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Mia Hsiao-Wen Ho and Pervez N. Ghauri

This chapter reconsiders the determinants, consequences, and moderators of knowledge transfer and organizational learning processes in international strategic alliances by highlighting the contextual differences between partners. We argue institutional distance and realized absorptive capacity as critical moderators in the processes of knowledge transfer and organizational learning, which in turn, determine the alliance performance. We also unpack the transferring and learning processes by demonstrating how the transferor firm’s behavior towards knowledge transfer influences the recipient firm’s learning mechanisms. We propose relationship quality as an important determinant of the transferor firm’s protective behavior, which will subsequently affect the level of knowledge acquisition by the recipient firm. Yet knowledge acquisition will be significantly reduced if the negative impact of knowledge protection is intensified by large institutional distance between alliance partners. We further assert that an alliance performance does not necessarily rely on the level of knowledge acquisition but, rather, is dependent on the firm’s realized absorptive capacity to apply sufficient, acquired knowledge to the alliance context.