ties for more sustained technology transfer are built into the second cluster of alliances, repeated transactions, but this represents the smallest category. The optimal framework for continuous transfer is embodied in the third cluster, the organizational fusion category, featuring some form of common organizational membership. Despite high entry barriers, a surprising number of alliances fall into this category. It should be pointed out, however, that alliances in the third cluster require the highest levels of up-front investment and risks, and are the hardest to organize and manage (but once organized, the most apt to be sustained). Still, movement toward the third cluster increases the likelihood of long-term interaction and a two-way flow of technology.
What separates cluster I alliances from those in clusters II and III is that the latter two give rise to quasi-formal or formal structures of continuous technology transmission over time. The alliance types in cluster II (especially joint development projects) offer limited opportunities for continuing or two-way technology transmission. Because of the seminal and growing importance of software, the formation of strategic alliances based on standards coordination is becoming increasingly common and important in terms of giving shape to the rapidly changing marketplace. The third cluster of alliance types, including joint ventures, product/technology-seeking investments, mergers, and acquisitions, encompasses the most enduring