The purpose of this study is to present a conceptual framework that compares different strategic alliances in terms of factors that expand knowledge creation capabilities and enhance organizational climate measures. The framework is empirically tested in the context of three different organizational arrangements: a wholly owned subsidiary, a joint venture, and a contractual agreement. The former arrangement is perceived as a hierarchical expansion, whereas the latter two arrangements are types of strategic alliances and cooperative ventures. Previous studies in knowledge creation view a firm as a social community that is effective in creating and transferring knowledge of individuals and groups within the boundaries of the firm. In addition, a firm can create new knowledge and learn by mobilizing and recombining its existing knowledge.; This study involves knowledge-based theory of the firm where sustainable improvements of an organization rely primarily on its abilities to combine, generate, and exploit knowledge. An instrument is developed and used to measure specific organizational factors that identify the strengths and weaknesses of firms in terms of knowledge creation capabilities and organizational climate measures. Among the factors that have been explored in the study: autonomy in the workplace, organizational capacity to learn, learning commitment and intention, redundancy in the workplace, tasks fluctuation, decision-making practices, information flow and communication style, human resources primacy, motivational conditions, and leadership quality. An important theoretical contribution of this study is in recognizing the interrelationships among factors that expand knowledge creation capabilities and enhance organizational climate measures in the context of various organizational arrangements.; The research findings were accomplished through questionnaires that surveyed 168 middle and top managers from the above three organizational arrangements. The study achieved the original objective of determining whether strategic alliances influences knowledge creation capabilities and organizational climate measures. Within the boundaries of the study, results indicate that organizations that operate in alliance modes have a greater potential to expand knowledge creation capabilities and enhance organizational climate measures. This finding can be attributed to the fact that organizations that operate in alliance modes possess more diversified knowledge within their boundaries. Therefore, the study suggests that managers should perceive strategic alliances not only as an efficient means to operate, but also as a powerful organizational structure that facilitates creative thinking and organizational learning.
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