Despite shifts toward a more cooperative business world, governmental policies on international trade in most developed countries have not kept up with this "collapsing of walls." In most developed countries, pressure to "buy national" and attempts to pass protectionist legislation are still prevalent. The joint communiques in which participants in economic summits proclaim the abolition of trade and investment barriers are often juxtaposed against national legislative actions aimed at shielding domestic economies from "unfair" external competition. Indeed, the United States and Europe have both erected new non tariff barriers against imports of manufactured goods during the eighties. The barriers include outright prohibitions, quotas, voluntary export restrictions, and burdensome licensing requirements. (See A ROSTER OF PROTECTIONIST MOVES) The United States' nontariff barriers cover some 15% of the manufactured goods imported from developed countries and 17% of those from the developing world. The EEC and Japanese barriers cover, respectively, 13% and 29% of the manufactured goods coming from developed countries and 23% and 22% of those coming from the developing countries. 1
On another front, businesses are seeing substantial increases in the cost of researching and developing new products and processes. In addition, the returns on money invested in R&D are decreasing because of the short life span of new inventions. To increase its return on investment, a firm must either find access to cheap new production technologies, develop them itself inexpensively ( that is, lower the initial investment), or increase the expected cash flows by making its products accessible to a large number of users.
These developments all point in one direction: collaborate to compete. Strategic alliances do not provide immunity against protectionism-the contract for an extension to the District of Columbia subway system was denied to a 70% -30% joint venture of Kiewit Construction of Omaha and Kajima Engineering & Construction of Japan, on the basis of the Murkowski-Brooks amendment, which bans Japanese firms from federally funded public works projects.14 They do minimize the effects, however. And the benefits of cooperation in R&D are obvious.
The new strategic responses that are being tried by MNCs these days are completely different from the hostile takeovers or mergers of the past. Strategic alliances include global partnerships, link-ups, joint projects, cross-border ties, and collaborative agreements. The aim of all such alliances is to allow MNCs to cooperate and compete. WHAT IS A GLOBAL STRATEGIC PARTNERSHIP? defines global strategic partnerships, and A SAMPLE OF GLOBAL STRATEGIC PARTNERSHIPS AND ALLIANCES lists some companies that have formed such alliances. True, most of the alliances shown in the exhibit give credence to the popular notion that in most cases giants are teaming with giants. But for small firms, especially in the new high-tech industries, strategic alliances can represent the best strategy for growth-a chance to team up with a giant without being gobbled up by it.
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