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Oxley & Sampson (2004) "The scope and governance of international R&D alliances

24 important questions on Oxley & Sampson (2004) "The scope and governance of international R&D alliances

What difficult change do participants in research and development alliances face?

How to maintain sufficiently open knowledge exchange to achieve alliance objectives while controlling knowledge flows to avoid unintended leakage of valuable technology

What do the authors explore?

The alternative response to hazards of R&D cooperation: reduction of the scope of the alliance

What do the authors argue?

That when partner firms are direct competitors in the end product or strategic resource markets even 'protective' governance structures such as equity joint ventures may provide insufficient protection to induce extensive knowledge sharing among alliance participants

Why must firms find the right balance between maintaining open knowledge exchange to futher the technological development goals of the alliance, and controlling the knowledge flows to avoid unintended leakage of valuable knowledge?

Because in today’s fast-paced, knowledge-intensive environment, research and development (R&D) alliances pose particularly thorny challenges related to the protection of technological knowledge, since successful completion of alliance objectives often requires a firm to put valuable knowledge at risk of appropriation by alliance partners.

What does prior research in transaction costs suggest?

That choosing an appropriate governance structure or organizational form is one mechanism that firms use to promote knowledge sharing and protection in an alliance.

What does establishing the scope of activities for an R&D alliance involve?

Decisions such as whether to restrict joint activity to pre-competitive R&D only or to extend it to include manufacturing and/or marketing

By adopting on of two major simplifications, prior research on alliance formation has approached the complex system of alliance decisions. Which two?

The first approach has been to look only at the question of which firms are chosen as alliance partners, ignoring the related issues of alliance scope and governance
The second simplification, adopted in transaction cost economic treatments of alliance formation, has been to focus exclusively on the governance decision, effectively abstracting from decisions regarding partner choice and alliance scope

Why is this so? (according to the transaction cost analysis)

Because firms have incentives to misappropriate the knowledge assets of alliance partners and/or to freeride on partners' innovative efforts

Why adopting a joint venture?

The hazards of opportunism can be mitigated, because incentives are more closely aligned when ownership of the venture is shared, and monitoring is enhanced due to the increased disclosure requirements among joint venture partners.

What is the most accessible dimension of alliance scope in terms of conceptual clarity and data availability?

The functional or 'vertical' scope of the alliance

What is the functional or 'vertical' scope of the alliance?

To what extent the partners combine multiple and sequential functions or value chain activities within the alliance, such as R&D, manufacturing and/or marketing

What does an increase in vertical scope of an alliance predictably exacerbates?

The complexity of the collaborative challenge, all else equal

Where is the horizontal scope of activities related to?

To the size, complexity, and uncertainty of the particular project, also undoubtedly varies within functional areas and across alliances

Why is the evaluation of horizontal scope a much more subjective and challenging exercise?

Because, in contrast to the vertical scope, these project-specific features cannot be ascertained from available secondary reports of alliance events

What does the research in the field of technology and operations management suggest?

That the key to reducing time-to-market and improving quality of new product introductions is to employ activity overlapping, information transfer in small batches, and the use of cross-functional teams

What are the implications for R&D alliances?

If the prime concern is to bring the best product to market in the timeliest fashion, then jointly performing R&D and manufacturing and marketing activities within the alliance is likely to superior arrangement

Which many opportunties for firms may collaboration in R&D provide for firms that glean competitive intelligence from alliance partners?

Hints about partner strategies and directions of technological search, or feasibility of particular ideas
Competitive benchmarking data
Identification of key personnel who may be hired away
Codified knowledge (in formulas, designs, and procedures)
Deep exposure to tacit knowledge in skills and routines

When is it almost impossible to effectively manage mixed activity R&D alliances?

When extensive sharing of tacit knowledge embedded in operational routines, which in turn may have significant effects on the relative competitive position of partner firms

When does protection of technological knowledge become more challenging with increases in alliance scope?

As the tacit knowledge embedded in operating routines must be exposed to alliance partners if joint operations are to proceed efficiently

What about competition, capabilities and alliance scope?

Even if the alliance activities are embedded in a protective governance structure such as an equity joint venture, the residual hazards of opportunism may be high enough to deter extensive knowledge sharing among alliance participants

What is a predictable outcome of collaborative R&D?

That inter-organizational learning increases the similarity of alliance partner's resources and capabilities after alliance formation

When there is extensive overlap in alliance partners' areas of technological expertise, partner firms are likely to draw on.....

The same external pools of technological knowledge and thus may perceive of each other as direct competitors in relevant resource markets

Where is a potentially competing effect?

Low technology overlap on alliance scope, unrelated to leakage hazards

Why would the authors expect firms to be more likely to choose an equity joint venture rather than a contractual alliance?

Because a broad scope increases the hazards of cooperation. However, in contrast to prior work, they view alliance scope as an alternative means of controlling partner opportunism. Furthermore, they argue that narrowing scope may actually be the preferred alternative when competitive overlap is particularly extensive, since the residual hazards of broad-scope alliances may be too high even when embedded in a protective governance structure.

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Oxley & Sampson (2004) "The scope and governance of international R&D alliances

24 important questions on Oxley & Sampson (2004) "The scope and governance of international R&D alliances

What difficult change do participants in research and development alliances face?

What do the authors explore?

What do the authors argue?

Why must firms find the right balance between maintaining open knowledge exchange to futher the technological development goals of the alliance, and controlling the knowledge flows to avoid unintended leakage of valuable knowledge?

What does prior research in transaction costs suggest?

What does establishing the scope of activities for an R&D alliance involve?

By adopting on of two major simplifications, prior research on alliance formation has approached the complex system of alliance decisions. Which two?

Why is this so? (according to the transaction cost analysis)

Why adopting a joint venture?

What is the most accessible dimension of alliance scope in terms of conceptual clarity and data availability?

What is the functional or 'vertical' scope of the alliance?

What does an increase in vertical scope of an alliance predictably exacerbates?

Where is the horizontal scope of activities related to?

Why is the evaluation of horizontal scope a much more subjective and challenging exercise?

What does the research in the field of technology and operations management suggest?

What are the implications for R&D alliances?

Which many opportunties for firms may collaboration in R&D provide for firms that glean competitive intelligence from alliance partners?

When is it almost impossible to effectively manage mixed activity R&D alliances?

When does protection of technological knowledge become more challenging with increases in alliance scope?

What about competition, capabilities and alliance scope?

What is a predictable outcome of collaborative R&D?

When there is extensive overlap in alliance partners' areas of technological expertise, partner firms are likely to draw on.....

Where is a potentially competing effect?

Why would the authors expect firms to be more likely to choose an equity joint venture rather than a contractual alliance?

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