How agglomeration affects alliance governance and innovation performance: The role of cluster size

We investigate how the size of the geographic cluster in which a firm is located influences its governance choice between equity and non-equity alliances and subsequent innovation performance. We argue that firms located in larger clusters tend to form non-equity alliances rather than equity alliances because the communication and control benefits of cluster membership, which increase with cluster size, reduce in-cluster firms' need to form equity alliances. We also claim that the effect of this preferential use of non-equity alliances on innovation becomes stronger when firms are located in larger clusters. Our arguments are supported by a panel analysis of alliances formed by US-listed semiconductor firms.     

Sentiment-dependent impact of funding liquidity shocks on futures market liquidity

We examine the effect of funding liquidity changes on futures market liquidity, depending on economic sentiment. Futures market liquidity improves following negative funding liquidity shocks, and economic sentiment is an important determinant explaining this relationship. While individuals' trading is most significantly affected by sentiment, its response to funding liquidity shocks remains independent of sentiment effects. Domestic institutions' reactions depend on the sentiment regime; they trade futures contracts more actively as funding liquidity becomes more abundant (scarcer) when sentiment is more pessimistic (optimistic). Foreigners, following negative funding liquidity shocks, generally increase their futures trading, whereas their trading decreases under the extremely pessimistic sentiment. Domestic banks and pension funds provide liquidity to the futures market even when sentiment is pessimistic.