The Self-Organisation of Strategic Alliances

Strategic alliances form a vital part of today's business environment. The sheer variety of collaborative forms is notable - which include R&D coalitions, marketing and distribution agreements, franchising, co-production agreements, licensing, consortiums and joint ventures. Here we define a strategic alliance as a cooperative agreement between two or more autonomous firms pursuing common objectives or working towards solving common problems through a period of sustained interaction. A distinction is commonly made between 'formal' and 'informal' inter-firm alliances. Informal alliances involve voluntary contact and interaction while in formal alliances cooperation is governed by a contractual agreement. The advantage of formal alliances is the ability to put in place IPR clauses, confidentially agreements and other contractual measures designed to safeguard the firm against knowledge spill-over. However, these measures are costly to instigate and police. By contrast, a key attraction of informal relationships is their low co-ordination costs. Informal know-how trading is relatively simple, uncomplicated and more flexible, and has been observed in a number of industries. A number of factors affecting firms' decisions to cooperate or not cooperate within strategic alliances have been raised in the literature. In this paper we consider three factors in particular: the relative costs of coordinating activity through strategic alliances vis-a-vis the costs of coordinating activity in-house, the degree of uncertainty present in the competitive environment, and the feedback between individual decision-making and industry structure. Whereas discussion of the first two factors is well developed in the strategic alliance literature, the third factor has hitherto only been addressed indirectly. The contribution to this under-researched area represents an important contribution of this paper to the current discourse. In order to focus the discussion, the paper considers the formation of horizontal inter-firm strategic alliances in dynamic product markets. These markets are characterised by rapid rates of technological change, a high degree of market uncertainty, and high rewards (supernormal profits) for successful firms offset by shortening life cycles.Strategic Alliances, Innovation Networks, Self-Organisation

The Invention of Invention

This paper models an industrial revolution as a qualitative transition from a world where innovation is infrequent and haphazard to one where it is continuous and systematic. Pre-industrial innovation is treated as a social process where an individual's effectiveness as an innovator depends on the skills of other individuals in his social network. As technology improves, individuals invest more time in learning through social contact. This gradual increase in linkage formation leads to a sudden change in the size of knowledge networks from small, isolated clusters, to a large connected cluster spanning most of the economy, causing a sudden increase in the effectiveness of innovation - an industrial revolution. The predicted sequence of typical innovators - from gifted amateurs, to lucky amateurs, to professionals - is consistent with empirical evidence.Industrial revolution, social networks, innovation

The Structure of Cluster Knowledge Networks Uneven, not Pervasive and Collective

This study focuses on the relationship between industrial clustering and innovation. It contributes to this literature by showing two empirical properties of the cluster learning process: first, that the structure of the knowledge network in a cluster is related with the heterogeneous distribution of firm knowledge bases and, second, that business interactions and inter-firm knowledge flows are not highly co-occurring phenomena. In particular, this paper highlights how the heterogeneity of firms’ knowledge bases generates uneven distribution of knowledge and selective inter-firm learning. This study has been based on empirical evidence collected at firm level in three wine clusters in Italy and Chile. Methods of social network analysis have been applied to process the data.Industrial clusters, knowledge flows, business interactions, networks.

Lost in translation: Toward a formal model of multilevel, multiscale medicine

For a broad spectrum of low level cognitive regulatory and other biological phenomena, isolation from signal crosstalk between them requires more metabolic free energy than permitting correlation. This allows an evolutionary exaptation leading to dynamic global broadcasts of interacting physiological processes at multiple scales. The argument is similar to the well-studied exaptation of noise to trigger stochastic resonance amplification in physiological subsystems. Not only is the living state characterized by cognition at every scale and level of organization, but by multiple, shifting, tunable, cooperative larger scale broadcasts that link selected subsets of functional modules to address problems. This multilevel dynamical viewpoint has implications for initiatives in translational medicine that have followed the implosive collapse of pharmaceutical industry 'magic bullet' research. In short, failure to respond to the inherently multilevel, multiscale nature of human pathophysiology will doom translational medicine to a similar implosion

The Self-Organisation of Innovation Networks

This paper explores the self-organising principles of horizontally-integrated innovation networks. It isshown that such networks can self-organising in environments where the co-ordination and production ofnew knowledge is itself a complex, dynamic and highly non-linear processes. The paper argues thedevelopment of a self-organisation perspective of innovation networks has two advantages. First, itprovides a general framework of dynamic systems in which different strands of a highly fragmentedliterature can be drawn together. Second, formal self-organisation modelling techniques can provideinteresting new insights into the micro-macro processes driving dynamic innovation systems.Section 1 of the paper identifies the four key principles of self-organisation: local interaction, non-linearity,thermodynamic openness and emergence. Section 2 discusses important complementarities between self-organisationtheory and the ‘new’ theory of innovation, with the latter’s emphasis of the systemic nature ofknowledge production within innovation networks containing multiple private and public institutions thatare connected in highly complicated and non-linear ways. This paves the way for a formal model of self-organisinginnovation networks presented in section 3. Section 4 discusses the main properties of theoutputs generated by the model and its novel insights, section 5 summarising and considering the potentialadvantages for current and future research offered by the self-organisation approach.research and development ;

Persistence of, and interrelation between, horizontal and vertical technology alliances.

The authors explore to what extent there is persistence in, and interrelation between, alliance strategies with different partner types (customers, suppliers, competitors). In a panel data set of innovation-active firms in the Netherlands from 1996 to 2004, the authors find persistence in alliance strategies with all three types of partners, but customer alliance strategies are more persistent than supplier alliance strategies and competitor alliance strategies. A positive interrelation between customer and supplier alliance strategies and a high persistence of joint supplier and customer alliance strategies are consistent with the advantages of value chain integration in innovation efforts. Prior engagement in horizontal (competitor) alliances increases the propensity to engage in vertical alliance strategies, but this effect occurs only with a longer lag. Overall, the authors’ findings suggest that alliance strategies with different partner types are both heterogeneous in persistence and (temporally) interrelated. This suggests that intertemporal relationships between different types of alliances may be as important as their simultaneous relationship in alliance portfolios.

Structural properties of cooperation networks in Germany: From basic to applied research

Economists pay more and more attention to knowledge networks and drivers of their development. Consequently, a rich literature emerged analyzing factors explaining the emergence of intra-organizational links. Despite substantial work focusing on the dyad level, only little is known about how and why (global) network structures differ between technologies or industries. The study is based on a new data source on subsidized R&D cooperation in Germany, which is presented in detail and discussed with respect to other types of relational data. A comparison of networks within ten technologies allows us to identify systematic differences between basic and applied research networks.R&D subsidies, network, cooperation, Foerderkatalog, Germany

Technological capability building through networking strategies within high-tech industries

Learning through networks has been considered as an important research topic for several years now. Technological learning is more and more based on a combination of internal and external learning and firms need to develop both technological and social capital for that purpose. This paper analyses the relationship between both types of capital and their impact on the technological performance of companies in high-tech industries. We claim and find empirical evidence for decreasing marginal returns on social capital. Technological capital and social capital mutually reinforce each other's effect on the rate of innovation for companies with small patent and alliance portfolios. However, when the patent portfolio and network of alliances are extensive, companies risk to over-invest since optimal levels of social capital become smaller at higher levels of technological capital and the marginal benefits of investing in technological capital decreases the higher the levels of social capital. Finally, we find empirical evidence that companies that explore novel and pioneering technologies have higher levels of innovation performance in subsequent years than companies that solely invest in incremental innovations.Strategic Alliances, Networks, Innovation

Persistence of and interrelation between horizontal and vertical technology alliances

We examine how and to what extent the propensity to be engaged in alliances with different partner types (suppliers, customers and competitors) depends on prior alliance engagement with partner firms of the same type (persistence) and prior engagement in alliances with the other partner types (interrelation). We derive hypotheses from a combined competence and governance view of collaboration, and test these on an extensive panel dataset of innovation-active Dutch firms during 1996-2004. We find persistence in alliance engagement of all three types of partners, but customer alliances are more persistent than supplier alliances. Most persistent are joint supplier and customer alliances, which we attribute to the advantages of value chain integration in innovation processes. Positive interrelation also exists in vertical alliances, as immediate past customer alliances increase the propensity to engage in supplier alliances and vice versa. On the other hand, while prior engagement in horizontal (competitor) alliances increases the propensity to engage in vertical alliances, this effect only occurs with a longer lag. Overall, our findings are highly supportive of the idea that alliance engagement with different partner types is heterogeneous but interrelated. Our analysis suggests that the inter-temporal relationship between different types of alliances may be as important as their simultaneous relationship in alliance portfolios.R&D collaboration, technological partnerships, innovation, path dependency