| In this era of global competition and technological advances, there is significant pressure on firms to reduce costs and to increase their knowledge substantially and continuously. International technology alliances have emerged as a strong corporate response to increasing global competition and internal resource limitations. Despite the strategic significance and proliferation of international collaborations, existing literature on strategic alliances has failed to clearly explicate how firms can enhance their firm value in international technology alliances. Hence, this study attempts to identify factors that contribute to the creation of firm value through interfirm cooperation.; First, this study examines whether international technology alliance formations lead to increases in firm value. Then, it theoretically identifies factors that are considered to affect alliance performance and measures the extent to which the factors—characteristics of parent firms, partnerships, and institutional environments—account for the variation in partnering firm's shareholder value. Firm-related variables are prior alliance experience, R&D investments, and diversification level of parent firm. Partnership-related factors include prior linkages with the same partner and the degree of technology overlap between partnering firms. Lastly, environmental factors comprise the national environment for technology development and different levels of intellectual property protection across countries. The three different levels of the variables have not been empirically tested systematically and simultaneously in extant alliance research.; In this study, the creation of firm value was measured with abnormal returns of partnering firms on the date of alliance announcement. Based on the knowledge-based view of the firm, a theoretical framework was developed and tested with the comprehensive alliance dataset, Securities Data Company, and other relevant secondary data. Empirical results suggest that firms engaged in international technology alliances significantly increased their firm value. Environmental factors were found to significantly influence firm value generated from cross-border technology collaborations between firms in high technology industries. In contrast, the attributes of parent firms and partnerships did not have substantial impact on firm value creation. Additionally, small firms were found to have significantly higher abnormal returns than larger firms, which is consistent with previous literature. These findings provide new insights for managers to develop alliance management capabilities. |
