Governance in Multilateral R&D Alliances

Abstract

In research and development (R&D) alliances, the partner firms must balance the tension between knowledge sharing and knowledge leakages because knowledge sharing, designed to support the alliance's technology development goals, can often lead to unintended and potentially damaging knowledge leakages. Governance structure is a well-understood knowledge protection strategy designed to reduce knowledge leakage concerns and thereby encourage desired knowledge transfers in two-party R&D alliances. Whether governance structure can be an important balancing mechanism for R&D alliances with multiple partner firms, or multilateral R&D alliances, however, requires further study. Because increasing the number of alliance partners introduces additional complexities to managing an alliance, the appropriate governance mechanism for a multilateral R&D alliance is likely to differ from that for a bilateral alliance. Drawing insights from social exchange theory, we explore governance decisions in multilateral R&D alliances. First, we examine the potential for variance between multilateral and bilateral R&D alliances in governance decisions as a means of knowledge sharing and knowledge protection. Results based on our analysis of 2,423 R&D alliances, 1,690 bilateral and 733 multilateral, are consistent with predictions drawn from social exchange theory. We next focus on three-partner R&D alliances, or trilateral R&D alliances, and compare governance mechanisms between two types of trilateral R&D alliances: chain and net. We find that equity governance structures are more likely to be used in net-based than in chain-based trilateral R&D alliances; we also find that alliance scope moderates the relationship between the type of alliance and governance structure. Finally, we find that multilateral R&D alliances with predicted (aligned) governance structures perform better, in terms of alliance longevity, than those with misaligned structures.

Mechanisms of Hybrid Governance: Administrative Committees in Non-Equity Alliances

“…It would therefore be useful to examine the administrative committees we study in other industries in order to probe the generalizability of our findings for other types of interfirm agreements. In addition, in other collaborative contexts different antecedents of steering committees might exist, including the complexity of a product or service within a collaborative agreement (Singh, 1997), the threat of opportunism when partners compete in common end markets (e.g., Oxley and Sampson, 2004), the need to coordinate partners' different resources and capabilities in horizontal collaborations (e.g., Sampson, 2004b), or the number of parties engaging in multi-partner alliances (e.g., Gong et al, 2007;Leiponen, 2008;Dokko and Rosenkopf, 2010;Li et al, 2012). Furthermore, in other collaborative contexts, firms might also implement substitute solutions to formal governance mechanisms, such as designing modularity for outsourcing agreements for software development (Tiwana, 2008).…”

The use and choice of multipartner alliances: an exploratory study

“…In a net-based configuration each partner contributes to and receives from the entire group of partners, which is considered as a single element. In a chain-based environment partners have specific reciprocal relations with each other (Li et al, 2012). Normally, the reciprocity between partners in an MPA is usually indirect, according to a net-based model, while in dyadic alliances it tends to be direct, consistent with a chain-based model.…”

“…Regarding control, it is more difficult to assess and limit opportunistic behavior in an MPA than in dyadic alliances (Li, Eden, Hitt, Ireland & Garrett, 2012), as well as to identify the real contribution and commitment of each company (García-Canal, 1996). This difficulty in assessing the behavior of the companies involved in an MPA can lead to a different cooperative orientation of the partners (Wincent, 2008) and to problems in establishing the appropriate compensation for partners (García-Canal, 1996).…”

“…This can take two different forms: net-based and chain-based (Li et al, 2012). In a net-based configuration each partner contributes to and receives from the entire group of partners, which is considered as a single element.…”

“…This facilitates decision-making and improves the coordination between the parties (Varamäki & Vesalainen, 2003). The fourth factor is related to the type of exchange relations between the partners in an MPA, since in a chain-based relationship the communication and control tasks are more simplified than in a net-based relationship (Li et al, 2012). The fifth factor points out that contractual completeness increases the likelihood of the success of alliances (Gong et al, 2007).…”