The Formation of Tie Strength in a Strategic Alliance's First New Product Development Project: The Influence of Project and Partners' Characteristics

This paper draws on theories of interorganizational learning, social networks, and transaction cost economics to investigate the formation of tie strength between first‐time alliance partners. It focuses on a strategic alliance's first new product development (NPD) project, which is characterized by a lack of prior experience and insufficient trust between partners and explores how the interaction between (1) interorganizational learning (the “degree” [amount of knowledge shared] and “type” [tacit or explicit nature of the knowledge]); (2) the required communication (“frequency level” and “degree of media‐richness”) to transfer and exchange knowledge; and (3) economic transaction considerations (reducing cost and avoiding opportunism), in highly uncertain and dynamic environments, and, in the absence of an assumption of trust, will determine the future strength of the ties between partners. We argue that the “degree” and “type” of interorganizational learning that are required to efficiently develop an alliance's first NPD project determine the strength of the ties between the partners. Each “degree and type” of learning has a different impact on the frequency and media richness of the partners' communication, and consequently each leads to a different level of social tie strength between the partners. This relationship is moderated by the partners' market overlap. We suggest that the required “degree and type” of interorganizational learning is contingent on the project characteristics (degree of innovation; “radical versus incremental,” and the mode of development; “modular versus integrated”). This relationship, however, is moderated by the partners' technical skills (complementary versus similar).     

Learning to collaborate through collaboration: How allying with expert firms influences collaborative innovation within novice firms

Research summary : Strategic alliances have been recognized as a means for firms to learn their partners' proprietary knowledge; such alliances are also valuable opportunities for partner firms to learn tacit organizational routines from their counterparts. We consider how relatively novice technology firms can learn intraorganizational collaborative routines from more experienced alliance partners and then deploy them independently for their own innovative pursuits. We examine the alliance relationships between Eli Lilly & Co. (Lilly), a recognized expert in collaborative innovation, and 55 small biotech partner firms. Using three levels of analysis (firm, patent, and inventor dyad), we find that greater social interaction between the partner firm and Lilly subsequently increases internal collaboration among the partner firm's inventors. Managerial summary : Can collaborating externally advance internal collaboration? Yes. Our research found that collaboration among scientists at small, early‐stage biotechnology firms significantly increased after these firms formed highly interactive R&D alliances with a large pharmaceutical company known for its expertise in such collaboration. It is well known that alliances help new firms learn specific new technologies and commercialize innovations. Our study broadens the scope of potential benefits of alliances. New firms can also learn collaboration techniques, deploying them internally to enhance their own abilities in collaborative innovation. Managers should take this additional benefit into consideration in developing their alliance strategies. Pursuing alliance partners with expertise in collaboration and keeping a high level of mutual interactions with partner firm personnel should be important considerations to extract this value. Copyright © 2015 John Wiley & Sons, Ltd.     

Knowledge sharing and safeguarding in R&D collaborations: The role of steering committees in biotechnology alliances

Research Summary: This research contributes to alliance governance research by demonstrating how partners' administrative controls in nonequity collaborations regulate knowledge transfers across partners. These administrative controls can take the form of board‐like joint committees having explicitly delineated authority over certain alliance activities. We illuminate governing committees as an important, albeit neglected, instrument for administrative control in the governance of non‐equity alliances, and we demonstrate that these organizational mechanisms facilitate knowledge flows within the scope of an alliance. We also show that governing committees safeguard against misappropriation hazards, particularly when a partner possesses the incentive and ability to engage in such behavior. This study extends alliance governance research beyond the implications of the equity‐nonequity dichotomy to consider a wider and richer gamut of governance instruments available to address the challenges associated with knowledge transfers in alliances. Managerial Summary: Non‐equity alliances are important vehicles to collaborate with external partners, particularly in the biopharmaceutical industry and other high‐tech sectors. To guide these collaborations effectively, partners can use the contract to custom‐build jointly‐staffed managerial units with clearly demarcated decision‐making responsibilities. We demonstrate that these organizational mechanisms facilitate knowledge flows within the scope of an alliance. We also show that governing committees also safeguard against misappropriation hazards, particularly when a partner values a firm's knowledge highly, or it possesses the required ability to absorb and assimilate a firm's knowledge. Our results imply that contractually‐defined managerial interfaces provide a channel to regulate knowledge‐sharing in collaborative alliances.     

Organizational differences,relational mechanisms,and alliance performance

In studying the antecedents of alliance performance, one stream of research has underscored the alignment between partners' characteristics whereas another has concentrated on relational mechanisms such as mutual trust, relational embeddedness, and relational commitment. We integrate these two perspectives by examining how congruence of the partners' cultures and organizational routines facilitates the emergence of relational mechanisms in non‐equity alliances. Our analysis of 420 non‐equity alliances in the information technology industry demonstrates how differences in partners' internal task routines undermine relational mechanisms that in turn impact alliance performance. Partners who acknowledge their latent differences can overcome some of these negative consequences. We advance alliance research by studying the performance implications of alliance partners' organizational differences and by demonstrating how these effects are mediated by relational mechanisms. Copyright © 2012 John Wiley & Sons, Ltd.     

Value creation in university‐firm research collaborations: A matching approach

University‐based technological opportunities are often exploited through joint corporate and academic entrepreneurship activities such as university–industry research collaborations. This paper explores the partner attributes that drive the matching of academic scientists and firms involved in these relationships. The paper models the formation of firm–faculty partnership as an endogenous selection process driven by synergy between partners' knowledge‐creation capabilities. The main findings indicate that faculty–firm matching is multidimensional: firms and scientists complement each other in publishing capabilities but substitute each other in patenting skills. Furthermore, firms and scientists with specialized knowledge create more value by teaming with more knowledge‐diversified partners. The paper contributes to the literature on university–industry knowledge transfer and, more generally, to the literature on alliance formation.     

Learning to Reduce Interorganizational Learning: An Analysis of Architectural Product Innovation in Strategic Alliances*

There is wide agreement in analyses of strategic alliances that, regardless of the purpose of the alliance, members of the partner organizations should engage in intensive mutual learning to make the alliance a success. In contrast to this view, the present article shows that in strategic alliances aimed at product innovations by recombining partners' extant technologies, learning between specialists can be reduced considerably without jeopardizing success. This is made possible through four interconnected mechanisms integrated into the concept of transactive organizational learning (TOL): (1) modularization, which allows specialists of different domains to develop modules to a large extent independently of each other and to concentrate communication between themselves on the design of interfaces between modules; (2) storing of knowledge in artifacts instead of in organizational members' memories; (3) localization of knowledge not present in the project team but for which a need has arisen through transactive memory; and (4) knowledge integration by prototyping (i.e., by repeated testing of modules and of interactions between modules until a satisfactorily working end product is achieved). Although these four mechanisms reduce the need for cross‐learning between specialists of different domains, some common knowledge and some cross‐learning between the partners' specialists is still required. Case studies on four of SAP's strategic alliances for product innovation with different partners lend empirical support to this study's concept. The article concludes with implications for practice: Companies should find out whether the TOL mechanisms that reduce time to market are present, to what extent their potential is exploited, and how well they work together.     

Free‐riding in multi‐party alliances: The role of perceived alliance effectiveness and peers' collaboration in a research consortium

Research summary : Multi‐party alliances rely on partners' willingness to commit and pool their efforts in joint endeavors. However, partners face the dilemma of how much to commit to the alliance. We shed light on this issue by analyzing the relationship between partners' free‐riding—defined as their effort‐withholding—and their perceptions of alliance effectiveness and peers' collaboration. Specifically, we posit a U‐shaped relationship between partners' subjective evaluations of alliance effectiveness and their free‐riding. We also hypothesize a negative relation between partners' perceptions of the collaboration of peer organizations and their free‐riding. Results from a mixed‐method study—combining regression analysis of primary data on a major inter‐organizational research consortium and evidence from two experimental designs—support our hypotheses, bearing implications for the multi‐party alliances literature. Managerial summary : Free‐riding is a major concern in multi‐party alliances such as large research consortia, since the performance of these governance forms hinges on the joint contribution of multiple partners that often operate according to different logics (e.g., universities, firms, and government agencies). We show that, in such alliances, partners' perceptions have relevant implications for their willingness to contribute to the consortium's shared goals. Specifically, we find that partners free‐ride more—that is, contribute less—when they perceive the effectiveness of the overall alliance to be either very low or very high. Partners also gauge their commitment to the alliance on the perception of the effort of their peers—that is, other organizations similar to them. These findings provide managers of multi‐party alliances with additional levers to motivate partners to contribute fairly to such joint endeavor. Copyright © 2015 John Wiley & Sons, Ltd.     

Alliance portfolio diversity and firm performance

In this paper, we offer a comprehensive alliance portfolio diversity construct that includes partner, functional, and governance diversity. Grounding our work primarily with the resource‐ and dynamic capabilities‐based views, we argue that increased diversity in partners' industry, organizational, and national background will incur added complexity and coordination costs but will provide broadened resource and learning benefits. Increased functional diversity results in a more balanced portfolio of exploration and exploitation activities that expands the firm's knowledge base while increased governance diversity inhibits learning and routine building. Hypotheses were tested with alliance portfolio and performance data for 138 multinational firms in the global automobile industry during the twenty‐year period from 1985 to 2005. We found alliance portfolios with greater organizational and functional diversity and lower governance diversity were related to higher firm performance while industry diversity had a U‐shaped relationship with firm performance. We suggest firms manage their alliances with a portfolio perspective, seeking to maximize resource and learning benefits by collaborating with a variety of organizations in various value chain activities while minimizing managerial costs through a focused set of governance structures. Copyright © 2010 John Wiley & Sons, Ltd.     

Alliance form: a test of the contractual and competence perspectives

This paper analyzes factors that influence firms' choice of the organizational form of strategic alliances. I consider arguments suggested by both the contractual and the competence perspectives. In order to distinguish empirically between them, I devote special attention to the role played by the similarity of partner firms' technological specialization. In the empirical section I consider a sample composed of 271 equity joint ventures, non‐equity bilateral and unilateral agreements established between each other in the period 1983–86 by 67 North American, European, and Japanese enterprises from the world's largest firms in information technology industries. I examine the effects on the choice of alliance form of a measure of firms' technological proximity based on patents count, while controlling for other variables that are usually considered in the empirical literature. The estimates of binomial and multinomial logit models support the competence‐based argument that in technological alliances divergence in partners' technological specialization results in a higher propensity to use equity forms. Overall, the findings suggest that both the contractual and competence perspectives provide valuable complementary insights into the determinants of alliance form. Copyright © 2003 John Wiley & Sons, Ltd.     

Agglomeration and the choice between acquisitions and alliances: An information economics perspective

Research summary : This research extends agglomeration theory by joining it with information economics research to better understand the determinants of firms' organizational governance choices. We argue that co‐location in a common geographic cluster fosters lower levels of information asymmetry between exchange partners and thus leads firms to employ acquisitions rather than alliances for their external corporate development activities. We further extend agglomeration theory by arguing that the impact of sharing a cluster location on acquisitions versus alliances strengthens with the level and dissimilarity of the exchange partners' knowledge‐based resources as well as with the intra‐cluster geographic proximity of the partners. Evidence from a sample of over 1,100 alliance and acquisition transactions in the U.S. semiconductor industry provides support for our hypotheses. Managerial summary : This paper investigates the role of geographical clustering for firms' external corporate development activities in acquisitions and alliances. We explain how better information is likely to be available among firms co‐located in the same cluster. This suggests that managers should have less need to use alliances over acquisitions as a means of reducing the risk of adverse selection (e.g., overpaying for acquisitions). Our investigation of over 1,100 transactions in the U.S. semiconductor industry shows that common cluster co‐location increases the probability of acquisition relative to alliance. Our arguments and evidence also indicate that the information‐related benefits of cluster co‐location are even more impactful when the parties have more divergent technology bases, possess larger stocks of knowledge‐based resources, or are located in closer geographic proximity. Copyright © 2015 John Wiley & Sons, Ltd.     

Relational mechanisms,formal contracts,and local knowledge acquisition by international subsidiaries

This research focuses on relational and contractual mechanisms and examines their impact on foreign subsidiaries' acquisition of tacit and explicit knowledge from local suppliers. Using survey data from 168 foreign subsidiaries operating in China, this study finds broad support for the proposed analytical framework. When the foreign subsidiary and supplier share common goals, the foreign subsidiary acquires greater levels of both explicit and tacit knowledge; trust between the two parties promotes the acquisition of greater levels of tacit than explicit knowledge. However, access to the local supplier network through the focal supplier enables the foreign subsidiary to acquire greater levels of explicit but not tacit knowledge. Formal contracts play a complementary role in knowledge acquisition: contracts enhance the acquisition of explicit knowledge and further strengthen the effects of relational mechanisms on tacit and explicit knowledge acquisition. Overall, these findings provide important implications for foreign subsidiaries regarding how to acquire local knowledge in host countries through both formal and informal mechanisms. Copyright © 2009 John Wiley & Sons, Ltd.     

The impact of R&D‐specific factors on the attractiveness of small‐ and medium‐sized enterprises as partners vis‐à‐vis alliance formation in large emerging economies

This study examines the impact of research and development (R&D)‐specific factors in determining the likelihood of small‐ and medium‐sized enterprises (SMEs) from developed countries to be attractive partners vis‐à‐vis forming alliances with SMEs from large emerging economies (LEEs). This study is founded on the knowledge‐accessing theory of alliance formation, which emphasises the higher efficiency gains of knowledge application as opposed to knowledge generation. We extend this theory to SMEs on the basis that smaller firms, because of their resources constraints and drive to survive, are likely to use alliances to access external knowledge bases leading to new product development (NPD) opportunities because of the low feasibility of acquiring knowledge. As a mix of complex knowledge is necessary to develop most modern products and services, SMEs are also likely to adopt a more flexible operational approach and to accept compromises to forge knowledge‐accessing alliances. We illustrate this theoretical development using primary data collected from British and German biotechnology SMEs, declaring the intention prospectively to form alliances with their counterparts in Brazil. Binary logistic regression was used to identify the factors influencing the likelihood of a firm as an attractive alliance partner. Our results indicate that R&D‐specific factors influence the likelihood of firms to be attractive alliance partners. In particular, firms showing an in‐house innovation history focused on one or few products are more likely to be attractive alliance partners with LEE firms than those that do not. Another R&D‐specific predictor that enhances the chances of alliance partner attractiveness with LEE firms is the firm's focused searching and identifying capability relative to technology or equipment that demonstrates good prospects to improve the firm's line of products. A third predictor refers to the firm's awareness regarding non‐cost obstacles for its own technological development. Implications for policy makers and practitioners are also discussed.     

R&D Cooperation,Partner Diversity,and Innovation Performance: An Empirical Analysis

Existing literature on research and development (R&D) alliances focuses on formation motives and performance impacts of these alliances but hardly on diversity of the partners' portfolio. Cooperation with a diverse set of partners leads to learning opportunities with regard to both cooperation and innovation skills and hence is expected to enhance the firm's innovation performance. This paper examines two research questions: (1) the impact of functional and geographical diversity of R&D partners on radical and incremental innovation performance of product innovating firms, and (2) the organizational determinants of partner diversity in R&D alliances. The empirical analysis is based on data from the Dutch Community Innovation Survey, R&D and Information and Communication Technology Surveys, and Production Statistics, which lead to a representative sample of 12,811 innovating firms in the period 1994–2006. Through random‐effects panel Tobit estimates, econometric models for both research questions are estimated. The results indicate that functional and geographical diversity act through different channels. Functional diversity leads to a variety of knowledge intake and synergetic effects necessary to develop and commercialize novel products. Geographical diversity results in successful adaption of existing products to different local requirements such as technical standards, market regulations, and customer preferences. The organizational determinants of both kinds of partner diversity are prior experience, patenting, and information technology infrastructure.     

Alliance or Acquisition? A Mechanisms‐Based,Policy‐Capturing Analysis

Research summary : While alliance researchers view prior partner‐specific alliance experience as influencing firms' subsequent alliance or acquisition decisions, empirical evidence on the alliance versus acquisition decision is surprisingly mixed. We offer a reconciliation by proposing and testing an analytical framework that recognizes prior partner‐specific experiences as heterogeneous along three fundamental dimensions: partner‐specific trust, routines, and value certainty. This allows us to use a policy‐capturing methodology to rigorously operationalize and test our mechanism‐level predictions. We find that all three mechanisms can increase the likelihood of a subsequent alliance or acquisition, and in terms of the comparative choice between alliances versus acquisitions, partner‐specific trust pulls towards alliances, and value certainty pulls towards acquisitions. We conclude with a discussion of the theoretical and empirical implications of our approach and method . Managerial summary : This study focuses on an important corporate decision: When a firm has had an alliance with another firm, how would that experience affect the likelihood of a future alliance or acquisition with that same firm? We first suggest that it will depend on three factors: the level of trust that existed in that prior alliance, the extent to which specific work routines were developed, and the degree to which the firm was able to confidently assess the value of the partner firm's resources. We then find that trust is a particularly strong predictor of future alliances, while confidence regarding value more strongly predicts future acquisitions. In this way, we demonstrate more precisely how past corporate choices can affect (consciously or unconsciously) future ones . © 2017 The Authors. Strategic Management Journal Published by John Wiley & Sons Ltd.     

Ambiguity and the process of knowledge transfer in strategic alliances

This research examines the role played by the ‘causally ambiguous’ nature of knowledge in the process of knowledge transfer between strategic alliance partners. Based on a cross‐sectional sample of 147 multinationals and a structural equation methodology, this study empirically investigates the simultaneous effects of knowledge ambiguity and its antecedents—tacitness, asset specificity, prior experience, complexity, partner protectiveness, cultural distance, and organizational distance—on technological knowledge transfer. In contrast to past research that generally assumed a direct relation between these explanatory variables and transfer outcomes, this study’s findings highlight the critical role played by knowledge ambiguity as a full mediator of tacitness, prior experience, complexity, cultural distance, and organizational distance on knowledge transfer. These significant effects are further found to be moderated by the firm’s level of collaborative know‐how, its learning capacity, and the duration of the alliance. Copyright © 1999 John Wiley & Sons, Ltd.     

Those Who Know,Do. Those Who Understand,Teach. Disseminative Capability and Knowledge Transfer in the Automotive Industry

Innovations in the automotive industry are increasingly building on contributions from different technological fields. Correspondingly, firms in this industry more than ever tend to form research and development (R&D) alliances that aim at innovating new products through integrating separate fields and transferring knowledge. While, in symmetrical R&D alliances, each partner intends to ultimately maintain their distinctive and specialized knowledge base, overlapping knowledge facilitates cooperation and ultimately alliance success. Thus, the capability for knowledge transfer between partners is crucial in such R&D alliances. The literature provides ample evidence that such knowledge transfer is more likely to succeed if the recipient firm has absorptive capability. However, whereas the characteristics of the knowledge transfer process and the recipient firm are well understood, limited attention has so far been given to the issue of the knowledge source firm's ability to transfer knowledge to R&D alliance partners. This study focuses on the impact of source firm capability on successful knowledge transfer in R&D alliances. The study develops a theoretical framework of disseminative capability consisting of five dimensions and tests it on a sample of 59 projects in R&D alliances in the automotive industry. To ensure content validity and avoid common source bias, data were collected from both alliance partners. To test the hypotheses, multiple regression analyses were performed. The results reveal that the source firm's disseminative capability including the attainment of expert knowledge, assessing the recipient firm's knowledge base, and encoding knowledge are positively related to knowledge transfer success, while, surprisingly, detaching knowledge and support of knowledge application in the recipient firm are negatively related. Intentionally or unintentionally, disseminating knowledge across firm boundaries is widely perceived as detrimental to a firm's competitive advantage. Accordingly, the literature tends to downplay disseminative capability as an important means of exploiting external knowledge in collaborative settings. By demonstrating potential benefits for the source firm to transfer knowledge to the allying R&D partner firm, this paper reinvigorates the collaborative dimension in knowledge transfer. Further, the paper is the first of this kind to theoretically explain and empirically show that dimensions of disseminative capability of collaborators in R&D alliances are important for knowledge transfer, whereas disseminative capability is the complementary inverse of an organization's absorptive capacity.     

The effects of knowledge attribute, alliance characteristics, and absorptive capacity on knowledge transfer performance

The main purpose of this study is to examine the effects of knowledge attribute, alliance characteristics, and firm's absorptive capacity on the performance of knowledge transfer. Regression analysis was used to test the hypotheses in a sample of 137 alliance cases. The findings suggest that knowledge transfer performance is positively affected by the explicitness of knowledge and firm's absorptive capacity; that equity-based alliance will transfer tacit knowledge more effectively while contract-base alliance is more effective for the transfer of explicit knowledge; and that trust and adjustment have positive effects while conflict possesses a curvilinear effect on knowledge transfer performance.     

Cooperative Innovation Projects: Capabilities and Governance Mechanisms*

This paper is concerned with how firms in a project‐based industry cooperate in technological innovation projects in the construction industry. The main focus of the paper is on the sharing of capabilities in cooperative innovation projects and how these cooperations are governed. A knowledge‐based perspective is applied, and four cooperative innovation projects in the construction industry are compared. Based on the case studies, a set of propositions is defined. First, a cooperation aimed at a mutual strategic benefit in mutually gaining access to the knowledge bases of the involved firms, while maintaining their own differentiated knowledge base, can result in more stable and long term relationships with mutual trust between the cooperating firms. Second, in a cooperation aimed at a mutual strategic benefit in mutually gaining access to the knowledge bases of the involved firms, partners not only gain access to each other's technological capabilities but also develop and share knowledge about organizational aspects and market situations and gain knowledge about the way of working of the partner firm. Third, in a cooperation aimed at mutual strategic benefit in mutually gaining access to the knowledge bases of the involved firms, noncodifiability of the capabilities is conditional to create a win–win situation. And fourth, cooperation aimed at a mutual strategic benefit in mutually gaining access to the knowledge bases of the involved firms is based on mutual competence and intentional trust as its main governance mechanism, whereas contracting between market parties aimed at knowledge–output transactions is represented by limited trust and arms' length (contractual) relationships as its main governance mechanism.     

Explaining post‐IPO venture performance through a knowledge‐based view typology

We extend the knowledge‐based view with a new typology and its application to post‐IPO firm performance. The typology categorizes knowledge development activity along the dimensions of familiarity (whether the firm has experience with the knowledge or it is new) and source (whether the firm creates it independently or with partners). We use this typology to determine direct and interaction effects of knowledge development activity on survival, RoA, and Tobin's q of newly public firms. Using a sample of 1,056 high‐technology manufacturing IPOs in 1990–2005, we find that focused, internal knowledge development correlates with higher performance. We also find a positive interaction effect in combining focused, internal and diversifying, alliance‐based knowledge development, and a negative interaction effect in combining diversifying, internal and alliance‐based knowledge development. Copyright © 2013 John Wiley & Sons, Ltd.     

This is what you came for? University–industry collaborations and follow-on inventions by the firm

The positive impact of university–industry collaborations on firms' innovative performance is well recognized. However, to date, the existing heterogeneity within university–industry collaboration processes and the sources of value creation underlying the resulting inventions are left underexplored. As a result, our understanding as to why some of the joint inventions resulting from such collaborations turn out to present a more fertile source of follow-on developments and value for the collaborating firm than others is limited. The present paper sheds light on this question through the application of a knowledge recombination perspective. Hence, we open the black box of innovation and put a spotlight on the knowledge components that make up the joint inventions resulting from university–industry collaborations. We evaluate how the nature—scientific versus technological—and origins—internal versus external to the collaborating partners—of these knowledge components relate to the inventive impact of the partners' joint invention. Examining a sample of 9102 USPTO co-patents, joint inventions created through university–industry collaborations are shown to be most fertile as a source of firm follow-on inventions when they are the result of a recombination process that includes technological knowledge components stemming from both collaborating partners. This effect is most pronounced when the partners' technological knowledge contributions are moderately similar. In contrast, when the joint technology development takes place in a technology domain that is novel to the firm, the resulting joint inventions are most fertile as a source of firm follow-on inventions when the university contributes through the input of technological knowledge components situated in exactly this technology domain that is novel to the firm. Remarkably, no evidence for such direct effects is found regarding the partners' scientific contributions. Together, these findings provide important insights for firms who intend to spur their internal technology development through collaboration with a university partner.