We use a simple model of collaborative innovation to structure an empirical analysis of minority equity links in biotechnology alliances between clients and R&D firms. In the model, an equity link is an investment in information acquisition: It improves the ability of the client to learn about the R&D firm's ability and the alliance project's quality. The model generates several testable hypotheses about how the R&D firm's project characteristics and previous alliances affect the use of equity links in new alliances. We test the hypotheses using a large data set of biotechnology alliances and find empirical support.
Bibliographical noteFunding Information:
We thank Tom Borcherding, David Finegold, David Galas, Benjamin Gomes-Casseres, participants at the NBER Summer Institute on R&D, Strategy and Organizations, 2001, and an anonymous referee for comments. For research assistance, we thank Lokman Ali, Faisal Harahap, Lila Lumbra, Isriya Nitithanprapas, Pariyate Potchamanawong, Ozan Sula, Ekarat Tantawichet, and especially Apanard Angkinand. Filson thanks the John M. Olin Foundation and the National Association of Scholars for financial support.
Copyright 2013 Elsevier B.V., All rights reserved.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
- Organizational Behavior and Human Resource Management