Governance in Multilateral R&D Alliances

Organization Science, pp. 1-20, 2011

21 Pages Posted: 2 Feb 2012

See all articles by Lorraine Eden

Lorraine Eden

Texas A&M University - Department of Management ; School of Law, Texas A&M University

Michael A. Hitt

Texas A&M University - Department of Management; Texas Christian University

R. Duane Ireland

Texas A&M University - Department of Management

Robert P. Garrett

Oregon State University - College of Business

Dan Li

Indiana University - Kelley School of Business - Management & Entrepreneurship

Date Written: May 17, 2011

Abstract

In research and development (R&D) alliances, the partner firms must balance the tension between knowledge sharing and knowledge leakages because knowledge sharing, designed to support the alliance’s technology development goals, can often lead to unintended and potentially damaging knowledge leakages. Governance structure is a well-understood knowledge protection strategy designed to reduce knowledge leakage concerns and thereby encourage desired knowledge transfers in two-party R&D alliances. Whether governance structure can be an important balancing mechanism for R&D alliances with multiple partner firms, or multilateral R&D alliances, however, requires further study. Because increasing the number of alliance partners introduces additional complexities to managing an alliance, the appropriate governance mechanism for a multilateral R&D alliance is likely to differ from that for a bilateral alliance. Drawing insights from social exchange theory, we explore governance decisions in multilateral R&D alliances. First, we examine the potential for variance between multilateral and bilateral R&D alliances in governance decisions as a means of knowledge sharing and knowledge protection. Results based on our analysis of 2,423 R&D alliances, 1,690 bilateral and 733 multilateral, are consistent with predictions drawn from social exchange theory. We next focus on three-partner R&D alliances, or trilateral R&D alliances, and compare governance mechanisms between two types of trilateral R&D alliances: chain and net. We find that equity governance structures are more likely to be used in net-based than in chain-based trilateral R&D alliances; we also find that alliance scope moderates the relationship between the type of alliance and governance structure. Finally, we find that multilateral R&D alliances with predicted (aligned) governance structures perform better, in terms of alliance longevity, than those with misaligned structures.

Keywords: R&D alliance, multilateral alliance, trilateral alliance, bilateral alliance, knowledge sharing, knowledge protection, governance, social exchange theory, alliance performance, alliance longevity

Suggested Citation

Eden, Lorraine and Hitt, Michael A. and Ireland, R. Duane and Garrett, Robert P. and Li, Dan, Governance in Multilateral R&D Alliances (May 17, 2011). Organization Science, pp. 1-20, 2011 , Available at SSRN: https://ssrn.com/abstract=1994466

Lorraine Eden

Texas A&M University - Department of Management ( email )

415D Wehner Bldg, TAMU 4221
College Station, TX 77843-4221
United States
979-845-4851 (Phone)
979-845-9641 (Fax)

HOME PAGE: http://mays.tamu.edu/mgmt/

School of Law, Texas A&M University ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States
9797773489 (Phone)

Michael A. Hitt

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-458-3393 (Phone)

Texas Christian University ( email )

Fort Worth, TX 76129
United States

R. Duane Ireland

Texas A&M University - Department of Management ( email )

430 Wehner
College Station, TX 77843-4218
United States

Robert P. Garrett

Oregon State University - College of Business ( email )

Corvallis, OR 97331
United States

Dan Li (Contact Author)

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

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