Alliance Experience Effects in Technology Collaboration Modes

Global competition and technological developments have provided firms with a broader range of cooperation strategies and alliances. Recently, increasing attention has been drawn to technology collaboration modes in the form of licensing, joint R&D projects and R&D joint ventures for two reasons. First, innovation is one of the most important organizational processes and outcomes for value creation. Second, it is believed that firms rely more and more on sourcing external technology through alliances. In some rapidly-evolving sectors, where the locus of proprietary knowledge is dispersed across firms and quickly shifts over time, the pooling of resources can produce superior and faster technological development, over the alternative of internal development. The purpose of this study is to develop the model and hypotheses with regard to the organization of technology collaboration modes. We develop a hierarchical model in which the choice between licensing and R&D alliances is made first, and then the issue of equity vs. non-equity modes is considered. Drawing from the literature on alliance learning, we differentiate between general alliance experience and partner-specific experience, and suggest that different types of experience will exert differential effects along two-stage decisions. Our study of the global chemical-pharmaceutical industry revealed that, first, general alliance experience influences the decision whether to ally or not, and that partner-specific experience has an influence on the choice of governance between equity and non-equity modes.