On the governance form of R& D alliances: joint ventures and contractual agreements
Di¤erences in the ability to absorb the partner’s know-how alter the distribution of the bargaining power within an alliance. In the paper, I study the impact of this fact on the performances of two typical modes of organizing an alliance, namely Joint Ventures (JVs) and Contractual Agreements (CAs). In the model, only in the latter case know-how absorption plays a role. This implies that, at an intermediate step of the alliance, in case of a CA a bargaining process takes place. I prove that the transfer that arises during this phase increases the e¢ciency the alliance if the partner whose contribution is most relevant is also the one with the largest absorptive capacity. Moreover, the more asymmetric the partners’ absorptive capacities are, the more hazardous is the use of a CA. JEL classi…cation: O32, L22, D23. Key-words: Joint Ventures, Alliances, Absorptive Capacity. ¤I would like to thank my advisor David Peréz-Castrillo, Inés Macho-Stadler, Joel Sandonís and Reinhilde Veugelers for helpful comments on earlier versions of the paper. I am also grateful to the participants at the workshops at the Universitat Autonoma de Barcelona, Katolieke Universiteit of Leuven, Jornadas de Economia Industrial (Madrid), Simposio de Analisis Economico (Barcelona), E.A.R.I.E. Conference (Dublin). The address for correspondence is: Stefano Comino, Università di Padova, Dipartimento di Scienze Economiche, via del Santo, 33 -35123 Padova - Italia. E-mail: firstname.lastname@example.org.