The characteristics of direct investment, original equipment manufacture, original design manufacture and contractual licensing are quite different. The paper employs absorptive capacity to mediate the relationships between international alliance modes and the performance of firms. However, the theory of transaction cost economics is inadequate for addressing how well the technological knowledge develops in the organization. Thus, a conceptual model to analyze the tension between product strategies and their strategy implementation is proposed. After practical investigation, the paper finds the most suitable alliance modes and their corresponding operations management at different levels of supply chains in renewable energy industry. (C) 2014 Elsevier Ltd. All rights reserved.