During the last three decades, Israel has shown dramatic growth in technolo
gical startups, which may be attributed to ifs human-resource base and its
physical-structure support for high-tech entrepreneurial activity. Medical
technology was targeted by Israeli firms because if was perceived to be att
ractive and global. Nevertheless, to acquire access to complementary techno
logies, to amass sufficient capital and marketing resources, and to compens
ate for market-knowledge shortcomings, many of the firms adopted cooperativ
e strategies. Our findings show that, overall, firms that have undertaken a
lliances marginally underperformed those that have not, suggesting that the
benefits of alliances are counterweighed by their drawbacks. R&D alliances
with a foreign firm outperformed alliances with a local partner in contras
t, production alliances involving another Israeli firm outperformed allianc
es with a foreign firm, except for cost. Foreign-partner alliances in marke
ting were superior to local alliances, but did not enhance survivability. i
mplications for strategic-alliance formation are discussed.