| While there is a sizable literature on strategic alliance formation, that literature has generally lacked empirical work to support the theory. Answers to basic question such as 'why do firms ally?' are incomplete and often unsubstantiated.;This thesis adds to the literature and challenges its theories in two ways. Using data on 329 biotechnology R&D alliances, I present empirical evidence that one central motivation for biotechnology firms to find alliance partners is asymmetric information between alliance partners (informed investors) and the less informed capital markets. Biotechnology firms' decision to access alliance capital is correlated both with market movements (negatively), as well as with asymmetric information in the capital markets (positively). In addition, I use patent data to find evidence that R&D alliances in the biotechnology industry do not result in observable scientific knowledge exchange. While the biotechnology industry actively engages in high rates of R&D and high rates of R&D alliance formation, the evidence is that partner firms do not move into each other's fields of expertise post-alliance. Rather, it would appear that partners bring complementary assets to the alliance.;Together, these results paint a very different picture from the typically theorized one. Biotechnology firms substitute between alliance and equity capital, rather than between internal development and external appropriation (by alliance) of R&D skills. Moreover, while these firms are developing new technologies in similar areas, the method of firm learning is not through alliances.;The results have implications for competition and innovation policy, antitrust policy, as well as management theory. |
