Resource linkages and capability development Chia-Wen Hsu a,b,1 , Homin Chen a, ⁎ , Lichung Jen a,2 a Department of International Business, National Taiwan University, N0. 85, Sec. 4, Roosevelt Road, Taipei 106, Taiwan b Department of International Business, Yuan-Ze University, No. 135, Yuan-Tung Road, Chung-Li, Taoyuan 320, Taiwan Received 25 March 2006; received in revised form 6 March 2007; accepted 6 December 2007 Available online 10 January 2008 Abstract In this paper, we examine the different resource linkages sought by manufacturing firms through strategic alliance. We look closely at the impact of manufacturing activities on choice of resource linkage. Using a sample of Taiwanese firms, we found that product development ability and marketing distribution channels are the top priority resource linkages that Taiwanese manufacturing firms seek to establish. The authors also found it interesting that marketing know-how was not a resource commonly sought by Original Design and Manufacturing (ODM) firms, nor by Own-Brand Manufacturing (OBM) firms. Some implications are further discussed. Instead of outsourcing production to external suppliers, Taiwanese OBM firms remained committed to manufacturing as a core competence when they established their own brands overseas. © 2007 Elsevier Inc. All rights reserved. Keywords: Resource linkages; Strategic alliance; Marketing distribution channels; Product development ability; Marketing know-how 1. Introduction Strategic alliances have gained increasing popularity across all business sectors in recent years. A strategic alliance is a coop- erative agreement between firms in which partners may contribute resources, technology or firm-specific assets (Chen & Chen, 2002, 2003; Murray & Kotabe, 2005). Through strategic alliance, partners can learn or acquire from each other the strategic capabilities that are not available within their own organizations (Nohria & Garcia-Pont, 1991). Such alliances may also contribute to business efficiency and be an important source of sustainable competitive advantage (Dyer & Singh, 1998). For Newly In- dustrializing Economy (NIE) firms like those from Taiwan, forming strategic alliances with advanced country firms is an important channel for gaining market access and new technolo- gies (Chen & Chen, 2003). In particular, use of such alliance activity can be critical for Small and Medium-sized Enterprises (SMEs) to improve their competitive positions (Arend, 2006; Beekman & Roobinson, 2004). We are now seeing increasing numbers of Asian brand names successfully establish a presence in the world market. In 2004, eight Asian companies ranked among the world's top 100 most valuable brands. By 2006 that number has increased to eleven, most being Japanese (Business Week, 2006). Many of these firms were probably unheard of 40 years ago. Beginning in the mid-1980s, Japanese companies began to develop alliances with Western partners to create greater competitive synergy and leverage their brand presence. Examples of these alliances include Toshiba's strategic partnership with Motorola, and Canon's partnerships and joint ventures with Texas Instruments, Hewlett-Packard, Apple, and Motorola. As a result of establish- ing strong brand names, Japanese companies have created immense economic leverage for themselves (Wee, 1994). In fact, in the initial phase Japan produced and sold many of its products through American and European distributors, very often under the distributors' brand names. They had to be camouflaged by using American and European brand names (Kotler, Fahey, & Jatuscripitak, 1985). As Japanese products improved in quality and gained market acceptance in the 1970s, Japanese companies began to embark systematically and relent- lessly on brand development and image building, with the result that Japan has since established strong brand names in the world market (Wee, 1994). Following Japan's success, other Asian NIEs such as Korea and Taiwan have been employing the same Available online at www.sciencedirect.com Industrial Marketing Management 37 (2008) 677 – 685 ⁎ Corresponding author. Tel.: +886 2 33664969; fax: +886 2 23641843. E-mail addresses: d92724010@ntu.edu.tw (C.-W. Hsu), hmchen@management.ntu.edu.tw (H. Chen), lichung@management.ntu.edu.tw (L. Jen). 1 Tel.: +886 2 33664969. 2 Tel.: +886 2 33664983. 0019-8501/$ - see front matter © 2007 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2007.12.001