R&D Alliances & Firm Performance: The Impact of Technological Diversity and Alliance Organization on Innovation

42 Pages Posted: 16 Apr 2001

See all articles by Rachelle C. Sampson

Rachelle C. Sampson

University of Maryland - Robert H. Smith School of Business; Georgetown University - Robert Emmett McDonough School of Business

Date Written: September 2003

Abstract

In response to competitive pressures, firms increasingly use R&D alliances to complement in-house R&D efforts. However, empirical evidence to date provides little guidance on how firms can use this strategy effectively. Here, I examine why some R&D alliances contribute more than others to firm innovative performance. I suggest that technological diversity, or differences in technological capabilities between partners, determines firm benefits from such alliances. Further, I argue that how partners organize their alliance activities influences this relationship between technological diversity and firm innovation. To test these relationships, I examine firm patenting performance with a sample of 463 R&D alliances in the telecommunications equipment industry. I find that alliances contribute far more to firm innovative performance when technological diversity is moderate, rather than low or high. Some diversity is required, or firms have nothing to learn from their partners. However, when very diverse, firms have difficulty learning from their partners. While this relationship holds irrespective of alliance organization, I find that hierarchical organization, such as the equity joint venture, improves firm benefits from alliances with high levels of technological diversity. Thus, alliance organization likely influences partner ability and incentives to share information, which affects performance.

Keywords: alliances, R&D, patents

Keywords: alliances, R&D, patents, innovation, technology, governance, joint ventures

JEL Classification: O31, O32, L22

Suggested Citation

Sampson, Rachelle C., R&D Alliances & Firm Performance: The Impact of Technological Diversity and Alliance Organization on Innovation (September 2003). Available at SSRN: https://ssrn.com/abstract=265999 or http://dx.doi.org/10.2139/ssrn.265999

Rachelle C. Sampson (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

Van Munching Hall
University of Maryland
College Park, MD 20742-1815
United States
(301) 405-7658 (Phone)

HOME PAGE: http://www.linkedin.com/in/rachelle-sampson-68a3b610/

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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