How agglomeration affects alliance governance and innovation performance: The role of cluster size

We investigate how the size of the geographic cluster in which a firm is located influences its governance choice between equity and non‐equity alliances and subsequent innovation performance. We argue that firms located in larger clusters tend to form non‐equity alliances rather than equity allianc...

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Bibliographic Details
Published in:Managerial and decision economics 2023-01, Vol.44 (1), p.297-310
Main Authors: Ryu, Wonsang, Brush, Thomas H., Bae, Joonhyung
Format: Article
Language:English
Subjects:
Alliances
Companies
Governance
Innovations
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Summary:We investigate how the size of the geographic cluster in which a firm is located influences its governance choice between equity and non‐equity alliances and subsequent innovation performance. We argue that firms located in larger clusters tend to form non‐equity alliances rather than equity alliances because the communication and control benefits of cluster membership, which increase with cluster size, reduce in‐cluster firms' need to form equity alliances. We also claim that the effect of this preferential use of non‐equity alliances on innovation becomes stronger when firms are located in larger clusters. Our arguments are supported by a panel analysis of alliances formed by US‐listed semiconductor firms.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.3681