Cooperative wealth creation: Strategic alliances in Israeli medical-technology ventures

During the last three decades, Israel has shown dramatic growth in technological start-ups, which may be attributed to its human-resource base and its physical-structure support for high-tech entrepreneurial activity. Medical technology was targeted by Israeli firms because it was perceived to be attractive and global. Nevertheless, to acquire access to complementary technologies, to amass sufficient capital and marketing resources, and to compensate for market-knowledge shortcomings, many of the firms adopted cooperative strategies. Our findings show that, overall firms that have undertaken alliances marginally underperformed those that have not, suggesting that the benefits of alliances are counterweighed by their drawbacks. R&D alliances with a foreign firm outperformed alliances with a local partner; in contrast, production alliances involving another Israeli firm outperformed alliances with a foreign firm, except for cost. Foreign-partner alliances in marketing were superior to local alliances, but did not enhance survivability. Implications for strategic-alliance formation are discussed.