In search of alliance-level relational capabilities: Balancing innovation value creation and appropriability in R&D alliances

SummaryIn order to advance our knowledge of alliance-level relational capabilities, this paper investigates how searching across different knowledge domains affects both innovation value creation and appropriability in R&D alliances. Focusing on the alliance level of analysis, we advance that, in R&D strategic alliances, search span has a curvilinear (inverted U-shape) relationship with value creation and a positive relationship with value appropriability. Our analysis on a sample of 1515 interfirm dyadic R&D alliances confirms these hypotheses. We find that, after a threshold level of search span, joint value creation decreases. Conversely, the allied firms’ ability to appropriate the value of their jointly developed inventions grows exponentially as the alliance search span increases. Thus, value creation and appropriability may have conflicting exigencies. We argue that firms involved in R&D strategic alliances should develop the interorganizational relational capability to jointly manage the process of search that occurs at the interorganizational level, and specifically the span of their search, in ways that balance the needs of value creation and appropriability.

Research highlights▶ Search span depends on how many different knowledge domains innovators search across. ▶ At the alliance level, we investigate the impact of search span on value creation and appropriability. ▶ Search span has an inverted U-shape effect on value creation and a positive effect on appropriability. ▶ Thus, value creation and appropriability in alliances have conflicting exigencies. ▶ Allied firms should manage search span balancing value creation and appropriability.