Abstract
While research has shown that joint ventures contribute more strongly to a firm’s innovativeness than contractual agreements, technology alliances are often governed by contractual agreements. Bridging alliance governance and partner selection research, this paper suggests how these apparently contradictory findings are fundamentally interrelated. By prevailing research, firms with joint ventures should be more innovative than those with contractual agreements. But as compared with contractual agreements, joint ventures will also reduce firms’ propensity for novel partners. Because novel partners enhance a firm’s innovativeness, joint ventures will therefore indirectly decrease its innovativeness. Finally, novel partners become more important when technological dynamism increases, which will in turn increase the innovative benefits of contractual agreements versus joint ventures. Application of a structural model to a panel of firms engaged in IT-related technology alliances during 1978–1999 generally supports the theory. Overall, the findings advance our understanding of the behavioral and performance consequences of alliance governance.
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