Information environment and interfirm alliance

Feng Gao () and Rong Zhong ()
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Feng Gao: Rutgers Business School-Newark and New Brunswick
Rong Zhong: University of Illinois at Chicago

Review of Quantitative Finance and Accounting, 2023, vol. 60, issue 2, No 8, 643-677

Abstract: Abstract Interfirm alliances require effective mechanisms that facilitate the integration of pertinent knowledge between independent firms. This paper examines whether a firm’s information environment helps improve collaborative outcomes. Using a large panel of firms engaging in global research and development (R&D) collaboration, we find that firms with better information environments are associated with a higher level of collaborative outputs and a broader scope of collaborative networks. The improvements in collaborative outcomes are more pronounced when alliance partners have a greater reliance on informal relationships instead of formal contracts. Further analysis shows that a better information environment helps foster a more durable relationship between partners. Lastly, a path analysis shows that facilitating interfirm collaboration is one of the main channels through which transparency boosts a firm’s innovative productivity. Overall, our findings suggest that the quality of a firm’s information environment plays a crucial role in sustaining efficient relational contracting in interfirm alliances.

Keywords: Corporate governance; Intellectual property; Business network; Strategic alliances; Relational contracting; Information asymmetry (search for similar items in EconPapers)
JEL-codes: D83 G30 L14 M41 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11156-022-01105-4

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