Absorptive capacity and innovation: When is it better to cooperate?

Research Policy, 2016

While alliances are widely acknowledged to facilitate knowledge transfers across firms, alliances also allow partnering firms to combine technological capabilities toward joint innovation outcomes through complementary specialization. We examine how technological overlap and alliance experience-widely recognized antecedents of external knowledge utilization-influence the extent of knowledge acquisition and complementary specialization in alliances. Our analyses of 841 two-partner technology alliances within the ICT industry indicate that alliances between firms with moderate-to-high degrees of technological overlap favor high levels of knowledge acquisition across partnering firms while alliances among firms sharing either low or high levels of technological overlap are well-suited for complementary specialization. We further find that partnering firms' prior experiences with a diverse range of alliance partners strengthen these relationships. Our results also suggest that the likelihood of an alliance to simultaneously exhibit knowledge acquisition and complementary specialization improves as partnering firms' technological overlap and alliance experience increase.

In this paper a model for the formation of strategic alliances is studied. Innovation results from the recombination of knowledge held by the partners to the collaboration, and from the history of their collaboration. Innovation brings partners closer together, while at the same time the repetition of partnerships fosters trust and helps improving the outcome of each round of cooperation. A tension exists between innovating with people I know in order to reduce uncertainty at the expense of the net benefit from our joint effort, and innovating with strangers with whom the outcome of joint innovation can be greater but at a larger risk of failure. This "organized proximity", built through the experience of cooperation, can be at the origin of strongly structured networks of innovation, where agents' relations focus on limited cliques of partners.

Http Dx Doi Org 10 1080 09537325 2015 1011612, 2015

Innovative performance is influenced both by the origins of the existing knowledge that is combined to generate innovation and by how economic actors search for new knowledge. Drawing on a sample of inter-firm dyadic R&D alliances, we found that whereas the integration of geographically distant knowledge and of organisationally proximate knowledge in R&D alliances are negatively related to the alliance innovative performance, search span positively moderates both relationships. We conclude that, in order to make the most of broadspan searching, firms participating in R&D alliances should integrate geographically distant but organisationally proximate knowledge. By doing so, firms take advantage of the diversity and novelty that characterises geographically distant knowledge, while preserving considerable levels of relative absorptive capacity that are needed for them to understand, internalise, and effectively use partners' knowledge from different domains.

Journal of Engineering and Technology Management, 2019

This paper focuses on technology alliances between R&D intensive biotechnology firms and larger pharmaceutical companies. It aims to investigate whether the biotech partners can leverage the depth and the breadth of their knowledge resources to retain their equity ownership when forming an alliance, and whether prior alliance experience adds to their overall leverage. Using a sample of 390 alliances formed between US biotechnology and pharmaceutical companies, we find that biotech firms with deeper technological resources are more likely to retain their equity ownership, and that this relationship is stronger when the biotech firm has more alliance experience. 1. Introduction Strategic management scholars have studied the conditions under which firms are most likely to adopt organizational governance forms such as markets or hierarchies (e.g., Monteverde and Teece, 1982; Walker and Weber, 1984), hierarchies or alliances (e.g., Pisano, 1990), and equity or non-equity alliances (e.g., Oxley, 1997). Broadly speaking, alliance governance involves choosing between equity and non-equity forms, also referred to as quasi-hierarchies and quasi-markets, respectively. Non-equity alliances are similar to market transactions with less contractual complexity, as they include contractual arrangements without equity exchange. Equity relationships, on the other hand, are similar to more hierarchical forms of governance, as they include joint ventures and minority equity alliances (Gulati and Singh, 1998). The choice of governance structure in technology alliances has been the subject of a variety of studies (e.g. Bosse and Alvarez, 2010; Das and Teng, 2000; Oxley and Sampson, 2004). Most of these studies are based on the assumption of bounded rationality, i.e. that managers cannot make accurate estimations on the future value of an alliance. Therefore, governance choices are made based on an estimation of the value to be gained and on risks to be avoided due to uncertainty (Pateli, 2009). Research has found that valuable R&D capabilities of the technology firm and the characteristics of knowledge involved in the alliance significantly impact the choice of governance (e.g. Carayannopoulos and Auster, 2010; Dunne et al., 2009; Oxley and Sampson, 2004). However, several questions remain unexplored: In research-intensive industries, the link between technological resources-the main asset brought into allianceand the governance structure needs further examination (

Journal of Financial Economics, 2006

We explore the role of inter-firm alliances as a mechanism for sharing technological knowledge. We argue that knowledge flows between alliance partners will be greater than flows between pairs of non-allied firms, and less than flows between units within single firms. Using patent citations as a proxy for knowledge flows, we find results that are consistent with these expectations. We then explore how firm characteristics affect knowledge flows within alliances and find positive effects due to technological, geographic, and business similarity between partners. We use alliance data from MERIT, patent data from the USPTO, and firm data from Compustat.

Research Policy, 1998

The resource-based view of the firm, with its focus on firm-specific 'capabilities', has attracted considerable attention in recent work by management scholars, but has not sparked much empirical analysis. This paper relies on the resource-based view to examine partner choice in interfirm collaborations, emphasizing the role of partners' technological capabilities. Patent citation data are used to measure 'technological overlap' between firms before and after alliance formation. Our results provide support for the resource-based view of the firm. Partner selection can be predicted by measures of technological overlap and, once formed, alliances appear to affect firms' technological portfolios in ways predicted by the resource-based view. q

Technology Analysis & Strategic Management, 2015

In this paper, we investigate the cooperative relationships of innovating firms with (dis)similar partners during the technology life cycle. We test the impact of such cooperative relationships on the innovative and market performance of these firms. To do so, we use a sample of 83 Application Specific Integrated Circuit firms over the period 1986-2005. We find that working with partners that are technologically similar improves innovative and market performance early on in the technology life cycle. Working with partners that are technologically dissimilar improves innovative and market performance later on in the technology life cycle. These results indicate that innovating firms have to change their partnership from technologically similar towards technologically dissimilar over the technology life cycle.

European Management Review, 2014

We adopt a knowledge-based perspective to investigate the individual and interaction effects of partner geographic and organizational proximity on the innovative performance of knowledge-creating alliances. Our econometric analysis on a sample of 1,515 interfirm dyadic knowledge-creating R&D alliances shows that both geographic distance between allied firms and their affiliation with the same business group negatively affect the alliance innovative performance. However, when jointly considered, the two examined partner characteristics positively moderate each other's effect on alliance innovative performance, so revealing a complementary effect on it. We argue that, while the existence of group ties between geographically distant organizations reduces the negative influence of geographic distance on the partners' ability to integrate their knowledge within the alliance, collaborating with remote partners weakens the negative influence of the existence of group ties between partners on knowledge diversity in alliances. We conclude that geographic distance and organizational proximity are contingent upon one another in their effect on the innovative performance of knowledge-creating alliances and that distance (proximity) in one dimension can be bridged (overcome) by proximity (distance) in another dimension.

Knowledge and Space, 2017

The growing complexity and shortening of cycles inherent in the innovation process have changed the industrial and technological environment in which firms operate. The associated increase in uncertainty and costs accompanying R&D projects has shaped a landscape that favors collaboration (Hagedoorn, 2002). Especially in hightech industries, where knowledge creation and accumulation is a crucial input factor and competition has become a learning race, joint research has steadily grown since the 1980s (Mowery, Oxley, & Silverman, 1996; Powell, 1998). A basic feature of joint research is the exchange and sharing of knowledge among the cooperation partners. Actors choose research cooperation in the expectation that it will maximize their potential gain in knowledge. In this context several scholars have stressed the importance that similarity between cooperation partners has for knowledge transfer and successful collaboration. Similarity determines with whom one connects, for it creates trust, facilitates knowledge flows, and increases the mutual attractiveness of potential collaboration partners (Boschma, 2005; McPherson, Smith-Lovin, & Cook, 2001). Similarity or proximity in three dimensions-cognitive, social, and competence-related-seems to play a cardinal role in knowledge exchange in collaborations intended to generate innovation. These three dimensions are not simply exogenously given and static; they develop in the course of the partners' collaboration. Continued collaboration eventually leads trust, experience, and common understanding to increase and knowledge differences to decrease. These dynamics are expected to determine whether the

2015

This study investigates the relationship between the technological value of collaborative research and development (R&D) outcomes and technological diversity in inter-firm R&D alliances. We differentiate technological diversity into two types—relational technological diversity (RTD) and distributional technological diversity (DTD)—and relate them to distinct mechanisms. By empirically analyzing 18,575 granted U.S. patent applications from 1993 to 2002, we find that RTD and DTD is negatively associated and positively associated, respectively, with the technological value of R&D outcomes. In addition, we consider two hypothesized moderators—team size and exploratory degree—in order to examine the moderation effects. The results show that the negative effect of RTD becomes stronger when team size is larger, and the positive effect of DTD becomes greater when an alliance attempts to invent in a less familiar technological field where the exploratory degree is higher. Moreover, we find t...