ABSTRACT

Strategic alliance has been acknowledged as an effective way to sustain a competitive advantage through knowledge management. However, research showed that strategic alliance has ignored new concepts on learning cycle and information that shared by partner. A failure of partnership in Small and Medium Entrepreunership (SME) usually caused by foundation from low commitment of partnership. It does not base on their need to grow together with the partners. This study developed and tested strategic alliance model as strategic knowledge to achieve sustainable competitive advantage. Result of this study showed that strategic alliance as strategic knowledge can be used to improve social capital which then influence human capital. Social capital is developed through a trustworthy partnership model and networking quality. Human capital is developed through skill, creativity and be the best model.