Organizational Choice in R&D Alliances: Knowledge Based and Transaction Cost Perspectives

32 Pages Posted: 20 Aug 2003

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

Abstract

This study examines how firms choose organizational form for their R&D alliances. Encouraging cooperation in these alliances is often challenging, given the difficulties in knowledge sharing between partners and protecting the property rights over partner knowledge. Interestingly, knowledge based and transaction cost perspectives generate different hypotheses on alliance organization choice in this setting. When partner knowledge bases are very different, the risk of unintended transfer or leakage is reduced, yet the need for enhanced communication and knowledge sharing mechanisms remains undiminished. With a sample of 232 R&D alliances, I find more thorough support for the transaction cost hypothesis. Firms more likely select an equity joint venture as partner knowledge bases diverge and knowledge transfer becomes more difficult. When such knowledge bases are very different, however, firms are less likely to choose an equity joint venture over more contractual forms of alliance organization. Thus, these results provide empirical evidence on alliance organization choice and also have important implications for the fundamental question of why firms exist.

Keywords: Governance, Alliances, R&D

JEL Classification: L22, L24, O32

Suggested Citation

Sampson, Rachelle C., Organizational Choice in R&D Alliances: Knowledge Based and Transaction Cost Perspectives. Available at SSRN: https://ssrn.com/abstract=424100 or http://dx.doi.org/10.2139/ssrn.424100

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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