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This study is based upon a longitudinal research project undertaken between 1994 and 1999 from one partnering case study. At the outset both parties did not anticipate the significance of the learning which would take place within and between the companies. The structure of the paper is as follows; first an overview of the companies involved provides the context of the study. A review of literature considers the resource‐based theory of strategy development, organizational learning and teamwork in the partnering context. Description of the methodology applied leads to discussion of the results in the light of the literature. Findings suggest that the inter‐organization project teams are the mechanisms by which knowledge is converted into new joint capabilities. Finally implications for theory and practitioners are considered as well as avenues for future research.

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