EXPERIENCE TRAJECTORIES, GOVERNANCE DESIGN, AND THE PERFORMANCE OF HIGH-TECH ALLIANCES

Drawing upon the knowledge-based view of the firm and transaction cost theory, this paper combines experience accumulation and governance design arguments to examine the performance of high-tech alliances. We differentiate three alliance experience trajectories – partner-specific experience (i.e., prior alliances with the same partner), technology-specific experience (i.e., prior alliances in similar product areas), and general collaborative experience – and suggest that experience accumulation at the parent firm level and governance design at the alliance level jointly influence the odds of alliance success. Based on a sample of 144 biotechnology alliances, we examine the extent to which these alliances result in knowledge accumulation, create new opportunities, and enable parent firms to achieve their objectives. We find that only partner-specific experience has a positive impact on alliance performance, and that this effect is due to the interaction between partner-specific experience and the alliance’s governance design. The development of inter-firm routines can enhance the effectiveness of partnerships, particularly non-equity alliances lacking formal coordination and control mechanisms.