Prior knowledge flow and governance mode of strategic alliances

Prior knowledge flow and governance mode of strategic alliances

CASB 108 - History, Politics, and Sociology

This study focuses on how prior knowledge flow between partnering firms affects the governance modes of strategic alliances. I examine the conditions under which prior knowledge flow between partnering firms reduces the likelihood of using a costly hierarchical governance structure in strategic alliances.

I distinguish the direction, extent, and characteristics of knowledge flow between partnering firms and examine how they impact the tension between reduced information asymmetry and increased competition, which affects the likelihood of a hierarchical form chosen by the partners. The model is tested in the sample of the US semiconductor industry.

This study contributes to the literature on the transaction cost theory and strategic alliances. It sheds light on the circumstances under which prior knowledge flow between partnering firms substitutes hierarchical forms of governance in reducing the hazards in the partnership.