Abstract
Small and Medium Enterprises (SMEs) always play an important role in Taiwan’s economic system. However, because they are rather small in size and resources, most of them usually encounter problems in production, funding, marketing, and managerial capabilities. Even though SMEs are in the difficult position, they can still pursue growth through cooperation with strategic partners. This research conducts a case study and tries to find out the decision-making process of strategic alliance considering about the situation that SMEs face. This research records the process of the strategic alliance of case company and concludes the five important issues for SMEs to consider when choosing the partner of strategic alliance: (1) Complementary Capabilities; (2) Cost of Alternative; (3) Market Knowledge/ Access; (4) Intangible Assets; (5) Managerial Capabilities. This research also suggests that SMEs develop core R&D capabilities to stand in its industry, choose partners with leading position and complementary capabilities, deal with the distributorship more carefully, and develop capability to manage strategic alliance. SMEs should also consider the second resort to reduce the business risk when involving in strategic alliance.