Previous research has maintained that the capacity to manage alliances is a distinct capability, defined as the ability to identify, negotiate, manage, monitor and terminate collaborations. This paper focuses on an important but hitherto neglected aspect of alliance capability by investigating how partnering firms may learn how to better manage their dyadic R&D collaborations. In particular, we seek to test the Nonaka and Takeuchi (1995) model of dynamic knowledge creation by establishing a link between the facilitation of four knowledge conversion processes – socialization, externalization, combination and internalization – and an improved capability to manage inter-organizational R&D processes. We specify and extend the model by identifying and testing several critical interactions between these knowledge conversion processes. Relying on data from 105 R&D partnerships in the global telecommunications industry, we suggest that the failure to support one of these knowledge conversion processes has the potential to hamper the proper functioning of the other knowledge conversion processes and thus the emergence of capability to manage dyadic R&D collaborations.
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