Research Summary: This research contributes to alliance governance research by demonstrating how partners' administrative controls in nonequity collaborations regulate knowledge transfers across partners. These administrative controls can take the form of board-like joint committees having explicitly delineated authority over certain alliance activities. We illuminate governing committees as an important, albeit neglected, instrument for administrative control in the governance of non-equity alliances, and we demonstrate that these organizational mechanisms facilitate knowledge flows within the scope of an alliance. We also show that governing committees safeguard against misappropriation hazards, particularly when a partner possesses the incentive and ability to engage in such behavior. This study extends alliance governance research beyond the implications of the equity-nonequity dichotomy to consider a wider and richer gamut of governance instruments available to address the challenges associated with knowledge transfers in alliances.
Managerial Summary: Non-equity alliances are important vehicles to collaborate with external partners, particularly in the biopharmaceutical industry and other high-tech sectors. To guide these collaborations effectively, partners can use the contract to custom-build jointly-staffed managerial units with clearly demarcated decision-making responsibilities. We demonstrate that these organizational mechanisms facilitate knowledge flows within the scope of an alliance. We also show that governing committees also safeguard against misappropriation hazards, particularly when a partner values a firm's knowledge highly, or it possesses the required ability to absorb and assimilate a firm's knowledge. Our results imply that contractually-defined managerial interfaces provide a channel to regulate knowledge-sharing in collaborative alliances.
- joint committees
- knowledge transfer
- R&D alliances
- transaction cost