Creating new technology through alliances: An empirical investigation of joint patents

Why are some alliances more productive than others in terms of creating new technology? Using a novel measure of alliance performance, that is, joint patents, this study aims to tackle this question. Our results from the global pharmaceutical industry show that joint invention has an inverted U-shape relationship with a path-dependent technology base, with the level of joint patents initially increasing and then decreasing beyond a certain level of path dependence. The results also show that joint patents are more numerous when the alliance partners have had prior ties with each other. Overall, the finding suggests that creating new technology through alliances can be facilitated by ensuring the positive side of absorptive capacity, while avoiding its downside.