Technological Characteristics and R&D Alliance Form: Evidence from the U.S. Biotechnology Industry

Xia Wang ()

No 2005-35, Working papers from University of Connecticut, Department of Economics

Abstract: This study seeks to advance and test the knowledge-based theory of the firm as it applies to explaining the governance structure of R&D alliances. Unlike transaction-cost economics, the knowledge-based theory attempts to explain organizational form not primarily in terms of incentive misalignment but in terms of the creation, acquisition, and coordination of productive capabilities. To study the role played by firm-specific technological competencies, I consider three technological characteristics of an alliance: technological similarity, technological relatedness, and technological diversity. With a sample of 111 biotech-biotech R&D alliances, I find that technological relatedness and diversity increase the probability that allying firms would select the higher integration mode. Technological similarity, though, bears a non-monotonic relationship with organizational choice. Overall, the results support the knowledge-based argument that the idiosyncrasy in technological traits influences which type of alliance forms would be selected by allying firms.

Keywords: technology; governance; alliance; R&D (search for similar items in EconPapers)
JEL-codes: L22 L65 O32 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005-08
New Economics Papers: this item is included in nep-ino and nep-tid
Note: I thank Richard N. Langlois, John Cantwell, Michelle Gittelman, Rachelle C. Sampson, and Anu Wadhwa for helpful comments on this paper. Will Mitchell has made the paper possible by allowing me access to ReCap. This paper also benefited from comments received at the 11th CCC conference at Goizueta Business School, Emory University, and the brownbag presentation at the Department of Economics, University of Connecticut. Financial support was provided by the Department of Economics and the Graduate School at the University of Connecticut.
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