In recent years, businesses' engagements in international alliances has been augmented considerably. While the popularity of such cross-border partnerships has stimulated the formation of a variety of collaborative arrangements between firms, this movement presents a paradox for researchers and managers. On one hand, a traditional view of interfirm competition suggests that businesses are naturally involved in fierce competition with their rivals. On the other hand, today's firms - especially multinational players - recognize the benefits of collaborative ventures. From a strategic point of view, multinational corporations (MNCs) have changed their traditional views of competition and have adopted a variety of new and flexible approaches for achieving sustainable competitive advantages. Such a shift in their business strategies has become more vivid today than ever before. In particular, the frequent use of business alliances as an indispensable tool in their strategic repertoire has manifested itself in the global business. MNCs have started to build business alliances even with their competitors. For example, it is interesting to observe that while two giant automobile manufacturers, General Motors and Toyota, compete intensively, they have built a joint venture called New United Motor Manufacturing Incorporation (NUMMI) in Fremont, California and are manufacturing cars together. This incident is not isolated, however - a number of companies have formed a variety of alliances in telecommunications, pharmaceutical, airline, and steel industries. Similarly, Bell Atlantic/GTE of the United States and Vodafone AirTouch of Britain formed Verizon Wireless, a joint venture to compete in the U.S. market. Also, Hitachi of Japan and TRW of the United States formed a strategic alliance to pursue opportunities in space technologies. McDonnell-Douglas Space Systems and Shimizu, a Japanese architectural and engineering company, announced their collaboration to develop space exploration technologies for the United States lunar/Mars initiative. All of these examples show that global alliances between companies are well underway in different industries.
Consequently, most researchers and managers wish to know the underlying reasons for augmenting global collaborations and the factors leading to their success. They are primarily interested in knowing why alliances occur in the first place and then what contributes to their effective management and success. In searching for a competitive advantage, firms have considered interfirm collaboration as a viable strategic option, and therefore many of them have attempted to exploit this alternative strategy. Nevertheless, there has been a high level of dissatisfaction with their actual outcomes relative to the expectations of partners - and, correspondingly, a high rate of failure of strategic alliances.
From a theoretical perspective, underlying theories and conceptual models alluding to global strategic alliances need to be developed or improved to enhance our understanding of this popular practice. Although some literature has already been developed to address different dimensions of strategic alliances, further refinement is needed to understand and manage strategic alliances between firms in different industries. Most literature has dealt with either general theoretical aspects or a specific form of alliances (for example, joint ventures). The extant literature often makes references to theories such as transaction cost analysis, game theory, and resource-based views in explaining strategic alliances. Basically, each of these theories ultimately addresses the concept of competitive advantage of the firm. Consequently, the basic premise of strategic alliances lies in winning against competitors, but with a different twist that a company can build partnerships even with its competitors to create or sustain a competitive edge. Albeit a traditional view - an industrial organization suggesting that only competition determines the winners in a given industry - firms today have realized the strategic benefits of interfirm partnership, as well.