Capitalism creates an environment where might is right, money is all that matters, and the Davids of the world have no chance against the Goliaths ... right?

Well, not always. As evolution has shown, with the right circumstances, cooperation can be more effective to survival than competition. Just as sharks benefit from partnering with remoras in the sea, several of today's companies are finding it better to cooperate than to compete.

Sometimes, this paradigm works out beautifully -- other times, not so much. I'll show you the big difference between the two, as well as what your company must do to ensure it benefits from cooperation. At the end, I'll offer you access to a special free report on stocks that only the smartest of investors are buying right now.

Partnerships behaving badly
Stratasys (Nasdaq: SSYS) is a fledgling small-cap producing a revolutionary new form of manufacturing: 3-D printing. While the technology has the capacity to wow the casual observer, without a distribution network, the printers won't be moving anywhere in the near future.

That's why the company decided in 2010 to partner with Hewlett-Packard (NYSE: HPQ). Under terms of the agreement, the two would collaborate to create an HP-branded group of 3-D printers that came from Stratasys' technology.

On paper, the deal makes a lot of sense, but things haven't panned out well. HP has had a string of pretty awful decisions from the executive suite over the past two years, and its focus has been elsewhere.

This situation has led Stratasys to develop its own distribution networks. Just last week, it announced it'd hire 90 sales associates to push its lower-end (affordable) uPrint 3-D printing line. These associates will start out in the United States and will probably move to Europe soon -- where HP is supposed to be moving lots of the printers through its own salesforce.

Stratasys has also decided to take a margin hit as well, as it's offering further incentives with the sale of its uPrint units: "distributor margin for the uPrint line was increased substantially." This is definitely the right move for the company, although it comes at the expense of reduced profitability.

Here's what Stratasys ultimately has to say about the HP partnership: "While we remain committed to the HP collaboration, we will continue to accelerate independent channel development strategies." In much the same manner that savvy Americans aren't relying on Social Security to provide for all their retirement needs, Stratasys is being forced to lay much of the groundwork itself.

The reason for this tragic mismatch is pretty obvious: One company (Stratasys) stood to benefit disproportionately more from the deal than the other (HP), and their values and commitment to the partnership were simply not aligned. In short, while Stratasys had a lot riding on it, HP didn't.

When things work out
But this example doesn't mean things always have to be this way.

The partnership between natural gas engine designer Westport Innovations (Nasdaq: WPRT) and engine manufacturer Cummins (NYSE: CMI) is an excellent case in point. Because Westport only designs natural gas engines -- and doesn't do the actual manufacturing -- it needed a partner that was interested in its technology.

And Cummins, with its foresight in seeing back in 2001 that natural gas trucking would probably be the wave of the future, decided that partnering with a company that had already designed a natural gas engine would be far more effective than trying to engineer an engine on its own.

The result was the formation of Cummins Westport, which generated more than half of the revenue for Westport in the most recent quarter (Cummins doesn't break out segment numbers). The partnership also got a significant boost from Navistar (NYSE: NAV) after the company announced that it will use Cummins Westport engines in its new fleet of natural gas trucks.

The difference between this partnership and the failed endeavor of Stratasys/Hewlett-Packard is clear: For such deals to work to their optimal level, all parties involved need to be fully invested in the success of the partnership -- to the point where failure of the partnership would result in significant losses for all parties involved.

Some might say that sounds risky, but I would argue that it reduces risk: If companies know that their future depends on the success of a partnership, they will do everything in their power to make sure that partnership succeeds.

Go where the smart investors are
If you were smart enough to spot the benefits of the Cummins Westport agreement, and lucky enough to grab shares with equivalent sums of money just two years ago, your investment would be up 190% today.

But that was two years ago, if you'd like to know where the smart investors are going now, I suggest you take a look at a special free report: "The Stocks Only Smart Investors Are Buying." Inside, you'll get the names of a few banks that the greatest investor of all time -- Warren Buffett -- would be buying if he could. Get your copy of the report today, absolutely free!