Depth and breadth of knowledge and the governance of technology alliances

Abstract

This paper focuses on technology alliances between R&D intensive biotechnology firms and larger pharmaceutical companies. It aims to investigate whether the biotech partners can leverage the depth and the breadth of their knowledge resources to retain their equity ownership when forming an alliance, and whether prior alliance experience adds to their overall leverage. Using a sample of 390 alliances formed between US biotechnology and pharmaceutical companies, we find that biotech firms with deeper technological resources are more likely to retain their equity ownership, and that this relationship is stronger when the biotech firm has more alliance experience.