Technological and Output Complementarities, and Inter-Firm Cooperation in Information Technology Ventures

Abstract

Firms whose profiles of technologicalcompetence are complementary to one another are morelikely to enter into technology-based cooperativeagreements, and a broad level of technologicalcomplementarity is necessary for these agreements toextend as far as a mutual coordination of learningprocesses (combined research ventures). Using data onagreements between the world's largest firms in thearea of information technology (IT) and the patternsof technological specialization of these firms in theIT fields as revealed by their corporate patenting inthe US, we show that the technologicalco-specialization of firms helps to explain allianceformation, over and above the effects of anyco-specialization in IT products. While firms whosetechnological efforts are less complementary are lesslikely to cooperate for technology purposes, if theydo cooperate it is to exploit the differences in theirfields of expertise, and hence they are likely to usequasi-market organizational forms such as licensing,while the purpose of the alliance is restricted to anexchange of knowledge without any joint coordinationof learning (research). Instead, equity jointventures are likeliest when at a broad level ofaggregation the profiles of technologicalspecialization of partners are complementary, but ata more detailed level of disaggregation there is agreater distance between them, such that thecoordination of learning efforts is feasible, butrequires a stronger organizational commitment.