somecommonalliance

degree, with the dispatching company. Thus, theircooperation, upper-level managers of partner firms

mere presence within an alliance partner may also be

generally will only closely interact at irregular,considered a form of inter-firm interaction.

in

the

typicalpatternofthough critical, intervals (Doz & Hamel, 1998). In

The first benefit of the addition of the close

the pattern of alliance cooperation found in the cases,

cross-firm upper-level interaction is that it provides a

however, in addition to the close mid- andmeans by which some degree of coordination andlower-level interaction mentioned above, frequentalignment of the core strategies of the partners may

and close cross-firm interaction of upper- andbe pursued on an ongoing basis. This can be

mid-level managers also occurred when managers

expected to lessen the fear of creating or aiding awere dispatched from one company to work on acompetitor, thereby encouraging higher levels ofdaily basis inside an alliance partner. While thesecommitment between partners. Higher commitment,

dispatched managers were generally fully integrated

provided there is also trust, can be expected tointo the alliance partner’s organization and charged

promote greater openness between partners and44

Inter-Firm Learning in High-Commitment Horizontal Alliances
knowledge sharing (Cullen et al., 2000). Increased

The organizational behaviors and learninginter-partner sharing of knowledge may help reduceorientations found in the cases, which were

ambiguity as to the value of knowledge, which has

characterized by high inter-partner commitment (e.g.,been noted as a barrier to inter-partner learning

the dispatching of managers at multiple hierarchical(Inkpen, 1998). Likewise, close interaction between

levels, mutually open information systems, the broad

partners at upper-levels may reduce other obstacles

sharing of knowledge, etc.), contrast with what is

to learning, such as a lack of transparency between

found in typical learning alliances. As such, wepartners (Hamel, 1991).

argue this type of cooperation may represent a

A second benefit of the addition of theforerunning pattern of the learning alliance, where

upper-level interaction between partners is that it

the mutual accumulation of competitive capabilities

permits widespread co-location to be implemented.

within both alliance partners is sought, an inherently

Co-location of mid- and lower-level managers

long-term objective.

frequently occurs under some commonly found

For this alliance pattern to translate into

alliance governance structures, such as joint productenhanced inter-firm learning and ultimately higher

development projects (Ishii, 2004; Midler, Neffa, &performance

Monnet, 2002), joint manufacturing ventures (cf.,observations suggest that at least the following three

Kogut, 1988) and other types of third-country

conditions must be met.
First,

collaborative initiatives (cf., Heller & Orihashi,

in

the

the

ex-antealliance

existence

partners,of

ourlearning2004). Under the governance mechanism observed

organizations in the partners and the ex-postin the cases, however, a form of upper-level

maintenance of these learning organizations after theco-location

toalliance has been initiated are needed. We use theco-location at these other hierarchical levels. As

term “learning organization” (cf., Easterby-Smith &mentionedandLyles, 2003; Senge, 1990) in its most basic sense toorganizational replication, both of which become

describe to an organization that “is good at

possible with widespread co-location, can beorganizational learning” (Tsang, 1997, p. 75). Moreunderstood to be facilitators of the inter-firm

specifically we use the term to indicate anlearning

Since

organization that is able “to generate, acquire andorganizational capabilities will generally containintegrate both internal and external sources ofcomplementarities across and within hierarchicalknowledge” (Rosenkopf & Nerkar, 2001, p. 287) tolevels (Levinthal, 2000), co-location at multiple

develop and maintain its distinctive organizational

levels of the alliance partners can be expected tocapabilities at industry-leading levels. Researchenhance the inter-firm learning of capabilities.

findings on disruptions often caused by full

becomesearlier,ofpossiblefrequent

organizational

inadditioninteraction

capabilities.

45

Heller and Fujimoto
integration mergers (Nakamura, 2003; Haspeslagh &partner to the extent that it is able to improve theJemison, 1991) suggest that maintaining high levels

acquired skills on its own at the same rate as aof organizational separation and autonomy between

partner.
Second, partners must be able to evaluate

alliance partners may facilitate their continued

accurately their relative organizational capability

co-existence as learning organizations.
Partners engaging in their own independent

strengths and weaknesses. In the absence of thisefforts continually to improve the competitiveness ofcondition, alliance partners cannot be expected to be

their distinctive capabilities to keep them atmotivated to engage systematically in inter-firm

industry-leading levels is necessary so that thelearning due to a lack of recognition of theongoing sharing of resources for mutual inter-firm

opportunity to do so that an alliance affords. Openlearning will remain attractive to the partners. The

access of information between partners will likely

continuation of a learning relationship is necessary

facilitate efforts at evaluation. Nevertheless, thebecause the learning of organizational capabilities

capability

may take many years. As such, it is not reasonable toevaluations must also be present. Such a capability

expect that such learning will quickly become what

may be considered an aspect of the relative

Hamel (1991) calls “self-sustaining,” that is,absorptive capacity (Lane & Lubatkin, 1998) of

reaching the point where a firm has learned from apartners, and we may expect that horizontal firms

toperform

reasonably

Figure 3. Potential Learning Benefits of Alliance Cooperation Pattern46

accurate

Inter-Firm Learning in High-Commitment Horizontal Allianceswithfunctioning

learning

organizations

cycle whereby an alliance relationship spurs thewillbuilding

generally posses this characteristic.

andaccumulationofcompetitive

organizational capabilities in the partners.

Third, allied firms must have the motivation
and ability to facilitate a partner’s inter-firm learning.

The observations of the authors suggest that

The mere existence of the inter-firm linkages cannot

managing the dynamics of the alliance pattern

be expected to contribute to inter-firm learning if

illustrated in Figure 3 may be quite difficult. In

they are not accompanied by firm motivations andparticular, the skillful use of often subtle actions andabilities to share knowledge. As mentioned earlier,signals may be required to preserve the motivations

close

at

and abilities of partners to learn from each other, as

producecore strategies are coordinated and at the same timeincreased alignment of the core strategies of partners,

sufficient independence of the partners is also sought.

as well as provide other benefits. However, such a

We agree with Doz and Hamel (1998) who present

resultalliance management as more art than science.

interaction

upper-management

depends

betweenlevelsonwillpartners
likelyappropriate

managerialaFuture research topics include the elaboration of thisrecognition that the knowledge that lies at the heart

issue, as well as further definition of the contents ofof any organizational capability is not an exhaustible

a learning organization within the context of a

resource. If one firm shares knowledge with another,learning alliance.

understandingsofcollaboration,

such

as

the sharing firm will still possess the knowledge
resource. In fact, the sharing firm may even deepen

Acknowledgement

its own knowledge because the act of sharing may

This work initially began as the text of a presentation

stimulate a firm to understand better its own

given by Takahiro Fujimoto in Korea in June 1999.

capabilities and facilitate their further development.

Earlier versions of the paper in its co-authored form

This type of mechanism is discussed elsewhere in an

wereintra-firm setting (cf., Kogut & Zander, 1992).

International Colloquium in Paris and the Workshop

presented

in

2001

at

the

GERPISA

Figure 3 is a conceptual drawing of theon Modern Business at the University of Tokyo’s

potential learning benefits of what we have argued

Graduate School of Economics. The International

may be an emerging pattern of the learning alliance.

Motor Vehicle Program provided partial funding for

The figure shows an active mutual learning

this research. The present paper is a broadly revised

relationship, between partners that co-exist as

version of Fujimoto and Heller (2004). The authors

separate learning organizations, stimulating new

would like to thank all those who kindly commented

learning in the partners. The result of such anon the paper and the companies covered in the caseongoing relationship can be thought of as a virtuousstudies for their cooperation with the various
47

Heller and Fujimoto
research projects upon which this paper’s analysis is(2000).

The

natureanddynamics

ofbased.

organizational capabilities. Oxford, UK: Oxford
University Press.

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