This study provides an empirical evidence of the relationship that exists between participation in technological strategic alliances and business performance by considering the knowledge-based distinctive competencies that the alliance is capable of generating as a mediating variable. The generation of knowledge in technological strategic alliances explains the contradictory results in the literature about the direct effect of strategic alliances on economic performance. The study uses a sample of Spanish industrial firms. The results findings prove that the relationship between technological strategic alliances, and performance is mediated by the generation of knowledge-based distinctive competencies; and that the contribution of the participation in alliances to the growth of the firm"s knowledge stock depends on its creation of innovation competencies. R&D managers should enhance the development of this kind of competencies in order to achieve superior performance.