GSM Lecture 8

Management > Global Strategic Management > Globalisation > Alliances > R&D alliances > external/internal sources

Substitutability of external and internal sources?

The simplistic view is that firms use alliances to reduce the costs of doing it themselves. However, firms are multi-technology and have distributed competences and even as the product diversification reduces, technological diversification increases, meaning the costs of R&D goes up, rather than down.

Firms must have a high level of in-house experts to monitor external technology inputs.

The decision to choose between modes is affected by:

• The firm specific capabilities of a firm and centrality of its technology to its competitiveness

• The distance to market

• The structure of the industry and game-theoretic determinants

Core competences

Reasons

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