Research

Technology Alliance Governance, Partner Selection, and Firm Innovativeness

A firm's innovativeness, defined as its ability to generate technologically significant knowledge, is essential to its performance. Technology alliances are interfirm cooperative agreements established to perform joint research and development relating to new technologies, products and processes. They represent a major factor influencing a firm's innovativeness. However, not all technology alliances are effective because their governance structure greatly affects their contribution to interfirm knowledge flows. Technology alliances are hybrid organisational arrangements, governed either by non-equity contractual agreements or by equity-based joint ventures. Contractual agreements are project or program based agreements between independent firms but in joint ventures the partner firms share ownership of both assets and derived revenues. It is these joint ventures that are thought to contribute more to interfirm knowledge flows and partner firms innovativeness.

This paper seeks to assess the direct and indirect effects of governance across a firm's set of techology alliances, on firm innovativeness. It aims to advance research on the relationship between alliance governance and firm performance by showing that some of the characteristics of hierarchical alliance governance which increase a firm's innovativeness, simultaneously hamper the firm's ability to engage with novel alliance partners. Therefore, because hierarchical alliance governance can be a source of inertia in partner selection, less hierarchical governance may be beneficial when novel partners are crucial to a firm's performance.

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