On the value of effectuation processes for R&D alliances and the moderating role of R&D alliance experience

Abstract

R&D alliances play an essential role in small and medium-sized enterprises’ (SMEs’) strategic focus. Prior research sees uncertainties that arise while companies establish R&D alliances as a primary cause for high failure rates. We suggest that SMEs would benefit from effectuation processes that allow firms to deal successfully with uncertainty. We explore the relationship between companies’ use of effectual principles (i.e., experimentation, affordable loss, and flexibility) and R&D alliance performance, with R&D alliance experience as an important contingency. Scrutinizing survey data of 376 German SMEs, we reveal that the relationship between R&D alliance performance and (i) experimentation and (ii) affordable loss takes on a curvilinear U-shape; the relationship between R&D alliance performance and (iii) flexibility is linear and positive. Our results confirm the moderating effect of SMEs’ R&D alliance experience. We uncover patterns of curvilinearity and investigate the effectiveness of SMEs’ effectuation processes, thereby emphasizing drivers of R&D alliance performance.