Exam 6: Engaging in Cross-Border Collaboration: Managing across Corporate Boundaries

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The process of collaboration creates a flow of information across the boundaries of the participating companies and creates the potential of learning from each other. To maximize its learning from a partnership, a firm effectively integrates its interface managers into the rest of its organization. Selecting the right interface managers is one of the keys of such learning. Supportive administrative processes also must be developed to facilitate the systematic transfer of information and monitor the effectiveness of those transfers. While exploiting the alliance's learning potential, however, each company must also manage the interface to prevent an unintended flow of information to its partner. This delicate task is the responsibility of the gatekeepers, who need to ensure that sensitive or proprietary knowledge is appropriately protected.

Correct Answer:

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An effective way to manage firm boundaries is to create an independent legal entity to engage in the strategic alliance. This would ensure that the assets of the firm are not directly mixed with the assets of the alliance partner and it would clearly delineate any resources that are included in the partnership. To guard against the risk of the proprietary firm information leaking out of the alliance, managers must clearly categorize information as either confidential or free to share. Alternatively, a firm might start with a more limited alliance agreement and then choose to expand the scope of the agreement if the alliance proceeds successfully.