Inter-firm Alliances Research Articles

Untangling the Interplay: Interfirm Alliances, University-Industry Collaboration, and Firm Innovation

Untangling the Interplay: Interfirm Alliances, University-Industry Collaboration, and Firm Innovation

Narratives of growth of formative technological innovation systems based on a knowledge perspective: the case of medical devices

Purpose This study aims to analyze the narratives of growth during the initial stages of development of the medical device technological innovation system (TIS). This paper used micro/nanofluidic-based point-of-care testing (mnPOCT), a breakthrough technology in the health-care sector. Design/methodology/approach This study presents a framework that includes measures of knowledge breadth and sharing mechanisms based on cognitive and actor-based networks. The framework integrates bibliometric, network and statistics-based approaches with a focus on the first decade of mnPOCT development. Findings In addition to the typical patterns of technological emergence, the mnPOCT sector exhibits distinctive characteristics. This paper observed significant scientific content and a high geographic concentration. Although small- and medium-sized enterprises, particularly startups, detonate knowledge development, large companies play a subtle yet impactful role as innovation mediators. Interfirm alliances are sparse, reflecting the complementarities between startups and large firms throughout the innovation value chain. These alliances show a significant correlation with SME knowledge creation. Research limitations/implications This study provides researchers and practitioners with guidelines for assessing the dynamics of the growth of technologies in the earliest stages of growth through knowledge and implications for research strategy toward the development and deployment of effective system interventions. Originality/value The study of formative TISs presents challenges because of the nascent characteristics and uncertainties surrounding emerging technologies. Current discussions on the narratives of growth of emerging TISs are limited to broad descriptions, which hinder understanding of these formative stages. This study offers a unique approach to assessing the initial stages of technological evolution. Moreover, it contributes to the existing literature by providing guidelines for managing new technologies for R&D researchers and practitioners.

Inter-firm alliance portfolio distance and the partners’ preferences for the distal governance modes to manage endogenous uncertainty in the biotechnology sector

Inter-firm alliances play a pivotal role in the swiftly evolving high-tech landscape, yet they often introduce uncertainty, especially when partners have varying degrees of asymmetry. This study explores the dynamics of such alliances, focusing on endogenous uncertainty (technology and partner-specific) over external factors (culture and institutions). We investigate whether the alliance portfolio distance between partners aligns with distal governance modes, which refers to the continuity from the upfront payment mode to equity investments on the timeline. Furthermore, does the investor’s comparative position influence this alignment between construed uncertainty and governance modes? Drawing on Construal Level Theory (CLT), inter-partner distance corresponds to high-level construal in distal governance modes, while proximity aligns with low-level construal in proximal modes. The analysis includes 13,000 biotechnology sector alliance events across 1,700 firms in 29 countries over a decade. Findings reveal a shift in governance mode preferences from the concrete and proximal (upfront) to abstract and distal (equity), touching milestones and licensing in the middle. The investor’s lead in the alliance portfolio asymmetry further strengthens the preference for abstract modes in the distal and high abstract construal levels. This study advances CLT as a framework, offers an integrated approach, and highlights a preference for high-value tech collaborations despite increased cost and risk over temporal and abstract governance conditions.

Neither Mergers nor Cartels: Innovation Networks and Competition Law

Abstract Organization theorists and innovation economists have been arguing for the past few decades that the locus of research and development activities has gradually moved away from vertically integrated firms to inter-firm alliances. In industries as diverse as construction and biotechnology, cooperation for innovation has given rise to collaborative forms of industrial organization varying from bilateral alliances to networks. Nonetheless, the EU competition law framework opens up limited space for inter-firm collaborations, cabined by the efficiency test of Article 101(3) TFEU and the requirements of the horizontal block exemption regulations. Building on this misfit, this article makes two contributions. First, a theoretical one, arguing that the law’s cautious approach to inter-firm collaboration is rooted in a binary vision of industrial organization which recognizes only firms and markets as modes of organizing production. Second, an explanatory one, showing how the 2023 Research & Development Block Exemption Regulation falls short of facilitating inter-firm collaborations for innovation and proposing fine-tuning suggestions.

Attention to alliances: The role of attention, relational embeddedness, and concentrated governance in the success of U.S. venture capital syndicates

Extending the Attention-based View (ABV) to firms’ alliances, this study examines the relationship between the degree of attention to a focal alliance by alliance members and its success. We also examine how two contextual factors of collaboration, relational embeddedness and concentration of governance, affect this relationship in the context of U.S. venture capital syndicates. We find that attention increases the chances of syndicate success, that relational embeddedness of partners enhances the positive effect of attention, and that concentrated syndicate governance negatively moderates the effect of attention. This study joins the nascent stream of literature that emphasizes the importance of organizational factors in outcomes of inter-firm alliances and contributes to the integration of insights from the ABV and alliance research traditions to build a more comprehensive understanding of alliance success factors.

Network ecology: Tie fitness in social context(s)

Social relations are embedded in material, cultural, and institutional settings that affect network dynamics and the resulting topologies. For example, romantic entanglements are subject to social and cultural norms, interfirm alliances are constrained by country-specific legislation, and adolescent friendships are conditioned by classroom settings and neighborhood effects. In short, social contexts shape social relations and the networks they give rise to. However, how and when they do so remain to be established. This paper presents network ecology as a general framework for identifying how the proximal environment shapes social networks by focusing interactions and social relations, and how these interactions and relations in turn shape the environment in which social networks form. Tie fitness is introduced as a metric that quantifies how well particular dyadic social relations would align with the setting. Using longitudinal networks collected on two cohorts each in 18 North American schools, i.e., 36 settings, we develop five generalizable observations about the time-varying fitness of adolescent friendship. Across all 252 analyzed networks, tie fitness predicted new tie formation, tie longevity, and tie survival. Dormant fit ties cluster in relational niches, thereby establishing a resource base for social identities competing for increased representation in the relational system.

Cooperative security against interdependent risks

Firms in interorganizational networks are exposed to interdependent risks that are transferable across partner firms, such as contamination in food supply chains or data breaches in technology networks. They can be decomposed into intrinsic risks a firm faces from its own operations and extrinsic risks transferred from its partners. Firms have access to two security strategies: either they can independently eliminate both intrinsic and extrinsic risks by securing their links with partners or, alternatively, firms can cooperate with partners to eliminate sources of intrinsic risk in the network. We develop a graph‐theoretic model of interdependent security and demonstrate that the network‐optimal security strategy can be computed in polynomial time. Then, we use cooperative game‐theoretic tools to examine, under different informational assumptions, whether firms can sustain the network‐optimal security strategy via suitable cost‐sharing mechanisms. We design a novel cost‐sharing mechanism: a restricted variant of the well‐known Shapley value, the agreeable allocation, that is easy to compute, bilaterally implementable, ensures stability, and is fair. However, the agreeable allocation need not always exist. Interestingly, we find that in networks with homogeneous cost parameters, the presence of locally dense clusters of connected firms precludes the existence of the agreeable allocation, while the absence of sufficiently dense clusters (formally, k‐cores) guarantees its existence. Finally, using the SDC Platinum database, we consider all interfirm alliances formed in the food manufacturing sector from 2006 to 2020. Then, with simulated cost parameters, we examine the practical feasibility of identifying bilaterally implementable security cost‐sharing arrangements in these alliances.

Network ecology: Tie fitness in social context(s)

Social relations are embedded in material, cultural, and institutional settings that affect network dynamics and the resulting topologies. For example, romantic entanglements are subject to social and cultural norms, interfirm alliances are constrained by country-specific legislation, and adolescent friendships are conditioned by classroom settings and neighborhood effects. In short, social contexts shape social relations and the networks they give rise to. However, how and when they do so remain to be established. This paper presents network ecology as a general framework for identifying how the proximal environment shapes social networks by focusing interactions and social relations, and how these interactions and relations in turn shape the environment in which social networks form. Tie fitness is introduced as a metric that quantifies how well particular dyadic social relations would align with the setting. Using longitudinal networks collected on two cohorts each in 18 North American schools, i.e., 36 settings, we develop five generalizable observations about the time-varying fitness of adolescent friendship. Across all 252 analyzed networks, tie fitness predicted new tie formation, tie longevity, and tie survival. Dormant fit ties cluster in relational niches, thereby establishing a resource base for social identities competing for increased representation in the relational system.

International alliance structure and effectiveness: evidence from law firms

Abstract International alliances are important strategic vehicles to build geographic scope and enter foreign markets, especially for firms lacking the resources or facing limitations to direct foreign expansion. Addressing recent calls to study alliance structure, we investigate the design parameters of nonequity international alliances and their performance implications. Building on the resource-based view of the firm, we theorize the effect of three key structural dimensions – formalization, interface, and specialization – on firm effectiveness. Our empirical work focusses on the legal service industry where international interfirm alliances are common, and resources like expert workers and knowledge are essential. We study 121 French, German, Italian, and Spanish law firms; and our data include the structural features of the alliances to which they belong, as well as various measures of firm effectiveness. Our analyses via structural equation modelling point toward the importance of informality and strong interface for effectiveness in these contexts. This study contributes to a finer understanding of international alliances by directly addressing the structural variation among nonequity international alliances, and analyzes their implications for firms. We thus respond to calls to investigate structural dimensions of alliances, operationalizing relevant dimensions of alliance organizational structure. Second, we add to understanding of the performance effects of international alliances, showing the benefits of individual structural parameters for firm effectiveness. Finally, we extend research on the use of international alliances as a strategic vehicle to enter foreign markets, capturing essential aspects of the internal arrangements of these interorganizational collaborative relationships, and thus adding to understanding of this strategic entry mode.

Information environment and interfirm alliance

Information environment and interfirm alliance

Opportunism in Chinese Interfirm Alliances: Effects of Asymmetric Dependence and Guanxi Governance

In alliance studies, opportunism is generally considered a critical obstacle to interfirm cooperation, as it hampers interfirm confidence, impedes alliance evolution, and increases the probability of alliance failure. This study extends the prior opportunism studies by hypothesizing that actor opportunism in Chinese business will be largely affected by two sets of interfirm relationships: partners’ asymmetric dependence and guanxi governance. Data from 109 alliances undertaken by Taiwanese information and electronic firms supported the research hypotheses.

Arranged Marriage: Social Ties between Political Stakeholders and Interfirm Alliance Formation

This study investigates whether socially connected political stakeholders internalize alliance strategies of firms under their respective jurisdictions into their own social exchanges and thus push for nonspontaneous interfirm alliances. To test my hypotheses, I take advantage of the rotation of top two officials (i.e., the governor and the secretary) at the province level in China. I structure a longitudinal dataset of firm-province pairs supplemented with officials’ résumé information and the records of all new cross-province joint ventures established by each listed firm from 2009 to 2019. I found that a listed firm established more alliances with firms in a host province if its home province was socially connected with the host province via more ties between top officials. In addition, this positive effect was stronger: 1) if governors were involved in the interprovincial social ties; 2) if officials were in their last term in their position; or 3) if a focal firm had no political stakeholders from other governments. Notably, I ruled out the competing mechanism that such ties enabled, rather than coerced into, interfirm alliance formation.

Managers’ Mobility as a Bridge to Alliance Formation: A Study of Venture Capital Syndication

While abundant evidence has highlighted the importance of resource dependency and social networks in inter-firm alliance formation, the potential obstacles for them to take effect remain unanswered. In this study, we contend that information asymmetry resulting from the geographic distance and competitive concerns induced by status similarity pose two obstacles for a pair of firms to form alliances. Managers’ mobility plays an active role in addressing the two concerns and bridging isolated firms. Using investment data of 1,015 venture capital (VC) firms in China over 1985-2016, we find that both geographic distance and status similarity between a pair of VC firms decrease the likelihood of syndication between them. The mobility of venture capitalists serves as a bridge by weakening the negative effects of geographic distance and status similarity on VC syndication.

ADVANTAGES AND PROSPECTS OF CO-BRANDING IN THE UKRAINIAN MARKET

BACKGROUND AND OBJECTIVES. The marketing practices of companies over the past two decades have increasingly been based on co-marketing, or inter-firm marketing alliances. The mutual recognition and understanding that each firm's success depends in part on the other firm forms the foundation underlying co-marketing activities. Firms move from trying to win alone to forming networks of partner firms. Corporations understand the need for alliances to acquire and maintain competitive advantage.METHODS. We used general scientific and special research methods: abstract-logical – to summarize theoretical and methodological foundations of co-branding as an integrative marketing tool for joint development of companies; economic-statistical – to analyze the level of development of poultry companies; monographic – to study the experience of individual companies with horizontal form of co-branding; analysis and synthesis – to study the components of co-branding companies; sociological research – to identify key success factors of co-branding.FINDINGS. The structural and logical model of co-branding alliances of poultry companies, the use of which is based on a co-branding strategy, creates the necessary basis for its further development within the framework of modern marketing theory, will increase the effectiveness of co-branding.CONCLUSION. Co-branding, which is a form of strategic collaboration between two brands that involves bringing them together to create a new product or service, makes the marketing alliances of companies visible to the consumer. In doing so, companies imply recognition of the fact that their prominence represents added value. Closer collaboration with retailers, more focused promotion, and co-branding are becoming ways for many consumer companies to control costs and keep prices down. An example of such cooperation is the use of a co-branding strategy for poultry companies.

University-industry collaboration and firm innovation: an empirical study of the biopharmaceutical industry.

Existing research has shown that university–industry collaboration (UIC) helps a firm achieve superior innovation outcomes. However, little is known about how UIC affects firm innovation when considering interfirm alliances. In this paper, we examine the influence of UIC on firm innovation performance by considering the interfirm alliance network. Based on a panel of 285 biopharmaceutical firms across the world over a thirty-year period from 1985 to 2014, we find that UIC enhances firm innovation performance. More alliances with other firms hinder the positive effect of UIC on firm innovation, whereas technological diversity strengthens the influence of UIC. Theoretical and practical implications of the results are discussed.

Alliances Between Academic Entrepreneurs & Large Firms-A Theory Elaboration Approach to Effectuation

This study applies a theory elaboration approach to investigate how effectuation's assumption manifests in inter-firm alliance governance. We conducted a field study of 25 alliances between technology-based academic entrepreneurs and large firms. We generate theoretical insights into how effectuation contributes to two dominant alliance governance mechanisms: trust and control. The emerging findings contribute to both scholarship of effectuation and inter-firm relationship governance by revealing how means-based actin and goal ambiguity respectively facilitate and impede trust-building an alliance and how affordable loss contributes to alliance control.

COVID-19 Pandemic and Small-Scale Industries in a Local Geographic Space of Nigeria: An Assessment of the Impact of Strategic Interfirm Alliance

The outbreak of Coronavirus pandemic has brought with it stagnation in all sectors of the economy, unemployment and loss of jobs, threats of recession, and annihilation of industries across the world. This paper examined the impact of strategic interfirm alliance on small-scale industries (SSI) amid the threat of COVID-19 pandemic in Nsukka, a local geographic space in Nigeria. A survey research design and a questionnaire survey of 82 SSIs were used in the paper. The data for the paper were analyzed using descriptive statistics while tables and percentages were used to illustrate the results. Results in the study revealed that 15.47%, 22.45%, and 44.20% of the respondents have experienced relative increase, increased, and significant increase, respectively, in COVID-19-induced challenges on their operations. The paper also showed that 24.81%, 25.01%, and 34.64% of the industries have experienced relative increase, increase, and significant increase, respectively, in their operations following their use of alliance, while 5.06% and 10.48% have experienced relative and significant decreases. The paper suggests that SSIs in Nigeria should adopt/institutionalize the use of strategic interfirm alliance in their operations in order to survive the COVID-19-induced challenges which have distrupted their production flow.

Centrality Asymmetry and Partner Complementarity as Influences on Alliance Dissolution

AbstractResearch on interfirm alliances indicates that partner firms’ asymmetry in network centrality increases the likelihood of alliance dissolution because it gives rise to a power imbalance and opportunism in the partnership. We contend that this view of centrality asymmetry does not consider the binding force that network resource complementarity can provide in an alliance, which motivates partners to ally for the long term. We propose that centrality asymmetry can have both divisive and cohesive forces in an alliance, which – when considered together – lead to a prediction that centrality asymmetry has a U‐shaped relationship with alliance dissolution. Moderate levels of asymmetry lead to lower rates of dissolution than high and low levels of asymmetry. The degree of cooperation between partners and the degree of external competition reduce the effects of centrality asymmetry on alliance dissolution because they mitigate power imbalances while encouraging partners to strengthen the alliance to withstand competitive challenges.

Power imbalance and value creation in joint ventures

Joint ventures (JVs) often do not create expected value due to power imbalance between partners. Despite the fact that JV partners are embedded in relational constraints, prior research has largely relied on economic reasoning by focusing on equity ownership difference between JV partners as the main source of power imbalance. We extend prior research to also consider important relational factors represented by repeated ties between partners and network openness, as well as institutional status difference and network status difference as two additional dimensions of power imbalance. Our findings indicate that ownership power imbalance by itself does not have a significant effect on value creation. However, value creation is facilitated when there is ownership power imbalance between partners with more repeated ties. In contrast, value creation may be hindered when JV partners with unequal ownership are embedded in more open interfirm alliance networks. Furthermore, value creation is facilitated if JV partners that have unequal ownership also have network status power imbalance in the same direction.

Understanding New Trend in Business: Inter-Firm Cooperative Alliance Between Competing Organizations

Abstract Traditional economics-based framework suggests that firm cooperates with competitors to increase its market power or efficiency in transaction for the maximization of its self-interest profit. However, nowadays growing numbers of firm engage in alliance with competitors for non-economic purpose. This paper seeks to understand the nature of inter-firm alliance between direct competitors by discussing several critical issues regarding it. The issues are chosen by the criterion that useful perspectives from either organization theory or strategic management can be applied to this phenomenon so that scholars are encouraged and can be easier to do a research on this topic in the future. In this regard, I seek to answer the question of why firm cooperates with competitor by comparatively adopting four novel approaches, which, combined together, provide an excellent complementary view to the traditional economics-based approach. Also, by understanding the distinctive feature of decision-making process when firm conduct a collaboration with competitor this study provides a practical insight on how firm structures, manages, and makes a decision when it cooperates with competitors. Overall, several conceptual ideas suggested by this paper can be an interesting starting point for the future empirical research.