Chapter 9: Cooperative Strategy 297partner trustworthiness. Typically, an opportunistic firm wants to acquire as much
of its partner’s tacit knowledge as it can.^100 Full awareness of what a partner wants in
a cooperative strategy reduces the likelihood that a firm will suffer from another’s
opportunistic actions.^101
Some cooperative strategies fail when it is discovered that a firm has misrepre-
sented the resources it can bring to the partnership. This risk is more common when
the partner’s contribution is based on some of its intangible assets. Superior knowledge
of local conditions is an example of an intangible asset that partners often fail to deliver.
An effective way to deal with this risk may be to ask the partner to provide evidence that
it does, in fact, possess the resources (even when they are largely intangible) it will share
in the cooperative strategy.^102
The cooperative relationships in the form of nonequity strategic alliances that are
being created between some large pharmaceutical companies and outsourcing firms is
potentially an example of the “misrepresentation of available resources” risk. As discussed
in Chapter 3, pharmaceutical companies are outsourcing the monitoring of drug safety to
firms claiming to have the requisite human capital skills needed to successfully complete
various monitoring tasks. But is this the case? Not everyone is convinced. In fact, “critics
of the (outsourcing) practice say drug monitoring is difficult, requiring deep experience
and a knack for detective work in addition to knowledge of biochemistry and pharma-
cology, and that the shift toward outsourcing carries risks that deadly side effects will go
unnoticed.”^103 Thus, pharmaceutical companies may need to carefully monitor the quality
of the human capital resource their partners provide for the purpose of completing what
appears to be complicated monitoring work.
A firm’s failure to make available to its partners the resources (such as the most sophis-
ticated technologies) that it committed to the cooperative strategy is a third risk. This
particular risk surfaces most commonly when firms form an international cooperative
strategy, especially in emerging economies.^104 In these instances, different cultures and
languages can cause misinterpretations of contractual terms or trust-based expectations.
A final risk is that one firm may make investments that are specific to the alliance
while its partner does not. For example, the firm might commit resources to develop
manufacturing equipment that can be used only to produce products associated with the
alliance. If the partner isn’t also making alliance-specific investments, the firm is at a rela-
tive disadvantage in terms of returns earned from the alliance compared with investments
made to earn the returns.
9-7 Managing Cooperative Strategies
Although they are difficult to manage, cooperative strategies are an important means
of growth and enhanced firm performance. Because the ability to effectively manage
cooperative strategies is unevenly distributed across organizations in general, assigning
managerial responsibility for a firm’s cooperative strategies to a high-level executive or to
a team improves the likelihood that the strategies will be well managed. In turn, being
able to successfully manage cooperative strategies can itself be a competitive advantage.^105
Those responsible for managing the firm’s cooperative strategies should take the
actions necessary to coordinate activities, categorize knowledge learned from previ-
ous experiences, and make certain that what the firm knows about how to effectively
form and use cooperative strategies is in the hands of the right people at the right time.
Firms must also learn how to manage both the tangible and intangible assets (such as
knowledge) that are involved with a cooperative arrangement. Too often, partners con-
centrate on managing tangible assets at the expense of taking action to also manage a
cooperative relationship’s intangible assets.^106