Successful Knowledge Transfer within Offshore Supplier Networks: A Case Study Exploring Social Capital in Strategic Alliances

Managing a global network of suppliers presents considerable challenges for large multinational corporations. Chief among these is how to effectively transfer knowledge among members of strategic alliances while maintaining tight control over intellectual property. This paper highlights the efforts of a Fortune 100 manufacturing firm (hereafter US Manufacturing) and its management of global IT suppliers. Using a social capital framework developed by Inkpen and Tsang (2005), we explore the supplier network at three levels (structural, cognitive, and relational) and present eight proven practices for creating, managing, and exploiting social capital within strategic alliances. The Inkpen and Tsang framework examines the linkages between knowledge transfer and social capital for three network types: intracorporate networks, strategic alliances, and industrial districts. We use the strategic alliance of US Manufacturing and its suppliers to illustrate salient social capital dimensions and the conditions and practices that facilitated knowledge transfer. These practices enabled US Manufacturing to improve knowledge transfer, decrease development costs, shorten cycle time, increase the quality of developed deliverables, quickly respond to changes in the regulatory environment, and, most importantly, build strong, strategic relationships with its suppliers.