Geographic Co-location of Partners and Rivals: Implications for the Design of R&D Alliances

Abstract

This study advances previous research on the competitive aspects of R&D collaborations that has been mainly interested in knowledge protection concerns in alliances between direct rivals. We join the alliance and agglomeration literatures and argue that geographic co-location between a focal firm's partner and rivals introduces potential indirect paths of knowledge leakage to rivals.Geographic co-location creates significant risks of unintentional knowledge spillovers to rivals while it also increases the likelihood of transactions between the partner firm and the rivals in which firm knowledge can be misappropriated. As a consequence of these risks associated with the co-location of partners and rivals, the focal firm is more likely to employ defense mechanisms when designing alliances. In particular, the focal firm will use equity structures to provide greater monitoring, control, and incentive alignment and will reduce the alliance's scope as well as task interdependence to address knowledge leakage concerns.

The interplay of competition and cooperation

“…For instance, a firm may cooperate with multiple alliance partners that compete with each other rather than with the focal firm (e.g., Lavie, ). It may also compete indirectly with another firm by virtue of their independent cooperation with the same alliance partners (Gimeno, ; Ryu, McCann, & Reuer, 2018). Accordingly, scholars should study the distinction between the direct and indirect interplay of competition and cooperation at multiple levels of analysis.…”

The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise

“…In fact, Adams (1980) early on suggested that protecting the organization and buffering it from external threats and pressures is one of the critical foci of attention when firms engage in boundary-spanning activities. Ryu, McCann, & Reuer (2018) specifically investigated risks of knowledge losses resulting from 'partner-rival' geographic co-location, and found that effective, alliance governance design choices were important, e.g., by narrowing the scope and reducing the task interdependencies within the alliance. While the extant literature has focused mainly on learning and on the transfer of knowledge and skills, the new IB realities will require a stronger focus on developing mechanisms for buffering key technological capabilities, not only as a function of micro-level frailties, but especially to protect against the vagaries of (neo) techno-nationalist policies.…”

Information Asymmetry in Management Research: Past Accomplishments and Future Opportunities

“…Examples include cultural distance between parent and foreign subsidiary (D. Shin, Hasse, & Schotter, 2017), vagaries in the IPO process (Kotlar et al, in press; Plummer, Allison, & Connelly, 2016), geographic within-country distance (Ryu, McCann, & Reuer, in press), within-firm diversification (Hitt, Hoskisson, & Ireland, 1994), and decentralization between headquarters and subsidiaries (Ecker et al, 2013). These barriers are often observed in emerging economies (Luo & Chung, 2005; Zhu & Chung, 2014), in political markets where public policy initiatives are “traded” (Bonardi, Hillman, & Keim, 2005), and more broadly in market transactions (Lado & Wilson, 1994; Shane & Venkataraman, 2000; Quinn & Jones, 1995; J.…”