Learning horizon and optimal alliance formation

H.T.W. Frankort, J. Hagedoorn, W. Letterie

Research output: Contribution to journalArticleAcademicpeer-review

164 Downloads (Pure)

Abstract

We develop a theoretical Bayesian learning model to examine how a firm’s learning horizon, defined as the maximum distance in a network of alliances across which the firm learns from other firms, conditions its optimal number of direct alliance partners under technological uncertainty. We compare theoretical optima for a ‘close’ learning horizon, where a firm learns only from direct alliance partners, and a ‘distant’ learning horizon, where a firm learns both from direct and indirect alliance partners. Our theory implies that in high tech industries, a distant learning horizon allows a firm to substitute indirect for direct partners, while in low tech industries indirect partners complement direct partners. Moreover, in high tech industries, optimal alliance formation is less sensitive to changes in structural model parameters when a firm’s learning horizon is distant rather than close. Our contribution lies in offering a formal theory of the role of indirect partners in optimal alliance portfolio design that generates normative propositions amenable to future empirical refutation. © 2015, The Author(s).
Original languageEnglish
Pages (from-to)212-236
Number of pages25
JournalComputational and Mathematical Organization Theory
Volume22
Issue number2
DOIs
Publication statusPublished - Jun 2016

JEL classifications

  • g34 - "Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance"
  • o32 - Management of Technological Innovation and R&D

Keywords

  • Alliance formation
  • Bayesian learning
  • Indirect partners
  • Learning horizon
  • Technological uncertainty
  • Distance education
  • Engineering education
  • RESOURCE-BASED VIEW
  • STRATEGIC ALLIANCES
  • RESEARCH-AND-DEVELOPMENT
  • MARKET VALUE
  • NETWORK STRUCTURE
  • ENTREPRENEURIAL FIRMS
  • TECHNOLOGY ALLIANCES
  • DOMINANT DESIGNS
  • INTERORGANIZATIONAL COLLABORATION
  • KNOWLEDGE TRANSFER

Cite this